By PATRICK MAZZA
One World, Ready or Not: The Manic Logic of Global Capitalism
By William Greider
Simon & Schuster
503 pages. $27.50
If Bill Greider is on the mark, batten down the hatches and prepare for a big blow. Because today's rapidly globalizing economy looks a whole lot like the economy of the 1920s, an uneven boom that ultimately led to depression and war.
In all industries, a glut of productive capacity is chasing a dearth of buyers, Greider writes in this new book of truly worldwide scope. The better-paid workers who might have been able to buy the growing torrent of goods have been displaced by technological innovation and globalization. To make it in this tight market, industry is driven to cut costs even further. That means automation and building new factories in low-wage countries. So the overcapacity problem becomes even worse while the pool of well-paid consumers is reduced still more. That sets up a deflationary cycle which is the classic prelude to depressions.
In this environment, capital cannot find sufficient productive investments. Looking for a place to go, it is fueling a speculative boom in stocks and other financial instruments increasingly unrelated to the everyday state of commerce. This repeats many former instances in history such as the 1920s when finance dramatically diverged from economic reality, only to be snapped back by a capital-destroying depression.
"The footrace with history is about whether modern societies can act intelligently on these large matters without the presence of visible catastrophe," Greider writes. "Put another way, is contemporary capitalism capable of learning from its own past excesses or must it repeat the bloody errors of the twentieth century?"
Greider looks at today's "revolution of free-running capital" building global-scale corporations, and sees a parallel in an earlier time -- the late 19th century. Then, a technological revolution in oil, chemicals and steel generated national-scale industries which overwhelmed local companies and economies. Today a microchip-driven economic transformation is impelling corporations from East Asia, North America and Western Europe to form worldwide alliances of unprecedented scope and scale. Greider sees these as latter-day versions of the trusts and cartels that arose in the last century.
Today's "revolution" resembles the earlier one in another key aspect, Greider notes. It signifies a return to the rawness and barbarities of unreconstructed 19th century capitalism. Then the brutalities of the unregulated "free market" fueled vast social struggles which continued well into the 20th century. The result was a series of social reforms in the US and Europe which softened capitalism's harsher edges. Unfortunately, notes Greider, those reforms are now being undermined by the new global revolution. He would reverse that trend to replicate those reforms on a global scale, creating a kind of regulated global capitalism.
Greider's book is both a report from key sites in the world economy -- places like Germany and Poland, China and Indonesia -- and an attack on the "free market" economics that has become a virtual religion among global elites. It is a skillfully crafted argument for intelligent intervention in the global economy along lines that produced the successful mixed economies the industrial world enjoyed from the 1950s to the early '70s.
The Rolling Stone political editor dares to espouse currently unfashionable ideas such as global Keynesianism to pump up demand, restoration of national controls over capital flow, tariffs against nations that employ predatory trade practices, a tax shift from labor to wealth, and cancellation of third world debt.
The book is not an all-out attack on globalization. In fact, Greider sees the process unintentionally yielding some socially just outcomes. A number of formerly poor countries are becoming contenders in an industrial system once completely dominated by the wealthy north. Before this spread of competence in production must inevitably fall notions of national, racial and cultural superiority, he asserts.
If people in the rich countries are capable of seeing it, the author says, this global shift also offers an unprecedented opportunity to meld personal and national self-interest with the good of all humanity. For workers in the wealthier nations must either help their poorer brethren in the third world -- bring up the bottom -- or be pulled inexorably downward by an ocean of impoverished workers desperate for jobs at any wage.
Greider advocates some form of global minimum wage adjusted to local conditions, as well as the right of labor to freely organize. He tells of visiting a Chinese aviation factory, a Boeing subcontractor. The American aircraft manufacturer's on-site representative tells Greider of improvements in labor practices -- the state-owned Chinese company no longer shoots workers for shoddy performance, just deducts it from their wages. Ironically, the Chinese "dictatorship of the proletariat" has become a crew boss offering a cheap, compliant workforce to global corporations.
Though Greider reports from a post-Cold War world where capitalism is apparently triumphant, it is a victory leavened with ironies. While Chinese communism has become the a perverse shadow of its ideal, and Eastern European socialism has collapsed, "the ghost of Marx hovers over the human landscape, perhaps with a knowing smile," Greider writes.
"The gross conditions that inspired Karl Marx's original critique of capitalism in the nineteenth century are present and flourishing again. The world has reached not only the end of ideology, but also the beginnings of the next great conflict over the nature of capitalism. The fundamental struggle, then as now, is between capital and labor."
Globalization tilts the playing field sharply in capital's favor, as Greider reports. He visits the frontlines of labor struggle in Indonesia, where labor organizers are commonly imprisoned and tortured. The conundrum, he notes, is that if labor becomes too successful in places like Indonesia, there is always another rung down the ladder, particularly China.
But capital and corporations do not quite rule the game either. "In a world of glutted markets, the leverage naturally shifts from producers to buyers," Greider writes. Hence, to gain sales, companies such as Boeing are forced to relocate production facilities to buyer countries. In the process they are creating their own future competitors, who will cram even more goods into tight markets, more of the "manic logic" of globalization.
Only one factor is keeping the system afloat, the author says -- the willingness of the United States, far more than Europe or Japan, to run trade deficits and absorb excess production. But the US has been doing that on its national credit card, and a fateful point was reached in 1993. Then, for the first time in a century, foreigners began to earn more from their investments in the US than Americans made from theirs overseas.
The US world debt by 1994 equaled 9 percent of its annual economic production. By 2010, that is expected to reach 40 percent. At some point, the system must crack. The world will cancel the American credit card, the US will no longer be able to soak up surpluses and the depression Greider anticipates will be upon us.
Probably only in the context of such a cataclysm will the kind of solutions Greider advocates have a chance. The defenders of the existing order are too entrenched to be easily dislodged. Greider himself notes, "any who question the reigning mantra of economic orthodoxy will be harshly disciplined by the press and multinational interests." (Stinging reviews of his book by mainstream publications confirm his observation.)
He writes, "I think there will be more pain, more destabilizing disruptions and loss, before people find the courage to rebel and take control of their destinies."
Greider sees sources of that rebellion in "a new ideology struggling to be born ... One cannot properly call it socialism, though this new understanding shares many of socialism's original ideals." He cites four key sources of this new worldview: environmental ethics, feminism -- representing the most exploited class in the global industrial system, organized labor and the world's great religions. But each has its own obstacles to overcome, Greider writes -- environmentalism its narrowness, labor its parochialism, religion its tribalism and feminism its class divisions. His hope is that these strands woven together can wrap the market in democracy and humanize global capitalism.
Of course, deepening economic troubles could spur another kind of popular response, a narrow nationalism that tends to the right. This, says Greider, is a clear and present danger.
The author's policy prescriptions are generally not radical, and he acknowledges this. But in two areas he leaps onto more visionary turf as he poses potential solutions for global capitalism's deepest crisis, moral legitimacy.
The first area is the social side of that crisis: Capitalism is a system where most people have little or no control over the means of their livelihood. They are at the mercy of the owners of capital. To remedy this Greider proposes a vast spread in worker ownership of companies. He cites successful models from the United States to Poland to Russia, which now has the world's highest level of worker ownership.
The major obstacle is that workers lack capital to buy their workplaces, and banks are little inclined to lend it. Greider asks that we consider the ideas of economist Louis Kelso, who suggested the money-creating powers of the Federal Reserve generate a capital pool for worker buyouts. (Currently the Fed each year distributes $30-40 billion in new money through the commercial banking system.) Workers could repay the loans with proceeds from the enterprise, a common practice for anyone who buys a business on credit.
The second crisis of legitimacy is environmental. The conventional faith of officials and managers is that market adjustments and technology will solve environmental problems. "My own conviction," writes Greider, "reinforced by glimpsing the scope and scale of global industrialization, is that a far more profound crisis is at hand."
That crisis, he says, roots in the nature of capitalism itself -- its drive to cut costs off by throwing them off onto someone else. Nature has born the brunt. A revolution in production is needed, Greider says, one in which a second half of the economy is built. That half would disassemble discarded products and use them as raw material for new ones. He cites the work of Herman Daly and others who have proposed fully incorporating environmental costs into pricing, using "Green taxes" as one tool to accomplish this. Taking full account of the value of "natural capital," the system will be driven toward environmental economics, Daly believes.
Confronting the "revolution of free-running capital," Greider is an unabashed reformer, a kind of global New Dealer who aims to save capitalism from itself. His proposed solutions will not satisfy those who seek a deeper social transformation. They are far more limited than those proposed in books such as David Korten's When Corporations Rule the World, or the anthology edited by Jerry Mander and Edward Goldsmith, The Case Against the Global Economy, and for a Turn Toward the Local. In particular, economic re-localization and community-based economics are not on Greider's menu of options.
At the same time, Greider has an excellent sense of the "manic logic" of the current system. His overall analysis of its self-destructive trajectory seems dead on. Those who work for profound social change would do well to factor in a strong likelihood of economic cataclysm in coming years, with the political openings it could bring. If the most that could be accomplished in such as context was Greider's global New Deal, it would be no mean feat. But perhaps the conjunction of social, economic and environmental crises on a planetary scale could yield more fundamental transformation.
At any rate, Greider's entrancing reporting and spanning vista of the new global economy merit his work a place on the rapidly growing shelf of books about globalization, its consequences and what we might do about it.
Patrick Mazza is a Portland, Ore.-based ecological journalist who edits Cascadia Planet, a Northwest bioregional website at <www.tnews.com>. He is also co-chair of the Association of State Green Parties.