The Economic Basis of Imperial Power

Economic CrisisGlobalization

International economic power is increasingly dispersed between the competing major power blocs. However, one power centre – the U.S. – has greater domination over more sectors than the other power blocs.

The Financial Times (May 27, 2004: “Special Report FT Global 500”) reveals that, in terms of the highest number and percentage of multinational corporations (MNCs), the U.S. remains the dominant power with 227 (45 per cent) among the top 500. The U.S. is followed by Western Europe, with 141 (28 per cent), and Asia, with 92 (18 per cent). Latin America, the Middle East and Africa possess 11 of the top-500 MNCs. In Latin America, only Brazil and Mexico have world-class MNCs, while Africa has none. In the Middle East, Saudi Arabia controls four of the six MNCs. Following its catastrophic collapse with the transition to pillage capitalism, Russia possesses only seven MNCs. Canadian giant MNCs deal largely in banking, natural resources and information technology. They are linked, in part, to the U.S. MNCs and operate with little direct state involvement in “empire building” except to follow U.S. direction.

The three regional power blocs of the U.S., Europe and Asia control 91 per cent of the biggest MNCs in the world. Overwhelmingly, then, “globalization” can be seen as a derivative of the power of the MNCs based in these power blocs to move capital and to control trade, credit, financing and entertainment. And while big Asian MNCs are increasingly present and a possible challenge in the proximate decades, in the short-to-medium run the U.S.-Euro economic axis still predominates. The boom in China and India and the economic recovery of Japan reflect the growth of endogenous capitalism and the expansion and conquest by Euro-U.S. MNCs of economic markets. The continents and countries that have the lowest development of world-class MNCs are precisely the countries that have been dominated by Euro-U.S. MNCs and their imperial states. The few big MNCs that appear in Russia and Latin America are largely privatized state firms resulting from public savings and investment by previous statist regimes able to limit the presence of Euro-U.S. MNCs.

Beyond the top-100 firms, the preponderance of U.S. MNCs is narrowed, and Euro-Asian MNCs have become a real challenge. At this point, European and Asian MNCs become important operators in the imperial system, moving beyond their traditional regional boundaries and selectively entering into and competing with U.S. MNCs within their domestic economy.

The Peak of the Fortune 500: Even More U.S. Power

A closer examination of the “peak” of the giant MNCs illustrates even greater concentration of U.S. power. Among the top-50 MNCs, for example, 60 per cent are American, 32 per cent European, six per cent Japanese and five per cent other. Among the top 20, 75 per cent are American, 20 per cent European and five per cent Japanese. Among the largest 10 MNCs, 80 per cent are American and 20 per cent are European. In other words, while greater competition sets in as one moves to the lower tiers of the Fortune 500 list, the greatest concentration of U.S. power is actually among the biggest MNCs of all.

The U.S. has the biggest MNCs in industry (General Electric), oil and gas (Exxon-Mobil), software and computer services (Microsoft), pharmaceuticals (Pfizer), banking (Citicorp), retailers (Wal-Mart), insurance (American International Group) and information-technology hardware (Intel).

Russian MNCs, almost exclusively located in natural resources, are a special case: they result from the pillage and theft of large-scale state enterprises, which were largely integrated in the domestic economy. Today, the Russian MNCs largely “service” and supply Euro-U.S. MNCs, are poorly integrated with the Russian state and have been operated by expatriate oligarchs in England, Israel and elsewhere.

Sector by Sector

Retail Trade

U.S. retail MNCs are dominant among the top 10, representing 80 per cent of the biggest firms. Given the fact that the U.S. economy is largely based on consumer spending, speculative bubbles and high levels of indebtedness, this is not surprising, All the leading U..S. retail MNCs began by dominating local markets, accumulating capital on the basis of the intense exploitation of low-paid, non-unionized labor, and then moved overseas where they reproduced their practices. Until recently, Europe’s and Asia’s retail trade was based on family-owned small-to-medium-size firms.

Information Technology

The U.S. dominates the information-technology sector with eight of the top-10 companies. This is partly the result of its early state subsidies via military spending, the Y2K scam (the “end-of-the-world scenario,” which pumped tens of billions into the emerging IT enterprises), and the IT speculative bubble of the 1990s.

Mass Media and Entertainment

American MNCs dominate the world mass media and entertainment sector. Almost 80 per cent of the top MNCs (11 of 14) are controlled by U.S. capital. With the dismantling of public media in the early part of the twentieth century and the monopolization of radio, television and film, the U.S. giants “conglomerized,” buying out or bankrupting local newspapers, music and cultural firms. They then repeated this pattern worldwide. The growth of concentrated U.S. media and entertainment conglomerates was achieved via favorable state intervention, “deregulation” and promotion, as media and entertainment served as an unofficial overt and covert propaganda arm of U.S. imperial conquests, wars, occupation and penetration.

Military/Industrial Complex

In the war-related, empire-building military industries, U.S. MNCs are the leaders. Of the top-11 giant firms among the top 500, nine are American and two are European. Militarism has fueled U.S. industrial expansion for the last 65 years, lifting the U.S. from the Great Depression of the 1930s. However, this militarism also absorbed and wasted trillions of state financing, thus severely weakening the U.S. presence among non-military industrial activity.

Software/Computer Services

The U.S. MNCs dominate the software and computer-service sector, with six of the 10 biggest firms. But here, U.S. supremacy is being challenged by Japan and Europe, which each have two of the top 10 firms. The anti-monopoly challenge launched from Europe, the bursting of the IT bubble and the greater state funding of research and development have led to intense inter-imperial competition, as well as fusions, buyouts and “unfair competitor practices.”


U.S. finance and banking capital has grown to become a leading force in the world economy. U.S. multinational banks comprise six of the top-10 banks in the world, followed by Europe, with three, and Japan, with one. U.S. banking has grown via its debt holdings in Latin America, Asia and Africa, converting debt holdings in equities via the neoliberal policies of privatization and deregulation of financial markets. U.S. bonds have also benefited disproportionately by facilitating the transfer of hundreds of billions in illicit funds by corrupt rulers, international criminals and tax-evading business leaders, especially from Latin America. Big overseas U.S. banks play a major role in shaping U.S. imperial state policy via the international financial institutions (IFIs) promoting neoliberalism, financial deregulation, class-based austerity programs and foreign-debt collection. On a lesser scale, but in the same direction, European banking giants influence the policies of the European Union. More often, however, European multinational banks act in unison with U.S. banks via the “Paris Club,” in pursuit of the same goals of debt collection via common policies.

The European Challenge

Europe is the leader in telecoms with four of the top-10 MNCs, followed by the U.S. and Asia with three each. Similar patterns are found in insurance, where Europe has five of the largest MNCs, followed by four for the U.S. and one for Japan. In gas and oil, the U.S. and Europe both have four of the top-10 MNCs followed by one each for Russia and Brazil. The same “parity” exists among pharmaceuticals, with the U.S. and Europe equally dominating the top-10 MNCs.

In electronics and electrical equipment, the Japanese MNCs in particular and Asian in general control seven of the largest producers, leaving Europe with two, and the U.S. only one MNC in the top-10.

The clearest expression of inter-imperialist competition is found in light and heavy manufacturing, which includes metals, transport, chemicals, forestry and electronics. Among the largest light manufacturing firms, U.S. MNCs represent 44 per cent, European 48 per cent and Japan eight per cent. Among the 100 largest heavy manufacturing firms, 32 per cent are American, 30 per cent are European, 22 per cent are Japanese, seven per cent are other Asian and the rest are spread among five other countries. The same “equality” of presence is found in the booming personal care and cosmetics sector, where the U.S. and Europe each have 33 per cent of the largest MNCs, followed by Japan with 11 per cent.

The U.S. thus exhibits both economic strength and some relative weaknesses. The U.S. is strong in both IT and finance, and dominates the “visible” and “consumer” sectors (mass media and retail stores). Meanwhile, the U.S. empire is competitive in pharmaceuticals, and oil and gas. However, it is relatively weak in manufacturing, insurance, telecoms and electronics. In these sectors, the U.S. has strong competitors that compete favourably with or have actually surpassed it.

Part of the reason for this is that U.S. power is built on services rather than the production of tangible civilian goods. Without the heavily subsidized military-industrial MNCs, the U.S. would have even less of a presence in industry. Moreover, the U.S.-based manufacturing economy has been severely weakened by the expansion of U.S. MNCs overseas, particularly to China.

The most recent data suggest that the U.S. is gradually losing dominance. The data for 2004 show that 30 U.S. MNCs fell out of the top 500, while there were only 16 new entrants. Europe more or less stayed the same, but Japan and the rest of Asia had a net increase of 14 between 2003 and 2004.

Two important caveats need to be taken into account. This U.S. decline in the percentage of MNCs relative to Europe and Asia is in part compensated for by the fact that the MNCs in Europe are dispersed among several countries. Despite the bonds of the EU, these European MNCs do not act as unified bodies. The same is true of the Asian MNCs. Moreover, through the use of its military and secret-police intervention, the U.S. state can gain economic advantages, even as its MNCs decline and face stiff competition.

Second, European and U.S. capital have become increasingly inter-penetrated. The Euro-U.S. economy generates U.S. $2.5 trillion in total commercial sales, employing 12 million workers on both sides. In 2003, U.S. MNCs invested $87 billion in Europe, an increase of 31 per cent over 2002. In the same year, European MNCs invested $37 billion in the U.S., an increase of 42 per cent over 2002. The high levels of trade and investment between the two biggest imperialist centres demonstrate that conflicts and rivalries are still less important than their common economic interests.

Despite these structural affinities, the Israel-Palestine conflict, the Iraq War and the Zionist-Pentagon plans for new Middle East conflicts (Iran, Syria and northern Iraq) will certainly create new tensions between the two imperial centres. The European empire, with its predominantly “trader-investment-market” diplomatic strategy, faces a highly militarist, colonial U.S. strategy. Europe proposes a multilateral, consultative, joint-sharing style of imperialism, while Washington looks to unilateral action and monopolization of rule and imperial plunder. The Europeans look toward joint partnership in the Middle East with Arabs and Israeli elites; Washington, influenced by the Zionists priorizes an exclusive relation with Israel to the exclusion of Europe and Arab rulers, except as submissive clients. In this context we can expect deepening structural links between the imperial MNCs and imperial regimes, continued competition over market shares, and political conflict provoked by the Zionist extremists in Washington and their mentors in Tel Aviv.

By way of conclusion, free-trade agreements, IMF and World Bank policies, privatizations, lowering tariff barriers and the establishment of over 180 military bases abroad in over 130 countries are responses to the structural imperatives of the U.S. economy and, more particularly, to the biggest U.S. MNCs, who operate throughout the world. Imperialism is not a “policy,” a “conspiracy,” or a product of any single administration, but a determining economic structural reality.

Nineteen of the top-500 companies are Canadian: of these, five are banks, four are in insurance, four are in oil and gas, and two are in mining. In other words, 15 are banks and finance, oil, gas and mining.

James Petras is a member of CD’s Editorial Collective.

This article appeared in the November/December 2004 issue of Canadian Dimension .


Our Times 3

Browse the Archive