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Global Capitalism: Three Converts to Anti-Globalization

"In the global age, radical criticism has become an esoteric function.. Individuals have long been degraded into mere market subjects.. Whoever only knows customers and not individuals ignors institutions and collective actors." In this essay translated from the German in "Merkur", the criticisms of George Soros, Joseph Stiglitz and John Gray are explored.
Global Capitalism. A Little Journey through Recent Literature

By Jurgen Mackert

[This article is translated from the German in: Merkur 57, Sept/Oct 2003. Jurgen Mackert, 1962, is a sociologist at Humboldt University in Berlin.]

The spirits are divided about capitalism. This was always true. Since the "most fateful power of our life" (Max Weber) made its triumphal advance in the 16th century, unconditional defenders and burning opponents have accompanied the development and metamorphoses of the capitalist economic system in defense or opposition. To liberals, capitalism is a complex economic system that trusts the "invisible hand" (Adam Smith) on the foundation of legally secured private ownership of the means of production. The free play of supply and demand should produce a self-regulating system leading to the most optimal results.

The Marxist tradition also understands capitalism as a delicate socioeconomic system and as a class society endemically laden with conflicts. The bourgeoisie owning the means of production buy laborers and control economic transactions and production processes while the "twice-free paid laborer" can only bring his labor power to the market. Driven by profit mongering, the bourgeoisie withdraw from the proletariat the surplus value produced by the proletariat, exploiting and robbing them of the fruits of their work.

These opposite perspectives on capitalism inevitably lead to entirely different assessments of the advantages and disadvantages in this economic- and social system. Vast prosperity for the widest sectors of the population, enormous productivity, the highest efficiency, impressive effectiveness, permanent technological innovation, "creative destruction" (Schumpeter), rational organizations and legally secured calculable transactions are advanced on the liberal side. Vast exploitation, poverty, impoverishment, growing social inequality, a merciless Darwinian struggle for survival on anarchist markets and the pitiless capitalist machinery subsuming the individual under the needs of capital are emphasized by (Marxist) critics.

While capitalism has changed greatly in the centuries of its enforcement, the basic model of the argument - unreserved support here and uncompromising rejection there - has remained the same. Thus Peter L. Berger at the end of the eighties went to battle
for a capitalism whose priorities and achievements were summarized in fifty principles connecting capitalism, prosperity, equality and freedom. The German challenge must be a post-socialist breach of a taboo. Beyond the idealized romanticism of an inefficient economic system obsessed with planning and oriented backwards, Berger listed all those who still mourn command socialism and the civilizing benefits of unrivaled capitalism with its enormous affluence machinery. Who would seriously doubt today that the post-socialist societies of the former eastern block could raise the living standards of their citizens and build democratic structures with their joyful turn to capitalism? The hardships of the past years are not ignored. One only needs to go east to understand what it means to be cut off from the development and the chance for wealth and prosperity possible through capitalism. This accomplishment should be acknowledged.

Fifty theses on the "capitalist revolution" are not paltry. Still everything is not as positive and convincing as it first sounds. The thesis "Industrial capitalism created the greatest production capacity in the history of humanity" may be correct but not the following thesis: "The new style of industrial capitalism brought and still brings the highest living standard in history to the broadest sectors of the population." Where and for whom was this thesis true? For whom were or are the promises never reality? The thesis for the legitimation of capitalism could also be accepted: "Capitalism depends on the legitimating effect of its benefits and products or on indirect legitimation through association with other non-economic legitimating symbols." This is not much as a basis of legitimation. Capitalism cannot supply meaning. The old discussion of legitimation problems in late capitalism or crisis rhetoric and the supposed collapse dynamic need not be revived to doubt whether global capitalism actually produces meaning through constantly increased goods production alone to gain the support of the global market citizen in times of crisis.

No book is a clearer counter pole to Berger's justification of capitalism than the Schwartzbuch Kapitalismus. Robert Kurz meticulously lists and analyzes all the cruelties inflicted on people since his childhood days. While Berger praises the horn of plenty of capitalism, prosperity, freedom and possibilities of social ascent, the Kurz-history of misery, poverty, totalitarian leisure capitalism and totalitarian democracy seems to probe a completely different social system. This inconsistency seems to be a constant in the analysis of capitalism.

Kurz' detailed epic attempts to unmask belief in the free market as an ideology and illusion from a Marxist perspective. The poverty of theory of many debates about old, new, informational, international, global or some other capitalism may be criticized. However the question presses after nearly a thousand pages, who in the time of obligatory capital courses at German universities are still tormented by the Marxist fetishes of goods, money and capital to speak seriously about the deep structure and surface phenomena of capitalism. The listing of the crimes of capitalism on humanity is cheap because some of the advantages cited in Berger's theses should have penetrated the harshest critics of capitalism. Capitalism is not responsible in everything that goes wrong and provokes indignation in this world.

From Capitalism to the Relation of State and Market

What serves as a backdrop in Schwartzbuch Kapitalismus for describing these monstrosities is the theme of an informative social-historical book "State or Market" by Daniel Yergin and Joseph Stanislaw: the relation of state and market and the transition from the old familiar international capitalism to global capitalism. While the former was state-centered and national capitalists were active across borders in national businesses withy competing economies, the global economy is dominated by global corporations and those who own, control and support them. At the end of the 20th century, capitalism adjusted to a new historical situation. If protecting citizens from the worst effects of the capitalist economic system and assuring claims guaranteed through social rights were central in past decades, the protection of business interests, market flexibility, efficiency, competitiveness, the highest prosperity, the greatest growth rates, development of new technologies and renewed enforcement of an economic laissez-faire model are now emphasized.

Commanding Heights - the original title of the book - reveals the authors' intention. The problem of a shift of the relative strengths between state and market on the commanding heights of the world economy was crucial to them. On 500 pages the book offers well-grounded information on the metamorphoses of capitalism from 1945 to today: from the genesis of Europe's mixed economy and the rise of Keynesianism, the strong role of the state, Hayek's and Friedman's economic ideas and the conservative revolutions of Thatcherism and Reaganomics to the dissolution of international capitalism by global capitalism. In addition there are country studies of Great Britain from the late seventies to the post-communist world of the nineties that describe these fundamental transformations of the capitalist economic system and their political conflicts and social effects. Finally, problems of an economically, politically, and culturally interwoven world are analyzed at the end.

The question is raised whether the change to the commanding heights will be a permanent chance or whether a return to a greater role and more responsibility of the state will occur. Unlike Berger's modest idea of a legitimation of capitalism through goods production alone, Yergin and Stanislaw formulate other criteria that the market system must fulfill for long-term legitimation. A fair and just system is sought here alongside provision of goods and services, a system that preserves national identities and doesn't only implement one form of capitalism, an economically sustainable system that preserves the environment, a system capable of meeting the demographic trends of the coming decades without serious social dislocations.

The End of Criticism

The discussion about capitalism and the changing relative strengths of the state and the market reveals a crucial conceptual change in current discourse. The argument about the effects of the "capitalist world system" (Wallenstein) has long been conducted with the innocent term world market. Capitalism is hardly mentioned. The ideological view that power asymmetries and even relations of power are extinguished at the end in the exchange processes of actors on the world market prevails with the dominant liberal conceptions about the world economy. If the emphasis on capitalism as a social relation led to criticism of the conditions of rule, power, exploitation and inequality, all this simply dissolves in the market euphoria of (neo-) liberal thinking. In this thinking, individuals have long been degraded to mere market subjects who have nothing to do all day other than work on markets to draw the greatest advantages from all exchange processes.

This conceptual shift from the criticism of capitalism to a discussion about the global market has a far-reaching consequence. We have obviously reached the end of criticism of capitalism with the prevailing market craze, the dominance of neoliberalism as an ideology, the end of command socialism and the weakness of Marxist theory. No criticism can be formulated any more than points beyond the capitalist world system. If the disruptive consequences of nascent industrial capitalism led to criticism of social dislocations, criticism of the capitalist system in the time after the Second World War occurred on the background of an alternative social system. In the global age, radical criticism has become a rather esoteric activity. Instead of radical criticism, there is only discussion around different forms of capitalism that are either rejected or defended. The vital questions are: how much capitalism do we want and what should be its form? How far should global markets be liberalized? The starting point is that the free market represents the most economically efficient form of global capitalism. The social costs are not considered.

Faith and Knowledge

The old liberalism was already advanced with the idea of a self-regulating market. A man not yet thirty years old wrote a pamphlet of twenty-three pages that changed the world against this idea and against the social and political effects of developing industrial capitalism. Karl Marx in "The Communist Manifesto" combined the following polished thetic statements with the basic theoretical assumptions of historical materialism: the history of humanity is the history of class struggles, the bourgeoisie has been the most revoluti8onary class, modern industry created the world market, everything corporative evaporates and everything sacred is desecrated. This manifesto is still regarded as a genial prank today and remains the most influential political writing since the proclamation of civil- and human rights in the French Revolution.

The thirty-year old Swedish historian Johan Norberg unfortunately neglected stressing this prominent position of the Communist Manifesto among the writings and declarations of western political thought. Where Marx analyzed keenly and forged completely new ideas in his Manifesto that gave a political perspective to an historical movement, Norberg leaps on a train that long ago left the station (abgefahren). Norberg's study is hardly a manifesto. The old song of the liberalization of the markets is endlessly repeated. Not even a single new idea is developed. With his book, Norberg is not at the apex of the age. While he defends the pure doctrine of the Chicago boys in blind loyalty and devotion and speaks about the idea of free markets, others on account of long experience know their subject well. George Soros, Joseph Stiglitz and John Gray, who speculated on the stock exchange, supported the policy of the World Bank and the International Monetary Fund and pleaded for a radical liberalization and deregulation of the markets, are now more than skeptical about their old positions and stress the dangers of further liberalization of world markets. Norberg knows nothing about all this. The young Swede has not done his homework.

George Soros points impressively to the dangers for the world economy resulting from speculating on the global financial markets. In his criticism of the present Laissez-faire that he describes as market fundamentalism, Soros emphasizes that universal principles like freedom, democracy and the constitutional state may not be left to the play of free market forces. On account of its instability, the collapse of the present free market system seems more likely to him than its survival.

The former chief economist of the World Bank Joseph Stiglitz confronts the policy of the IMF. He shows that the IMF with its three maxims fiscal austerity, privatization and market opening decaying to ends-in-themselves is complicit in the ruin of whole national economies and hopeful development projects and in the expansion of the Asian crisis. The strategies of the IMF lack coherence, Stiglitz says, since the mandate and goals of the IMF triumphed silently under the dominance of neoliberal strategists. "The IMF serves the interests of the international financial world instead of the interests of the world economy. The liberalization of capital markets opens up vast new markets to Wall Street and hardly promotes the stabilization of the world economy."

John Gray, former chief advisor to Margaret Thatcher, is also a convert. If one justifiably hoped in the seventies that the British economy congealed by hypertrophic state spending and union blockades could get back on its feet through deregulation and liberalization, this idea is forbidden after experiences with the free market on the global plane. In Gray's socio-historical study "The False Promise", the consequences of the global free market are underscored. He stresses the effects of worldwide capitalism on people, living conditions and on the democratic structures of modern societies.

The Cruz of Norberg's dogma is manifest. Whoever only knows customers and not individuals forgets institutions and collective actors that realize interests on these markets. He forgets counter-movements with legitimate interests against the exploitation interests of capital and forgets that bequeathed processes and constellations of actors meet us everywhere. The plain and harmless mechanism of supply and demand is hardly alone. Everything distorted by Norberg from the desirable to the supposedly real is set in a theoretical perspective by Gray and subjected to a sobering and down-to-earth analysis.

Gray joins the institutionalist perspective developed by Karl Polanyi in "The Great Transformation" (1944. The social embedding of markets is highlighted to moderate or restrain their disruptive effects on social structures. On the background of England's historical experience with free markets in the middle of the 19th century, Gray clears away several errors of the market apologists. He opposes the idea of the United States in the "Washington Consensus" that "democratic capitalism" will soon gain worldwide acceptance. According to the "Washington Consensus", the long-lasting economic cultures and systems that could have survived in their diversity will dissolve in a single universal and free market. All that is intolerable, Gray says. Rather "the single-minded pursuit of this goal leads already to massive social uprooting and economic and political instability."

Gray understands the intention of the United States to produce an all-embracing world market as "the enlightened project of a world civilization in its last form" and points to the futility of this project. The United States shows that "new varieties of capitalism arise where deregulated markets break through in late-modern societies". Thus "the free market destroys the liberal capitalist civilization built according to Roosevelt's New Deal." Gray argues convincingly against all the supposedly necessary consequences in enforcing "democratic capitalism" of the American style. There will be no world civilization, no general diffusion of western-liberal democracy and no brave new world as the "Washington Consensus" planned. Quite the contrary! Economic globalization threatens the current rule of Laissez-faire: "The world market cannot deactivate the social explosiveness that refers back to the very different economic development of different societies. Political counter-movements are called into action that put in question the basic rules of the free world market: fast growth and equally fast decline of industries and abilities, sudden shifts in production and capital flow and finally the game of chance of currency speculation.

Gray analyzes an impressive number of problems. From his developed theoretical perspective, he puts his finger on the wounds inflicted by the ideology of the free market. Social and political consequences of free markets are seen in the examples of the United States, Russia and Asia, the astronomical rates of imprisonment and poverty in the United States, the connection between the idea of world civilization with the debates on the "clash of cultures" (Huntington) and the "end of history" (Fukuyama), the connection of free markets with falling wages and the end of social democracy. The list could be easily extended. The intrinsic connection of economic globalization with the social consequences and worldwide instabilities caused by free markets is shown convincingly.

The global financial markets are central. Gray sees the decisive cause of global crises in the financial markets. "These markets do not strive for balance or equilibrium. Exaggerations are their normal conditions. The instability of a world economy consisting of free markets lies in the changeableness of deregulated financial markets." World civilization, democracy and prosperity are the false promises of free markets. The "Washington Consensus" suggests all this is possible without an embedding of free markets in social contexts and without political and legal regulations. Gray's great merit is in showing all this is pure ideology and that the actual realization of a free global market produces global "instability" and makes a "policy of uncertainty" into a universal phenomenon.

What is to be done?

Lenin's question is not only raised at the end of John Gray's book. This question is still the big question of all debates on capitalism. Gray sees enough reason to be pessimistic and argues against an economic philosophy ready to sacrifice whole national economies to pure doctrine. His hope is in a reform of transnational organizations and a change of American policy, a hope that may have little prospect for realization given the practiced unilateralism of the last remaining superpower.

What is to be done? How should global capitalism be analyzed? Are there any new great ideas beyond the "No-Logo" slogans? The ethical variant of capitalist criticism as in the book "Civilize Capitalism!" by Marion Grafin Donhoff is hardly helpful. Criticism along ethical maxims agreed upon by all honest people remains inconsequential because global capitalism cannot be simply tackled with ethical ideas of the good life. Ulrich Beck's proposal in "Power and Counter-Power in the Global Age" is also unpromising. He believes that cosmopolitanism could be the next great idea after the end of nationalism, communism, socialism and neoliberalism. Asserting the end of the powerful ideologies nationalism and neoliberalism is somewhat irritating on the backdrop of recent experiences of world politics. However that isn't Beck's argument. On 400 pages, a cosmopolitan realism with recognition of the otherness of the other on its banners is proposed for the future. Whether a difference-sensitive universalism, an idea that Beck derives from the debate around rights of groups and minorities in the context of multiculturalism, is a convincing answer to the challenges of global capitalism remains open.

But back to Lenin. In the age of preventive wars for the second-largest worldwide supply of oil, one could ask whether the (new) imperialism of the United States is the highest stage of (global) capitalism or whether or not features of a monopolist state capitalism can be discerned given the striking conflation of the interests of the oil and armament industries. Happily history doesn't repeat itself. We will have to put up with capitalism and the polarized positions accompanying capitalism. The next great idea in the debate around capitalism has not yet appeared.

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a good note 16.Nov.2003 09:35


In the belly of the global capitalisim is an aritocracy that forms.

In the end, the aritocrats win their game of monopoly, prices collapse, unemployment
rises and great disorder results-as the locals try for survival.