Following up on the last post, I'm posting a
cool piece Robert Reich wrote on his blog:
Comparative advantage is nice in theory, but in a world where powerful global corporations are using every strategy imaginable to maximize their profits and powerful governments are strategically employing market access to develop their economies, it’s just theory.
Economics writers like those affiliated with Forbes Magazine surely are sophisticated enough to know this as well. So why are they so eager to trot out such economic nonsense?
Perhaps because so much profit is at stake that those who pay their salaries – and who have also put many academic economists on retainers – prefer that they mislead the public with simplistic economic theory that appears to justify these profits rather than to tell the truth.
and
Many of the world’s most successful economies – among them, China and Singapore – owe their successes in part to their conditioning market access on certain kinds of jobs and investments, including research and development. That’s the way they have come to use global corporations, rather than be used by them.
In other words: resist corporate control by restricting corporate access. That's the NO711 program in a nutshell. He's thinking of restrictions from above. We're thinking of it from the local level.
With all due respect to Robert Reich I'm not convinced that China and Singapore offer a strategic model for other poor nations to follow. Capital is dependent on China (a nation that managed to stay outside the Bretton Woods austerity model of the last 30 years) in ways that do not hold for other counties. Singapore is a city-state that has been able to exploit its historical position of a crossroads of trade in SE Asia. Most nations do not have the power to impose regulations without risking the devastating consequences of capital flight. This is precisely why the Global Justice movement targeted reform at the level of the IMF, World Bank, and WTO. Change the rules is one country and capital leaves. Change the structure of the global market as a whole and capital will no longer have an exit card to play.
ReplyDeleteI guess the good news for No 7-Eleven is that the global free market undercuts the power of states everywhere. Power devolves upwards to transnational actors and downwards toward localities. The classic case is devolution in the UK, where power has shifted upwards toward the EU and downwards toward Scotland and Wales. It could be that a loss of regulatory power at the national level may be offset in some limited way by new power at the local level -- at the level of community boards as No 7-Eleven seeks. Certainly there's some precedent for it given numerous community campaigns against big box stores in recent years. Hopefully local struggles like No 7-Eleven will help form the basis of a broader agenda for change.
I think you're right -- Reich is defending his narrower argument about access to the US, so the analogies are not to developing nations.
ReplyDeleteGlobal capital is double-edged: rapacity both develops and controls. The world grows towards development while capital gains control -- TPP is an example in point.
Political structures make a difference as well. At the most local level, administrators in China often will capitulate to local protesters instantly rather than be criticised from their bosses as having created trouble down below. Those stories are necessarily kept hidden and so don't get broadcast to the West.
A member of Alt Bank, Occupy's financial think tank, presented recently on local credit forms -- local money for local economies. The idea is still half-baked, but it's a strategy to consider for a future.
I'm puzzled by the phrase "the Bretton Woods austerity model of the last 30 years" since Bretton Woods was abandoned forty years ago, and while it had austerity elements, it seems more like a paternalistic balance model, falling apart because dad turned out to be a dead beat in some ways. Do you mean that dollar hegemony and IMF and WTO austerity are artifacts of Bretton Woods? Could you elaborate?
hollander.rob@gmail.com
Thanks for your response. I can see why "Bretton Woods austerity model for the last 30 years" needs some clarification. Yes, the Bretton Woods model generally refers to the initial period that came to an end in the myriad of crises of the 1970s. And I agree the initial postwar arrangement was definitely paternalistic in character. What I was trying to get at is that there was a new project after 1980 that the BWI's were at the center of. The new project was constructing a global free market and finding a governance model for that new arrangement. At the center of the new project (call it neoliberal globalization) was a rolling back of the state through austerity measures by applying the toolkit of structural adjustment. I hope that makes more sense than the original way I put it.
ReplyDeleteThanks for depuzzling me. Makes perfect sense.
ReplyDelete