In the past decade remarkable changes have taken place in the relations between big business and government in Western Europe. Large corporations have always been intimately linked to their governments—sometimes carrying out national policies, frequently influencing those policies. Recently, however, more and more national enterprises have become multinational enterprises whose aims diverge increasingly from those of the states in which they originated. In addition, the growth of the European Economic Community has outdated customary ways of doing business for large corporations while creating new opportunities for them.

A number of significant insights and interpretations result from this timely book. The interests of the big firms of Western Europe are becoming increasingly worldwide and less concerned with Europe; inter-European collaboration among them has been largely disappointing in furthering European goals; emphasis on creativity and innovation in big business has given way to the diversion of financial resources to declining industries; and lip service to promoting transnational collaboration notwithstanding, governments have preferred to back national standard bearers in key industries. No less important, the political role of large economic groups has been enhanced and that of parliament weakened or altogether circumvented.

The world’s multinational enterprises face a spell of rough weather, political economist Ray Vernon argues, not only from the host countries in which they have established their subsidiaries, but also from their home countries. Such enterprises—a few thousand in number, including Microsoft, Toyota, IBM, Siemens, Samsung, and others—now generate about half of the world’s industrial output and half of the world’s foreign trade; so any change in the relatively benign climate in which they have operated over the past decade will create serious tensions in international economic relations.

The warnings of such a change are already here. In the United States, interests such as labor are increasingly hostile to what they see as the costs and uncertainties of an open economy. In Europe, those who want to preserve the social safety net and those who feel that the net must be dismantled are increasingly at odds. In Japan, the talk of “hollowing out” takes on a new urgency as the country’s “lifetime employment” practices are threatened and as public and private institutions are subjected to unaccustomed stress. The tendency of multinationals in different countries to find common cause in open markets, strong patents and trademarks, and international technical standards has been viewed as a loss of national sovereignty and a weakening of the nation-state system, producing hostile reactions in home countries.

The challenge for policy makers, Vernon argues, is to bridge the quite different regimes of the multinational enterprise and the nation-state. Both have a major role to play, and yet must make basic changes in their practices and policies to accommodate each other.

This is the key volume in the New York Metropolitan Region Study. It is a synthesis and interpretation of the seven specialized books that have already been published and the one that is still awaiting publication. Here, at last, with a depth of perspective made possible by the author's familiarity with the unpublished as well as the published findings of the other participants in the Study, is the whole picture--New York's busy and varied economy as it is now, as it has been, and as it is likely to be twenty-five years from now.

Beginning with the visible present, Mr. Vernon with swift strokes lays bare the essentials of the economic history of the New York Region. He shows how its industries grew out of one another, the part played by labor, the early crucial role of the port, and the later crucial role of "clustering" that enables firms to share common facilities. He discusses the Region's advantages and disadvantages for different kinds of business and industry, the interrelation between the jobs in the Region and the people who live in it. He traces the movement of jobs geographically in and out of the Region as a whole, and also outward within the Region, relating this outward movement to such developments as the thinning-out of population in mid-city tenements and the continuing boom in suburban split-levels. He analyzes the problems besetting the multitude of local governments in the Region, and the crisis of commuting and rapid transit services. Finally he projects the metropolis of 1985, picturing it as all the infinitely complex forces of its history to date indicate that it will be, if these forces are not altered in their future operation by governmental actions of unprecedented magnitude.

In this book there is clearly presented the information that can enable the metropolitan dwellers themselves to communicate more effectively with the experts whose business is objective evaluation of urban problems. Once that communication is established, Mr. Vernon says, "We shall have moved a giant step closer to the objective of a more tolerable metropolitan environment."

Multinational enterprises—what they are and the challenge they pose to national objectives—have never been so clearly delineated. Raymond Vernon cuts through polemic and propaganda to place in perspective the spread of large companies from their home bases to foreign countries. He draws upon the variety of recent studies and his own vast scholarly endeavors and firsthand experience to answer such questions as: Are multinational enterprises and nation-states incompatible in goals and outlook? Should their economic (and political) behavior differ in underdeveloped countries as compared to modernized states?

After reviewing the growing interrelationships of the world's economies, Vernon takes a close-up look at multinationals, commenting on their size, business activity, and patterns of management and control. He identifies the real problems these large enterprises generate, sorting them out from the ills that are associated with industrialization in general. He traces these problems in the developing world and in industrialized countries. In the process, he explores the ramifications of the multinational double identity—each enterprise must comport itself as a national of the country that sanctioned its creation, while at the same time it must respond to the link that ties it to units of the same company in other countries.

Finally, Vernon reviews proposals that have been made to alter the relationship between the enterprises and their host countries, and he suggests scenarios for the future. The issues run deep and the threat of conflict grows, he asserts, and if policymakers hope to deal constructively with problems associated with multinational enterprises, they will have to recognize some of the basic difficulties that have so far blocked progress. His book, by setting forth the issues clearly and without special pleading, makes significant progress in pointing the way to solutions.

This is the first book that explores the relationship between the United States and Japan in terms of the competition for industrial raw materials. With startling consistency, their responses to similar problems appear to stem from each country's history and culture, almost as if the country had no choice but to pursue the policy selected. Vernon suggests that in this field of policy, political leaders are prisoners of their national environment more than anyone--including the leaders themselves--has been prepared to recognize.

Examining in turn the world markets in oil, aluminum, copper, and steel, Vernon shows how Japan has learned to cope with its have-not status, using flexible and inventive national policies designed to help industries acquire what they need. The United States, on the other hand, lacking an explicit and consistent national policy, is torn between protecting domestic producers of these resources and trying to develop dependable sources of supplies abroad. The result is a haphazard and unstable raw-materials policy.

This unique commingling of political and economic analysis will appeal not only to scholars of international relations, domestic political behavior, and commodity markets but also to the informed layman who wishes to understand what is likely to happen as two economic superpowers range the world to satisfy their appetites for raw materials.