Rise of the Demise of Global Capitalism
THE two elephants in the house on the road in the race for the White House have one thing in common. Bernie Sanders and Donald Trump both blame free-trade deals for the decline of working-class jobs and incomes in America. But someone in a position to know better than both says they’re both wrong.
Robert Reich, a former US Labour Secretary under Bill Clinton who is described by Newsweek as one of the top ten influential Cabinet Secretaries in Washington in the past decade, says it’s not just free trade stealing American jobs, but also technology. However, he goes on to argue, it’s not just a combination of free trade and technology to blame, but the collapse of the entire capitalist trade system.
In an article published March 17, 2016, Reich noted that America has lost millions of factory jobs over the last three decades. In 1980, he noted, one in five Americans worked in manufacturing, but now it’s one in 12.
When he visits America’s remaining factories today, he added, “I rarely see assembly-line workers. I don’t see many workers at all. Instead, I find a handful of technicians sitting behind computer screens. They’re linked to fleets of robots and computerized machine tools that do the physical work.”
While the researchers debate whether trade or technology is more responsible for the decline in factory jobs, Reich argues that “In reality, the two can’t be separated.”
“Were it not for technological breakthroughs,” he says, “there wouldn’t be the huge cargo containers, massive container ports and cranes, satellite and Internet communications systems that have created highly-efficiently worldwide manufacturing systems.”
These systems have relocated factory jobs from the United States to Asia, especially to China. In fact, Reich argues, “The biggest losses in American manufacturing started in 2001 when China joined the World Trade Organization, requiring the US to lower tariffs on Chinese goods.”
In fact, MIT economist David Autor and two co-authors have estimated that between 2000 and 2007 the United States lost close to a million manufacturing jobs to China – about a quarter of the total decline in those years. (Robert Scott of the Economic Policy Institute puts the loss since then at about three million.)
But free trade has not been entirely bad for Americans, Reicht notes, as it’s given them “access to cheaper goods, saving the typical American thousands of dollars a year.” A recent study by economists at UCLA and Columbia University found that trade has in fact increased the real incomes of the US middle class by 29% — and even more for those with lower incomes.
But Reich notes as well that “Trade has also widened inequality and imposed a particular burden on America’s blue-collar workers.”
He argues that free trade “has given the better educated better access to worldwide markets for their skills and insights – resulting directly or indirectly in higher pay.”
Indeed Reich’s underlying argument, as indicated in the title of the article, is that ‘America’s problem isn’t Free Trade; it’s the demise of an entire economic system!’
Reich’s message to America does also apply to the Caribbean, Latin America and the rest of the world. Free trade has exposed the wider region’s vulnerabilities over the years.
The WTO’s dismantling — under US pressure for American-owned companies in Latin America — of the preferential treatment Caribbean bananas enjoyed in Europe has had catastrophic results in Jamaica and the four Windward Islands (Dominica, Saint. Lucia, St. Vincent and the Grenadines).
The global economic system hasn’t fully recovered from the 2008 crisis sparked off by the credit crisis in the USA. Successive warnings have been coming from the annual Global Economic Forums in Davos that the capitalist system is still failing the world. Now the global chieftains of world capital are quietly but nervously asking whether another world economic crisis is on the way – of whether the global financial system has actually ever fully recovered from 2008.
In January 2016, figures released (ahead of the latest Davos meeting) showed the mega rich the world over had increased their wealth by 40% since 2004. The 16 top billionaires in the USA now own more than half of the rest of America. And in Australia, the top ten billionaires on the world’s largest island own more than all the rest of Aussies put together.
That’s not all. OXFAM, the UK-based world charity organization reported that 62 super-rich billionaires the world over own as much as half the poor people in the entire world.
But with all that real money floating around the world, none of the super rich persons and entities have found a way to put a fraction of what they have to work to solve the worst problems affecting the world’s poor.
As far back as 1975, it was estimated that 0.7% of the amount spent on the arms race could have eradicated poverty. Forty years later, Ethiopia started 2016 needing only US $50 million to address the worst drought in its history, with the lives of 400,000 children at stake.
Besides, Climate Change is spelling doom for countries big and small, while the current refugee crisis hitting Europe has already split the EU down the middle, erasing borders while redefining life and politics across states.
The signs of the crisis facing world capitalism have been evident, but hardly highlighted by the mainstream media everywhere. Now, as Reich has shown, the chickens have come home to roost and the process of adjustment to the new global economic realities is shaking the very foundations of the predominant economic system.
But while the chieftains keep their lips zipped, their visionaries have not been losing sleep.
The likes of Warren Buffet has been able to encourage co-chiefs of global capital like Bill Gates and Mark Zuckerberg, along with some in China as well, to invest in entrepreneurship ventures that see them declaring their life worth to charitable-sounding causes that will cement their status as leaders of capital through accruable tax gains.
The adventure capitalists and conquistadores of global capital are frantically in search of new worlds to conquer. But their main engine for movement and expansion – the economic system they have relied on without reason for doubt for so long – is no longer able to drive the process as before.
The rise of China, Russia and India, along with South Africa and Brazil, through the BRICS mechanism, has provided alternative avenues for access to developmental capital that have attracted both developing and developed countries away from the World Bank and the IMF. Between them, the five BRICS member-states control over half the world’s population, space and capital. And besides, China holds the US’ foreign debt in one of its back pockets.
Market volatility and inability to stabilize exchange rates, accelerated unemployment and growing concentration of accumulated capital continue to be major features in the current accelerated decline of the traditional capitalist economic system.
What Reich is saying to both Sanders and Trump, to the Caribbean and the Americas, to all of Africa, Asia, Australia and Europe, is that the system is broken. He doesn’t say it’s beyond repair. But if facts and figures, time and history are to be taken into account around the world, it may be much easier – and better — to change the broken capitalist system, than to fix it!