_Journal of World-Systems Research_, 1995, Volume 1, Number 12
http://jwsr.ucr.edu/
ISSN 1076-156X
WHO HAS THE MOST FORTUNE 500 FIRMS?:
A network analysis of global economic competition, 1956-1989.
Albert Bergesen
Department of Sociology
University of Arizona
Tucson, Arizona 85721
Fax (602)621-9875
email: aberg@ccit.arizona.edu
Roberto Fernandez
School of Business and Department of Sociology
Stanford University
Stanford, California 94305
Copyright (c) 1995 Albert Bergesen and Roberto Fernandez
An earlier version of this paper was presented at the Annual
Meeting of the Political Economy of the World-System Conference,
Irvine, California, April, 1994.
[Page 1]
ABSTRACT
Network analysis is employed to examine the decline of
American hegemony in world production. Data coded from Fortune
magazine's ranking of the world's largest multimationals between
1956 and 1989 provides information on a firm's industry (chemicals,
autos, etc.), headquarter country, and size (defined by annual $
sales). From this we are able to examine the changing position of
states within, and the industrial structure of, the world economy.
Based on the changing proportion of top 50 firms over the years,
American dominance is objectively declining and that of Europe and
Japan growing. Europe and Japan also exhibit different patterns of
growth, with Europe deepening its position in industries where it
already has a foothold and Japan expanding its position by entering
new industries. The implication of this for the question of who
will succeed the United States as the next hegemonic power in world
production is also discussed.
I. INTRODUCTION
It is something of a given in international studies that no
state's dominance of the world economy lasts forever. There is
some debate as to how many states have exercised such hegemony over
[Page 2]
the 500 year history of the modern world-system. There seems to
be agreement on a hegemonic presence of Spain in the 16th century,
the Netherlands in the 17th, Britain in the late 18th and early
19th, and the United States in the 20th century. The idea of a
singular American hegemony was supported by world-system theorists,
although the Cold War Soviet/American competition created the idea
of bipolarity for many international relations scholars, which ran
against the singularity of the hegemony notion. But with the
collapse of the Soviet Union (Bergesen, 1992) the question of
dominance, leadership, or hegemony has turned more and more toward
the economic question of competition and position in the world
economy (Heilbroner, 1993; Kennedy, 1993; Thurow, 1992; Tolchin,
1992; Kolko, 1988; Luttwak, 1994) . The coming competition, we are
told, is over world markets, not the nuclear weapons of the Cold
War.
This paper seeks to examine three aspects of the late 20th
century international system: the economic dominance or hegemony by
a single state, the economic competition between states, and the
changing industrial composition of the overall world-economy. This
research is a continuation of earlier work (Bergesen and Sahoo,
1985; Bergesen, Sahoo, and Fernandez, 1987). Our goal is to
empirically examine the question of American hegemonic decline and
the degree of competition in the world economy. There are many
sources of data for such analysis, from a nation's percent of world
trade to their percent of world GDP. There is, though, a unique
[Page 3] source of data on the size, industry, and national
headquarters of large multinational corporations. This is the
annual ranking by Fortune Magazine of the world's largest 50
business enterprises. The multinational has been singled out as
the principal organizational form of the modern international
economy (Barnett and Cavanagh, 1994), and focusing upon which
countries possess the largest firms provides a good indicator of
dominance in the world economy.
RESEARCH PLAN
The plan of this research is to examine the distribution of
the world's largest multinationals across nations to see which
countries have the most Fortune 500 firms. Our time span is from
1956 to 1989, which covers the period from the height of American
hegemony to later decades in which many claim it has declined.
Second, we will examine the changing industrial structure of the
world economy over this period. Data on industry allows us to
aggregate all firms by industry to see which industries
predominate in this period. These first two analyses are then
combined as we look at the number of firms each country has per
industry to examine the deepening (more firms per industry) and
the widening (more industries) of world economic competition.
II. DATA AND METHOD
To measure economic competition this paper assembles a data
[Page 4] set of the world's 50 largest corporations (annual sales
define size) by coding Fortune Magazine's annual ranking of
multinational corporations from the first appearance of Fortune's
International 500 in 1956. In later years the magazine published
a World 50, and in earlier years firms from Fortune's domestic and
international 500 rankings were combined to produce a world top 50.
Fortune provides data on size (annual sales), headquarter country,
and industry (auto, chemical, electrical, etc.). Where a firm is
active in a number of industries only the most predominant industry
is coded.
CONSTRUCTING BINARY MATRICES. To examine national and
industrial sites of competition the technique of network analysis
is employed. We begin by classifying the largest 50 firms by the
country in which the firm bases its operations, and the primary
industry in which the firm operates for each year. We then
construct binary matrices (those containing only zeros and ones)
for each year with industries along the rows and countries along
the columns where the entries denote the countries' industrial
affiliations on the basis of the top 50 firms. As such, these
matrices describe the pattern of overlap between countries and
industries represented by the world's largest 50 firms.
We then manipulate these binary matrices in order to examine
the two types of structural patterns described above. We use
Breiger's (1974) method of analyzing overlapping memberships.
[Page 5] Labelling the binary matrices A, matrices describing
relations among countries based on sharing of industries (denoted
as C) are computed by pre-multiplying A by the transpose of A
(denoted AT). This procedure (C = ATA) is repeated for each year
and yields country-by-country matrices where the entries denote
the number of industries shared by pairs of countries. The C
matrices will be used to study patterns of industrial competition
among nations. The examination of the second structural pattern
(relations among industries based on shared nations) is based on
constructing a set of industry by industry matrices (one for each
year) where the entries are the number of nations that pairs of
industries share. These matrices (labelled I) are constructed by
post-multiplying A by the transpose of A, that is, I = AAT.
III. RESULTS
COUNTRIES AND FIRMS
Tables 1 and 2 present the number of top 50 firms by country
and year from 1956 through 1989. The first and most
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TABLE 1. The World's 50 Largest Corporations by Year and Country
United Great Brit/ South
states Brit. Neth* Neth. Germany Japan France Italy Switz. Mexico Brazil Venez. Iran Kuwait Sweden Canada Austral. Korea
1956 42 4 2 0 1 0 0 0 1 0 0 0 0 0 0 0 0 0
1957 43 4 2 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0
1958 44 2 2 1 0 0 0 0 1 0 0 0 0 0 0 0 0 0
1959 44 2 2 1 0 0 0 0 1 0 0 0 0 0 0 0 0 0
1960 42 2 2 1 2 0 0 0 1 0 0 0 0 0 0 0 0 0
1961 40 2 2 1 4 0 0 0 1 0 0 0 0 0 0 0 0 0
1962 39 3 2 1 3 0 0 1 1 0 0 0 0 0 0 0 0 0
1963 39 3 2 1 3 0 0 1 1 0 0 0 0 0 0 0 0 0
1964 37 3 2 1 5 0 0 1 1 0 0 0 0 0 0 0 0 0
1965 38 3 2 1 4 0 0 1 1 0 0 0 0 0 0 0 0 0
1966 38 3 2 1 3 0 0 2 1 0 0 0 0 0 0 0 0 0
1967 39 3 2 1 2 0 0 2 1 0 0 0 0 0 0 0 0 0
1968 37 6 2 1 1 1 0 2 0 0 0 0 0 0 0 0 0 0
1969 37 4 2 1 3 1 0 2 0 0 0 0 0 0 0 0 0 0
1970 32 3 2 1 6 4 0 2 0 0 0 0 0 0 0 0 0 0
1971 30 3 2 1 6 5 0 2 1 0 0 0 0 0 0 0 0 0
1972 27 4 2 1 6 6 1 2 1 0 0 0 0 0 0 0 0 0
1973 24 4 1 1 8 6 2 3 1 0 0 0 0 0 0 0 0 0
1974 24 5 1 1 7 4 3 2 1 0 1 0 1 0 0 0 0 0
1975 23 5 1 1 7 5 3 2 1 0 1 0 1 0 0 0 0 0
1976 22 3 2 1 7 5 5 1 1 0 1 1 1 0 0 0 0 0
1977 22 3 2 1 8 6 4 1 0 0 1 1 1 0 0 0 0 0
1978 21 3 2 1 7 6 5 1 1 0 1 1 1 0 0 0 0 0
1979 22 3 2 1 7 6 4 2 1 0 1 1 0 0 0 0 0 0
1960 23 2 2 1 7 5 4 2 1 1 1 1 0 0 0 0 0 0
1981 21 3 2 1 7 5 4 2 1 1 1 1 0 1 0 0 0 0
1982 21 3 2 1 7 6 3 3 1 1 1 1 0 0 0 0 0 0
1983 23 3 2 1 6 5 3 3 1 1 1 0 0 0 1 0 0 0
1984 22 3 2 1 6 6 2 3 1 1 1 1 0 1 0 0 0 0
1985 21 2 2 1 6 7 2 3 1 1 1 0 0 1 0 1 1 0
1986 21 2 2 1 8 6 4 3 1 0 1 0 0 1 0 0 0 0
1987 20 2 2 1 7 9 4 3 1 0 1 0 0 0 0 0 0 0
1988 19 2 2 1 6 10 4 4 2 0 0 0 0 0 0 0 0 0
1989 17 3 2 1 6 10 4 3 2 0 0 0 0 0 0 0 0 2
*Royal Dutch Shell and Unilver jointly owned by British and Dutch interests.
-------------------------------------------------------------------------------
Table 2. The World's 50 Largest Corporations by Year and Region
United Developing
States Europe Japan Countries*
1956 42 8 0 0
1957 43 7 0 0
1958 44 6 0 0
1959 44 6 0 0
1960 42 8 0 0
1961 40 10 0 0
1962 39 11 0 0
1963 39 11 0 0
1964 37 13 0 0
1965 38 12 0 0
1966 38 12 0 0
1967 39 11 0 0
1968 37 12 1 0
1969 37 12 1 0
1970 32 14 4 0
1971 30 15 5 0
1972 27 17 6 0
1973 24 20 6 0
1974 24 20 4 2
1975 23 20 5 2
1976 22 20 5 3
1977 22 19 6 3
1978 21 20 6 3
1979 22 20 6 2
1980 23 19 5 3
1981 21 20 5 4
1982 21 20 6 3
1983 23 20 5 2
1984 22 18 6 4
1985 21 18 7 4
1986 21 21 6 2
1987 20 20 9 1
1988 19 21 10 0
1989 17 21 10 2
* South Korea, Canada, Kuwait, Iran, Venezuela, Mexico, Brazil
SOURCE: Data from Table 1
-------------------------------------------------------------------
basic observation is the decline of American dominance among the
world's largest corporate enterprises. 42 of the top 50
corporations in 1956 are American, a clear sign of hegemony in
production among the world's largest enterprises. By 1989 the
number has dropped to 17, a clear decline in American dominance.
Germany goes from 1 to 6, Japan from 0 to 10, and France from 0 to
4 firms over this period. This reflects the post-war recovery of
Japan and Germany and their rising status as challengers to
[Page 6]
American dominance (Fallows, 1994; Lincoln, 1993). Britain, on the
other hand, hovering between 3 and 4 firms over the period, neither
adds nor loses firms among the top 50. This may tell us something
about the processes of permanence and change in the world economy.
As a past hegemon Britain developed numerous large industrial
enterprises, and even though Britain's overall industrial position
declines, they remain among the largest firms in the world.
Countries such as Germany, France, and Japan, without such past
hegemonic advantage, show more fluctuation in the rankings of
their firms. Britain seems to have lodged 3 or 4 very large firms
in the world's top 50, which remain there throughout the period,
independent of the rise in firms by other countries. Britain does
not add to the number of firms it has over this period. Germany
and Japan start with no such advantage during the 1950s upswing,
and so their number of firms increases over the period.
A pluralization of economic competition can also be seen. In
1956 the largest 50 firms were divided among only 5 countries
(United States, Britain, Germany, Netherlands, Switzerland),
whereas by 1989, 9 countries were represented (United States,
Britain, Germany, Netherlands, Switzerland, France, Japan, Italy,
South Korea). Early on the United States is largely competing with
itself having 42 of the top 50 firms. Later competition is more
internationally diversified. A single state's hegemonic decline and
a pluralization of the national sites of production seem to go hand
[Page 7] in hand. There is a declining number of firms in the top
50 for the United States--42 to 17, and an increasing number of
countries possessing large firms--5 to 9.
THE TRIPOLAR ECONOMY
We normally think of bipolarity in the Cold War military terms
of the US vs. the USSR, but it also exists on the economic plane.
When grouped by region (Table 2) the shift from a bipolar to a
tripolar world economy is clearly seen. The initial bipolarity was
between the United States (42 firms) and Europe (8 firms). Going
into the 1990s, though, there are now three blocs: the United
States (17 firms), Europe (21 firms, of which 10 are German), and
Japan (10 firms). Japan has almost twice as many large firms as
Germany and seems a much more likely contender for post-American
hegemony in world production. Also, when the International 500 is
considered as a whole, Japan has about three times as many firms as
Germany or any other European country. While some predict a
German-led Europe as the successor the United States the data on
large firms points more to Asia and Japan. We should note that the
recent growth of the economy of south China has led to speculation
over future Chinese world economic leadership. At this point it is
too early to tell, but from the data presented here, Japan still
has the clear advantage.
[Page 8]
THE WORLD ECONOMY'S INDUSTRIAL STRUCTURE
Our data allow us to examine the world economy's changing
industrial structure. The unit here is industry, not country.
Looking at Table 3 one can see that some industries gained, some
lost, and some kept constant their number of firms in the top 50.
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Table 3. World's 50 Largest Corporations by Year and Industry
Steel Personal Buitding Metal Coal/ Transport. Industrial &
Oil Auto Electric Chemical & Iron Food Computers Conglom. Tobacco Rubber Care Material Photography Aerospace Containers Paper Products Mining Equip. Farm Equip.
1956 12 4 4 4 4 6 1 0 1 4 1 0 0 5 2 1 1 0 0 0
1957 12 4 4 4 3 6 2 0 2 3 1 0 0 5 2 1 1 0 0 0
1958 12 4 5 4 4 6 2 0 0 3 1 0 0 6 2 1 0 0 0 0
1959 12 3 6 4 4 6 3 0 0 3 1 0 0 5 2 1 0 0 0 0
1960 12 6 6 3 4 6 2 0 0 2 1 0 0 5 2 1 0 0 0 0
1961 11 6 7 3 3 6 2 0 0 2 1 0 0 6 2 1 0 0 0 0
1962 11 7 7 3 2 6 2 0 0 2 1 0 0 6 2 0 0 1 0 0
1963 12 7 8 4 2 6 2 0 0 2 1 0 0 5 0 0 0 1 0 0
1964 10 7 8 5 3 7 2 0 0 2 1 0 0 4 0 0 0 1 0 0
1965 11 6 8 5 3 6 1 0 0 2 1 0 1 5 0 0 0 1 0 0
1966 10 7 8 5 3 6 1 0 0 2 1 0 1 5 0 0 0 1 0 0
1967 12 6 8 4 2 5 1 1 0 2 1 0 1 6 0 0 0 1 0 0
1968 11 7 9 4 3 3 1 1 0 2 1 0 1 6 0 0 0 1 0 0
1969 12 8 9 5 3 2 1 1 0 2 1 0 1 5 0 0 0 0 0 0
1970 11 8 10 6 5 4 1 1 0 1 1 0 1 1 0 0 0 0 0 0
1971 11 10 7 7 5 4 1 1 0 1 1 0 1 1 0 0 0 0 0 0
1972 12 13 9 6 3 2 1 1 0 1 1 0 1 0 0 0 0 0 0 0
1973 12 11 11 6 5 2 1 1 0 1 0 0 0 0 0 0 0 0 0 0
1974 18 8 7 7 5 2 1 0 1 1 0 0 0 0 0 0 0 0 0 0
1975 17 9 7 7 4 2 1 0 1 1 1 0 0 0 0 0 0 0 0 0
1976 19 9 7 6 3 2 1 0 1 0 1 1 0 0 0 0 0 0 0 0
1977 18 10 7 6 4 1 1 0 1 1 1 0 0 0 0 0 0 0 0 0
1978 18 10 7 6 3 2 1 0 1 0 1 1 0 0 0 0 0 0 0 0
1979 20 11 7 5 3 2 1 0 1 0 0 0 0 0 0 0 0 0 0 0
1980 22 9 7 5 3 2 1 0 0 0 0 0 0 1 0 0 0 0 0 0
1981 23 9 6 5 2 2 1 0 1 0 0 0 0 1 0 0 0 0 0 0
1982 22 9 6 5 3 2 1 0 1 0 0 0 0 1 0 0 0 0 0 0
1983 20 11 6 5 1 2 1 0 2 0 1 0 0 1 0 0 0 0 0 0
1984 22 9 7 5 1 2 1 0 1 0 1 0 0 1 0 0 0 0 0 0
1985 19 10 7 5 2 2 1 0 0 0 0 0 0 2 0 0 0 1 1 0
1986 15 11 8 5 2 3 1 0 2 0 1 0 0 2 0 0 0 0 0 0
1987 12 12 10 5 2 3 1 0 2 0 1 0 0 2 0 0 0 0 0 0
1988 10 11 9 6 2 4 1 0 1 0 1 0 2 2 0 0 0 0 0 1
1989 9 11 11 5 2 4 2 0 1 0 1 0 1 2 0 0 0 0 0 1
---------------------------------------------------------------------
The oil industry had the largest number of firms and shows a
curvilinear growth pattern over the period. In 1956 there were 12
oil companies among the top 50 firms, a number which rose to 18-22
with the OPEC quadrupling of prices in the mid-1970s, and then
declined to near the early figure by the end of the 1980s. The
chemical, computer, tobacco, and personal care product industries
kept about the same number of firms, while the steel and iron,
rubber, and aerospace industries declined in their number of top 50
firms. The combined extraction, refinement and sales aspects of
oil companies makes them inherently large, which may account for
their presence in the top 50. But oil also constitutes the
material base for the expansion of the post-war economy and that
probably contributes to the fact that oil has many more firms than
other industries. The post-war expansion of consumerism can also
be seen in the dramatic increase in the number of automobile and
electric firms, which almost tripled in number, from 4 to 11.
INDUSTRIAL CONCENTRATION. In 1956, 20 of the top 50 firms
were in oil, autos, and electrical industries. By 1989 the number
had risen to 31, as the top 50 were more concentrated in these
three industries. The data suggest that during the earlier years
[Page 9]
of the post-war boom the A-phase start-up was spread out across
more industries. As the upswing continued some industries grew
very large, such that by 1989 the world economy, at the top at
least, was more concentrated in fewer industries. This is perhaps
a sign of the fullness or completeness of the post-war expansionary
phase of world economic growth in that there was a higher degree of
industrial concentration at the end than at the beginning of the
upswing. Second, there may be an inherent economic shift from more
basic to more consumer industry as an expansionary A-phase
proceeds. Early on in the cycle there were more iron and steel,
rubber, and aerospace industries in the top 50, but they all
declined in number as more consumer-based industries, automobile
and electrical firms (TVs, radios, VCRs, etc.), grew in
number. The over-saturation of markets, creating a crisis of
overproduction which turns expansion into stagnation and
contraction, may be reflected here in the growth of consumer
industries. In effect, production begins more widely dispersed
across industries and with more of them being basic industries.
Then, as the A-phase comes to fruition the consumer end of the
production process expands and these industries become more
prominent in the top 50.
INDUSTRY BY COUNTRY
[Page 10]
OIL. Table 4 presents the breakdown by industry and country.
----------------------------------------------------------------------
Table 4. Wortdls 50 Largest Corporations by Year, Country, and Indu stry
Oil Electrical Auto
-------------------------------------------------------------------------------------------- ------------------------------------------------------------ -------------------------------------------------------------------------------
United Great Brit/ United Great South United Great Brit/
States Brit. Neth. Japan France Italy Mexico Brazil Venez. Iran Kuwait States Brit. Neth. Germany Japan France Korea States Brit. Neth. Germany Japan France Italy Sweden Canada
1956 10 1 1 0 0 0 0 0 0 0 0 4 0 0 0 0 0 0 4 0 0 0 0 0 0 0 0
1957 10 1 1 0 0 0 0 0 0 0 0 4 0 0 0 0 0 0 4 0 0 0 0 0 0 0 0
1958 10 1 1 0 0 0 0 0 0 0 0 4 0 1 0 0 0 0 4 0 0 0 0 0 0 0 0
1959 10 1 1 0 0 0 0 0 0 0 0 5 0 1 0 0 0 0 3 0 0 0 0 0 0 0 0
1960 10 1 1 0 0 0 0 0 0 0 0 5 0 1 0 0 0 0 5 0 0 1 0 0 0 0 0
1961 9 1 1 0 0 0 0 0 0 0 0 5 0 1 1 0 0 0 4 0 0 2 0 0 0 0 0
1962 9 1 1 0 0 0 0 0 0 0 0 5 0 1 1 0 0 0 4 0 0 2 0 0 1 0 0
1963 10 1 1 0 0 0 0 0 0 0 0 6 0 1 1 0 0 0 4 0 0 2 0 0 1 0 0
1964 8 1 1 0 0 0 0 0 0 0 0 6 0 1 1 0 0 0 4 0 0 2 0 0 1 0 0
1965 9 1 1 0 0 0 0 0 0 0 0 6 0 1 1 0 0 0 4 0 0 1 0 0 1 0 0
1966 9 1 0 0 0 0 0 0 3 0 0 6 0 1 1 0 0 0 4 0 1 1 0 0 1 0 0
1967 10 1 1 0 0 0 0 0 0 0 0 6 0 1 1 0 0 0 4 0 0 1 0 0 1 0 0
1968 9 1 1 0 0 0 0 0 0 0 0 6 1 1 0 1 0 0 4 1 0 1 0 0 1 0 0
1969 10 1 1 0 0 0 0 0 0 0 0 6 0 1 1 1 0 0 4 1 0 2 0 0 1 0 0
1970 9 1 1 0 0 0 0 0 0 0 0 6 0 1 1 2 0 0 4 0 0 2 1 0 1 0 0
1971 9 1 1 0 0 0 0 0 0 0 0 5 0 1 0 1 0 0 4 0 0 2 3 0 1 0 0
1972 10 1 1 0 0 0 0 0 0 0 0 5 0 1 1 2 0 0 4 1 0 3 3 1 1 0 0
1973 8 1 1 0 1 1 0 0 0 0 0 6 0 1 2 2 0 0 4 0 0 2 3 1 1 0 0
1974 11 1 1 0 2 1 0 1 0 1 0 4 0 1 1 1 0 0 3 0 0 2 2 1 0 0 0
1975 10 I 1 0 2 1 0 1 0 1 0 4 0 1 1 1 0 0 3 0 0 2 3 1 0 0 0
1976 11 1 1 0 2 1 0 1 1 1 0 4 0 1 1 1 0 0 2 0 0 2 3 2 0 0 0
1977 10 1 1 0 2 1 0 1 1 1 0 3 0 1 1 2 0 0 3 0 0 2 3 2 0 0 0
1978 10 1 1 0 2 1 0 1 1 1 0 3 0 1 1 2 0 0 3 0 0 2 3 2 0 0 0
1979 13 1 1 0 2 1 0 1 1 0 0 3 0 1 1 2 0 0 3 0 0 2 3 2 1 0 0
1980 14 1 1 0 2 1 1 1 1 0 0 3 0 1 1 2 0 0 2 0 0 2 2 2 1 0 0
1981 14 1 1 0 2 1 1 1 1 0 1 2 0 1 1 2 0 0 2 0 0 2 2 2 1 0 0
1982 14 1 1 0 2 1 1 1 1 0 0 2 0 1 1 2 0 0 2 0 0 2 3 1 1 0 0
1983 13 1 1 0 2 1 1 1 0 0 0 2 0 1 1 2 0 0 3 0 0 2 3 1 1 1 0
1984 12 1 1 1 2 1 1 1 1 0 1 3 0 1 1 2 0 0 3 0 0 2 3 0 1 0 0
1985 11 1 1 0 2 1 1 1 0 0 1 2 0 1 1 3 0 0 3 0 0 2 3 0 1 0 1
1986 8 1 1 0 2 1 0 1 0 0 1 2 0 1 2 3 0 0 3 0 0 2 3 2 1 0 0
1987 7 1 1 0 1 1 0 1 0 0 0 2 0 1 1 5 1 0 3 0 0 3 3 2 1 0 0
1988 6 1 1 0 1 1 0 0 0 0 0 1 0 1 1 6 0 0 3 0 0 2 3 2 1 0 0
1989 5 1 1 0 1 1 0 0 0 0 0 1 0 1 1 5 1 2 3 0 0 2 3 2 1 0 0
----------------------------------------------------------------------
Table 4. World's 50 Largest Corporations by Year, Country, and Industry, p. 2
Conglo- Personal Building
Chemical Food Steel & Iron Computer merate Tobacco Rubber Care Material
------------------------------------------- ---------------------------------- --------------------------------------------------- --------------- ------ ---------------- --------------- -------- --------
United Great Brit/ United Great Brit/ United Great United United United Great United Great United
States Britain Neth. Germany Italy States Britain Neth. Switz. States Britain Germany Japan Italy Aust. States Japan States States Britain States Britain States France
1956 3 1 0 0 0 4 0 1 1 3 0 1 0 0 0 1 0 0 0 1 3 1 1 0
1957 3 1 0 0 0 4 0 1 1 3 0 0 0 0 0 2 0 0 0 2 3 0 1 0
1958 3 1 0 0 4 0 1 1 4 0 0 0 0 0 2 0 0 0 0 3 0 1 0
1959 3 1 0 0 0 4 0 1 1 4 0 0 0 0 0 3 0 0 0 0 3 0 1 0
1960 2 1 0 0 0 4 0 1 1 3 0 1 0 0 0 2 0 0 0 0 2 0 1 0
1961 2 0 0 0 4 0 1 1 2 0 1 0 0 0 2 0 0 0 0 2 0 1 0
1962 2 1 0 0 0 4 0 1 1 2 0 0 0 0 0 2 0 0 0 0 2 0 1 0
1963 3 1 0 0 0 4 0 1 1 2 0 0 0 0 0 2 0 0 0 0 2 0 1 0
1964 3 1 0 1 0 5 0 1 1 2 0 1 0 0 0 2 0 0 0 0 2 0 1 0
1965 3 1 0 1 0 4 0 1 1 2 0 1 0 0 0 1 0 0 0 0 2 0 1 0
1966 3 1 0 0 1 4 0 1 1 2 0 1 0 0 0 1 0 0 0 0 2 0 1 0
1967 2 1 0 0 1 3 0 1 1 2 0 0 0 0 0 1 0 1 0 0 2 0 1 0
1968 2 1 0 0 1 2 0 1 0 2 1 0 0 0 0 1 0 1 0 0 2 0 1 0
1969 2 1 1 0 1 2 0 0 0 2 1 0 0 0 0 1 0 1 0 0 2 0 1 0
1970 2 1 0 2 1 3 0 1 0 2 1 1 1 0 0 1 0 1 0 0 1 0 1 0
1971 2 1 0 3 1 2 0 1 1 2 1 1 1 0 0 1 0 1 0 0 1 0 1 0
1972 2 1 0 2 1 0 0 1 1 1 1 0 1 0 0 1 0 1 0 0 1 0 1 0
1973 1 1 0 3 1 0 1 0 1 2 1 1 0 0 1 0 1 0 0 1 0 0 0
1974 2 1 0 3 1 0 1 0 1 2 1 1 1 0 0 1 0 0 0 1 1 0 0 0
1975 2 1 0 3 1 0 1 0 1 1 1 1 1 0 0 1 0 0 0 1 1 0 1 0
1976 2 1 0 3 0 0 0 1 1 1 0 1 1 0 0 1 0 0 0 1 0 0 1 1
1977 2 1 0 3 0 0 0 1 0 1 0 2 1 0 0 1 0 0 0 1 1 0 1 0
1978 2 1 0 3 0 0 0 1 1 1 0 1 1 0 0 1 0 0 0 1 0 0 1 1
1979 1 1 0 3 0 0 0 1 1 1 0 1 1 0 0 1 0 0 0 1 0 0 0 0
1980 1 1 0 3 0 0 0 1 1 1 0 1 1 0 0 1 0 0 0 0 0 0 0 0
1981 1 1 0 3 0 0 0 1 1 0 0 1 1 0 0 1 0 0 0 1 0 0 0 0
1982 1 1 0 3 0 0 0 1 1 0 0 1 1 1 0 1 0 0 0 1 0 0 0 0
1983 1 1 0 3 0 0 0 1 1 0 0 0 a 1 0 1 0 0 1 1 0 0 1 0
1984 1 1 0 3 0 0 0 1 1 0 0 0 0 1 0 1 0 0 0 1 0 0 1 0
1985 1 1 0 3 0 0 0 1 1 0 0 0 0 1 1 1 0 0 0 0 0 0 0 0
1986 1 1 0 3 0 1 0 1 1 0 0 1 0 1 0 1 0 0 2 0 0 0 1 0
1987 1 1 0 3 0 1 0 1 1 0 0 0 1 1 0 1 0 0 2 0 0 0 1 0
1988 1 1 0 3 1 2 0 1 1 0 0 0 1 1 0 1 0 0 1 0 0 1 0
1989 1 1 0 3 0 2 0 1 1 0 0 0 1 1 0 1 1 0 0 1 0 1 0
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Table 4. WorLd's 50 Largest Corporations by Year, Country, and Industry, p. 3
Metal Coal/Mining/ Indust. & Farm
Photography Aerospace Container Paper Products Crude Oil Transportation Equipment
--------------- --------- --------- ------ -------- --------------- -------------- --------------
United United United United United United Great
States France States States States States States Britain Japan Switzerland
1956 0 0 5 2 1 1 0 0 0 0
1957 0 0 5 2 1 1 0 0 0 0
1958 0 0 6 2 1 0 0 0 0 0
1959 0 0 5 2 1 0 0 0 0 0
1960 0 0 5 2 1 0 0 0 0 0
1961 0 0 6 2 1 0 0 0 0 0
1962 0 0 6 2 0 0 0 1 0 0
1963 0 0 5 0 0 0 0 1 0 0
1964 0 0 4 0 0 0 0 1 0 0
1965 1 0 5 0 0 0 0 1 0 0
1966 1 0 5 0 0 0 0 1 0 0
1967 1 0 6 0 0 0 0 1 0 0
1968 1 0 6 0 0 0 0 1 0 0
1969 1 0 5 0 0 0 0 0 0 0
1970 1 0 1 0 0 0 0 0 0 0
1971 1 0 1 0 0 0 0 0 0 0
1972 1 0 0 0 0 0 0 0 0 0
1973 0 0 0 0 0 0 0 0 0 0
1974 0 0 0 0 0 0 0 0 0 0
1975 0 0 0 0 0 0 0 0 0 0
1976 0 0 0 0 0 0 0 0 0 0
1977 0 0 0 0 0 0 0 0 0 0
1978 0 0 0 0 0 0 0 0 0 0
1979 0 0 0 0 0 0 0 0 0 0
1980 0 0 1 0 0 0 0 0 0 0
1981 0 0 1 0 0 0 0 0 0 0
1982 0 0 1 0 0 0 0 0 0 0
1983 0 0 1 0 0 0 0 0 0 0
1984 0 0 1 0 0 0 0 0 0 0
1985 0 0 2 0 0 0 1 0 1 0
1986 0 0 2 0 0 0 0 0 0 0
1987 0 0 2 0 0 0 0 0 0 0
1988 1 1 2 0 0 0 0 0 0 1
1989 1 0 2 0 0 0 0 0 0 1
----------------------------------------------------------------------
Starting with oil we can see that national competition
has increased. Of the 12 oil firms that made the top 50 in 1956,
almost all (10) were American. By 1989 only half (5) of the oil
firms were American. Hegemonic position has declined, and national
competition across the world economy has increased. In 1956 only
the United States, Britain, and the Netherlands had oil firms among
the world's largest 50 firms. By 1989 France and Mexico (Pemex)
had joined the list. The number of countries competing in the oil
industry had increased from 3 to 5.
ELECTRICAL AND CHEMICAL. Hegemonic decline and increasing
competition can also be seen in the electrical industry, where the
United States and Japan change places between 1956 and 1989. In
1956 the United States has 4 electrical firms in the top 50 and
Japan had none. By 1989 the United States is down to 1 and Japan
is up to 5, almost a complete change of place. Also, in 1956 the
United States has all the electrical firms in the world 50, but by
1989 the Netherlands, Germany, Japan, France, and South Korea also
have at least one electrical firm in the top 50. World-wide
competition is increasing. There is a somewhat similar pattern in
chemicals. The United States declines (3 to 1) while Germany rises
(0 to 3) over this period.
AUTOMOBILES. In the automobile industry the pattern is
slightly different. Hegemonic decline is more relative, as the
United States only goes from 4 to 3 auto firms. By 1989 there are
[Page 11] more countries with large auto firms and their number of
firms is remarkably equal. The United States has 3, Germany 2,
Japan 3, France 2, and Italy 1 automobile company among the top 50
firms. Looking at the other industries of Table 4, one can see
that by 1989 the automobile industry has the most equal competition
across national producers of all industries. While the question of
future hegemonic leadership is often discussed in terms of
competition for new technologies like the fifth generation
computer, biotechnology, or fiber optics, in the world as it exists
today the area of most equal competition is the sale of cars.
National competition, then, is more heightened in a consumer
industry like autos rather than in more basic industries like oil,
steel and iron, rubber or chemicals. Perhaps the A-expansionary
ends when the technology of production, such as autos, is so
diffused that many national producers are able to have firms among
the 50 largest in the world. The hegemon can no longer dominate
world production as in the 1950s when there were only American auto
firms among the top 50 firms. There is also relative and absolute
decline in world production, and the fact that the United States
has kept about the same number of auto firms while the rest of the
world has increased their number may point to relative, rather than
absolute, decline. If, however, the number of United States auto
makers continues to decline while those of other countries
increase, absolute decline may be said to begin.
[Page 12]
FIRMS PER INDUSTRY
The question of increasing competition in the world economy is
more directly addressed in Table 5, which presents data on the
number of industries, and the number of firms per industry, for the
United States, Europe, Japan, and the semiperipheral NICs.
-----------------------------------------------------------------------
Table 5. Number of Firms among the World's 50 Largest Firms, Number of Industries in Which
Firms Produce, and Number of Firms Per Industry by Region and Year for the Period
1956-1989
United States Europe* Japan Semiperiphery
----------------- ----------------- ----------------- ------------------
F I F/I F I F/I F I F/I F I F/I
1956 42 13 3.23 8 6 1.33 0 0 - 0 0 -
1957 43 13 3.31 7 4 1.75 0 0 - 0 0 -
1958 44 12 3.67 6 4 1.50 0 0 - 0 0 -
1959 44 12 3.67 6 4 1.50 0 0 - 0 0 -
1960 42 12 3.67 6 5 1.20 0 0 - 0 0 -
1961 40 12 3.33 10 6 1.67 0 0 - 0 0 -
1962 39 11 3.54 11 6 1.83 0 0 - 0 0 -
1963 39 10 3.90 11 6 1.83 0 0 - 0 0 -
1964 37 10 3.70 13 7 1.85 0 0 - 0 0 -
1965 38 11 3.45 12 7 1.71 0 0 - 0 0 -
1966 38 11 3.45 12 7 1.71 0 0 - 0 0 -
1967 39 12 3.42 9 6 1.50 0 0 - 0 0 -
1968 37 12 3.08 12 7 1.71 1 1 1.00 0 0 -
1969 37 12 3.08 12 6 2.00 1 1 1.00 0 0 -
1970 32 12 2.67 13 6 2.17 5 3 1.67 0 0 -
1971 30 12 2.50 15 6 2.50 5 3 1.67 0 0 -
1972 27 10 2.70 17 6 2.83 6 3 2.00 0 0 -
1973 24 8 3.00 20 6 3.33 6 3 2.00 0 0 -
1974 24 8 3.00 20 7 2.86 4 3 1.33 2 1 2.00
1975 23 9 2.55 20 7 2.86 5 3 1.67 2 1 2.00
1976 22 8 2.75 20 8 2.50 5 3 1.67 3 1 3.00
1977 22 9 2.44 19 7 2.71 6 3 2.00 3 1 3.00
1978 21 8 2.62 20 8 2.50 6 3 2.00 3 1 3.00
1979 22 7 3.14 20 7 2.86 6 4 1.50 2 1 2.00
1980 23 8 2.87 19 6 3.17 5 3 1.67 3 1 3.00
1981 21 8 2.62 20 7 2.86 5 3 1.67 4 1 4.00
1982 21 7 3.00 20 8 2.50 6 3 2.00 3 1 3.00
1983 23 9 2.56 20 7 2.86 5 2 2.50 2 1 2.00
1984 22 7 3.14 18 7 2.50 6 3 2.00 4 1 4.00
1985 21 6 3.50 19 6 3.17 5 2 2.50 5 3 1.67
1986 21 9 2.33 21 6 3.50 6 2 3.00 2 1 2.00
1987 20 9 2.22 20 6 3.33 9 3 3.00 1 1 1.00
1988 19 10 1.90 21 8 2.62 10 3 3.33 0 0 -
1989 17 9 1.88 21 8 2.62 10 4 2.50 1 1 1.00
*Data include one Canadian firm in 1985.
KEY: F = Number of firms; I = Number of industries; F/I = Number of firms per industry.
-----------------------------------------------------------------------
In 1956 the United States has 42 firms that were active in 13 different
industries. Europe has 8 firms active in 6 industries, while Japan
and the semiperipheral NICs have no firms among the top 50. By
1989 the number of firms and industries in which the United States
competes declines by about half, from 42 to 21 firms and 13 to 6
industries. In Europe the number of firms has more than doubled (8
to 19) while the number of industries in which these firms produce
has stayed around 6. Finally, in Japan the number of firms has
increased (0 to 5) as has the number of industries (0 to 2), a
pattern which similarly holds for the semiperipheral NICs.
There are three general patterns here which tell us something about
international competition. The first pattern is a decline in both
firms and industries, as represented by the United States. It
would be interesting to see if this is a general pattern of
hegemonic decline by examining the economic activity of earlier
hegemons like 19th century Britain and the 17th century Dutch. The
second pattern is an increase in firms while the number of
industries stays constant, as in Europe. This may reflect the
historic prominence of Europe in world production, such that there
are certain industries in which Europe already has a niche prior to
[Page 13]
the period under examination. Post-war recovery, then,
entails a filling up of already existing industrial niches more
than the creation of new ones. Japan and the NICs, on the other
hand, are newer to the world of very large corporate enterprises,
so their post-war expansion involves the addition of both
industries and firms to fill them. This pattern, more firms/more
industries, is the mirror opposite of the United States pattern,
fewer firms/fewer industries.
Interestingly then, we see both sides of the transition process in
world production: the declining hegemon loses firms and industries,
while an ascending challenger is adding firms and industries.
Other core states, like those of Europe, gain firms during the
great post-war upswing, but not more industries. This may have
implications for the direction of hegemonic succession: Asia rather
than Europe.
THE FIRM TO INDUSTRY RATIO. These patterns are summarized in
Table 5 in the column F/I, the firm to industry ratio. For the
United States the ratio has stayed about the same as there has been
a proportionate decline in both the number of American firms in the
top 50 and the number of industries in which they compete. For
Europe the F/I ratio is increasing, from 1.33 in 1956 to 3.17 in
1989, reflecting the fact that Europe is adding more firms per
industry over this period. The F/I ratio for Japan has fluctuated
between 1 and 2, reflecting the fact that both the number of
Japanese firms and industries has increased.
[Page 14]
MEASURING NATIONAL COMPETITION
Table 6 presents network data on the number of different
industries and firms that Europe, Japan, and the NIC semiperiphery
have in competition with the United States.
--------------------------------------------------------------------
Table 6. Number of Industries Shared with the U.S., Number of Non-U.S. Firms Competing with
the U.S., Number of U.S. Firms Competing with Non-U.S. Firms, and the Ratio of
Non-U.S. Firms to U.S. Firms by Region and Year for the Period 1956-1989
Europe* Japan Semiperiphery
------------------------- ------------------------ ------------------------
IS FC US FC/US IS FC US FC/US IS FC US FC/US
1956 5 7 23 .30 0 0 0 - 0 0 0 -
1957 3 5 17 .29 0 0 0 - 0 0 0 -
1958 4 6 22 .27 0 0 0 - 0 0 0 -
1959 4 6 22 .27 0 0 0 - 0 0 0 -
1960 5 6 28 .21 0 0 0 - 0 0 0 -
1961 6 10 27 .37 0 0 0 - 0 0 0 -
1962 5 10 24 .42 0 0 0 - 0 0 0 -
1963 5 10 27 .37 0 0 0 - 0 0 0 -
1964 6 12 28 .43 0 0 0 - 0 0 0 -
1965 6 11 28 .39 0 0 0 - 0 0 0 -
1966 6 11 28 .39 0 0 0 - 0 0 0 -
1967 5 8 26 .31 0 0 0 - 0 0 0 -
1968 6 11 25 .44 1 1 6 .17 0 0 0 -
1969 6 12 25 .48 1 1 6 .17 0 0 0 -
1970 6 13 26 .50 3 5 12 .42 0 0 0 -
1971 6 15 24 .63 3 5 10 .50 0 0 0 -
1972 5 15 21 .71 3 6 10 .60 0 0 0 -
1973 5 17 21 .81 3 6 12 .50 0 0 0 -
1974 5 17 21 .81 3 4 9 .44 1 2 10 .20
1975 5 17 19 .89 3 5 9 .56 1 2 8 .25
1976 5 16 19 .84 3 5 7 .71 1 3 10 .30
1977 5 16 18 .89 3 6 7 .86 1 3 9 .33
1978 5 16 18 .89 3 6 7 .86 1 3 9 .33
1979 5 17 20 .85 4 6 7 .86 1 2 12 .17
1980 5 17 20 .85 3 5 6 .83 1 3 13 .23
1981 5 17 18 .94 3 5 5 1.00 1 4 12 .33
1982 5 16 19 .84 3 6 5 1.20 1 3 13 .23
1983 6 19 20 .95 2 5 5 1.00 1 2 12 .17
1984 4 14 19 .74 3 6 18 .33 1 4 12 .33
1985 4 15 18 .83 2 5 5 1.00 3 5 17 .29
1986 5 19 15 1.27 2 6 5 1.20 1 2 8 .40
1987 5 19 14 1.36 2 8 5 1.60 1 1 7 .14
1988 5 19 14 1.36 2 9 4 2.25 0 0 0 -
1989 5 18 12 1.50 3 9 5 1.80 1 2 1 2.00
*Data include one Canadian firm in 1985.
KEY: IS = Number of industries shared with the U.S.; FC = Number of non-U.S. firms competing
with U.S. firms; US = Number of U.S. firms competing in each region; FC/US = Ratio of FC and
US
--------------------------------------------------------------------
In Table 6 (IS) is the number of industries shared
with the United States, (FC) the number of non-United
States firms competing with United States firms, (US)
the number of United States firms competing in each region,
and (FC/US) the ratio of (FC) and (US). The growing competition
between the United States and Europe and Japan can be examined
here. The IS column shows that the number of industries in which
Europe has firms competing with the United States has stayed about
the same over the period, while it has increased for Japan and the
semiperipheral NICs. But while the number of industries in which
competition has occurred stayed constant for Europe and the United
States, the number of European firms in these fixed industries has
doubled, from 7 to 15. On the other hand, reflecting hegemonic
decline, the number of United States firms competing with European
firms has slightly declined, from 23 in 1956 to 18 in 1985. This
can be summarized in the FC/US ratio which is the ratio of European
firms competing with the United States to United States firms
competing with European firms. As a sign of increased competition
with Europe, that ratio has gone up from .30 in 1956 to .83 in
1985. For Japan and the NICs, the number of both industries and
firms competitive with the United States has gone up.
[Page 15]
There are two possible explanations for these findings. The
more recent world economic presence of Japanese and NIC firms
means that any growth for them will of necessity involve moving
into new industries simply because they are starting closer to
zero. Europe, already active in the world economy, recovers after
the war, and adds more firms to those industries in which Europe
was already present. Europe, though, does not expand its
industrial base in competition with the United States in any
significant way over this period. Europe starts and finishes the
thirty year period (1956-1985) competing with the United States in
the same number of industries, whereas Japan increases over this
same period the number of industries in which it competes with the
United States. Newness or hegemonic challenger? The question is
whether the attainment by Japan of a certain level of competition
with the United States, similar to that of Europe, will constitute
a ceiling to future growth in new industries for economic
competition. That is, maybe Europe has reached the limit of the
number of industries in which competition can occur when the
sample of firms is limited to only the world's 50 largest.
Table 7 presents the number of firms and industries competing
for the United States, Europe, Japan, and the NICs, for 1956, 1970,
and 1985. Reading across the table in 1956 for Europe we see that
they have 7 firms competing in 5 industries with the United States,
----------------------------------------------------------------------
Table 7. Number of firms and Industries Competing by Region for 1956, 1972,
and 1989
United Europe* Japan Semi-
States periphery
---------- --------- -------- ---------
----------
1956
----------
F I F I F I F I
U.S. 42 13 23 5 0 0 0 0
Europe 7 5 8 6 0 0 0 0
Japan 0 0 0 0 0 0 0 0
Semi- 0 0 0 0 0 0 0 0
periphery
----------
1972
----------
U.S. 27 10 21 5 10 3 0 0
Europe 15 5 17 6 8 3 0 0
Japan 6 3 6 3 6 3 0 0
Semi- 0 0 0 0 0 0 0 0
periphery
----------
1989
----------
U.S. 17 9 12 5 5 3 1 1
Europe 18 5 21 8 9 3 3 1
Japan 9 3 9 3 10 4 5 1
Semi- 2 1 2 1 2 1 2 1
periphery
*Data include one Canadian firm in 1985.
KEY: F = Number of firms; I = Number of industries.
----------------------------------------------------------------------
[Page 16]
and no firms in no industries competing with Japan. By
1985 the picture has changed. Reading across the table for Europe
again, they now increase their number of top 50 firms competing
with the United States to 15 (from 7), but their number of
industries in which these 15 firms compete stays about the same,
moving from 5 to 4. This reflects a clear deepening, rather than a
spreading, of competition for Europe and the United States. More
European firms are competing with American firms at the end of the
period, but in the same number of industries. European competition
with Japan is also increasing. In 1956 Europe has no firms (in the
world top 50) competing with Japan. By 1970, though, Europe has 6
firms competing in 3 industries with Japan. This pattern holds in
1985 as seen in Table 7.
THE NEXT HEGEMONY: GERMANY/EUROPE OR JAPAN/ASIA
These findings of different growth patterns--Japanese width
vs. Euro depth--provide some data from which the debate over
whether the next hegemon will come from a Japan-dominated Asia or
a German-dominated Europe can be addressed. While the evidence is
tentative, the fact that Europe expands in industrial areas where
it is already present does not portend well for future hegemony, as
new areas of production are often part of being a new hegemon.
Europe recovered from the Second World War during the A-phase boom
(1945-1973) but basically expanded in areas where European presence
[Page 17] was already established. The rising tide of the A-phase
lifts all boats. The question is do any of them set sail for a new
course? To the extent that Japan moved into new areas of
industrial competition one could see signs of not just repeating
past industrial gains, but of moving into new areas. This may
suggest new technologies and new modes of production.
In that regard we would like to address the question of
hegemonic succession from the point of view of two dimensions of
hegemony: technology and industrial organization. First
technology. Many scholars favor the rise of Europe--usually seen
as a collective economic entity--as the successor to the United
States. The problem here is one of new or cutting-edge
technologies, in which the Japanese seem more advanced than the
Europeans. There is no denying the volume of European trade and
production, but the upturn in the world-economy of the mid-21st
century will ride upon new industrial technique and here the
Japanese seem ahead of the Europeans. When you hear of the race
for the fifth generation computer it is between the US and Japan,
not Europe, and similarly new innovations in fiber optics,
photography without film, and other high-tech innovations seem to
originate more in Japan than Europe. This is not to rule Europe
out, but those wishing to argue for their cause need to identify
newer industrial techniques for which Europe leads and the world
follows. In this regard Asia, not Europe, seems the lead sector of
technological development on a world scale.
[Page 18]
Second is the question of industrial organization, and here
too the Japanese model seems clearly advantageous over Europe.
This can be seen when we examine the long economic waves of the
capitalist world-economy. The long cyclic expansions and
contractions of global economic life function to reorganize not
only class relations within states, trade regimes, and colonial
holdings, but also the size of the business enterprise (Bergesen,
1981, 1982). Over the long history of the world-system the size of
the capitalist enterprise has continuously grown since at least the
emergence of the joint partner family firm of the late 18th
century. Obviously the scale of economic life has expanded since
the beginning of social organization itself, but here we will
concentrate on changes since the modern enterprise associated with
the industrial revolution and the rise of capitalism in the
18th/19th century.
HOW THE FIRM GROWS. There are two dynamics at work
restructuring capitalist enterprises. The firm can (a) expand
internally keeping the same basic organizational format, or it can
(2) merge with other firms, creating a new, and organizationally
different, entity. These two strategies, however, do not occur at
the same time, although, of course, there is some overlap. There
are periods when the expansion of the capitalist enterprise occurs
more through merger and other periods when it grows more through an
internal expansion of the existing firm. The dynamics of the
[Page 19] world-system enter into what seems, on the surface, to be
a simple question of organizational analysis. The key point here
is that these two strategies are employed during different phases
of the larger Kondratieff-like cyclic undulations of the
world-economy. During A-Phases of expansion, the firm grows
internally, as sales rise, profits expand, and new labor is hired.
While there may be some mergers, A-phases are dominated by the
strategy of internal organizational growth. Following the logic of
capitalism, expansion leads to contraction, and the B-phase of
falling profits, unemployment, and a decline in trade and
production.
Interestingly enough the capitalist enterprise continues to grow,
even during these downturns. But it grows following a different
logic. The strategy of growth now is through mergers. In an
economic climate of failing enterprises the strong acquire the weak
and the weak combine to survive. The B-phase, then, is
characterized by waves of mergers. To this pattern of internal
growth strategies for A-phases and external merger strategies for
B-phases, another world-system element is added. The crisis of
B-phases are also moments of hegemonic transition, as Schumpeterian
"creative destruction" not only reorganizes economic relations, but
also partakes in the restructuring of hegemonic relations.
At least since the British hegemony of the 19th century the
following pattern has appeared. During the B-phase the most
innovative and successful merging of firms has taken place within
a non-hegemonic state that provides an economic bedrock that will
[Page 20] help facilitate the transition to hegemony for this
challenger. The failure to merge also helps keep the existing
hegemonic state from succeeding itself for a second round of
hegemony. The existing hegemonic state stays with the mode of
economic organization already in place, in good part because their
hegemonic position buffers it from the full force of the downturn,
making dramatic reorganization less necessary. The irony, of
course, is that in avoiding the creative destruction of the
downturn, the existent hegemon fails to undergo the dramatic
reorganization that affects others, and hence does not transition
to the next form of industrial organization to the same extent as
the states caught in the full throes of the B-phases mergers and
creative destruction. This is one reason the old hegemon is at a
disadvantage the during the next A-phase expansion. The
organizational pillars of world production have changed and they
have not been part of that transition.
Historically the pattern of B-phase firm merger and
reorganization is this. With British decline in the second half of
the 19th century and at the tail end of the Great Depression of
1873-1890s, there was a great wave of mergers that created the
modern multi-unit corporation. But this merger wave happened more
in America than England or Germany (which did produce cartels
during this period). The important sociological point for
hegemonic transition theory is that Britain, which pioneered the
smaller family firm that was the bedrock of the earlier mid-19th
[Page 21] century economic boom, is left behind when world
production transitions to the new larger firm format. After the
turn of the century merger wave there is something of an upturn in
the early teens, then WWI, the twenties and thirties were decades
of slow growth and overt depression, then WWII, so that it isn't
until after 1945 that there is another sustained upturn boom
A-phase
in the world economy. By now hegemony has passed to the country
with newest organizational technology--the United States and the
multi-unit corporation. But since this is an A-phase the growth
strategy is one of internal expansion. Profits are up, sales are
up, employment is up, and the firm expands. At this point in
history it is the multiunit corporation that does the expanding,
and this takes the form of establishing overseas plants, sales
offices, and divisions, in short, becoming the multinational
corporation.
There were multinationals before 1945, obviously, but they were not
the dominant form of industrial organization they became during
the post-war years, when Ford, GM, US Steel, etc. expanded
operations under the umbrella of American political/military
hegemony to operate around the world. The social science
literature reflected the shift to corporate production on a world
scale and there were all sorts of arguments made about the
omnipotence of the multinational, with some even arguing that it
had now passed the state as the most important form of social
organization in the world system. This enthusiasm was short lived,
however, for A-phase again turned to B-phase, expansion turned to
[Page 22] contraction, and by the mid-1970s the world economy was
heading into another of its long-term cyclic downturns as world
trade and production slowed. American economic decline has now
become obvious and with this decline and a slowing of the
world-economy, there has been more merger activity.
Now, has this most recent wave of mergers created the new
industrial enterprise that will be the pillar of the mid-21st
century A-phase upturn? The answer is no. There is still another
significant wave of business reorganization to come that will
accompany a severe deepening of the past 20 years of slow growth.
Most of the recent mergers are amongst multinationals, and while
this is merger activity, it has not yet led to another form of
industrial organization. It has just created bigger
multinationals. At this point we engage in speculation and
educated guesses. The thought is that this is where Japan's
possible edge over Europe will appear, in a merger of
multinationals with national governments. The "Japan Inc." idea,
where the country is like a single firm, is in fact a prefiguring
of what future industrial organization will look like after a wave
of 21st century state and firm mergers makes the nation-state also
the industrial organization. The size of the firm has gotten so
large that the next wave of mergers will bring it into contact with
the bureaucratic structures of the state, such that the state will
become the organizational structure of the business enterprise.
This new, enlarged, production unit will then be the pillar of the
21st century A-phase expansion, and Japan, which shows the
[Page 23]
clearest evidence of moving in this direction, will be the center
of productive hegemony. What we are suggesting is that the
MITI-like connection of state and firm in Japan prefigures a fusion
of state and firm that will be the predominant form of productive
organization when the world economy recovers from the present
downturn, and this merging will occur more in Japan/Asia than in
either the US or Europe. This will be the equivalent of the turn
of the century merger wave that created the modern corporation,
except now it will be the state/firm corporation. Certainly in
the air frame industry there is state/firm cooperation, if not
outright fusion in Europe, but on the whole the close connection
of firm and bureaucracy for the sake of explicit growth and
conquering overseas markets seems more an Asian strategy than a
European one, and on this ground Japan seems to have more of the
possible organizational formats that will provide a new foundation
for world production and a new hegemony. As the then-existent
hegemon, Britain, stuck with the smaller family firm when the
next-in-line hegemon, the US, went to the multiunit corporation,
so today will the existent hegemon, the US, stick with the
multinational firm, while the hegemon-to-be, Japan, moves to the
new firm, that is the state as a new unit of productive
organization.
IV. CONCLUSION AND SUMMARY
[Page 24] The network analysis of the national and industrial
distribution of the world's 50 largest firms supports the idea that
American dominance in world production is declining, and that
competition between regions is increasing. The tripolar world
economy is becoming a reality. Europe appears to increase the
number of firms which compete with the United States, but
the number of industries in which they compete stays constant.
Japan and the NICs increase both the number of firms and industries
which are in competition with the United States.
The growth in new areas lends some support to those who argue
that Japan, alone or in some combination with East Asia, is the
hegemonic successor to the US rather than Germany in some
combination with Europe. It is also very possible that the sheer
newness of Japan in world competition means than any growth will
have to be in new industries for they were not world competitors
before.
Finally, a note about quantitative analysis and the hegemony
debate. The data of Fortune magazine's ranking of the top 500
international firms is not part of any standard data set. It was
constructed for the purpose of seeing which countries and
industries were rising and falling in the post-war period. So much
discussion of the future of the world takes place in a vacuum that
we would encourage all who want to partake to assemble their own
data sets for verification of predictions or at least for hints as
to where the world economy may be moving and who may or may not be
[Page 25] the next hegemon.
REFERENCES
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Bergesen, Albert. In press.
"The Art of Hegemony" in Sing C. Chew and Robert Denemark
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Bergesen, Albert. 1992. "Communism's Collapse: A World-System
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-----------------. 1956-1981. Annual Listings of the Top 500
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[Page 27]
Heilbroner, Robert L. 1993. 21st Century Capitalism. New York:
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[Page 28]
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