5 - International Cartels in Business History (co-authored with Hara Terushi)

Summary

INTRODUCTION

THIS CHAPTER EXAMINES the evolution of international cartels by focusing on the process of organization as well as rationalization of manufacture and sales in corporations in different countries through the international cooperation and competition that took place. As a definition of cartels we propose the following: “Cartels have been defined as voluntary agreements among independent enterprises in a single industry or closely related industries with the purpose of exercising a monopolistic control of the market.” The United Nations, Department of Economic Affairs, gives the following definition of international cartels: “International cartels are of the same nature and serve essentially the same purpose [as national cartels], with the qualification that the contracting parties are located in two or more countries and may be either single firms or groups of firms already combined into national cartels.”

Within international cartels, there are both raw materials cartels and manufactured goods cartels. An examination of manufactured goods cartels or, more precisely, industrial cartels is undertaken because raw materials cartels are in many cases affected by the geographical, political, and diplomatic factors of the countries where the raw materials are produced. In contrast, manufactured goods cartels are more strongly influenced by operational factors, such as production technology and terms of sale. Therefore, manufactured goods cartels prove more suitable for a historical analysis of the management of international cartels.

We have limited ourselves to international cartels from the inter-war period, the 1920s and 1930s, because it is within the process of economic reconstruction after the First World War, in the 1920s, that the full-scale establishment of international cartels can first be observed. Moreover, this was the period when the world economy began to be reorganized through competition and cooperation on an international level. One of the factors behind the emergence of the international cartels was the imbalance that arose between production and consumption. This was due to the accumulation of surplus production power exceeding demand, caused by the construction or enlargement of production facilities to meet the urgent demand that arose during the war. The international nitrogen and dyestuffs cartels are two examples of cartels that arose in this way.