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Issue 50, September 2000

The truth about capitalism

    The growth of inequality
    Winners and losers
    Globalisation past and present
    Seeds of revolt

There has been widespread coverage of the increased poverty and misery in the neo-colonial world; and growing international protests against the power of multinational corporations and world debt. Now, a new book tries to portray globalisation as a progressive force for humanity. PETER TAAFFE examines the arguments.

A Future Perfect - The Challenge and Hidden Promise of Globalisation
By John Micklethwait and Adrian Wooldridge,
Heinemann 2000,
£20 hdbk

SEATTLE, LONDON, WASHINGTON DC, Davos and France, mass demonstrations in the neo-colonial world, and Prague looming on 26 September: world-wide protests against globalisation and the effects of 'savage' capitalism have shaken the confidence of the ideologues of this system in the past year. But they are determined to fight back. This book by two prominent writers of The Economist is a manifestation of this. But the capitalists are seeking shelter under a very leaky umbrella from the recent storms which have battered them (with worse to come). In a ramshackle discourse, without any logical construction, every cliché is dragged in to reinforce the case for globalisation.

John Micklethwait and Adrian Wooldridge fall into the category of super- or hyper-globalisers. Their message is that 'nothing can be done', now or in the future, to prevent the inexorable advance of globalisation. Critics, like William Greider or even the right-wing economist John Gray (who argues that globalisation is 'spreading misery and alienation'), are summarily dismissed. Yet the authors admit: "In many parts of Europe, it is hard to think of an intellectual who might be described as 'pro-globalisation'." Yet they have no doubts as to the benefits to humankind of ruthless, unrestrained, globalised capitalism.


Predictably, Newsweek hailed their work as 'a tremendous book'. It has received favourable reviews from the likes of Hamish McRae, economics correspondent of The Independent, and his colleague Diane Coyle. Yet Michael Prowse, in the Financial Times, surely reflects the opinions of the more discerning capitalist commentators who fear the consequences of accepting unrestrained globalisation as the guiding principle for the 'management' of capitalism. He writes: "The book will provide ideal entertainment for the chief winners from globalisation: the overpaid class the authors call 'cosmocrats'. Investment bankers and chief executives will learn not only that their vast salaries are justified but that they are essential if the world's poorest are to enjoy a bright future". (15 May)

Despite the pretensions of being intellectual heavyweights, Micklethwait and Wooldridge never come to grips with the serious criticisms of global capitalism. They mention the ideas of Karl Marx in the most superficial manner (the dilapidated state of Highgate Cemetery where Marx is buried is evidently sufficient criticism of his ideas). They do not even examine in any serious fashion the ideas of capitalist economists like John Maynard Keynes or Friedrich Hayek, or relate their ideas to the situation confronting world capitalism today.

The detail that the authors provide is in flagrant contradiction to the title of the book. The world they describe, far from being 'perfect', will be a nightmare for future generations on the basis of the trends of world capitalism. Growing world poverty, the AIDS pandemic (which has already claimed over 17 million lives - more than were killed in the first world war), while the pharmaceutical companies in the rich industrialised countries refuse to supply cheap drugs, ever-increasing numbers of people dying through malnutrition and tuberculosis, the horrendous and growing problems of world pollution and massive unplanned urbanisation - all mean that the planet could be virtually uninhabitable within 25 to 50 years. Yet with breathtaking complacency, the authors consider their system, capitalism, to be the best, the fairest, and the most equitable possible, not just now but for the foreseeable future.


top     The growth of inequality

MICKLETHWAIT AND WOOLDRIDGE give numerous facts and figures to show that the system is not working and is, in fact, on the verge of a total breakdown. They point to the massive growth of inequality, "within companies (the average American boss now earns 419 times the salary of the average factory worker), within countries (the richest 2.7 million Americans now earn as much as the poorest 100 million) and even between countries (the per capita income of the richest industrialised country, Switzerland, is now 400 times that of Mozambique)".

Nonetheless, the authors claim that through a slow - if long - evolutionary progress, the masses in the neo-colonial world will gradually climb out of poverty. What is their evidence for this? Fifty million Chinese possess mobile phones! Entirely secondary to Micklethwait and Wooldridge is the fact that there are 1.2 billion people in China, the vast majority of whom have little prospect of ever acquiring a mobile phone or even the basics of a real human existence, particularly on the basis of a return to capitalism. According to recent statistics, the majority of the world's population has never even made a telephone call. The authors cite the fact that in India 19 million poor households own watches and a third have radios! India's population is now over one billion. This flimsy evidence of rising prosperity represents a metaphorical drop in the ocean of deprivation and misery which is India today.


The new technology introduced into these countries is extremely limited and is grafted onto the existing archaic social and economic structures, which are the main barriers to releasing the populations from the cycle of deprivation and poverty which they now experience. It will get worse under the system which Micklethwait and Wooldridge defend. There is not the slightest recognition of the 'killer facts', in the figurative and literal senses of the term, highlighted in the United Nations Human Development Report published in June. This showed that the number of people living on less than $1 a day has grown by 20% to 1.2 billion since 1995. The World Bank admits that the numbers will not fall in the next eight years 'unless something is done'. Very little will be done on the basis of capitalism.

All exhortations to increase aid programmes, which have been slashed in the past period, amount to a wringing of hands by the defenders of the rich in the UN, World Bank, International Monetary Fund and other agencies. It's like using a thimble to empty an ocean. One hundred and twenty-five million children have not seen the inside of a classroom. This year, 1,700,000 children will die needlessly because of the poverty engendered by globalised capitalism. Four billion of the six billion people on the planet live on $5 or less a day. Even the more 'favoured' nations in the neo-colonial world have had their dream of catching up with the industrialised world shattered by the economic crises in Asia in 1997 and Latin America in 1999. The authors are compelled to admit: "It hardly looks like a triumph of free markets when the Indonesian government tells its people to fast for two days a week to save food and when Russian soldiers and pensioners are obliged to dig for potatoes".


Notwithstanding all of this, the engine of world capitalism is going to overcome these 'temporary difficulties' and unleash a future of undiminished prosperity, which will be 'perfect'. As defenders of capitalism, the authors are incapable of recognising the huge cost of the capitalist ownership of the means of production, distribution and exchange by a handful of monopoly owners and the impediment of the nation state (which they realise will continue to exist for the foreseeable future).

top     Winners and losers

AN AVALANCHE OF statistics reveals the greatest polarisation of wealth in history. Micklethwait and Wooldridge can hardly ignore that this is helping to shape a consciousness which will have colossal consequences for capitalism in the period we are entering. The dispossessed can see the massive disparity between the rich and the poor, both in the neo-colonial world and in the advanced industrial countries. One of the consequences of new technology, particularly modern mass communications, is that the peasant in India and the starving masses in Africa no longer compare their lot to those in neighbouring villages or countries. Through television and radio they see and hear of the obscene piling-up of wealth in the industrialised world. Three men have as much wealth as the poorest nations in the underdeveloped world with a combined population of 600 million. The authors even quote from a headline in The Guardian in Britain: "What is the difference between Tanzania and Goldman Sachs? One is an African country that makes $2.2 billion a year and shares it among 25 million people. The other is an investment bank that makes $2.6 billion and shares it between 161 people". They quote the words of 'reliable prophet', Peter Drucker, who chastises modern bosses because they cannot "even imagine the hatred, contempt and fury that has been created".


This fury is not passive. It is impossible, because of modern communications and transport, to build a wall around the 'rich' countries and keep the poor clamouring outside the gate. No Fortress Europe or Fortress USA will stop a massive influx of the dispossessed seeking salvation from the growing miseries of life in Africa, Asia and Latin America. Despite their occasional hand wringing for the 'poor', this is of little concern to Micklethwait and Wooldridge. Callously, they claim there will be more 'winners' than 'losers'. Even if this was the case it would still leave a vast army of 'losers' who would revolt against this system.

One has only to compare the situation from 1950 to 1975, the so-called 'golden age' of world capitalism, to see the fundamentally changed situation today. At that time there was a broad-based development of the productive forces in the advanced industrial countries. Not only was there a development of science, and the organisation of labour and technique, there was also a substantial rise in the living standards of the majority of the population. This was the case even for significant layers in the neo-colonial world. Now Africa's average GDP is lower than in 1900, while Asia's dream of 'Western living standards' has been shattered. The masses in the former Soviet Union are increasingly reduced to the level of some of the most deprived countries in the neo-colonial world, with bloodsucking gangster capitalism on their backs.

For Micklethwait and Wooldridge, however, what stands out is that globalisation has created a new ruling class, the so-called 'cosmocrats'. They are called this because they are cosmopolitan, happy in any country and with any culture. They are allegedly a new 'meritorious' elite that reigns supreme in the new borderless world, the new aristocracy. These colossi bestride the world - one airline boss even designing his own 'drawing room' to resemble the front of a Boeing 747 to make himself feel more at home! Marx, quoting Thomas Carlyle in the Communist Manifesto, says that capitalism tends to reduce all human relations to the 'cash nexus'. Yet, this has been taken to unheard of and obscene levels by modern capitalism. This is illustrated by the way the authors deal with the so-called 'sex industry' - as others have dealt with the 'drugs industry' - as if it is normal human activity and not an expression of a society in economic and moral decay.


top     Globalisation past and present

ON THE ECONOMIC front, the authors cannot find one new argument to convince us that globalisation in its present form is here to stay or that it is the best way of ensuring 'the greater good' for the majority of humankind. They claim that nobody has accurately described globalisation. Yet for us this term is neutral and anodyne unless it is linked to the kind of economic and class system which predominates today. What we face is global capitalism. The authors are correct in pointing out that, in a sense, this is nothing new. Marx, as many capitalist commentators have indicated recently, drew attention to the development of the international division of labour through the world market and its tendency to eradicate barriers to the growth of the productive forces. Marx also described the development of the nation state, which the authors quite correctly say has not been overcome by the development of the multinational corporations or, as they are described more often now, 'transnationals'.

One of the factors in the structural boom of 1950-75 was the lowering of tariff barriers. Globalisation represents a further extension of this, together with developments in television, the telephone, modern means of communication, and computers, over the last 25 years. Micklethwait and Wooldridge together with the majority of other commentators exaggerate the role of new technology in the development of the 1990s boom. Socialism Today has pointed out consistently that the application of this technology has been intensive in a number of fields, notably telecommunications, office work and a number of other areas. But it has not been on the scale of the extensive development of technology in the latter part of the 19th and the beginning of the 20th centuries, with the telephone, motor car and electric power, all deployed on a huge scale.


Claims that globalisation represents a substantial increase in the productivity of labour in the USA and that it is the building block for a new 'industrial revolution', are not proven. Indeed, many recent reports demonstrate that a 'third industrial revolution' is not taking place. Robert Gordon, Professor of Economics at Northwestern University, recently wrote in the Financial Times that productivity for 88% of the economy outside of the durable goods sector increased by "only 0.07 per cent - a mere pittance". (26 July) The alleged productivity revolution and the internet have brought mixed blessings for the bosses. They have discovered that "traffic on consumer-oriented websites peaks during the day, confirming that people are surfing the net when they should be working". (The Guardian, 3 July)

The authors state that there is far more trade in services today than there was a century ago, far more trade amongst the multinational companies, and a far more wide-ranging capital market. Nevertheless, in the period leading up to 1914, there was a high degree of integration, with a substantial movement of capital and transfer of profits, which went largely unhampered. In that period, moreover, governments exercised little influence over the distribution of wealth, and the Gold Standard provided the industrial world and much of the 'developing' world with a 'friction-free' means of exchange. Micklethwait and Wooldridge point out that by 1913 the total stock of long-term foreign investment had reached $44 billion and nearly 60% of securities traded in London were foreign ones. One of the differences between the earlier period of 'globalisation' and the present phase is that then there was relatively free movement of peoples, whereas in the present era there is no 'free movement of labour'.


top     Seeds of revolt

THE MOST ASTOUNDINGLY false claim made in this book is that deregulation and neo-liberalism, inherent features of global capitalism, have not worsened the conditions of the working class globally. It seems that 'real jobs' have not been destroyed to be replaced by 'McJobs' paying lower wages. The authors produce no facts and figures, however, to contradict the claim made in Greider's book, One World Ready or Not. Greider showed conclusively that massive deindustrialisation has taken place, above all in Britain and the USA, but in other industrialised countries as well. This has led to the replacement of high-paid manufacturing jobs with lower-paid jobs in the privatised service sector. This has meant that people work longer hours, under worse working conditions, and have to hold down multiple jobs.

Regardless of the contentions of Micklethwait and Wooldridge, this has been the everyday experience of the mass of working people in Britain, and even more so in the USA. The hired managerial 'class' of the cosmocrats is also wilting under the onslaught of global capitalism and its tendency to convert us all into helots - work slaves. According to the Financial Times, British bosses are now 'the most overworked' in Europe. Some of them are in revolt against the rootless and often sleepless existence which goes together with being a 'general' or, at least, an officer in the army of the cosmocrats. It is a price that many are no longer prepared to pay.


The major criticism of this book by the more serious capitalist commentators is that Micklethwait and Wooldridge do not see the recoil that will take place against globalisation, the signs of which are evident in the present protests. It can assume hurricane proportions, and will be particularly the case as a result of the coming recession or slump in world capitalism.

Keynes is implicitly criticised because he sinned against the concept of untrammelled, uncontrolled capitalism when he advocated a 'protective policy' for Britain in the 1920s. Yet Keynes had been just as keen an advocate of 'globalisation' prior to the first world war as the authors of this book are today. But a new situation forced him to alter his policy: 'When conditions change, I change. What do you do?' In the same way, Mahathir Mohamad, the prime minister of Malaysia, resorted to temporary capital and currency controls because of the dire threat to Malaysia's capitalist economy and society from global finance capital in particular. His ideas are dismissed as 'poppycock'. The controls were eased when the danger passed. This is a foretaste of what could happen on a huge scale in the aftermath of a serious economic crisis.

It can be taken for granted that the pro-capitalist authors of this book are incapable of sympathising with the victims of their system. But there is no inkling on their part of the major problems that will confront world capitalism in the not-too-distant future. Globalisation is presented as a seamless whole that will lead humanity up a golden staircase to a perfect future. In fact, it already means hell, suffering and misery to substantial sections of humankind. The number of victims, moreover, will grow unless it is checked and eventually overthrown.


Ideologically, Micklethwait and Wooldridge represent the class whose stewardship of the world is patently failing. In examining the events in Seattle and elsewhere they dimly understand that the seeds of a mass revolt are brewing against their system. But their attempt to stem the tide is the equivalent of those reactionary writers in Britain, such as Edmund Burke, who inveighed against the French revolution in the 18th century for fear of its contagious effects on the working class in Britain. In vain! The life experiences of millions of working people and peasants are bringing them into conflict with the realities of global capitalism. The only perfect future for the vast majority of this planet would be if the colossal potential built up by the labour of working people was freed from the shackles of private ownership and the nation state. Then a new world could be created through a harmonious, democratic, socialist planned economy.

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