By Guest Columnist Alan Singer
The New York Times recently ran a front-page article “Failures of Globalization Shatter Long-Held Beliefs.” It was a very comprehensive article with one major flaw. It blamed globalization for a slew of problems but barely mentioned its connection to capitalism.
According to the article, globalization hastened climate change and deepened inequalities internationally and domestically. In the United States, industrial jobs were exported to lower-wage countries as “companies embarked on a worldwide scavenger hunt for low-wage workers,” removing a “springboard to the middle class.” Essential human needs like health care and housing and higher education were priced beyond the means of many Americans and the job exodus undercut wages and “workers’ bargaining power, spurring anti-immigrant sentiments and strengthening hard-right populist leaders.”
The transporting of raw materials and manufactured goods from mines and factories to consumers on the other side of the planet worsened global warming by increasing greenhouse gas emissions. The promised rebalancing of wealth never happened as poorer nations fell deeper into debt and were forced by lenders to invoke austerity measures increasing misery in the very nations most threatened by climate change.
Capitalism has been a transformative force in global history starting with the commercial revolution in the Mediterranean basin during the 13th century. Capitalism created the modern world with its technological marvels and longer human life spans. But capitalism has also been responsible for some of the most negative developments in human history, including chattel slavery, the depopulation of indigenous American civilizations, colonization, imperialism, world war, genocide and an impending climate catastrophe.
Within a hundred years after Columbus’ arrival in the Caribbean, the population of the Valley of Mexico declined by 90%. The devastation of the indigenous population of the Americas meant a new labor force had to be introduced to develop the land and resources. During the course of about 150 years, first on agricultural plantations in the Caribbean and Brazil, and then more generally, enslaved Africans became the primary un-free workforce.
An estimated 13 million Africans were shipped to the New World from coastal slave ports. Millions of others died in tribal warfare stimulated by the demand for slaves, during raids, while being transporting to the coast, or when left behind in decimated communities. Profit from the trans-Atlantic slave trade and the sale of slave-produced commodities fueled the movement of Western Europe from the global periphery to center stage. It provided the capital for the Industrial Revolution, funds for building the physical infrastructure of European nations, and the money to support powerful armies and navies leading to imperialism and European global domination.
In the contemporary era, transnational capitalism, unleashed from national loyalties and regulatory restraints, supported by computerization and instantaneous communication, and utilizing mature financial and distribution networks, has taken on a dynamic of its own with the potential to undermine the nation-state system built up during the preceding 500 years, a system that still organizes, governs, taxes, represents, and provides services for, most of the people of the world.
In “Capitalism in America: A History,” Alan Greenspan (2018), formally chair of the Federal Reserve banking system in the United States, and co-author Adrian Wooldridge, a columnist and editor for the weekly financial magazine The Economist, championed the “creative destruction” unleashed by free-market capitalism and argued it would propel a more productive global economy and overall long-term social benefit.
However, Greenspan and Wooldridge largely ignored the social impact of short- and medium-term dislocation. They also ignored the way the destructive forces and unequal power relationships that capitalism generates treated the environment, including air, land, water, and climate, as a renewable resource to be exploited, an assumption that no longer can be sustained.
In recent years it has become clearer that unrestrained industrial capitalism, now operating on a global scale, has misused resources, polluted the planet and altered the climate in ways that threaten the survival of human civilization as we know it. It has also stimulated vast human migration and weakened confidence in the ability of governments to address social needs. For a long period, it was believed that capitalism and democracy were symbiotic, but the emergence of new undemocratic movements in more advanced economies suggests that this is a fragile relationship. It is not clear whether our globalized civilization has either the will or the ability to resolve the contradictions that threaten it.
In a 2018 year-end letter to investors in his Baupost Group that was distributed at the annual meeting of the World Economic Forum in Davos, Switzerland, in January 2019, billionaire Seth Klarman warned that widespread social tensions, rising debt levels, and receding American leadership on the world stage were creating an expanding political and social divide that could end in a global economic calamity. According to Klarman’s analysis of the global political economy, “it can’t be business as usual amid constant protests, riots, shutdowns and escalating social tensions.” And Klarman did not even address uncertainties that will result from climate change.
New York Times columnist Thomas Friedman popularized the idea that globalization in the modern era has produced a world that is flat, without the disruptive forces that impeded economic development in the past. But it may be more useful to describe it as seismically unbalanced, with capitalist economic forces producing goods for non-existing markets, promoting change without plan, and maximizing short-term profit without concern for long-term social and environmental consequences. It is as if Shiva, the Hindu God of creation and destruction, walks the Earth and is out of control.
Alan Singer, director, Secondary Social Studies
Hofstra University
