Stephen Hymer (1934–1974) lecturing at the New School for Social
Research c.1971 (photo: Peter Moore). Photos of Hymer are almost
non-existent. The source of this one is the New School Photograph
Collection in the New School Archives and Special Collection, New York.
(My thanks to Wendy Scheir for locating it.)
Hymer died in a car crash in New York State in February 1974. He was 39
at the time. His M.I.T. thesis, completed in 1960, was described as
seminal because it was the first piece of writing on international firms
(the so-called ‘multinationals’) that offered what the author called a
theory of direct investment, arguing that neither international trade
theory nor finance could explain the existence of enterprises with
foreign operations. M.I.T. refused to have the thesis published and it
was only published in 1976 thanks to his supervisor C. P. Kindleberger,
who had publicized it in his own book American Business Abroad (1969).
Hymer’s tragically brief life reverses the ‘God That Failed’ trope, in
the sense that starting as an orthodox economist who continued to use
neo-classical ideas even into the late sixties, he became increasingly
radicalized and came around to a solidly Marxist understanding of the
contemporary world. Before saying something briefly about this, here’s a
very short account of his life.
Hymer was Canadian and has been described as the best Canadian economist
of his generation. He was born in Montreal in the early years of the
depression, his father a Jewish immigrant from Eastern Europe who ran a
clothing store. He graduated from McGill University in 1955, wrote his
thesis ‘The International Operations of National Firms’ from M.I.T. in
the late fifties, and went on to visit Ghana twice in the early sixties.
Here he was active in an informal group called the Marxist Forum,
although his own radicalization wouldn’t occur till around 1967.
Meanwhile, after joining the economics faculty at Yale in 1964, he and
Steve Resnick (1938–2013) began to read Capital together. Like Sartre
complaining that there was no chair of Marxism at the Sorbonne when he
was a student there in 1925 and that ‘students were very careful not to
appeal to Marxism’, describing his own generation in the U.S. Hymer
would later write, ‘it was difficult for young people (in America) to
gain access to Marx. His language seemed impenetrable, and there were
hardly any courses in the universities to help people understand him. In
fact, there were few who had any idea even of what was different about
Marx’.
Hymer spent the autumn of 1968 at Cambridge with Bob Rowthorn. Here he
joined an informal discussion group that included Rowthorn, Robin
Murray, and Geoffrey Kay among others. (When Rowthorn published his 1971
monograph International Big Business 1957-1967, he did so with a title
page that said ‘In collaboration with Stephen Hymer’.) Rowthorn, Murray
and others would almost certainly have debated whether the
internationalization of capital that was driving the postwar boom had
left nation states economically weaker and whether it had not also
weakened the ties between capital and its home state. At any rate,
thanks in part to the discussions in Cambridge, Hymer is said to have
‘returned to the United States fully committed to the study of Marx’. In
1969 he spent the summer at the University of Chile and it was during
this trip that he ‘finally and irrevocably changed his perception of
international capital’. If this refers to a further espousal of Marxism
it would mean that he felt he had found a language in which to recast
much of his thinking about international firms, dealing with them now as
an evolution of twentieth-century capitalism. In May 1970 he attended a
conference in Hamburg that was also attended by Celso Furtado (the
renowned Brazilian economist), Arghiri Emmanuel (the Paris-based Greek
economist who had just published the French text of Unequal Exchange)
and Giovanni Arrighi among others. It was here that he presented a draft
of his paper ‘The Multinational Corporation and the Law of Uneven
Development’, which started with a master-quote from Fanon’s Wretched of
the Earth.
In the spring of 1970 Hymer taught his first course on Marx, at Yale of
all places. Robert Cohen, chief editor of a collection of his writings
published some years after he died, tells us that after being denied
promotion and tenure at Yale ‘because of his radicalism’ (that was how
Hymer saw it), ‘he was offered a position both at the University of
Toronto and at the New School for Social Research in New York City’,
decided to remain in the United States, and joined the faculty of the
New School as a professor of economics in the fall of 1970. ‘He was now
free to teach courses on Marx and to develop his criticisms of economic
theory’ (Cohen, ‘On Becoming a Radical Economist’, in Hymer, The
Multinational Corporation: A Radical Approach, 1979).
While Hymer discounted any positive correlation between size and growth
(the biggest firms didn’t necessarily grow any faster), firm size was a
crucial determinant of direct (i.e. foreign) investment. If the rapid
expansion of foreign investment in the fifties and sixties was
spearheaded by US firms, this was because they had, through most of
their history, exploited economies of scale to achieve ‘giant’ size. But
to Hymer’s mind size wasn’t enough, corporate form was just as crucial
to the huge advantage American firms had built by the 1940s. By this he
meant the multidivisional structures that large American firms began to
introduce from the 1920s and which were widely adopted after the Second
War. Rowthorn tells us that Hymer had ‘great admiration’ for Alfred
Chandler. Among radical economists he was unique in taking both Marx and
Chandler seriously (in sentences like ‘the process of capital
accumulation has become more and more specialized through time’,
Chandler and Marx are inextricably joined). Chandler foregrounded
business administration as a key source of American capital’s lead over
the rest of the world. Hymer of course accepted this but integrated the
insight into a framework where the law of increasing firm size was now
expressed as ‘a general law of capital accumulation’. In the Hamburg
paper, he wrote, ‘The development of business enterprise can therefore
be viewed as a process of centralizing and perfecting the process of
capital accumulation’. ‘In the modern multidivisional corporation, a
powerful general office consciously plans and organizes the growth of
corporate capital’. Or again, ‘Multinational corporations enlarge the
domain of centrally planned world production’. But they could only do
this thanks to corporate hierarchies that straddled the world,
transforming the ‘underdeveloped countries’ into branch-plant countries
and reducing their governments to the same ‘middle management outlook’ .
Hymer frequently used the image of the skyscraper to convey some sense
of how top management alone was the repository of an ‘international
perspective’; ‘on a clear day, they can almost see the world’.
A second element that set Hymer apart was his conception of U.S. capital
rapidly losing its hegemonic position as competition between large firms
of different nationalities started driving the internationalization of
capital from the late sixties. Turning Servan-Schreiber on his head, he
argued that ‘in the late 1950s, United States corporations faced a
serious “non-American” challenge’ from European and Japanese firms, and
foreign investment was their answer to that. ‘It will be easier for the
U.S. corporations to counterattack abroad, and to meet inward foreign
investment with outward foreign investment’. This image of a dialectic
of internationalization, of successive waves of foreign investment being
driven by competition in oligopolistic markets (those dominated by
handfuls of the biggest players, e.g. in oil, tyres, pharmaceuticals,
etc.) was variously described as ‘cross-penetration’ and
‘cross-investment’, and has of course become a standard feature of the
world economy since the 1960s. At Hamburg in 1970 Hymer claimed, ‘The
present trend indicates further multinationalization of all giant firms,
European as well as American’, and forecast that the rivalry between
them (and thus between Europe and America) would ‘probably abate through
time’ and turn into ‘collusion’ as those giant firms approached ‘some
kind of oligopolistic equilibrium’. And by the spring of 1972 he was
predicting that where production was no longer the crucial element,
international firms would simply outsource it. This passage is worth
quoting for its prophetic quality: ‘where product design becomes the
dominant element, investment in development and marketing is more
important. The large corporations might then prefer to allow small
businesses to own the plant and equipment (along with the associated
risks) while it concentrates on intangibles’.
In sharp contrast to these positive images was Hymer’s unswerving
acceptance of Marx’s critique of capitalism. In his first thoroughly
Marxist essay ‘The Internationalization of Capital’, written towards the
end of 1971, he defined the corporate hierarchy as rooted in a division
of mental and manual labor and noted how those hierarchies were partly
designed to break lateral communication at the bottom (among workers).
‘At the bottom of this vertical hierarchy, labor is divided into many
nationalities’, which outlines a theme that a colleague and I would go
on to discuss 15 years later in a book called Beyond Multinationalism.
However, to my mind the single most Marxist paper Hymer wrote was one he
presented to a conference in Italy in November 1973. This was called
‘International Politics and International Economics: A Radical Approach’
and published in 1975. He argued here that ‘A socialist alternative,
under which the working class seizes control of the investment process,
could open new possibilities of organizing production and promoting the
growth and development of the potential of social labor’. He also
suggested that an international capitalist class was emerging whose
‘interests lie (less in any given national economy than) in the world
economy as a whole’. In other words, what Hymer was predicting was a
deeper integration of national economies as well as alliances between
firms of different nationalities.
This was also in some ways Hymer’s most optimistic piece of writing,
with him forecasting that if ‘during the last twenty-five years, capital
has been able to expand and internationalize’, ‘during the next
twenty-five years we can expect a counterresponse by labor and other
groups to erode the power of capital. This response will take a
political form, i.e., a struggle over state power around the central
issue of capitalism and its continuance’. What happened of course was
the opposite; capital struck back with fury, breaking the industrial
militancy of the late sixties with massive redundancies and
restructuring production worldwide. The fifteen years following Hymer’s
death saw major changes. The most dramatic shift was the retreat of
American manufacturing capital that became evident, for example, in the
near-complete takeover of the U.S. tire industry by foreign competitors
in the 1980s (only Goodyear survived). At a more global level, his
essential insights proved resilient. Japanese direct investments
increased sixfold during the 1980s. Overall, the internationalization of
capital reached staggering proportions, with the outward stock of FDI
controlled by companies from the advanced capitalist countries standing
at close to $14 trillion by 2008, up from just over $500 billion in
1980. By 2012 international firms coordinated a whole four-fifths of
world trade (that is, 80% of world trade occurred within these firms).
Of course, the forms in which they did so were more complicated now,
since much of that intra-firm trade occurred not just through affiliates
but through contractors and independent suppliers, in short,
cross-border production networks that began to replace the vertically
integrated hierarchies of Chandler’s capitalism with supply chains
(replace Fordism with ‘Toyotism’) and that could do so thanks to the
ongoing revolutions in maritime transport, satellite communications and
ICT more generally.
What is so striking about Stephen Hymer’s work is the nuanced way in
which he was able to handle the subject of international capital,
viewing the multinational through the lens of the Manifesto as ultimate
proof that modern capitalism ‘destroys the possibility of national
seclusion and self-sufficiency and creates a universal interdependence’,
but increasingly aware of how the promise contained here of a truly
internationalized humanity could never be fulfilled under capitalism.
With a dreadful disease ravaging large parts of humanity, Big Pharma has
made it clear it is opposed to sharing the necessary IP, technologies,
data and know-how (what Hymer would have called their ‘technological
advantage’) to ensure that ‘as many companies as possible can produce
these lifesaving vaccines’. And yet that is the only way of bringing
about a rapid expansion of the overall global supply and ensuring
equitable access worldwide, as MSF’s Access Campaign has been arguing
since December.
(My thanks to Sughosh Majmundar
<https://www.facebook.com/sughosh.majmundar?__cft__[0]=AZVkx2pk1mXfv-EuoLjHhmQXKdQAqHjFE1g3cZ2xi6broXbLf1gImOoszCXWeUn7OCn0u8dWgYLQUUk6iZT8s_us3zSoT3iPeyK8FcqHNDqJ-a7tEVAawAKPgrNkmM02a6EmvfGU7UDHXS4EyEHLlNjkRml61Vb-2Vh8wum7iHVwEw&__tn__=-]K-R>
and Sudeeti Gm
<https://www.facebook.com/sudeetig?__cft__[0]=AZVkx2pk1mXfv-EuoLjHhmQXKdQAqHjFE1g3cZ2xi6broXbLf1gImOoszCXWeUn7OCn0u8dWgYLQUUk6iZT8s_us3zSoT3iPeyK8FcqHNDqJ-a7tEVAawAKPgrNkmM02a6EmvfGU7UDHXS4EyEHLlNjkRml61Vb-2Vh8wum7iHVwEw&__tn__=-]K-R>)
May be a black-and-white image of 1 person and standing
<https://www.facebook.com/photo/?fbid=10159209237205489&set=a.352264660488&__cft__[0]=AZVkx2pk1mXfv-EuoLjHhmQXKdQAqHjFE1g3cZ2xi6broXbLf1gImOoszCXWeUn7OCn0u8dWgYLQUUk6iZT8s_us3zSoT3iPeyK8FcqHNDqJ-a7tEVAawAKPgrNkmM02a6EmvfGU7UDHXS4EyEHLlNjkRml61Vb-2Vh8wum7iHVwEw&__tn__=EH-R>
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