96 Stephen Hymer marketing outlets,searching for and moving to places of cheaper labor, and secrecy.These two methods,of course,are intertwined,for the wider a firm's market,the more it can spread the costs of innovation, and the more it can afford to spend on research and development. Both these methods require further investment.At a given point of time,a corporation may be earning a high rate of profit because it is onto a good thing,but competition and technological change threaten to wipe out its advantage.It must plough back its profits in order to improve production and expand its scale "merely as a means of self-preservation and under threat of ruin."Thus under capitalism change becomes normal and businessmen can never afford to look upon and treat the existing form of a process as final.The incessant revolu- tions in production and the depreciation of the existing capital this implies spur them on to new methods and new places. International Competition in the Fifties and Sixties This dialectic played an important role in the postwar expansion of American firms in foreign countries.The American giants who were or became multinational possessed numerous advantages in organization, technology,access to capital,and product differentiation.They could supply some of the foreign market through exports,gaining a certain protection for their secrets from the long distance between production and consumption.The recovery of Europe and Japan soon challenged them,and they began to see many foreign firms using their technology and methods,or improving upon them.They could see their own ex- pansion being thwarted by the formation of new capitals in other coun- tries,and they discovered their advantages would be short-lived if they did not undertake foreign investment to preserve them. These firms had three motives for expansion:(1)they saw a rapid growth in the markets for goods in which they specialized;(2)they saw cheaper labor (productivity divided by wage)which made it profitable to produce abroad;and (3)they saw foreign competitors growing faster than themselves and gaining an increased share of the world market. To the individual firm these might appear as separate phenomena,but they are closely connected to each other through the labor market. Europe and Japan emerged from the devastation of the war with con- sumption patterns and expectations well below the American standard. However,their potential productivity was not nearly as far below that of America's,given the work habits and levels of skills of the labor force. A large surplus was available if the labor force could be organized and consumption kept from rising too fast. With American help the threat of a socialist alternative was avoided, This content downloaded from 202.120.14.154 on Mon,04 Jan 2016 03:31:29 UTC All use subject to JSTOR Terms and Conditions96 Stephen Hymer marketing outlets, searching for and moving to places of cheaper labor, and secrecy. These two methods, of course, are intertwined, for the wider a firm's market, the more it can spread the costs of innovation, and the more it can afford to spend on research and development. Both these methods require further investment. At a given point of time, a corporation may be earning a high rate of profit because it is onto a good thing, but competition and technological change threaten to wipe out its advantage. It must plough back its profits in order to improve production and expand its scale "merely as a means of self-preservation and under threat of ruin." Thus under capitalism change becomes normal and businessmen can never afford to look upon and treat the existing form of a process as final. The incessant revolu￾tions in production and the depreciation of the existing capital this implies spur them on to new methods and new places. International Competition in the Fifties and Sixties This dialectic played an important role in the postwar expansion of American firms in foreign countries. The American giants who were or became multinational possessed numerous advantages in organization, technology, access to capital, and product differentiation. They could supply some of the foreign market through exports, gaining a certain protection for their secrets from the long distance between production and consumption. The recovery of Europe and Japan soon challenged them, and they began to see many foreign firms using their technology and methods, or improving upon them. They could see their own ex￾pansion being thwarted by the formation of new capitals in other coun￾tries, and they discovered their advantages would be short-lived if they did not undertake foreign investment to preserve them. These firms had three motives for expansion: (1) they saw a rapid growth in the markets for goods in which they specialized; (2) they saw cheaper labor (productivity divided by wage) which made it profitable to produce abroad; and (3) they saw foreign competitors growing faster than themselves and gaining an increased share of the world market. To the individual firm these might appear as separate phenomena, but they are closely connected to each other through the labor market. Europe and Japan emerged from the devastation of the war with con￾sumption patterns and expectations well below the American standard. However, their potential productivity was not nearly as far below that of America's, given the work habits and levels of skills of the labor force. A large surplus was available if the labor force could be organized and consumption kept from rising too fast. With American help the threat of a socialist alternative was avoided, This content downloaded from 202.120.14.154 on Mon, 04 Jan 2016 03:31:29 UTC All use subject to JSTOR Terms and Conditions