Page 46 - Global Political Economy_Understanding The International Economic Order

THE NATUR E OF PO LITIC AL ECO NOMY
evidence either for the existence of a distinctive Pacific Asian economy
or for any Japanese effort to create a regional sphere of influence.
Whereas the political scientists’ analysis defined the Pacific Asian
economy as composed of powerful economic and state actors, the
economists defined the regional economy in terms of economic forces
and quantities. The opposed conclusions of the two groups of special-
ists reflected the differences in their basic assumptions about the na-
ture of economic reality, the evidence studied, and the methodology
employed. I believe that the differing analytic approaches and conclu-
sions of the economists and the political scientists are actually com-
plementary rather than contradictory. Considered together, both in-
tellectual approaches increase awareness of the role of both political
and economic factors in shaping economic reality and thereby deepen
our comprehension of developments in the world economy.

Nature of Economic Actors
In the late 1960s, a group of graduate students in public affairs at
Princeton University’s Woodrow Wilson School of Public and Inter-
national Affairs asked a professor of economics to offer a course on
the multinational corporation (MNC). During the 1960s the rapid
overseas expansion and increasing importance of these giant firms (at
that time mostly American) had captured public attention and be-
come intensely controversial. Raymond Vernon and other commenta-
tors believed that these business firms would greatly facilitate efficient
utilization of the world’s scarce resources and speed economic devel-
17
opment of the entire globe. However, Stephen Hymer and other rad-
ical critics regarded such powerful corporations as nothing more than
instruments of an expanding American capitalist imperialism that was
exploiting countries throughout the world. 18 The students believed
that the MNC was a novel and important phenomenon that should
be the focus of at least one course in the School’s substantial econom-
ics curriculum.
The students were firmly rebuffed with the professor’s response
that “the multinational corporation does not exist.” Corporations ex-
ist, the economist granted, but there is no such thing as a distinctive
multinational corporation that behaves differently from other corpo-
rations. Every corporation, whatever its nationality or scope of its

17
Raymond Vernon, Sovereignty at Bay (New York: Basic Books, 1971).
18
Stephen Hymer, The International Operation of National Firms: A Study of Direct
Foreign Investment (New York: Cambridge University Press, 1976).
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