The Internationalisation Squeeze: Double Capital Movement and Job Transfer within Philips® Worldwide

Abstract

Internationalisation of domestic capital is decomposed into four distinct processes. As a result, it is possible to show that, from a national perspective, increased internationalisation and deinternationalisation of the national economy may occur at the same time. A brief historical analysis of internationalisation processes in the electronics industry also reveals that extensive phases are followed by intensive phases of reorganisation of capital. These are more ‘political’ in nature and do not follow the pattern of typical ‘market forces’. Basic concepts such as power and dependency structure are more suitable to the analysis of these phases. This is illustrated by the case of Philips, an international electrotechnical company. Part of the movement of Philips capital is determined by comparative costs advantages and export substitution; in particular, the movement towards Third World countries. An increasing part of its capital is flowing, however, towards countries in the core of the world economy, with larger (state) markets. This second movement can be understood as a strategic response to the increased dependency of multinational firms upon economic ‘backing’ powers of the state. As a result, employment in multinational firms, located in small industrialised countries like the Netherlands, is squeezed between these two capital movements. A quantitative analysis of the changing distribution of jobs within Philips worldwide is introduced to illustrate these issues. The data also show that a dual process is not only typical for small core countries, but also for large industrialising countries in the periphery. This, however, has been observed before, and it has played a role in modern theories of ‘imperialism’, like that of Galtung. In view of the present analysis, however, this theory should be refined: workers in small core countries have more interests in common with workers in some Third World countries than predicted by Galtung's theory.