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Liberation and the Multinationals
By Dennis P. McCann

WHAT follows represents a thought-experiment in the increasingly crucial and controversial discussion of the relation between Christian and business social ethics.

The main area of focus will relate to Latin American liberation theology, the role of the so-called multi- or transnational corporations, and analysis of representative critical interpretations both secular and theological. The discussion is divided into two stages.

The first stage, which I will dub "Generalities," is represented by Gustavo Gutierrez's A Theology of Liberation (1973) and Michael Novak's The Spirit of Democratic Capitalism (1982). At this stage transnational corporations count merely as tokens in a larger game, namely, whether the will of God is more appropriately served by the structures of socialism or capitalism. The second stage, "Case Histories," descends from this ambitious effort to discern "the signs of the times" to attempt moral evaluations of specific transnational corporations. While even at this stage, God's justice remains the ultimate criterion, it does presuppose that like other business enterprises, transnational corporations have significantly different moral cultures leading to significantly different patterns of corporate social responsibility. I have chosen to represent this stage by contrasting the discussions of United Brands and Gulf & Western's activities in Central America, as presented in Penny Lernoux's Cry of the People (1980) and Oliver F. Williams' and John W. Houck's Full Value: Cases in Christian Business Ethics (1978).

I

Gutierrez's indictment of transnational corporations is part of his attempt to spell out the social scientific basis for his religious ideology of liberation. Relying heavily on the work of Latin American political economists Fernando Henrique Cardoso and Enzo Faletto, Gutierrez

Dennis P. McCann, Assistant Professor of Religious Studies at De Paul University in Chicago, is the author of Christian Realism and Liberation Theology (1981) and the co-author, with Charles R. Strain, of the forthcoming book, The New Messiah? A Future for Practical Theology (Crossroad). Dr. McCann has published essays in the Journal of Religion, Religious Studies Review, the Journal of Religious Ethics, and the Union Seminary Quarterly Review. Recently, he presented a paper, "Redeeming the 'City of Pigs': Catholic Principles for Welfare Justice," at the symposium on Catholic Social Teaching and the American Economy, held at the University of Notre Dame. "Liberation and the Multinationals" is the first step in a larger research project on the ethics of international business corporations that Dr. McCann is pursuing in conjunction with his M.B.A. program.

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defines the "Latin American reality" as "dependence" rather than " underdevelopment." The developmentalist programs of the Alliance for Progress have necessarily failed because underdevelopment in the Third World is the inevitable consequence of development in the First World. Latin American development will never proceed properly until economic dependence is broken. This, among other things, is what Gutierrez means by liberation. Only within "the framework of worldwide class struggle" can the Latin American reality be interpreted and transformed (p. 87).

Within this struggle dividing the world into "oppressed countries and dominant peoples," Gutierrez sees the multinational corporations as representing "a new kind of dependence." Noting that such corporations now go beyond "the old forms of imperialistic presence," for example, "the enclave economy [mining centers and plantations]," he argues that "foreign investment... [in] the more dynamic elements of budding native industry ... [is]...binding it ever more closely to international capitalism (p. 85)." Not surprisingly, he views this link as beneficial only to "vested interests," those local elites who collaborate with the transnational corporations as well as their stockholders among the dominant peoples. His advice to the oppressed countries is vague. Liberation will mean a form of revolutionary socialism to be achieved in the "praxis" of those acting in "solidarity with the oppressed." Whether this will mean expropriation of the assets of the multinationals is simply not discussed.

Novak's recent controversial book is best read as another theology of liberation; only in this case, the theologian is a white male North American "communal Catholic"--and proud of it. There is real oppression and real liberation in Novak's perspective. His personal struggle for liberation involves doing battle with what he identified some twenty years ago as "the forces of non-historical orthodoxy," the residue of ecclesiastical authoritarianism that for him lingers even beyond Vatican II in the social teachings of the Catholic Church. In this context, it is clear that The Spirit of Democratic Capitalism is another name for liberation. The American experience, for Novak and Catholic ethnics like himself, has meant liberation from the benighted political economy of a still medieval Central Europe and liberation for new freedom in all aspects of life made possible by the unprecedented success of "democratic capitalism" in promoting the wealth of nations. Novak's book is an attempt to re-present this experience in theological terms, by identifying the "ideals" operative in it and by arguing for their superiority over any plausible alternative.

Novak's vision of the liberating effects of "democratic capitalism" directly contradicts the social scientific basis of Gutierrez's reading of the Latin American reality. Relying heavily on the work of another Latin American economist, Joseph Ramos, Novak cites six facts that refute the Cardoso and Faletto theory of dependency: (1) Only five percent of U.S. investment is made abroad. (2) U.S. investment in Latin

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America represents less than one percent of the U.S. Gross National Product. (3) The after-tax return on U.S. capital in Latin America is approximately ten percent. (4) That U.S. investors in the Third World take out more in profit than they invest is, for all sound investments, a truism. (5) That U.S. corporate profits depend to a high degree on investments in the Third World is misleading. Figures on U.S. overseas profits vary from year to year, from company to company. (6) The U.S. has a chronic balance of payments problem insofar as the total value of its imports usually exceeds that of its exports.

These six facts simply cannot be squared with any theory that purports to explain Latin American underdevelopment in terms of United States' development. Latin American poverty, Ramos and Novak claim, is a long-term consequence of the "internal structures common to Latin American and Iberian countries." Long after the overseas empires of Spain and Portugal have vanished, their cultural legacies remain "fundamental obstacles" to economic development (pp. 304-5).

Like Gutierrez, what Novak has to say about transnational corporations is largely a function of his overall theoretical perspective on political economy. Since "democratic capitalism" remains for him the most promising model of development, transnational corporations are praised as an instrument of "the common good." Citing the example of Zimbabwe's Robert Mugabe, the socialist prime minister who begged Union Carbide to stay in his country, Novak observes that to "absent global corporations, the likelihood that the world would be more prosperous, freer, more peaceful, and more healthful is slim (p. 229)."

Novak accepts the reassuringly positive assessment of multinationals sponsored by John Kenneth Galbraith. The same new patterns of investment that caught Gutierrez's attention are seen here as an opportunity for liberating humanity from certain inefficiencies in the allocation of global resources as well as certain other market imperfections resulting from the now obsolete system of nation-state sovereignty, such as protectionist tariff wars that all too often deteriorate into full-scale military action (pp. 232-3). Novak notes in passing that transnational corporations challenge existing patterns of cultural and political development, and therefore generate social tensions and the accompanying intellectual controversies. Yet he reaffirms his faith in this "process new to world history," conceding that "there is always room for improvement and reform" (p. 232).

II

It may seem futile to pursue this dispute between Gutierrez and Novak unless we can find a way to transcend their polarities. Perhaps help can be found in Ralph Potter's book, War and Moral Discourse (1969), which seeks to adjudicate the diverse views regarding American involvement in Viet-Nam.

Potter argued that four areas of disagreement must be analyzed: (1)

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empirical descriptions of the situation, (2) affirmations of loyalty, (3) modes of moral reasoning, and (4) quasi-theological beliefs. Let us apply one or two of Potter's criteria to our present debate.

The first category, "empirical descriptions of the situation," directs our attention to the historical facts and the social scientific theories invoked to interpret them. Here Gutierrez and Novak both remain at a high level of abstraction. For all their appeals to a sense of history, neither provides so much as a paragraph detailing the operations of any specific transnational corporation in any given Third World country. Their views of the situation are theory-laden, to say the least. Transnational corporations are viewed as instruments either of dependence in the manner of Cardoso and Faletto, or of development in the manner of Adam Smith, and they are praised or blamed accordingly. Thus the dispute in this first category can only be resolved to the extent that one or the other theories of political economy can be refuted as a whole. At this point in my own research, I'm inclined to agree with Novak that the theory of dependence cannot be sustained as a sufficient explanation of Latin American poverty. But I am not persuaded that this warrants the unguardedly optimistic conclusions that Novak goes on to draw from, for example, Galbraith's prophesies.

III

Passing over Potter's second and third critical categories, let us pick up his fourth and final criterion, namely, "quasi-theological beliefs."

That both Gutierrez and Novak were nurtured in the Roman Catholic Church prior to Vatican It indicates the possibility of a shared theological horizon. Yet differences show up within this horizon. Two are significant for our purposes here. The first concerns Christology. While both of them tend to see Jesus of Nazareth as exemplar, they differ remarkably concerning their sense of what his mission actually accomplished. Gutierrez's picture of "Christ the Liberator" is a promise in principle already fulfilled, the hopeful symbol of our transformation as a "new man" to be realized in the struggle for liberation (p. 189). Here the themes of "liberation" and "salvation" converge, thus establishing a powerful religious legitimation for whatever revolutionary "praxis" the "basic communities" (communidades de base) deem necessary.

Novak, on the other hand, insists that "the single greatest temptation for Christians is to imagine that the salvation won by Jesus has altered the human condition" (p. 343). Taken at face value, such an assertion makes it almost impossible to assign any concrete historical meaning to either "liberation" or "salvation." Nevertheless, Novak, too, manages to derive a weak religious legitimation of democratic capitalism from it: "The Incarnation obliges us to reduce our noblest expectations, so to love the world as to fit a political economy to it, nourishing all that is best in it" (p. 344).

These political Christologies are better understood by turning to the second important difference, their approaches to Scripture. While both

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of them depart from the way in which Scripture was used in traditional Catholic theology, they do so in divergent ways. Given his view of the relation between liberation and salvation, it is no surprise that Gutierrez's discourse is emphatically biblical in its rhetoric. The connection between his reading of salvation history and contemporary struggles for liberation is reinforced at every step through a process of rhetorical transference. This process, which Gutierrez himself has described as a "conscienticizing evangelization," allows him to give expression to the faith of "basic communities" in God's special concern for them and their struggles. It also dramatizes the meaning of the strong religious legitimation of their "praxis." Scripture, in short, provides less the basis for ethical argument than a model of historical discernment. This, too, is consistent with the sophistication of Gutierrez's hermeneutic circle.

Novak's discourse, given the topics it covers, is remarkable for its lack of biblical rhetoric. Hardly an omission, this modesty can be attributed to his recognition that "there is a great gap between the Word of God and systems of economic, political, social, and cultural thought in modern societies" (p. 335). This lack of resonance between biblical narrative and contemporary history not only renders a rhetorical use of Scripture suspect, it also entails an explicitly conceptual strategy: "The human mind requires a powerful set of philosophical and theological concepts in order to relate the pure and simple Word of Scripture to the complex body of modern thought." Novak insists that this strategy is actually more incarnational than the rhetorical use of Scripture. Be that as it may, the concepts he has in mind are such that at best they warrant only a weak religious legitimation of any political economy: "The Word of God is transcendent. It judges each and every system, and finds each gravely wanting." Consequently, while neither Judaism nor Christianity "require democratic capitalism... without it they would be poorer and less free." Yet, given Novak's hermeneutic circle and its exigencies, this qualified endorsement may be all that he needs.

Neither Gutierrez nor Novak is interested in the morality of transnational corporations as such. Only to the extent that these impinge on the larger question, the historic choice between democratic capitalism and revolutionary socialism, do they take them into account. This does not mean that our first stage, "Generalities," is superfluous. On the contrary, the clarification of the larger ideological conflict provides a context in which ethical assessments can proceed. Even though conclusive argument seems to be impossible in the first stage, the clarification of the issues attempted here will be useful as we move to the second stage, "Case Histories."

IV

Of the attempts to move the theological discussion from the first stage, "Generalities," to the second stage, "Case Histories," the work of various interdisciplinary seminars and symposia at the University of Notre Dame can be promising. The textbook developed for undergraduate

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business ethics courses by Professors Houck and Williams, Full Value: Cases In Christian Business Ethics (1978), provides two case studies that I will use to show what can be done at this second stage as well as what remains to be done. Penny Lernoux's remarks on these same two cases in Cry of the People (1980) will allow us to proceed without abandoning the concerns of liberation theologians already aired in the first stage.

Houck's and Williams' book is addressed to undergraduate business students. It seeks to awaken them to the implications of their usually taken-for-granted Christian faith, as they prepare themselves for careers in business. It makes two assumptions that would be subject to intense debate in the first stage: namely, that business corporations are capable of moral reform, and that Christian business ethics can make a difference in the quality of that reform. Unlike Novak, who seems satisfied with the mere assertion of democratic capitalism's openness to reform, Houck and Williams have selected and developed cases involving typical problems facing aspiring reformers who would also do well in the business world.

The first that I wish to consider is "The Eli Black Story" (pp. 141-153). As in many of their cases, the focus rests not on the corporation, United Brands, but on the fate of its chief executive officer, Eli Black, who leapt to his death from his office window overlooking Park Avenue. Black's story is used to dramatize the tension between religious and business values. For besides being a financial wizard, Black was also a pious Jewish rabbi. His personal story, however, cannot be told apart from that of the corporation he managed.

Houck and Williams stress that Black's faithfulness to the Jewish tradition of "Tzedakah," the love that does justice, was reflected in the policies he implemented at United Brands. As evidence they cite his decisions to raise the wages of agricultural workers to "nearly six times that of competitors," to upgrade housing for plantation workers, and his personal efforts to get to know Cesar Chavez better in order to achieve a more equitable relationship with the United Farmworkers' Union (pp. 144-5). Indeed, they quote Chavez's eulogy: "Mr. Black's life was proof that farm labor and management could work for the betterment of all."

This picture fell apart when two major disasters struck United Brands during the six months prior to Black's suicide. In August, 1974, Costa Rica, Panama, and Honduras levied a tax on bananas that cost United Brands eleven million dollars in the third quarter alone. Later that year, Hurricane Fifi struck the Honduran plantations, doing some twenty million in damage to United Brands' property. Black managed to cover these losses by selling another subsidiary, Foster Grant, for a handsome profit, and, going into 1975, it appeared that United Brands was on the mend. At that point Eli Black, for whatever reasons, fell into the abyss.

Houck and Williams, apparently, are at a loss to explain the suicide. They mention, but only in a footnote, that three days after Black's death

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two senior vice-presidents disclosed the "Honduras Arrangement, " a plan approved by Black that would have paid a Honduran official two and a half million dollars for cutting the banana tax in half (p. 143). Strangely, this clue somehow gets lost in all the testimony to Black's sense of corporate social responsibility and the wholesomeness of his traditional Jewish family life. Thus the students, reading this textbook, are left with a deep question, "Can a sensitive person, a person with high moral standards, survive in an uncompromising financial world.... ? But they would not know how this question may have been asked and answered in the concrete dilemma that Black actually had to face. Here is one case where focusing on the personal character of the chief executive officer distracts our attention from a more penetrating analysis of the corporate ethos that may have prevailed at United Brands.

V

Penny Lernoux shows no sympathy for Eli Black. She is, however, keenly interested in the history of United Brands' operations in Central America. In her hands, it is just one more episode in the conspiracy of evil that links the U.S. government, American-based multinational corporations, and corrupt right-wing military dictatorships in an attempt to repress the great awakening in the Latin American Catholic Church. While some would place her report in the genre of American muckraking journalism, the issues she dramatizes demand a response.

The factual information contributed by Lernoux suggests that the "Honduras Arrangement" was only the tip of the iceberg, that it was part of a pattern at United Brands that predated Black's ascendancy and persisted long after his demise. She cites as evidence the corporation's involvement in the U.S.-sponsored coup that overthrew the "populist government" of President Jacobo Arbenz in Guatemala in 1954 (p. 116); its violent repression of a "militant labor movement" in 1959; its refusal in the mid- 1960s to implement the recommendations of a study done by the International Basic Economy Corporation (IBEC) that it had requested-these included a proposal for constructing decent workers' housing in the Honduras plantations (p. 108); and its further efforts to repress union activities and grower cooperatives in the years after 1975.

This pattern is hardly reconcilable with the picture of United Brands under Eli Black that Houck and Williams present. In Lernoux's exposé , Black comes off as a pious hypocrite who got in over his head. Presumably, she would have business students draw the inference that there's no way serious Christians can be successful in a company like United Brands without imperilling their immortal souls. As Jesus once said: "It is easier for a camel to pass through the eye of a needle than for a rich man to enter the Kingdom of God." So much for the creative "tension" between religious and business values that Houck and Williams would like to use as the engine of corporate social responsibility.

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VI

Lest the Eli Black story be discounted as unrepresentative, let us examine another case where our authors address the same situation. In Houck and Williams, it is the story of "The National Council of Churches vs. Gulf & Western" (pp. 170-191). Interestingly enough, while the controversy itself surrounds Gulf & Western's sugar plantations in the Dominican Republic, Houck and Williams focus on the effort of a suburban middle-class Christian couple to decide whether to vote for the 1975 proxy resolution that the National Council of Churches sponsored as a stockholder in the corporation. Their point, in short, is to show that such stockholder resolutions can be an effective method of Christian witness.

As to Gulf & Western's performance in the Dominican Republic, they try to present-an even-handed synopsis, structured according to the four areas in which the National Council of Churches had requested an accounting. It includes: (1) a general briefing on the company's operations in the Dominican Republic; (2) information on employment practices and wage policies; (3) an accounting of union-management relations; and (4) a statement on management relations with government officials in the Dominican Republic. The facts presented under these four headings, even in light of company rebuttals, create the strong impression that G & W is guilty of exploiting its workers, repressing their attempts to bargain collectively, and helping to perpetuate the basic problem facing the Dominican Republic, namely, severely distorted economic growth coupled with an almost incorrigible legacy of official corruption. Despite the impression created, or perhaps because of it, Houck and Williams are content to show why serious Christians would vote to air these charges in a report to the stockholders.

Penny Lernoux addresses the same case in a section on "The 'Sugarization' of the Dominican Republic" (pp. 236-247). She dramatizes many of the same facts that are cited in Houck and Williams, but her interpretation focuses more vividly on three areas beyond the proxy fight. First, she traces G & W's involvement in the Dominican Republic to the immediate aftermath of the 1965 invasion by U.S. Marines. She shows how the attorney Cyrus Vance, whose firm had previously represented G & W, helped arrange the provisional government at the time the company began to acquire an interest there. The political fix, it would seem, was in from the beginning. Second, she shows how the company's persistent "union busting activities" resulted in a situation where the cane cutters, the least advantaged of G & W's employees, were earning "less in 1975 than in 1964." Unlike Houck and Williams, she seems convinced that G & W's labor policies ultimately were responsible for the murder of two union organizers. The point is that in her account "union-management relations" are far more outrageous morally than they seem to be in Houck and Williams. Third, she emphasizes the disruptive cultural impact of transnational agribusiness.

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Quoting a local priest, Juan Miguel Perez, she contrasts the sometimes benevolent paternalism that peasants once experienced at the hands of traditional senores with the lack of "interpersonal relations" under the new system. She also cites statistics that suggest how gearing the island's food production primarily to the export market has resulted in even worse poverty for the local population. These emphases would lead any sensitive reader to wonder whether successful reform could ever be enough. Perhaps Lernoux would have us conclude that G & W should get out of the Dominican Republic altogether.

Nevertheless, this is not the conclusion that she comes to. At the end of her chapter on transnational corporations, having paraded before our eyes the outrages committed by United Brands, Gulf & Western, and others, she concurs with Houck and Williams in advocating proxy battles as an effective way of publicizing injustice. Without saying so, she assumes that disclosure will lead to change, and that by implication the policies of both the U.S. government and the transnational corporations are still responsive to the pressure of public opinion, and hence still reformable (pp. 278-280). Beyond that she has little to say about what we should do with her revelations.

VII

I don't mean to minimize the differences that still exist at this second stage of the discussion. Yet there does seem to be a consensus emerging, not only about what to do with transnational corporations but also about the nature of the moral challenge they represent.

Prior to undertaking this study, I was more or less content with the proposition that the morality or immorality of business corporations was no better and no worse than that of other large-scale institutions in our society. I felt that maintaining one's moral integrity in business is no different a problem in principle than maintaining it in a religious order, or in politics, or in organized labor, or in academic life. The tension between one's personal commitments and one's institutional responsibilities are difficult, and sometimes overwhelming, in any of these situations. So far, I have found no reason to recant this heresy. Nevertheless, I have been impressed by the special character of the challenge posed by transnational corporations. Were it not for this generation's ongoing revolution in communications technology, they would be little more than a paper tiger, something with which to frighten the gullible and the naive. As it is, multinationals have mastered this technology and in so doing increased their capacity to respond to new opportunities beyond anything heretofore imaginable.

John Kenneth Galbraith may be right in seeing the very existence of these corporations as the human race's latest, if not last, best hope for world peace. Were this to turn out to be the case, then their questionable performance in the recent past may be regarded as something like a rather terrible adolescence. Scarcely able to comprehend their own

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burgeoning strength and the responsibilities that go with it, they are continually subject to scolding on all sides. And, as is normally the case with adolescents, much of it is justified. The basic problem is that their newly acquired strength has burst forth precisely in those areas of the world where they are least likely to encounter the necessary restraints supplied by effective political and cultural institutions. In the absence of these restraints, they have acted as most adolescents do: They've taken the easy way out and followed the line of least resistance in pursuing their own narrowly conceived interests.

The metaphor of adolescence, of course, resolves none of the difficult moral issues, but it may point to a reasonably hopeful outcome, namely, that controversies like this one may eventually result in a new social vision in which the transnational corporations take their rightful place as responsible members of the community, alongside the big churches, big government, and big labor, not to mention the thoroughly modern urban universities, that is, the community of saints that know themselves to be sinners. I don't know if that's how God sees it; but that's how it looks from here for now.