BOOKS: Urge to plunder

BOOKS: Urge to plunder - Empires of Profit; by Daniel Litvin; Texere pounds 18.99

by David Smith, economics editor of the Sunday Times
Last Updated: 31 Aug 2010

Empires of Profit; by Daniel Litvin; Texere pounds 18.99

This survey of the imperial might of giant multinationals is timely, says David Smith.

At a time when a major TV series and bestselling book on the British Empire has sparked so much interest, and the US is being accused in some quarters of pursuing an imperialist agenda, Daniel Litvin's book on the 'imperial' role of multinational firms is timely.

Litvin is also well placed to write Empires of Profit. He read anthropology and development at the London School of Economics before becoming an Economist journalist, policy adviser to Rio Tinto and then founder of Percept Risk and Strategy, a consultancy advising on political and ethical issues.

The book is well structured and Litvin has chosen some lively case studies.

The story begins with 'Empires I', the ruthless multinationals associated with the British Empire, in particular the East India Company and the British South Africa Company of Cecil Rhodes. 'Empires II' looks at two equally aggressive multinationals, one Japanese (the South Manchuria Railway Company) and the other American (the United Fruit Company and its exploits in Guatemala).

The third part of the book, 'Backlash', describes the wave of nationalisation, particularly in the 1960s and '70s, as the governments of developing countries, many newly independent, asserted themselves by taking control of the operations of foreign multinationals. The nationalisation of Aramco by Saudi Arabia in the '70s was part of Opec's assertion of its powers, but there were plenty of other examples, often from less economically powerful governments.

The final section of the book, 'Resurgence', describes the revival of multinationals in the past quarter of a century, an era of sharply rising investment flows between nations. Even in this period, though, there are problems, notably those of Shell in Nigeria. Litvin also tells the as yet unfinished story of Rupert Murdoch in China.

The author's overall conclusion, that corporate social responsibility does not mean pursuing exactly the same strategy in each country, and that companies need to be aware of the political and social context in which they operate, is surely right - although I would be disturbed if many boardrooms thought otherwise.

It would have been nice, too, to focus a little more on some of the many successes achieved by multinationals in being good corporate citizens around the world. Success is significantly less sexy than failure and conflict, but its lessons are every bit as important.

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