Book Reviews

With the U.S. media, Congress, and national security advisers dwelling on Western vulnerability to strategic mineral embargoes, new research on the world copper industry comes at a particularly propitious time. Factual data and sober analysis of how international commodity markets function help evaluate the now commonplace assumptions. Moreover, such studies may turn attention to profound questions of power: who controls and who benefits from the distinctive arrangement of the copper industry?

In recent years, the price of copper has fluctuated wildly. From an historic high in real terms during the period 1970-74, copper fell to less than half that level for 1975-79. These vicissitudes have greatly affected the four Third World copper producers-Chile, Peru, Zaire, and Zambia, all of whom are members of CIPEC, the copper producers' association. Major multinational corporations involved in the copper industry including Kennecott, Newmont, Phelps Dodge. AMAX and Rio-Tinto Zinc-have not been as disadvantaged by these price changes; in fact, they have often manipulated them to their advantage.

Each of the three books explores the past decade of change in this primary mineral sector of the world economy. Dorothea Mezgar, a Germa - trained academic, writes to improve CIPEC's understanding of political alternatives, applying a sophisticated analysis of recent corporate and government interactions in copper mining. She sees Third World elites in a losing effort over the long term, as alternately weak rivals and mere accomplices of the multinational corporations.

The international corporations shift burdens elegantly, Mezgar points out. For instance, they have placed much of the cost of low mining wages on Third World subsistence laborers, largely women. The corporations reserve smelting and refining for the First World, in order to safeguard against nationalization. At the most general level, private venture capital's risk has been shifted onto Third World governments through the now-institutionalized intrusion of international agencies like the International Court for the Settlement of Investment Disputes (ICSID). Private agreements are thereby linked structurally to the international financial legitimacy of a Third World state.

By keeping a tight grip on new technologies, fragmenting production processes, reserving sales outlets, and restricting access to capital (major copper companies are part-owned by international banks like Chase Manhattan), the current oligopoly of multinational copper producers maintains and enhances its control.

This is, in sum, a very important thesis for big-picture analysts to contemplate. In the face of such power, Third World producers cannot compete, and the policy of nationalization accomplishes little.

The other recent titles come from old-timers in the government-industry consulting circuit. Raymond Mikesell, now teaching economics at the University of Oregon, has written a great deal about copper for a generation and is well-placed to lay out the structure and operations of the industry as a whole: production processes, price history, market stabilization and cartels, and investment. He presents a vast amount of data in a readable format, and reserves mathematical models for appendices.

Wolfgang Gluschke and his U.N.-World Bank colleagues try much the same themes and add a bibliography. Despite the title of their work, however, the book contains only sparse material on future capital, political or technical needs of the industry.

What is most disturbing about these two books is the overall failure of their economic models to ask critical questions about who benefits from the copper industry as it now functions and what different trends imply for the welfare of various actors in the system. Unlike Mezgar, these writers do not even see the copper market as a system, much less as only a small part of a larger ' interdependent world economy. They remove economic actors from any larger political or social context.

Only by ignoring most of the hidden market complexities can Mikesell claim that despite imperfections, "The world copper industry is essentially a competitive one." Only by ignoring the political struggles within Third World countries, and the repression-often backed by foreign investors-can he claim that governments like Pinochet's invite multinational mineral companies in "for national welfare."

Mezgar, using far less data, has done much more to reveal the enormous costs the copper multinationals inflict on the poor, and she does so in a way which sheds light on some fundamental power equations in the world economy. Although more current material (much of Mezgar's data goes back to the mid1970's) is needed, Mezgar has provided one of the most sophisticated discussions to date of the macroeconomic plight of the Third World mineral producers.

- Guy Gran

The author most recently edited Zaire: The Political Economy of Underdevelopment (Praeger)

A Swiss economist, given free rein with internal World Bank documents, has produced a short analytical work that switches back and forth from Bank propaganda to mild criticism. It's valuable to see how the Bank justifies its own development processes and the changes wrought by "new style" projects in the 1970's. But the overall good marks the author accords the Bank are supported neither by any field investigation nor by much awareness of recent development studies literature.

Typical of many insupportable generalizations is the claim that the Bank is learning by doing, not following any overall economic theory. This "flexibility," the author asserts, has allowed a conservative organization to change quickly. Such flights of fancy diminish the value of Hurni's more sophisticated assessments.

This book presents in a clear and concise, although dry way, the central issues and complexities surrounding the topic of transfer pricing. Distinguishing the various "inducements" corporations have in manipulating transfer prices and exposing the weakness of the arms-length method of assessing multinationals, the primer reveals the basic motivations and mechanisms of corporate tax manipulation.

Unfortunately, the book contains some overly sanguine generalizations about the effectiveness of the U.S. government in controlling transfer pricing abuses and about internal management constraints on the use of such maneuvers. In addition, the discussion of alternatives to the current system of tax regulation is inadequate.

This study, sponsored by the conservative Committee for Economic Development, is little more than a whitewash of foreign corporate activities in the Third World. Using interviews with 90 senior executives of international firms, Frank concludes that there exists a "basic sympathy among the multinationals for the broadly stated national goals of the developing countries," and that multinationals have become increasingly "accommodating" to the desires of. Third World countries.

Frank's methodology, however, calls into question his rosy assessments. Interviewing only corporate executives and not Third World leaders, workers, and consumers is, to say the least, a curiously one-sided approach to the subject of multinational-Third World relations.

Moreover, Frank omits entirely any specific discussions of Third World countries that have come in conflict with multinationals. He lumps Jamaica, Mozambique, and Nicaragua in the same undifferentiated category with South Korea and the Philippines, leaving the reader no clue as to the sharp divisions within the Third World over the question of how to deal with multinationals.

Frank's book has received widespread notice and acclaim in the mainstream press, which suggests much more about the media's susceptibility to uncritical, pro-corporate material than it does about the nature of multinational activity in the Third World.

The Economist has drawn from more than 20 governmental and multilateral sources to present this valuable economic analysis of over 200 countries.

In addition to a capsule summary of the political and economic situation in each nation, the book offers statistics on international debt, external trade and agricultural and industrial production. Also included are measures of infrastructural development ranging from the number of hospital beds to the quality of port facilities. A "focus section" offers greater detail on a particularly important aspect of the country's economy (rice growth in Thailand, government investment programs in Algeria, and bauxite production in Jamaica).

Besides these country analyses, there are extensive inter-country comparisons, including graphs and maps, on topics such as aid, transportation, and agriculture.

Although much of the data is not current (1976 being the most recent figure in many categories), the book is reasonably priced for a volume of its kind, and can serve as a useful reference, particularly in comparative research.

Organizations

Coming out of the Australian labor movement, the TNC aims to educate workers in Australia about the effects of multinational corporations on the island continent and elsewhere in the world.

The TNC studies a range of issues affecting workers, including the impact of new "labor-saving" technology, the economics of uranium mining, and the role of Australia in 'the Asia-Pacific ', region. The group also organizes conferences on labor and the economy and offers slide shows and other audio visual materials for interested groups.

Most recently, the TNC has launched the Transnational Brief, a 24-page publication that will appear monthly starting in 1981. The Brief discusses themes relating specifically to the labor movement and broader issues concerning developments in international politics and economics.

For more information, write:

TransNational Co-operative Ltd.
G.P.O. Box 161
Sydney, NSW
Australia 2001

Reports

This recent report of the Washington-based Citizens' Energy Project documents how the multinational oil companies dominate the solar energy industry. The study concludes that the ; big oil corporations are capturing the solar field not only to secure future profits once oil supplies run out, but also to postpone the transition from oil to solar so that they can squeeze as much money from existing supplies of energy.

The report also details the extensiveties between the giant energy conglomerates and the U.S. government, pointing out that the vast majority of government solar contracts go to these companies, even though many smaller solar businesses, functioning more efficiently than the big corporations, apply for the contracts.

The study includes substantive recommendations for arresting the monopolistic trends in the solar industry, such as. prohibiting multinational corporations from investing in more than one energy area, and requiring at least 46 percent of all government research and development contracts in the solar field to go to small businesses.

These proposals, and the. analysis behind them, should be useful to anyone-living in the U.S. or abroad concerned with energy issues.

A copy of the report costs U.S.$1.50, and is available by writing:

Citizens' Energy Project
1110 6th St., N.W.
Washington, D.C. 20001

Periodicals

This new journal, published semiannually in Geneva by the Office for Research and Social Action of the Lutheran World Federation, is designed to "raise the awareness of development workers to the root causes of socio-economic injustice."

The first issue deals with the history and general concepts of development. The second and most recent issue examines the role that multinational corporations play in development. Responding to what the editors view as the failure of the U.N. Special Session to consider the effects of multinationals on development, the issue attempts to address basic questions such as: What is development? Do transnationals hinder development? What is the power of these companies on developing countries? on the U.N.?

Also included is an article by a former multinational executive now working for the World Council of Churches, presenting a conventional corporate viewpoint.

Most of the articles are in English, with a remaining few short pieces in French. Written in a straightforward, easy-to-read manner, Forum should be a valuable educational tool.

For more information write:

The Office for Research
and Social Action
Department of World Service
Lutheran World Federation
P.O. Box 66
1121 Geneva, Switzerland