William Greider addresses the most important issue concerning America's economic future: the globalization of the economy and it's implications. In the new world order, capital is in limited supply but labor is in overabundance. As would be expected in a laizze faire economy, the cost of labor will remain depressed in the industrialized world.
In the developing nations across Asia and Latin America, the factory workers simply don't have the purchasing power to buy the products they are manufacturing. Since Japan has never matured into a consumer based society, developing nations especially China will add to the global oversupply of labor and production.
While few mainstream economists predicted the recent economic collapse of the 11th largest economy (ie. South Korea), William Greider's prediction of global economic chaos and collapse can no longer be ignored. "One World, Ready or Not" should be heeded by Washington policymakers mesmerized by the exuberance of the stock market.
The section about the negative impact of free trade zones on the poor people who work in them is very telling. (For a more comprehensive look at the exploitation of third world workers see Naomi Klein's excellent No Logo, which is a good companion text to this). It is something that has troubled me since I saw a large group of peasant girls lining up at the gates of a textile factory in Cambodia, they looked like they were twelve, it was very Dickensian. The fact that they make around $20 a month for shoes that cost over $100, is absurd to me. I'd like to present some of the suggestions he has for reforming the global economic system, which has been spiraling out of control. All of them seem quite reasonable to me.
1. Tax capital instead of labor.
2. Reform the terms of trade to ensue more balanced flows of commerce, compelling export nations to become larger consumers of the global production.
3. Bring the bottom up-raising wages on the low end as rapidly as possible-by requiring trading nations to honor labor rights.
4. Forgive the debtor-that is, initiate a general write-off of bad debts accumulated by poorer nations.
5. Reform the objectives of central banks so they will support a pro- growth regime instead of thwarting it.
6. Refocus national economic agendas on the priority of work and wages rather than trade or multinational competitiveness, as the defining issue for domestic prosperity.
As Greider mentions, none of the propositions I have suggested is especially radical or even new in historical terms, since they all have been actively employed at one time or another. Nonetheless, I don't really expect to see any of these reforms adopted given the fact that there's no real economic motivation to do so. The problem as Greider states it, is that there is no governing body with the best interests of workers overseeing economic policies. As a result the gap between the haves and have-nots will continue to extend. All in all, a very thought provoking look at global economics.
His evidence is at best, anecdotal. At worst it is from questionable or unnamed sources. Discussion of the free market concepts he opposes is almost totally lacking. The author claims that free market economics is unscientific and derides it as 'dogma' and 'a value laden form of prophecy' (p48). But, he tells his audience little about these supposedly false ideas. In fact, he admits (p53) that he does not argue much with this 'dogma'. So he admits to evading a serious discussion of the concepts he slanders.
He speaks in terms of absurdly simplistic supply and demand type reasoning, and mentions arbitrage, but he ignores the real issues that pertain to his subject matter. His chapter on wages and work ignores the issue of labor productivity- he barely mentions it (p67+76). The economic arguments that he dismisses hinge on marginal productivity, but it is not clear that knows anything about this supposed dogma. Instead, he focuses on income distribution between capital and labor. He sees international competition in labor markets as benefiting capital- consumers seem not to benefit from this at all. Later in this book (p122), he stumbles into the notion that competition benefits consumers, but fails to realize that he has damaged his own argument.
Greider claims that the most successful Asian economies rejected Laissez Faire and free markets (p87). But, the most successful postwar Asian economies (including Japan) have some of the freest markets. They have some governmental intervention, but far less than other nations. This is not Laissez Faire in the strictest sense, but who would deny that Hong Kong has a high degree of Laissez Faire? Successful Asian nations developed after considerable (not complete) privatization and deregulation.
He writes that the general claim by economists that free trade benefits people generally and causes only temporary and narrowly focused dislocation (p73) is wrong. His condemnation of trade theory is strong, yet he fails to demonstrate an understanding of important concepts, like the principle of comparative advantage. If he wants to engage in idle conjecture that is fine. But if he is going to claim that the experts are generally wrong, he could at least demonstrate a basic understanding of what the experts actually say.
Greider is fond of labor unions. He employs a simplistic high wages=prosperity argument to argue that labor competition benefits capital only and is per see bad for workers (p59). Efforts to restrict competition do raise wages for some workers. It also renders other workers unemployable (productivity matters) Greider provides an example of this principle in action with his Thailand example of job losses following higher minimum wages (p 70). This contradicts his dismissal of economic theory. Greider also writes much about things like social cohesion, shared responsibility, and collective identity. These are catchy phases, but indicate little more than his own dissatisfaction with current trends. He claims that people are helpless in the face of global capitalism, but voluntary consumer spending drives it. There is 'someone' at the wheel of global capitalism- global consumers.
Greider also has nice things to say about Veblen and Keynes (p51-2). In Veblen's case, there is some reason to show some admiration. Veblen was an interesting, though mistaken thinker. Keynes is a different matter. Greider tries to substitute discredited Keynesian ideas regarding overproduction for sound economic theory. He explains neither theory, provides no relevant evidence, and instead assumes the superiority of the demand-side economics of Keynes. This is mere conjecture rather than argument.
Greider complains that America is the worlds 'buyer of last resort' that absorbs surplus production. We supposedly buy imported VCR's, TV's, cars, beer, and clothing not because we derive consumer satisfaction from these goods. We are desperately trying to prop up global Capitalism by spending beyond our means! This, of course, is doomed to failure because we cannot accumulate debt forever. So he accepts Keynesian theory, which promotes deficit spending, but complains about he practice of deficit spending.
Greider admires Keynes' optimism about the supposed possibility of abundance (p440). Once having solved the economic problem, we can 'become social beings on a larger scale, discarding barbarism' and so on. Instead of private property in capital, we should have universal capital ownership- in other words, socialism. Greider dodges all the economic objections concerning socialism, all the incentive and knowledge problems. Instead he whines about how Capitalism induces 'infantile responses'- the pursuit of self interest and evasion of responsibility for collateral consequences of actions. This all reveals that Greider is merely a utopian dreamer. Limited life spans and physical resources put abundance permanently out of reach. Self interest is a part of human nature. As for evading responsibility, that is what socialism does. It socializes costs. Property rights enforcement under Capitalism forces people to bear responsibility for their actions. Some try to avoid this, but that is a violation of Capitalist ethics, not a consequence of them.
Perhaps his most obvious error is in blaming industrial capitalism for the rise of Nazism (p38). Everybody knows that the treaty of Versailles and hyperinflation wrecked German economy and led to Hitler's rise to power- everybody but Greider.
Grieder derides professional opinion rather than criticizing it. Of course, there is no reason why amateurs cannot criticize professional opinion. But Greider does not do this. He offers conjecture, derision, and utopian fantasies, but no substantive analysis. This book should not be taken seriously.