Big Business and National Governments: Reshaping the Compact in a Globalizing Economy
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Business
and
National
Reshaping
Governments: the
Compact
Globalizing
in
a
Economy RaymondVernon1
ished and presented. It was the last paper he wrote. We are pleased to be able to publish it posthumously in this symposium, with the permission of his daughter Heidi Vernon. The paper was subject to minimal copyediting by the editor of JIBS.
This paper was written byRaymond Vernon for the conference, "Mapping the Multinationals," organized by Bruce Mazlish and Alfred Chandler in October1999. Professor Vernon died on August 26, 1999, at the age of 85, before the paper was finome big changesare takingplace in the structureof world business, especially in the world's biggest enterprises.In addition,some equallyportentous changesare takingplace in the relations of those enterprises to the governmentswith which they deal. I havebeen askedto speculateon the implicationsofthese changesforthe future, with special emphasis on future relationsbetweenbusinessand government. Otherscholarshavemade attemptsof a similar kind in the past, from Karl Marxto FrancisFukuyama.In his first effort, Fukuyama(1992) drew inspiration from some concepts fashionedby philosophersa century or two earlier, titling the workTheEnd of Historyand theLastMan.2But pretendingto predict the end of historyis a high-riskactivity, even when the metaphoris only attention-getting hyperbole. In this case, Fukuyamawants the readerto believe that a basic issue in political economy has at last been settled - that, whatever else politicalscientistsmayhaveto quarrel about, they should accept history's JOURNAL OF INTERNATIONAL BUSINESSSTUDIES,32,
verdict of the superiorityof a society based on liberal democraticprinciples and open markets. Today,atthe close of the millennium, Fukuyama's 1992 conclusions seem painfully fragile. The intervening years have been full of economic, political, and social surprises, repeatedly raising basic questions about how well we understand the societies whose behavior we are being asked to predict. Not all the surprises have been disconcerting. But they have left many, including myself, with some major unanswered questions about the behavior of productivity, savings, investment, and inflation in our modern society. And they have generated many new cautions about joining in the mantra regarding the superiority of open markets and democratic societies as an adequate foundation for a new compact between big business and national governments. CHOOSE YOUR THEORY
In the United States, we have just passed through some years of a curious
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BIG BUSINESSANDNATIONAL GOVERNMENTS
prosperity that have left many economists puzzled and shaken. Some signs of prosperity are everywhere, especially in the consumption patterns and employment levels of the advanced industrialized countries. But the economic processes associated with these patterns are so
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