Partnership Capitalism

by ERIC JOHNSTON

1

NOT long ago, I had lunch with two friends, one of whom belongs to the “political left,” the other to the “economic right.”They seldom agree on any t hing except the time of day, but on that occasion they joined in berating me soundly for having spoken favorably of America’s new foreign policy. This business of loans to Greece and Turkey — this business of the United States stretching itself to help out this country’s economy or that country’s economy — this business of forcefully stopping Communist expansion — and aggression everywhere — they were upset and angry about it.

“Why,” said my friend from the left, “it’s imperialistic. It’s dollar diplomacy. We’re using the excuse of stopping Russia to grab everything for America. That’ll get us into trouble.”

“Look!” interrupted my friend from the right. “We’ve enough to do here at home. We can’t give away this country’s substance. It’s like a sailor on a spree. We’ll never get the money back — not a dime of it. And we’ll wind up in the poorhouse if we try it.”

“Well, I’m sure of one thing,” I put in, “you both can’t be right. We can’t give away our substance and be imperialistic at the same time. And if we’re imperialistic, we’re certainly going about it in a very strange way.”

I asked my leftish friend if he’d ever heard of any other “imperialist” nation which gave away its possessions and cut its armed forces to about a tenth of their full strength.

“We just gave the Philippines their independence,” I reminded him, “and every time we turn around we take a new whack at the appropriation bills for the Army and the Navy and the Air Force. We’re telling our generals and our admirals they’ve got to cut, cut, and cut.”

And to my friend on the right who predicted national bankruptcy, I said: “We’re still paying for the war, and loans to help other nations help themselves are an investment in future peace. Unless the world can get back on its feet, we’re never going to have peace. It’s cheaper to build a peaceful work! than to fight another war. The way I look at it, America is embarked on the greatest venture in her history. It’s a complete break with the past, and there’s no turning back!”

I don’t think my friends realize there is more to this break with the past than happenstance. Two mighty events have come out of two world wars in our generation to shape profoundly the destiny of man and the course of history.

What was the most significant result of World War I? It was the Russian revolution from which Communist Russia emerged. This has affected all people everywhere ever since.

What was the most significant result of Work! War II? It was the emergence of America as the strongest and most powerful nation the world has ever seen. American production has nearly doubled since Hitler invaded Poland in 1939. We are strong because we have the mightiest production machine, and production is the yardstick of power in the modern world.

We know how Russia has used her power. She has used it to suppress man’s freedoms, to promote the class struggle and the police state.

Today earnest, sincere people who are neither “right” nor “left” are asking how America will use her new and almost frightening power. They want to know what kind of leadership the United States is going to give to the world. Is it going to mean peace or is it going to mean war?

Those are fair questions, and they deserve answers. As an American businessman who has been fortunate enough to have visited around the world in the last few years, I’d like to suggest how America can exert leadership to help give the world peace and stability.

2

AMERICA has come into world leadership by a fortuitous coincidence of history and geography. Within her own boundaries, she is fabulously endowed. That was not true of one-time leading powers. For the most part, they were poor at home in natural resources. They depended for their wealth on the take from conquered or exploited territories. America, by contrast, is rich materially; she is also rich morally and spiritually. The world never stood more in need of a world leader with that kind of dual strength.

I am conscious of the fact that swaggering, conquering nations of the past have made that same assertion to justify their actions. But we Americans are assuming a role of world leadership with more reluctance than swagger, and so far as conquering is concerned, our victory in the last war was a case of whipping aggressors who asked for it in a war we neither wanted nor inspired.

America has made two distinctive contributions for the betterment of the world. One is the concept of the dignity of man, the citizen. The other is the technique of mass production.

The idea of the essential, basic dignity of man, the citizen, was given political embodiment in the American Revolution. For the first time, the rights of man were written into a binding constitutional document with which our law must conform. This new political concept shook the world. For generations, thinking men in older lands beat paths to our doors to learn of this revolutionary thing called “the inalienable rights of man.” Some took the idea home with them and tried to adapt it. Others stayed with us to become its most devoted advocates.

Then, about fifty years ago, another new American concept shook the world: the technique of mass production. It was precisely what men of free will and free choice needed. Together, the two American traditions — both sweepingly spectacular — have proved out a. workable formula: that man can have free will and free choice and still have an abundance of material things to enjoy along with that freedom.

Again the world sent its emissaries here, to learn the magic touch American genius had given the machine.

I think the second contribution would not have come about without the first. The first created an environment in which initiative and inventive genius could come to their finest flowering. So they did, and we achieved the technique of mass production in an atmosphere which glorified the right of man to experiment, to take a chance, to invest, to invent, and to harvest the profit of his own talents.

Both these concepts are as distinctly native to America as the bison and the redwood. Because they are so characteristically American, they must be made to stand out in our foreign policy. We’re not going to force these two ideas down the throats of the rest of the world. It isn’t to our purpose to force them on anybody. The truth is, they can’t be forced; they can only be accepted. We are offering these concepts solely on the theory that they’ve worked so well for us, they ought to work as well for others.

Everyone here at home, of course, accepts the thought that individual freedom and freedom of choice ought to be universal, but I’d like to point out why I think mass production should be just as universal.

I am convinced mass production cannot be nationalistic. It must have mass markets. Fence it in, and periodically it sickens. Mass production must constantly expand. It forbids us to be nationalistic in thought or action. Mass production demands a mass world market. If there is anything which can ever bring the “one world” concept into being in its best and most reasonably logical sense, it will be the fruits of mass production made possible by large-scale investment.

Here in America, the machine and the technique of mass production have made us the rich man in a world street of poor neighbors. I think it is impossible for one rich man to retain his riches very long in a community of paupers. What is true of a rich man in a community is true of a rich nation in a world community of poor neighbors. The United States cannot long survive as an island of plenty in a world ocean of want. It can’t be an oasis of prosperity in a desert of despair. One day the winds of envy and disgruntlement will whip up such a sandstorm they will bury that oasis.

I think our economic future lies in producing things by the billions for the billions of people in the world to buy, which means that those billions must have the wherewithal to buy them. I don’t think there’s any economic future in producing things by the millions for fewer millions to buy. There is no point or profit in producing by the billion without being able to sell to a billion customers. And only world industrialization will provide a billion customers.

That’s why there’s nothing altruistic in the foreign policy of freedom and industrialization which I am projecting. We have no intention, as I see it, of playing Lady Bountiful around the world. Neither is it imperialistic. If it’s imperialistic to try to help the vast mass of people around the world to be free, self-supporting, and self-reliant, then we need a new definition of imperialism. If it’s “giving away our substance” to help ot hers produce so that they may in turn buy from us, then we need a new definition of “giving.”

3

THE policy I suggest is different from that followed by any other predominant nation in history. It is not my intention to say that all actions of world leaders of the past were bad. Each, of course, made positive contributions to civilization. But because of the economics of their times, past world leaders had to impoverish others to enrich themselves. Their prosperity was built on seizure of wealth from subjugated peoples.

Rome used her power to tax, enslave, and exploit. The legions of Rome flowed out around the then known world to bring back slaves, to bring back wealth, to collect taxes, to force tribute. It was always a case of “bringing back” whatever wealth could be pried loose from weaker nations and weaker peoples.

We skip some centuries, and then there was Spain as the great world power. In her heyday she sent out explorers and missionaries but she also used the power of the sword to conquer and bring back wealth. Every year Spanish galleons carried gold and silver from the New World. Without that plunder — which it was — the Spanish court could not have long survived. Again, it was a case of “take back”; never of “build up.”

Britain succeeded as the dominant power. In the early days of her empire building, she followed a policy of “take back” instead of “build up.” More enlightened, by far, than her predecessors, however, she ruled with an easier hand, and a few generations ago began to build a commonwealth of free and independent peoples. But the exploitation of subject peoples was her first use of her power.

Our policy as the world’s predominant power must be different: we must put in before we can take out; we must invest before we can profit.

But actually there can bo no investment, no industrialization, no recovery, no stability, so long as the haunting fear of aggression overhangs the world. Russia alone among the nations has been kicking at the doors of her neighbors. Wherever the door has been open, Russia has walked in. Wherever they have been locked, Russia has passed on.

Now we are telling Greece and Turkey we will help them lock their doors against aggression and assist them to rebuild their economies. And we’re going to have to do the same for other nations. There has been a steady deterioration of Europe’s economy and the morale of the people. Large-scale outside aid — food, raw materials, and machines — is necessary to avoid complete collapse and chaos in Europe. The job to be done is costing more today than if it had been done a year ago, and it will cost infinitely more to do a year from now if we put it off.

The sooner the American people become aware of these unpleasant facts the better, because America is the only nation which can undertake the task. What we are doing in Europe now is in effect a program of lend-leasc for peace. Once the specter of aggression is removed and stability and order are achieved, then the way is open to launch a world industrialization program. Here is where American individuals and American private capital can play the major roles.

I want to suggest one approach which I think is a practical, workable way in which American enterprise can help build prosperity and peace around the world. It is “partnership capitalism.”

There are other approaches and other techniques, but in partnership capitalism I place my greatest hope for world reconstruction and for lifting the living standards of people throughout the world.

Partnership capitalism is the natural handmaiden of the kind of world leadership for America which I am discussing. It involves just this: American capital and know-how in partnership with the capital, the manpower, and the resources in other countries. Its purpose is a mutual and cooperative development of industry among nations. In this way, America makes available to the world one of its greatest assets — the American capitalist, with his dollars plus his techniques.

Partnership capitalism is not just talk. It is already at work. There are notable examples. Take the Corning Glass Works of Corning, New York. This company is interested in expanding the glass business on a partnership basis around the globe. Several years ago, it went into partnership with a long-established glass company in Argentina. It invested cash and American know-how in exchange for a stock interest. It was a minority stock interest. Officers of Corning tell me that they are not interested in majority control or balance of power in the Argentine company.

Results today demonstrate the worth of partnership capitalism. Everyone has benefited. Argentina has a thriving and expanding glass industry, and America has received dividends through selling equipment and machinery and supplies to that country’s glass plants.

Corning has done the same thing with companies in Brazil and Chile, with the same stimulation of industry and beneficial results in those countries. And Coming expects to go into other countries.

Another example of partnership capitalism is the Ford Motor Company. It has promoted automobile production around the world by going into partnership with native capital. The Ford Motor Company of Dearborn, Michigan, has a stock interest in the Canadian and British Ford Motor companies. Ford Motor Company of Dearborn and Ford Motor Company of Canada have associated companies in Asia, Africa, Australia, and New Zealand. And Ford Motor Company, Dearborn, has associated companies in Central and South America. Ford Motor Company, Dearborn, and Ford Motor Company, Ltd., of England, have associated companies in Europe. In addition, there are separate Ford companies in France and Germany with manufacturing facilities.

I’d like to cite some examples from my own industry. There is an excellent illustration of partnership capitalism in Holland, where a DutchAmerican syndicate was organized to buy and operate the Asta Theater in The Hague, and to build or buy and operate about a dozen other first-run motion picture theaters in leading cities of the Netherlands. Fifty per cent of the stock of the enterprise is owned by Dutch interests, and the other half is owned by American companies. The articles of agreement specifically stipulate that the American interest shall not at any time exceed 50 per cent and that at least half of the ten directors shall be citizens of the Netherlands.

Then there’s the case of RKO Radio Pictures, Inc., which has contributed substantially to the development of the motion picture industry in Mexico. RKO took American capital and American know-how across the border in a voluntary partnership agreement with Mexican capital and resources. It was on a 50-50 basis. The project is not only giving employment to large numbers of persons but is giving Mexico a greater film-producing industry and helping Mexico develop its native culture.

There are numerous other examples of this kind which could be cited, but it’s only a beginning. I should like to see the practice vastly expanded. It has worked well where it has been tried. And it has worked well because it is the opposite of old-line capitalism which exploited peoples and countries.

In contrast to partnership capitalism, observe what recently happened to old-line capitalistic investments in Argentina. Within the last year, the British-owned railways and the American-owned telephone and telegraph companies in Argentina were bought out by the Argentine government. In effect, Argentina said to that type of British and American interests: “Go home! We don’t want you.”

Old-line capitalism, as illustrated by those two instances, functioned as a gamble of “outside interests” instead of joining forces with the nat ionals of the country in a cooperative venture.

To sum up: —

I think America can offer a new type of leadership to the world — a leadership based on mutuality and reciprocity. It can be an enlightened leadership, a twentieth-century kind of leadership, as different from older types of world leadership as the dawn differs from the dark of night.

Older kinds of world leadership held that, man, the individual, was unimportant. Ours must insist that man, the individual, is supreme. Older kinds of leadership sought only to expand their own frontiers. Ours must offer new horizons of hope to peoples everywhere. Older leaderships were based on exploitation. Ours must be based on an extension of the two concepts which have brought America to her present might: the freedom and the dignity of man; the technique of mass production.

The kind of leadership I am suggesting is in tune with the times. Peoples have been promised their freedoms; they have been promised a chance to earn a livelihood, a chance to choose their governments by free elections, a chance to work out their own economic destiny. These promises must be redeemed.

And we have given our solemn pledge to cooperate in building a strong United Nations to ensure and perpetuate this peace. That pledge we intend to honor. We must be partners in peace. We must be partners in prosperity.