Jihad vs. McWorld (39 page)

What was true for the Germans, was true for all of the successful postwar capitalist nations. For they understood well enough that a pure laissez-faire economy quickly breaks and then self-destructs along the fissures introduced by labor strife, unemployment, trade cycles, and monopoly. Only the new transitional democracies have been talked by foreign advisors or bullied by international banks into thinking that laissez-faire capitalist economics is a self-sufficient social system. Predictably, the results have been catastrophic. As we will see below, what Aleksandr Solzhenitsyn calls “savage capitalism”—a system “fraught with unproductive, savage and repulsive forms of behavior, the plunder of the nation’s wealth”—has turned
the new Russia into a place where “the brazen use of social advantage and the inordinate power of money” (the very problems the collapse of communism was supposed to cure!) are today worse than ever.
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Even under ideal conditions, where the depredations of wild capitalism are controlled and the economy achieves a certain self-regulation, markets have a limited capacity to generate what a society needs.
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Ideal conditions only mean that sellers and buyers interact in accord with prices whose fluctuating levels keep goods, consumers, and laborers interacting productively. At best, this only secures maximum economic efficiency in producing and distributing hard (durable) goods. Nothing else. Advocates of laissez-faire as a political strategy claim far more, however. And therein lies the problem.

There is today a disastrous confusion between the moderate and mostly well-founded claim that flexibly regulated markets remain the most efficient instruments of economic productivity and wealth accumulation, and the zany, overblown claim that naked, wholly unregulated markets are the sole means by which we can produce and fairly distribute everything human beings care about, from durable goods to spiritual values, from capital investment to social justice, from profitability to sustainable environments, from private wealth to the essential commonweal. This second claim has moved profit-mongering privateers to insist that goods as diverse and obviously public as education, culture, penology, full employment, social welfare, and ecological equilibrium be handed over to the profit sector for arbitration and disposal.
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It has also persuaded them to see in privatization not merely a paring knife to trim the fat from overindulgent state bureaucracies but a cleaver with which democracy can be chopped into pieces and then pulverized.

In America, the confidence in the omnipotence of markets has been transformed into a foreign policy that assumes internationalizing markets is tantamount to democratizing them and that human freedom is secured the minute nations or tribes sign on to the dogmas of free trade. The Friedmans called their celebration of markets
Free to Choose
, as if choosing brands or trademarks and choosing life-plans or common cultural norms were kindred activities.
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More recently, Jeffrey Sachs, a zealous Friedman clone and the ambitious first consul of capitalist reform in transitional societies, has argued
that Eastern Europe “shed the communist system” not to create an open society but “to adopt capitalism.” That being the case, its goal must be “economic harmonization with Western Europe”—some-thing requiring radical economic reform (a “Big Bang” as the Poles called it) and ongoing economic “shock therapy.”
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Laissez-faire doctrines can imperil the nation-state, but at least the nation-state possesses a sovereign power capable of countering raw capitalism’s materialistic, privatizing consequences. In the international economy, laissez-faire doctrines are fatal, for here sovereignty vanishes and aggressive transnational bodies pursue market strategies in the absence of any countervailing regulatory bodies whatsoever. Kuttner notices that “as the ethic of laissez-faire gained ground, it did so almost in lockstep with the relative decline of its prime sponsor”—the United States.
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While earlier incarnations of international institutions like the International Monetary Fund and the World Bank permitted the flexing of American muscle in a world arena, America’s diminishing power leaves such institutions at the mercy of the true multinationals of our epoch, the transnational corporations and thousands upon thousands of nongovernmental interest groups and associations that constitute the international market.

Public relations aside, the World Bank, for example, is less concerned to create a sustainable environment or forge sustainable national economies in the debtor nations it services than to assure an open (though by no means level) playing field for international business. Its loans often bankrupt its clients: Poland’s total debt in 1993 was over 60 percent of its annual GDP, while Hungary’s approached 80 percent of its GNP;
¹⁴
Uganda owes 62 percent of its foreign debt to the bank while Guatemala’s controversial World Bank—financed Chixoy Dam accounts for 40 percent of its external debt. The bank has also been known to impose population resettlement on peoples who have had no part in deciding on the irrigation or transportation projects being undertaken in the name of “their” development.
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Those who believe in the continuing vitality of the nation-state may not worry. Robert Kuttner, for example, still thinks that although “the global intelligentsia may think of itself as stateless, and global capital may see nation-states as anachronistic encumbrances … the state remains the locus of the polity” that “remains the structure best suited for counterbalancing the excesses of the
market.”
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The state is certainly “best suited” to balance wild capitalism, but the question is whether it is any longer capable of doing so or willing to try. The reality seems to be, as Stanford University economist Paul Krugman has noticed, that “governments have consented to a regime that allows markets to boss them around.”
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The new government of the Czech Republic boasts that it wants to create “a level playing field for investors, both domestic and foreign” and is actively “preaching minimum government interference.”
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Those new states that, “as civil society has been progressively colonized by organized crime,” have been led slowly to discover the “positive uses of power,” must contend both with the old state-hating victims of imperious communism and their new state-hating laissez-faire advisors who urge them to turn the very state institutions by which they might control rapacious markets into their primary adversary.
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Even where states weigh in on behalf of civil society, there is no surrogate for the polity in the international domain—certainly not the state’s weak supranational imitators—that has the clout to countervail multinational corporations and the markets in which they operate. Business leader Walter B. Wriston observes that governments no longer can even “measure” capital formation because so much new capital is intellectual.
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How then can they regulate or control such capital? As he wryly suggests, a computer wizard with a bold new program in his mind can walk across a border untithed and untariffed, carrying more capital assets with him in his head than might be contained in a thousand cargo ships. As we saw earlier (in
Part I
), the new goods are virtual rather than durable, and their producers—Robert Reich’s “symbolic analyst professionals”—represent a new transnational class pretty well beyond the purview of particular national sovereignties. The Senate banking committee can look over the shoulder of the nation’s banks (if not very wisely or very well), but who has the power (or the vision) to look over the shoulders of international bankers and currency dealers? Or of the programmers and analysts who make banking and currency markets function? Currency markets trade up to a trillion dollars a day: no national bank, no collection of national banks, can have much of an impact on them. When in the summer of 1994, seventeen of the world’s largest central banks (including America’s Federal Reserve) tried to prop up the dollar, they could come up with only $5 billion.
Their effort had (in Thomas Friedman’s charming image) all the impact of “a zoo keeper trying to calm a starved gorilla by offering it a raisin for lunch.”
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Free-market advocates like Wriston boast about the failure of the Bretton Woods Treaty (by which sovereign nations tried to govern the international currency exchange after World War II)—proof that “Big Brother” (his caricature of all states, democratic as well as autocratic) has been forced out of business. Unfortunately, Big Brother’s role as a guardian of social justice has also been superseded and the many junior siblings who have displaced him turn out to be both more intimidating and far less accountable. National regulatory commissions can curtail in-country labor exploitation with minimum wage laws, unemployment insurance, and safety regulations, but who can set and enforce such standards for the global market where unrooted companies can chase low-wage labor from country to country as they please? Far more today than in the nineteenth century, the workers of the world need to unite to offset the exploitative consequences of monopoly capital on a global scale. Yet never has there been less likelihood that they could do so.

Multinationals cannot be blamed for promoting high profits at the price of high unemployment or sacrificing the local environment to the economic benefits of free trade. It is the job of civil society and democratic government and not of the market to look after common interests and make sure that those who profit from the common planet pay its common proprietors their fair share. When governments abdicate in favor of markets, they are declaring nolo contendere in an arena in which they are supposed to be primary challengers, bartering away the rights of their people along the way.

Markets simply are not designed to do the things democratic polities do.
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They enjoin private rather than public modes of discourse, allowing us as consumers to speak via our currencies of consumption to producers of material goods, but ignoring us as citizens speaking to one another about such things as the social consequences of our private market choices (too much materialism? too little social justice? too many monopolies? too few jobs? what do
we
want?). They advance individualistic rather than social goals, permitting us to say, one by one, “I want a pair of running shoes” or “I need a new VCR” or “buy yen and sell D-Marks!” but deterring us from saying, in a
voice made common by interaction and deliberation, “our inner city community needs new athletic facilities” or “there is too much violence on TV and in the movies” or “we should rein in the World Bank and democratize the IMF!” Markets preclude “we” thinking and “we” action of any kind at all, trusting in the power of aggregated individual choices (the invisible hand) to somehow secure the common good. Consumers speak the elementary rhetoric of “me,” citizens invent the common language of “we.”

Markets are contractual rather than communitarian, which means they stroke our solitary egos but leave unsatisfied our yearning for community, offering durable goods and fleeting dreams but not a common identity or a collective membership—something the blood communities spawned by Jihad, reinforced by the thinness of market relations, do rather too well. Cybernetic and automatic rather than deliberative and genuinely voluntary, markets produce collective consequences that cannot be foreseen in the simple feedback loops established by consumers making individual choices and markets responding to them. What Ludwig von Mises blithely called the “daily plebiscite in which every penny” gives consumers the right to “determine who should own and run the plants, shops and farms” is a charming fraud; for the self-interested motives on the basis of which consumers spend their pennies have nothing to do with who runs anything, let alone with the kind of civil society these same consumers hope to live in or the civic objectives they forge together as citizens in democratic political arenas in order to control the public and political consequences of their private consumer choices.
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Recall Felix Rohatyn’s warning that markets entail “a brutal Darwinian logic … They are nervous and greedy (and) … what they reward is not always our preferred form of democracy.”
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Democracies prefer markets but markets do not prefer democracies. Having created the conditions that make markets possible, democracy must also do all the things that markets undo or cannot do. It must educate citizens so that they can use their markets wisely and contain market abuses well; it must support values and a common culture in which the market has no interest and does not try to reward; it must deploy mechanisms that prevent the market from self-destructing via anarchy or via monopoly; and it must secure an alternative form of choice that permits common choosing
as a remedy to the inadvertent social consequences of individual choosing.

Take the transportation debate raised earlier. When I choose to buy a car, I choose to get from here to there efficiently and perhaps pleasantly; however, among the consequences of my choice may be air pollution, resource depletion, the disadvantaging of public transportation, pressure on hospital facilities, and the despoilation of the natural environment by a highway system. As a consumer, the only way I can avoid these consequences is to refuse to buy a car—an irrational act from the narrow economical perspective and one that throws a wrench into the market economy. So I play the consumer and buy the car. Capitalism is served and so am I—as a consumer. But in a democratic society, I am not just a consumer, I am a citizen. And as a citizen, I can act in common with others to modify the untoward public consequences of my private choice. As a citizen I can join with others and redress the ill effects of my car purchase: we can outlaw leaded gas, fund electric engine research, subsidize public transportation, mandate hospital insurance for drivers, and limit highway construction in scenic regions. These civic activities do not curb our market freedom, they facilitate it. Democracy makes markets work by allowing us the freedom of our consumer choices in the knowledge that we can counteract their accompanying vices. To do so, however, we must have alternative nonmarket institutions, and in the international arena such democratic tools are entirely absent.