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TechnoratiAsia: The Coming Fury
As goods pile up in wharves from Bangkok to Shanghai, and workers are laid off in record numbers, people in East Asia are beginning to realize they aren't only experiencing an economic downturn but living through the end of an era.
For over 40 years now, the cutting edge of the region's economy has been export-oriented industrialization (EOI). Taiwan and Korea first adopted this strategy of growth in the mid-1960s, with Korean dictator Park Chung-Hee coaxing his country's entrepreneurs to export by, among other measures, cutting off electricity to their factories if they refused to comply.
The success of Korea and Taiwan convinced the World Bank that EOI was the wave of the future. In the mid-1970s, then-Bank President Robert McNamara enshrined it as doctrine, preaching that "special efforts must be made in many countries to turn their manufacturing enterprises away from the relatively small markets associated with import substitution toward the much larger opportunities flowing from export promotion."
EOI became one of the key points of consensus between the Bank and Southeast Asia's governments. Both realized import substitution industrialization could only continue if domestic purchasing power were increased via significant redistribution of income and wealth, and this was simply out of the question for the region's elites. Export markets, especially the relatively open U.S. market, appeared to be a painless substitute.
Japanese Capital Creates an Export Platform
The World Bank endorsed the establishment of export processing zones, where foreign capital could be married to cheap (usually female) labor. It also supported the establishment of tax incentives for exporters and, less successfully, promoted trade liberalization. Not until the mid-1980s, however, did the economies of Southeast Asia take off, and this wasn't so much because of the Bank but because of aggressive U.S. trade policy. In 1985, in what became known as the Plaza Accord, the United States forced the drastic revaluation of the Japanese yen relative to the dollar and other major currencies. By making Japanese imports more expensive to American consumers, Washington hoped to reduce its trade deficit with Tokyo. Production in Japan became prohibitive in terms of labor costs, forcing the Japanese to move the more labor-intensive parts of their manufacturing operations to low-wage areas, in particular to China and Southeast Asia. At least $15 billion worth of Japanese direct investment flowed into Southeast Asia between 1985 and 1990.
The inflow of Japanese capital allowed the Southeast Asian "newly industrializing countries" to escape the credit squeeze of the early 1980s brought on by the Third World debt crisis, surmount the global recession of the mid-1980s, and move onto a path of high-speed growth. The centrality of the endaka, or currency revaluation, was reflected in the ratio of foreign direct investment inflows to gross capital formation, which leaped spectacularly in the late 1980s and 1990s in Indonesia, Malaysia, and Thailand.
The dynamics of foreign-investment-driven growth was best illustrated in Thailand, which received $24 billion worth of investment from capital-rich Japan, Korea, and Taiwan in just five years, between 1987 and 1991. Whatever might have been the Thai government's economic policy preferences - protectionist, mercantilist, or pro-market - this vast amount of East Asian capital coming into Thailand could not but trigger rapid growth. The same was true in the two other favored nations of northeast Asian capital, Malaysia and Indonesia.
It wasn't just the scale of Japanese investment over a five-year period that mattered, however; it was the process. The Japanese government and keiretsu, or conglomerates, planned and cooperated closely in the transfer of corporate industrial facilities to Southeast Asia. One key dimension of this plan was to relocate not just big corporations like Toyota or Matsushita, but also small and medium enterprises that provided their inputs and components. Another was to integrate complementary manufacturing operations that were spread across the region in different countries. The aim was to create an Asia Pacific platform for re-export to Japan and export to third-country markets. This was industrial policy and planning on a grand scale, managed jointly by the Japanese government and corporations and driven by the need to adjust to the post-Plaza Accord world. As one Japanese diplomat put it rather candidly, "Japan is creating an exclusive Japanese market in which Asia Pacific nations are incorporated into the so-called keiretsu [financial-industrial bloc] system."
China Masters the Model
If Taiwan and Korea pioneered the model and Southeast Asia successfully followed in their wake, China perfected the strategy of export-oriented industrialization. With its reserve army of cheap labor unmatched by any country in the world, China became the "workshop of the world," drawing in $50 billion in foreign investment annually by the first half of this decade. To survive, transnational firms had no choice but to transfer their labor-intensive operations to China to take advantage of what came to be known as the "China price," provoking in the process a tremendous crisis in the advanced capitalist countries' labor forces.
This process depended on the U.S. market. As long as U.S. consumers splurged, the export economies of East Asia could continue in high gear. The low U.S. savings rate was no barrier since credit was available on a grand scale. China and other Asian countries snapped up U.S. treasury bills and loaned massively to U.S. financial institutions, which in turn loaned to consumers and homebuyers. But now the U.S. credit economy has imploded, and the U.S. market is unlikely to serve as the same dynamic source of demand for a long time to come. As a result, Asia's export economies have been marooned.
The Illusion of "Decoupling"
For several years China has seemed to be a dynamic alternative to the U.S. market for Japan and East Asia's smaller economies. Chinese demand, after all, had pulled the Asian economies, including Korea and Japan, from the depths of stagnation and the morass of the Asian financial crisis in the first half of this decade. In 2003, for instance, Japan broke a decade-long stagnation by meeting China's thirst for capital and technology-intensive goods. Japanese exports shot up to record levels. Indeed, China had become by the middle of the decade, "the overwhelming driver of export growth in Taiwan and the Philippines, and the majority buyer of products from Japan, South Korea, Malaysia, and Australia."
Even though China appeared to be a new driver of export-led growth, some analysts still considered the notion of Asia "decoupling" from the U.S. locomotive to be a pipe dream. For instance, research by economists C.P. Chandrasekhar and Jayati Ghosh, underlined that China was indeed importing intermediate goods and parts from Japan, Korea, and ASEAN, but only to put them together mainly for export as finished goods to the United States and Europe, not for its domestic market. Thus, "if demand for Chinese exports from the United States and the EU slow down, as will be likely with a U.S. recession," they asserted, "this will not only affect Chinese manufacturing production, but also Chinese demand for imports from these Asian developing countries."
The collapse of Asia's key market has banished all talk of decoupling. The image of decoupled locomotives - one coming to a halt, the other chugging along on a separate track - no longer applies, if it ever had. Rather, U.S.-East Asia economic relations today resemble a chain-gang linking not only China and the United States but a host of other satellite economies. They are all linked to debt-financed middle-class spending in the United States, which has collapsed.
China's growth in 2008 fell to 9%, from 11% a year earlier. Japan is now in deep recession, its mighty export-oriented consumer goods industries reeling from plummeting sales. South Korea, the hardest hit of Asia's economies so far, has seen its currency collapse by some 30% relative to the dollar. Southeast Asia's growth in 2009 will likely be half that of 2008.
The Coming Fury
The sudden end of the export era is going to have some ugly consequences. In the last three decades, rapid growth reduced the number living below the poverty line in many countries. In practically all countries, however, income and wealth inequality increased. But the expansion of consumer purchasing power took much of the edge off social conflicts. Now, with the era of growth coming to an end, increasing poverty amid great inequalities will be a combustible combination.
In China, about 20 million workers have lost their jobs in the last few months, many of them heading back to the countryside, where they will find little work. The authorities are rightly worried that what they label "mass group incidents," which have been increasing in the last decade, might spin out of control. With the safety valve of foreign demand for Indonesian and Filipino workers shut off, hundreds of thousands of workers are returning home to few jobs and dying farms. Suffering is likely to be accompanied by rising protest, as it already has in Vietnam, where strikes are spreading like wildfire. Korea, with its tradition of militant labor and peasant protest, is a ticking time bomb. Indeed, East Asia may be entering a period of radical protest and social revolution that went out of style when export-oriented industrialization became the fashion three decades ago.
30 Comments so far
Show AllWhen we talk about changing the status quo, we hear a cry of "protectionism," but protectionism come in many forms:
There are lots of types of protectionism. One type practiced by the Chinese is to peg its currency to the dollar in such a way as to undervalue it, so they can sell more goods here. You are correct, this is not the 1930's, and jobs are leaving our shores due to an ability to shift capital (workers cannot shift to different locales as easily) that was not present then.
If the trade agreements truly lead to higher wages elsewhere (i.e., leading to equalization in the standard of living), that would have been a good thing, and presumably equalized trade, rather than create such an imbalance; instead, these agreements have been used as a means to maximize profit for a few and a 'race to the bottom' for the worker. Definitely, a kind of protectionism for the short term profits of the corporate elite.
In essence the United States has allowed its manufacturing base to be given away for next to nothing (excepting perhaps cheap wal-mart type goods), which we have been purchasing in exchange for credit debt. Great deal, eh? The race to the bottom is proving to be bad for workers everywhere, and economies in general. This short-sighted approach based on greed is showing its true colors. I wonder if even the elite expected it. You cannot go on forever impoverishing the many for the profit of the few without some kind of negative backlash.
Now Obama tells us that the low-skilled jobs are gone forever, and we need to better educate ourselves for those 'great' jobs to come. Haven't we heard this somewhere before? Many of us DID retrain, only to have those jobs we retrained for shipped away as well! And I'm not sure some common sense regulation equates to protectionism, especially given that the present 'free trade' agreements haven't lived up to their promises. For example, what price does China ultimately pay for lax environmental regulation? Would we be willing to sacrifice our air and/or water quality as they seemingly are doing?
Another thing is that we need all kinds of jobs for all kinds of workers, not everyone will be a scientist, accountant, engineer, or IT specialist. There needs to be opportunity for all levels of employment. The BIG LIE we hear is that we're losing jobs because to foreign sources because there are not enough qualified workers here. What they mean is there are not enough qualified workers to work for a fraction of the local competitive salary.
Big corps and Wall Street interests use the word 'protectionism' like the Bogey man to maintain a status quo so they can continue to rake in the profits at the expense of everything and everyone else. This is becoming abundantly clear as things quickly unravel.
What's happening both here and in Asia is a consequence of not spreading the benefits of increased profit to all levels of worker, and a direct outcome of concentrating the wealth for the benefit of a select few. Outsourcing essentially meant taking money from Peter to pay Paul. Peter used easy credit for awhile to maintain his spending, but once he lost his job and maxed out his credit card, Paul no longer had a market for his cheap goods. Seeing the complete fallacy of this unmaintainable paradigm provides us with the opportunity to transform it. This question now is: will we?
The population of the planet increases at three people per second.
We are reaping the whirlwind of the failed economic policies of a "free-market", anything goes Capitolist society. Our economy has been based on cheap labor, cheaper goods. We have allowed human greed to taint our markets, our very lives. God help us!
The population of the planet increases at three people per second.
Our economy is based on ignoring this fact and encourage people to have more kids and buy more stuff.
Cicero: "Freedom is participation in power."
One of the things not being taken into account regarding this situation is that world population (and that population's pressures on arable land, water supplies, forests, fisheries, other natural resources finite and renewable) has more than doubled since Mao began his Long March. Populations are much larger all over Asia and India. The scale of the suffering Bello is alluding to is unprecedented in all of human history. American won't be exempt from its shockwaves it because we have lots of nifty fast food joints and strip malls and the price of gas is once again temporarily cheap.
We as human beings in the era of high-technology pride ourselves on the advancement of our so-called "civilizations," but the old Roman adage holds more true: "Man is a wolf unto man." When we as a species still lived in smaller numbers closer to the land, the fall of great empires--whether we lived in them or near them--did not lead to the death of tens or hundreds of millions of human beings. Current pressures on the biosphere combined with global warming may start killing Billions of human beings by 2050.
Now that we as a species have left somatic natural evolution 250 years behind us our vaunted technology has only compounded our population into the confused impulses of barely media-managed hordes, our material disparities into monstrosities of inequality, our effects on the biosphere into an unsustainable cross between a virus and a cancer. We are still acting as spoiled, deliberately deluded children, unwilling to take responsibility for technology's effects on our own species and the rest of the biosphere; unwilling to take responsibility for our continued conscious evolution as a species willing to make some planned sacrifices to create a more harmonious relationship between human beings, and between human beings and the planet that supports their lives. The path we are on is resource wars, chaos, blood, fire, pollution and destruction of the very things future generations would have needed to survive. Pollution, compromise and confusion of our very souls to the point that we no longer can distinguish good from bad--blind damnation. Behold capitalism's insane endgame. Communism offers no better ideas for humane management of the natural resources vs. over-population equation. Time for a Third Way.
Tell all that to the "right to life" ghouls who will not be happy until every square inch of the planet is occupied by a "god-fearing, bible-believing" nitwit.
Walden Bello provides the west valuable insights into Asian economics/politics but his framing in this one flounders. He is relying on the dead assumptions that people need "capital, growth, and work", as defined and dispensed by the elites, for the elites, at the expense of the people. The people don't need anything from the elites. The people themselves and the land they hold inherent rights to are the only resources they need. Growth and work are completely irrelevant ideas. Zero growth is the norm in a functional society. And work is encapsulated in the people's own independent small enterprises. What is the purpose of these elitist analyses of elitist rackets? Better to focus on replacing them with local small scale production.
And he ignores the role played by the Korean War in reviving the Japanese economy, and the VietNam War in launching the Korean and Taiwan "tigers"
"Now, with the era of growth coming to an end, increasing poverty amid great inequalities will be a combustible combination."
It is becoming a combustible combination in every nation!
The horse-traders around the globe aren't fooling anyone with their greed and rhetoric. The globilization scheme designed to enrich the "few" has been a complete failure.
"Should government refrain from regulation (taxation), the worthlessness of the money becomes apparent and the fraud can no longer be concealed." -- John Maynard Keynes
Well, there's capitalis-m and there's capitalis'nt-m.
Those who would take over the earth
And shape it to their will
Never, I notice, succeed.
The earth is like a vessel so sacred
That at the mere approach of the profane
It is marred
And when they reach out their fingers it is gone.
For a time in the world some force themselves ahead
And some are left behind,
For a time in the world some make a great noise
And some are held silent,
For a time in the world some are puffed fat
And some are kept hungry,
For a time in the world some push aboard
And some are tipped out:
At no time in the world will a man who is sane
Over-reach himself,
Over-spend himself,
Over-rate himself.
LaoTzu #29 600 BC (China)
This would be a good time to reform the "corporation" into something less carnivorous and cancerous.
Over reach himself.
The population of the planet increases at three additional people per second.
Get it fixed. Contact Planned Parenthood for details.
OMG, China might have a Communist revolution!
"WE americans...carefully nurture an attitude of detached indifference to the suffering of others.....even if we are the cause of it".......unknown american poet.
all these things are of course the consequences and related to the history of US Capitalist Imperialism. EVEN the rise of communism in china was a REACTION to previous US and British Imperialism ...and one might say -- as the globe was "forced" to function within that US model of capitalist expansion at the expense of other nations -- as will be seen in the revelation below by General Smedley Butler's quotes - even TODAY's asian and other "export -oriented" economies and their finding the "end of the game" as the USA implodes upon itself - unable to continue being the "consumer of last resort" - and they WILL be forced to become "Domestic consumption" economies eventually , as should have been the case...these things are continuing consequences of US imperialist capitalism. NOTE that his "service to our BIG BOSS..our supernationalistic capitalism" INCLUDED forays into China for US OIL..
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05/05/04 Quotes From a Few Good Marines…
TMPress International Newswire
TMPress ™ – United News & Press Features ®
(TMPress International – New York – May 07, 2004) – Quotes From a Few Good Marines … Gen. Smedley Butler’s confession, in 1935, a two-time Medal of Honor winner, retired former U.S. Marine Commandant, Gen. Smedley D. Butler accused major New York investment banks of using the U.S. Marines as racketeers and gangsters to exploit the peasants of Nicaragua. Later, Butler stated, `The trouble is that when American dollars earn only six percent over here, they get restless and go overseas to get 100 percent … the flag follows the dollar and the soldiers follow the flag.' `I wouldn’t go to war again as I have done to defend some lousy investment of the bankers … we should fight only for the defense of our home and the Bill of Rights … war for any other reason is simply a racket.' `There isn’t a trick in the racketeering bag that the military gang is blind to.` `It had its ‘finger men’ to point out enemies, its ‘muscle men’ to destroy enemies, its ‘brain men’ to plan war preparations and a ‘Big Boss’ – supernationalistic capitalism.’
`Common Sense' in November 1935.
And another more recent Marine Commandant … `I believe that if we had and would keep our dirty, bloody, dollar soaked fingers out of the business of these (Third World) nations so full of depressed, exploited people, they will arrive at a solution of their own. And if unfortunately their revolution must be of the violent type because the `haves' refuse to share with the `have-nots' by any peaceful method, at least what they get will be their own, and not the American style, which they don’t want and above all don’t want crammed down their throats by Americans.' – General David Sharp, former United StatesMajor General Smedley Butler USMC
Throughout the years various men of military service have spoken up and spoken out against the actions of the American military. Some men speak up about atrocities that have gone covered up, about discrimination, about deceptions that have been used against the American public, and about actions that have been taken that are contrary to what they view as American principles. Major General Smedley Butler is one of the most outspoken military service men who opposed the actions of the military that he served in.
Marine Smedley Darling Butler is one of the most highly decorated military men from the pre-World War II era. He served from 1898 to 1931 and saw action all over the world.
Butler (second from right) in Veracruz, Mexico - 1914
Butler became a prominent political figure and was one of America’s important leaders of the liberal movement of the 1930s. Butler advocated military isolationism and was against American involvement in World War II. His isolationist views are certainly unpopular today, and in fact are not compatible with the current geopolitical situation. His views, however, developed from 33 years of serving as what he called “a gangster for capitalism.”
Smedley Butler at his 1931 retirement ceremony
Though Butler was not a member of the American Communist Party he did give speeches at Communist Party meetings in the 1930s as well as many speeches for the League Against War and Fascism. When asked about the company he was keeping he noted, “They told me I’d find a nest of communists here. I told them ‘What the hell of it!’”
Smedley Butler preparing to speak at one of his stops in the 1930s
All told Butler gave over 1,200 speeches in over 700 cities during his speaking tour of the United States.
In 1935 Butler published War is a Racket, which got high praise at the time, as well as strong criticism. The forward by Lowell Thomas spoke of Butler’s “moral as well as physical courage” and noted that “Even his opponents concede that in his stand on public questions, General Butler has been motivated by the same fiery integrity and loyal patriotism which has distinguished his service in countless Marine campaigns.”
What Butler fought so hard to do was to take the focus off of moral and ideological arguments for war and concentrate on the geopolitical factors that actually motivated war. He tried to raise awareness of what the real motivating factors of war were as well as the consequences of war. He was one of the first Americans to really bring the economic implications of war to the forefront of the public conscience. In War is a Racket Butler “names names” and lays out in wonderfully blunt detail how the American “military machine” was used to the benefit of wealthy American industrialists. He noted how proponents of war typically call on God as a supporter of the cause and how they embellish the mission as one of liberation and the spreading of freedom, but that these people tend to shy away from discussing the economic details of military ventures.
Butler didn’t choose sides when it came to expressing his views on war. Butler could certainly be considered a liberal but he spoke out against the liberal FDR administration and also broke ties with anti-fascist groups when they called for war to defend against fascism. In 1935 he commented to a veterans meeting on the subject of the growing interest in the FDR administration to become involved in the conflicts of Europe that, “The political leaders of this country are for another conflict to cover up their blunders.”
Though most today would agree that his isolationist views would have been harmful had they been followed by the country in regard to American involvement in WWII his views on imperialism and the economic implications of war are still as relevant today as ever.
The following is an excerpt from a speech he gave in 1933:
“War is just a racket. A racket is best described, I believe, as something that is not what it seems to the majority of people. Only a small inside group knows what it is about. It is conducted for the benefit of the very few at the expense of the masses.
I believe in adequate defense at the coastline and nothing else. If a nation comes over here to fight, then we'll fight. The trouble with America is that when the dollar only earns 6 percent over here, then it gets restless and goes overseas to get 100 percent. Then the flag follows the dollar and the soldiers follow the flag.
I wouldn't go to war again as I have done to protect some lousy investment of the bankers. There are only two things we should fight for. One is the defense of our homes and the other is the Bill of Rights. War for any other reason is simply a racket.
There isn't a trick in the racketeering bag that the military gang is blind to. It has its "finger men" to point out enemies, its "muscle men" to destroy enemies, its "brain men" to plan war preparations, and a "Big Boss" Super-Nationalistic-Capitalism.
It may seem odd for me, a military man to adopt such a comparison. Truthfulness compels me to. I spent thirty- three years and four months in active military service as a member of this country's most agile military force, the Marine Corps. I served in all commissioned ranks from Second Lieutenant to Major-General. And during that period, I spent most of my time being a high class muscle- man for Big Business, for Wall Street and for the Bankers. In short, I was a racketeer, a gangster for capitalism.
I suspected I was just part of a racket at the time. Now I am sure of it. Like all the members of the military profession, I never had a thought of my own until I left the service. My mental faculties remained in suspended animation while I obeyed the orders of higher-ups. This is typical with everyone in the military service.
I helped make Mexico, especially Tampico, safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefits of Wall Street. The record of racketeering is long. I helped purify Nicaragua for the international banking house of Brown Brothers in 1909-1912. I brought light to the Dominican Republic for American sugar interests in 1916. In China I helped to see to it that Standard Oil went its way unmolested.
During those years, I had, as the boys in the back room would say, a swell racket. Looking back on it, I feel that I could have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents.”
http://www.fas.org/man/smedley.htm Marine Commandant, 1966.
And another more recent Marine Commandant … `I believe that if we had and would keep our dirty, bloody, dollar soaked fingers out of the business of these (Third World) nations so full of depressed, exploited people, they will arrive at a solution of their own. And if unfortunately their revolution must be of the violent type because the `haves' refuse to share with the `have-nots' by any peaceful method, at least what they get will be their own, and not the American style, which they don’t want and above all don’t want crammed down their throats by Americans.' – General David Sharp, former United States Marine Commandant, 1966.
Finally let us examine a newer conversation with an ex-Marine who served with Reagan's so-called `Contras’ all during the 1980s – 1990 … a talk by John Stockwell, 13-year veteran of the CIA and former U.S. Marine Corps major, `Systematically, the Contras have been assassinating religious workers, teachers, health workers, elected officials, government administrators. Remember the ‘Assassination Manual’ that surfaced in 1984? It caused such a stir that President Reagan had to address it himself in the presidential debates with Walter Mondale. They use terror to traumatize society so that it cannot function. `I don’t mean to abuse you with verbal violence, but you have to understand what your Government and its agents are doing. `They go into villages. They haul out families. With the children forced to watch, they castrate the father. They peel the skin off his face. They put a grenade in his mouth, and pull the pin. With the children forced to watch, they gang-rape the mother, and slash her breasts off. And sometimes, for variety, they make the parents watch while they do these things to the children. `This is nobody’s propaganda!' `There have been over a hundred thousand American `Witnesses for Peace' who’ve gone down there, and they have filmed and photographed and witnessed these atrocities immediately after they’ve happened, and documented thirteen thousand people killed this way – mostly women and children. `These are the activities done by the Contras … the Contras are the people who former President Reagan called ‘freedom fighters.’ He said … `They are the moral equivalent of our founding fathers.' – Major, John Stockwell, 13-year veteran of the CIA and former U.S. Marine Corps major.
http://www.williambowles.info/guests/marines.html
"QUOTES FROM A FEW GOOD MARINES"
I believe you're referring to General David Shoup, not Sharp.
The military & security apparatus in every country have been preparing for the conflicts of the 21st century: that is, crushing the desperate urban (and rural) poor. Look for the rise of charismatic & militant leaders in the mould of Hitler, Mao, Ghandi, or William Wallace. It will be the haves against the have-nots.
http://www.atimes.com/atimes/Global_Economy/GF24Dj01.html
below are excerpts - this is but one article among many voluminous ones by this author, Henry CK Liu ..
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Jun 24, 2005
THE COMING TRADE WAR, Part 2
Dollar hegemony
against sovereign credit
By Henry C K Liu
(For other parts in the series, click here)
Global trade has forced all countries to adopt a market economy. Yet the market is not the economy. It is only one aspect of the economy.
A market economy can be viewed as an aberration of human civilization, as economist Karl Polanyi (1886-1964) pointed out. The principal theme of Polanyi's Origins of Our Time: The Great Transformation (1945) was that market economy was of very recent origin and had emerged fully formed only as recently as the 19th century, in conjunction with capitalistic industrialization. The current globalization of markets that followed the fall of the Soviet bloc is also of recent post-Cold War origin, in conjunction with the advent of the electronic information age and deregulated finance capitalism. A severe and prolonged depression could trigger the end of the market economy, when intelligent human beings are finally faced with the realization that the business cycle inherent in the market economy cannot be regulated sufficiently to prevent its innate destructiveness to human welfare and are forced to seek new economic arrangements for human development. The principle of diminishing returns will lead people to reject the market economy, however sophisticatedly regulated.
Prior to the coming of capitalistic industrialization, the market played only a minor part in the economic life of societies. Even where marketplaces could be seen to be operating, they were peripheral to the main economic organization and activities of society. In many pre-industrial economies, markets met only twice a month. Polanyi argued that in modern market economies, the needs of the market determined social behavior, whereas in pre-industrial and primitive economies the needs of society determined market behavior. Polanyi reintroduced to economics the concepts of reciprocity and redistribution in human interaction, which were the original aims of trade.
Reciprocity implies that people produce the goods and services they are best at and enjoy producing the most, and share them with others with joy. This is reciprocated by others who are good at and enjoy producing other goods and services. There is an unspoken agreement that all would produce that which they could do best and mutually share and share alike, not just sold to the highest bidder or, worse, to produce what they despise to meet the demands of the market. The idea of sweatshops is totally unnatural to human dignity and uneconomic to human welfare. With reciprocity, there is no need for layers of management, because workers happily practice their livelihoods and need no coercive supervision. Labor is not forced and workers do not merely sell their time in jobs they hate, unrelated to their inner callings. Prices are not fixed but vary according to what different buyers with different circumstances can afford or what the seller needs in return from different buyers. The law of one price is inhumane, unnatural, inflexible and unfair. All workers find their separate personal fulfillment in different productive livelihoods of their choosing, without distortion by the need for money. The motivation to produce and share is not personal profit, but personal fulfillment, and avoidance of public contempt, communal ostracism, and loss of social prestige and moral standing.
This motivation, albeit distorted today by the dominance of money, is still fundamental in societies operating under finance capitalism. But in a money society, the emphasis is on accumulating the most financial wealth, which is accorded the highest social prestige.
continuing excerpt on Henry CK Liu's article "The Coming Trade Wars" - and on its chapter Dollar Hegemony 2005.
======================
In a speech on June 3 at the Take Back America conference in Washington, DC, Bill Moyers drew attention to the conclusion by the editors of The Economist, all friends of business and advocates of capitalism and free markets, that "the United States risks calcifying into a European-style class-based society". A front-page editorial in the May 13 Wall Street Journal concluded that "as the gap between rich and poor has widened since 1970, the odds that a child born in poverty will climb to wealth - or that a rich child will fall into middle class - remain stuck ... Despite the widespread belief that the US remains a more mobile society than Europe, economists and sociologists say that in recent decades the typical child starting out in poverty in continental Europe (or in Canada) has had a better chance at prosperity." The New York Times ran a 12-day series this month under the heading "Class Matters" that observed that class is closely tied to money in the US and that "the movement of families up and down the economic ladder is the promise that lies at the heart of the American dream. But it does not seem to be happening quite as often as it used to." The myth that free markets spread equality seems to be facing a challenge in the heart of market fundamentalism.
People trade to compensate for deficiencies in their current state of development. Free trade is not a license for exploitation. Exploitation is slavery, not trade. Imperialism is exploitation by systemic coercion on an international level. Neo-imperialism after the end of the Cold War takes the form of neo-liberal globalization of systemic coercion. Free trade is hampered by systemic coercion. Resistance to systemic coercion is not to be confused with protectionism. To participate in free trade, a trader must have something with which to trade voluntarily in a market free of systemic coercion. All free trade participants need to have basic pricing power that requires that no one else commands monopolistic pricing power. That tradable something comes from development, which is a process of self-betterment. Just as equality before the law is a prerequisite for justice, equality in pricing power in the market is a prerequisite for free trade. Traders need basic pricing power for trade to be free. Workers need pricing power for the value of their labor to participate in free trade.
Yet trade in a market economy by definition is a game to acquire overwhelming pricing power over one's trading partners. Wal-Mart, for example, has enormous pricing power both as a bulk buyer and as a mass retailer. But it uses its overwhelming pricing power not to pay the highest wages to workers in factories and in its stores, but to deliver the lowest price to its customers. The business model of Wal-Mart, whose sales volume is greater than the gross domestic product (GDP) of many small countries, is anti-development. The trade-off between low income and low retail price follows a downward spiral. This downward spiral has been the main defect of trade deregulation when low prices are achieved through the lowering of wages. The economic purpose of development is to raise income, not merely to lower wages to reduce expenses by lowering quality. International trade cannot be a substitute for domestic development, or even international development, although it can contribute to both domestic and international development if it is conducted on an equal basis for the mutual benefit of both trading partners. And the chief benefit is higher income.
The terms of international trade need to take into consideration local conditions, not as a reluctant tolerance but with respect for diversity. The former Japanese vice finance minister for international affairs, Eisuke Sakakibara, in a speech titled "The End of Market Fundamentalism" before the Foreign Correspondent's Club in Tokyo on January 22, 1999, presented a coherent and wide-ranging critique of global macro-orthodoxy. His view, that each national economic system must conform to agreed international trade rules and regulations but need not assimilate the domestic rules and regulations of another country, is heresy to US-led, one-size-fits-all globalization. In a computerized world where output standardization has become unnecessary, where the mass production of customized one-of-a-kind products is routine, one-size-fits-all hegemony is nothing more than cultural imperialism. In a world of sovereign states, domestic development must take precedence over international trade, which is a system of external transactions made supposedly to augment domestic development. And domestic development means every nation is free to choose its own development path most appropriate to its historical conditions and is not required to adopt the US development model. But neo-liberal international trade since the end of the Cold War has increasingly preempted domestic development in both the center and the periphery of the world system. Quality of life is regularly compromised in the name of efficiency.
I will tell you all that , being from the Philippines myself....as far and remote as those countries are ... a brother tells me what is CLEAR TO ASIANS....that they UNDERSTAND very intimately the EFFECTS of US policies across the globe...and as they watch - even their livelihoods which over the years they could do little about under US hegemony and impositions (through ":globalization" that traps them) - -
even through those internal problems...i was told that across asia - it is UNDERSTOOD that the "culprit" is the USA.
they understand intimately the continuity of policies.
i was actually shocked when my brother e mailed me , as i inquired how things are ...and his answer :
"well...as you know the economy is very bad...but it's worse than we have ever experienced even when we were kids....and we all know it's all related to that Wall Street, banking and finance and what's been happening in the USA...."
and then he told me that this was the same report from other countries where we have cousins working in indonesia, or traveling around asia....
"THE USA is the root of the mess".
Really, the only question to ask, now that we're off the cliff, is how far it is to the bottom, and how big a crater we're going to make when we impact? Fasten your seatbelts, it's gonna be an ugly ride. Think worldwide depression, and the resultant catastrophe's that are inevitable. This is a shitball of American making, and this country is going to be among the first to take the rage of the world on it's back. Great strategy that the Bush Crime Syndicate followed...enrage the entire world against America, for the endless criminal abuses of "foreigners" and their countries, then bankrupt the country and knock the chocks out from under the entire system. When all is said and done, we'll be exposed to the wrath of a rightfully angry world. The end result will most likely be that more innocent will die, and more guilty will walk away without consequences.
Thanks a shitload Bushy, you did a hell of a job! And hell certainly has a luxury suite awaiting you...in the deepest, dankest, nastiest depths of hell.
How come this author is not discussing other developing nations in Asia aside from China and Japan? It's far worse in most of those. I guess Southeast Asia isn't part of Asia to him.
Every country has decoupled from US as much as possible without injuring themselves.
That process will continue.
The people of the world yearn for freedom from US imperialist tyranny.
a critical part of it is China perhaps leading the way in getting rid of Dollar Hegemony. if they take the pill and bitter medicine, and somehow achieve a currency regime in asia , such as direct convertability between their currencies BYPASSING the US dollar..............that is, if their governments realize that the costs of doing that are FAR LESS and only temporary in comparison to continued linkage to the US DOLLAR as "currency of transactions" (which disables their currencies to be used outside and lowers their sovereign wealth as a result, and which, in using the dollar as the currency of trade internationally, STILL does not give them the value of holding the dollar which is unusable in their domestic economy ) - the Dollar is finished.
that is the foundation of American Hegemony, and in fact the basis of all the American Militarism.
as General Smedley Butler said:
"The problem with americans is -- when our dollar can't sell domestically beyond 6 percent of its value ...we want 100 percent value more and look for it abroad -- and where the dollar goes -- our military follows".
this is related to the USA as the leading Currency manipulator of the world.
should CHINA or a number of asian countries have that as the basis for "decoupling" - the USA is finished as an empire.
watch for china and india to become the next generation of consumers and the US becoming the exporters...The roles will start to reverse. And the US cannot survive on the massive debt. Especially when China comes a calling to collect their money.
Horrified 12:47 --------- Why would China and India not manufacture and consume their own products especially after the example of the USA's self destruction. I guess Kruschev is having the last laugh " We will bury you from within".
What Khruschev should have said was, "You will bury yourselves."
I think he was saying capitalism was to collapse under it's own weight; just like the Soviets did.
Sorry.
And if China and Japan have no money who is to fund USA debt?