I bought this book thinking that it would cover the rise of the anti-globalization movement and what I hope is a growing backlash against the power of multinational corporations. But Lynn has a narrower definition of the 'global corporation' than simply a multinational, and he sees the doom of said global corporation stemming not from grassroots rebellions against its overweening power, but rather from the fragility inherent in its productive system. It's an interesting and not entirely implausible argument.
For Lynn, a 'global corporation' is a new breed of business, born of the late 20th century, that is steadily replacing the old assembly line giants like Ford and GM. Those giants of the past profited from economies of scale, collecting under their own factory roofs as many steps of the production process as possible. Efficiency for them meant the continuous operation of the assembly lines, and this required long-term cooperation with closely allied suppliers and parts inventories sufficient to safeguard against possible supply interruptions.
The new global corporation is less a producer than an assembler and marketer of components harvested from a far-flung network of contractors and sub-contractors. Using tracking systems pioneered by companies such as FedEx and WalMart, global corporations keep inventories razor thin, squeezing profits from increases in logistical efficiency and pressing their suppliers to do the same. Lynn explains how companies like Dell have even learned to integrate their marketing campaigns into their supply systems, "engineering demand" so that customers buy the products the company currently has in stock.
Improvements in communications and computing technology have enhanced the growth of the GC's, but legal and political decisions dating from the 1960s laid their foundations. Painting a historical picture with a somewhat over-broad brush, Lynn divides US policy on foreign trade into three periods: From George Washington to F.D.R., the US pursued a policy of foreign engagement sufficient only to allow the US to develop its own self sufficiency. Facing the threat of global communism in the aftermath of WWII, however, the US shifted to policy of economic interdependence among the Western allies, integrating into the US economy the economic interests of much of the rest of the world. The US actively encouraged the development of manufacturing in countries such as Japan and Germany and helped US companies move operations overseas in the belief that such economic ties would best ensure continued peace.
Bill Clinton, according to Lynn, broke with this Cold War tradition and began a "radical" restructuring of foreign trade policy predicated on the notion that no governmental guidance of the market whatsoever would better ensure prosperity and security. Clinton's support of NAFTA and, later, of regularization of trade with China, effectively signaled to US companies that the government would not bar them from relocating to any part of the world any part or all of their production. (It's odd that Lynn singles out Clinton for such ire, considering that by Lynn's own account Reagan and Bush I did nothing to encourage US companies to stay in the US. He seems to view Clinton as an apostate, though he also maintains that "the idea that protectionism kills" was "one of the central founding myths of the modern Democratic Party" , and, more ludicrously, that during the Depression the Dems won back American workers by demonizing the Smoot-Hawley tariffs.)
Clinton's deification of the market was predated among businessmen and economists by the work of Milton Friedman in the 1960s. In reaction to the growing consumer rights movement, Friedman argued that a corporation's sole obligation was to its shareholders and stock price, not to its employees, consumers or country. Making the corporation maximally free to increase its value in the eyes of the market, the argument went, was the best way to ensure the efficiency of the economy. This ideology fit well with the development of globally distributed network production systems; legally and physically, companies became more disembodied and placeless, less beholden to anyone save the traders on Wall Street.
Lynn's summation of the effects of these changes is that today's corporations are the leanest, most cost-efficient organizations the world has ever seen. But their very efficiency creates dangers. With less physical plant to look after and ever-fewer employees, the managers of GC's concentrate more on short-term profits and share price rather than careful husbanding of productive resources for the long term-they are less system-builders than system- squeezers. The search for ever-greater efficiency radiates across the productive network, as GC's use the threat of relocation of facilities or contracts to squeeze suppliers and states for lower prices and tax breaks. Suppliers have less and less capital to devote to innovation or to risk management, and the pressure for lower and lower prices has led to what Lynn calls "hyperspecialization" in the production of key components. The entire system is so pulled so taught that an accident in any one part of it can have disastrous results for the system as a whole.
Lynn is somewhat alarmist in his predictions of a coming disaster for this finely- tuned world economic machine. He has a few well-known examples of how an earthquake in Taiwan, or an epidemic in China, threatened to derail certain industries, but I am unconvinced that such shocks could necessarily entail a serious economic downturn. Indeed, we seem to have survived Lynn's exemplar disasters in fairly good shape. But if the GC's are better at managing short-term risk than Lynn gives them credit for, Lynn's more subtle point that GC's search for efficiency is corrosive of social and political well-being seems on target. At the end of his book, he gives eight specific policy recommendations to combat the dangers of globally-networked production, which I can recount at request. More worthy of concluding this overly long review is Lynn's larger point that the corporation is not an inevitable product of global economic development, nor some alien invader bent on destroying society. It is, rather, a creation of government-an organization molded by law and policy-and we can and should use those tools to shape it into a more socially useful form.