Whether or not less developed countries can better realize their economic aspirations by strengthening their ties with developed countries will remain in dispute as long as there are rich and poor countries. Dispute will be particularly sharp while the main instruments of such interconnection are identifiable institutions like the multinational corporation. It is easier to map the growth of the multinational corporation than to assess its consequences, but the need for an assessment cannot be ignored. As this essay's subtitle suggests, my main concern is consideration of arguments which are critical of the role of the multinational corporation.

This essay elaborates several basic propositions. First, the extraordinary changes in international communication and international transportation during the past 40 or 50 years have profoundly altered the horizons of business decisionmakers, giving enormous stimulus to the creation of multinational business enterprises. Second, in narrow economic terms the multinationalization of business activity has added to the efficiency of the world economy. Third, the advances in transportation and communication, reinforced by the existence of multinational business enterprises, have stimulated interaction between national economies and reduced the effectiveness of national controls, particularly in advanced countries. Finally, despite the increasing porosity of national boundaries these countries have been expanding and refining their national economic and social goals in ways that require more controls at national borders or more joint controls between cooperating states.

Transnational relations and other multional process seriously threaten democratic control of foreign policy, particularly in advanced industrial societies. The intermeshing of decisionmaking across national frontiers and the growing multinationalization of formerly domestic issues are inherently incompatible with the traditional framework of democratic control. The threat is all the more serious because it is sustained not by enemies of democracy but unknowingly by people who consider themselves to be acting within Western democratic traditions and because it results in part from the very forces of internationalism, interdependence, and economic advancement that have come to be regarded as indispensable. The consequences of these developments and the ongoing erosion of control over military and foreign policy, dramatically demonstrated by the debate on the Vietnam War, amount to a fundamental challenge to the democratic structure of Western societies. This essay analyzes the threat of transnational relations by reexamining the arguments for limited democratic control of foreign policy in light of recent structural changes in world politics and the consequences of transnational relations for the democratic process and its institutions. It concludes by indicating some approaches that could strengthen the democratic dimension which is being eroded.

World politics is changing, but our conceptual paradigms have not kept pace. The classic state-centric paradigm assumes that states are the only significant actors in world politics and that they act as units. Diverse domestic interests have effects on international politics only through governmental foreign policy channels. Intersocietal interactions are relegated to a category of secondary importance–the “environment” of interstate politics. As Karl Kaiser has pointed out, the reality of international politics has never totally corresponded to this model. Nevertheless, the model was approximated in the eighteenth century when foreign policy decisions were taken by small groups of persons acting within an environment that was less obtrusive and complex than the present one.