Book Reviews : Johan Jørgen Holst (ed.): Five Roads to Nordic Security, Universitetsforlaget, Oslo-Bergen- Tromsø 1973. (Norwegian Foreign Policy Studies, No. 9), 240 pp
| Date | 01 March 1974 |
| Author | Ingemar Dörfer |
| DOI | 10.1177/001083677400900132 |
| Published date | 01 March 1974 |
| Subject Matter | Articles |
317
have
on
the
various
goals
of
society,
i.e.
on
economic
growth,
on
the
distribution
of
in-
come,
and
on
non-economic
goals
such
as
auto-
nomy
in
political
and
cultural
matters.
Foreign
enterprises
striving
for
profit-maximization
may
be
more
difficult
to
control
than
domestic
firms.
Allocative
signals
(e.g.
the
French
sy-
stem
of
indicative
planning)
given
by
the
go-
vernment
may
be
overlooked
by
the
foreign
firm,
or
the
way
it
responds
may
be
different
from
the
domestic
firm
as
the
options
avail-
able
are
different.
If
for
instance
a
credit
squeeze
is
deemed
necessary
by
the
govern-
ment,
a
subsidiary
of
a
multinational
firm
can
easily
evade
such
a
squeeze
by
obtaining
funds
from
abroad,
or
through
manipulation
with
leads
and
lags
in
settling
its
account
with
the
mother
company.
Furthermore,
the
price
of
internal
deliveries
within
the
multinational
enterprise
can
be
arranged
so
that
necessary
capital
is
gradually
made
available
to
the
subsidiary.
Internal
price
setting,
however,
is
most
effective
in
allocating
the
profit
of the
multinational
enterprise
among
its
different
subsidiaries
so
as
to
maximize
overall
net
profits
(i.e.
profits
after
tax.)
In
discussing
the
effect
on
the
functional
distribution of
income
(i.e.
between
labour
and
capital)
assuming
that
foreigners’
direct
in-
vestments
add
to
domestic
capital
accumula-
tion,
Bergo
seems
to
have
missed
the
point
that
under
full
employment
labour
productivity
will
increase
and
so
will
the
wage
rate
as
wor-
kers
come
to
have
more
capital
to
work
with
(neoclassical
scheme).s
This
has
most
likely
been
the
case
in
Norway.
In
less
developed
countries
with
abundant
labour
supply
and
where
the
authorities
therefore
are
more
in-
terested
in
labour-intensive
rather
than
capi-
tal-intensive
modes
of
production,
a
tax-cum-
subsidy
scheme
should
have
the
effect
of
giving
a
socially
desirable
factor-combination
(i.e.
subsidizing
the
use
of
labour
and
taxing
the
use
of
capital).6
On
pure
theoretical
grounds.
Bergo’s
fear
of
an
unwanted
income
distribu-
tion
as
a
result
of
direct
foreign
investments
thus
seems
unwarranted.
History,
however.
provides
us
with
abundant
evidence
of
labour
exploitation
by
multinational
enterprises.
This
book
is
an
important
contribution
to
the
discussion
and
understanding
of
the
multina-
tional
enterprise.
Its
comparative
advantage
is
the
variety
of
interesting
issues
taken
up
and
the
clear
way
in
which
they
are
presented.
This,
however,
also
leads
to
its
weakness;
one
searches
in
vain
for
a
coherent
frame
of
reference
for
the
analysis
(be
it
classical.
neoclassical,
or
marxian).
Statements
are
less
convincing
when
a
solid
theoretical
founda-
tion
is
missing.
When,
in
addition,
the
em-
pirical
material
is
fragmented,
the
book
gives
the
impression
of
being
a
collection of
in-
teresting
but
somewhat
speculative
viewpoints.
Historically,
Norway
has
received
direct
foreign
investments;
it
has
played
the
role
of
host
country.
The
oil
activity
in
the
North
Sea,
however,
is
yielding
a
substantial
inflow
of
foreign
exchange
and
Norway
may
within
short
time
become
a
net
exporter
of
capital,
thus
switch
to
the
role
of
being
a
mother
coun-
try
of
direct
foreign
investments.
It
is
therefore
of
importance
that
social
researchers
in
general
and
economists
in
particular
in
Norway
pay
attention
to
the
issues
posed
by
the
increasing
multinationalization
of
modern
business
enter-
prises.
Therefore,
this
book
ought
to
have
a
big
market -
at
least
in
its
mother
country.
NOTES
1
Stephen
H.
Hymer,
The
International
Operation
and
National
Firms:
A
Study
of
Di-
rect
Investments,
M.I.T.,
1960.
2
Cf.
Harry
Johnson,
’The
Efficiency
and
Welfare
Implications
of
the
International
Cor-
poration’.
in
Charles
Kindleberger
(ed.),
The
International
Corporation,
1970.
3
Cf.
R.
Aliber,
’A
Theory
of
Direct
For-
eign
Investment’,
in
Charles
Kindleberger
(ed.),
The
International
Corporation,
1970.
4
For
a
detailed
discussion,
see
John
Wil-
liamson,
’The
Choice
of
a
Pivot
for
Parities’,
Princton
Essays
in
International
Finance,
1971.
5
For
such
an
analysis
see
G. D.
A.
Mac-
Dougall,
’The
Benefits
and
Costs
of
Private
Investments
from
Abroad’
in
Economic
Record,
March
1960.
6
Cf.
J.
Bhagwati,
’The
Generalized
Theory
of
Distortions
and
Welfare’
in
Bhagwati,
Jones,
Mundell,
and
Johnson
(eds.),
Trade,
Balance
of
Payments
and
Growth,
1971.
INGEMAR
DÖRFER
Johan
Jørgen
Holst
(ed.):
Five
Roads
to
Nordic
Security,
Universitetsforlaget,
Oslo-Bergen-
Tromsø
1973.
(Norwegian
Foreign
Policy
Studies,
No. 9),
240
pp.
John
Newhouse
recalls
in
Cold
Dawrn
how
a
distinguished
professor
after
attending
a
conference
on
SALT
asked
himself
whether
he
had
not
learned
more
about
SALT
than
there
is
to
know.
After
a
first
reading
of
this
book
one
is
tempted
to
similar
reflections
con-
cerning
Nordic
security.
Yet
the
comparison
is
unfair.
True
enough,
we
get
the
defense
structure
of
each
of the
Nordic
countries
down
to
the
last
rifle,
but
the
detail
is
supplemented
by
an
overview
and
scope
that
is
full
of
insights.
These
authors
are
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