Capitalism and its victims
IT has never been easy offering a critique of capitalism or markets to my undergraduate students. Most have never heard an unkind word about these bedrock institutions, which they know to be the foundations of American power and prosperity.
These are hallowed institutions. The power of private capital to produce jobs, wealth and freedom is one of the central dogmas that many Americans absorb with their mother's milk. To hear this dogma challenged, in any context, is unsettling. I sometimes suspect that this bitter pill is harder to swallow because it emanates from someone who, so transparently, is not a native-born American.
Nevertheless, the thesis that "free" markets have rarely worked for economies lagging far behind the economic leaders, does not quite take root. The fault could not lie with markets. For too long, the West has believed that Asians, Africans and Latin Americans failed because they were lazy, spendthrift, venal and unimaginative. My students, like most Americans, have been conditioned to look at capitalism from the standpoint of the winners in global capitalism. They cannot conceive how a system that has worked so well for them could produce misery for others in Asia, Africa and Latin America.
I have been away from my teaching duties as the United States has led the world into a deepening recession. Within a few months, the titans of Wall Street have been laid low, rescued from extinction by tax-financed bailouts. Teetering on the edge of bankruptcy, the auto giants have been placed on life-support also by taxpayers, their future still uncertain. In this maelstrom, there steps forward Bernard L. Madoff, the Einstein of Ponzi schemes, who operated his colossal con for twenty years without notice from regulators. As Americans on Main Street were being devastated, executives of bailed out banks continued to receive millions in bonuses.
Ordinarily, American democracy directs its venom against writers and activists on the left foolish enough to want to defend the underprivileged. For a change, Americans are threatening captains of finance, venerable bankers, with dire consequences even death threats. Wall Street is being being toppled by greed, recklessness and fraud; by a free-market ideology that has no regard for human life; by capitalist elites and their partners in the White House and Congress, who had turned the financial sector into a giant Ponzi scheme.
When I return to teach in fall of this year, I expect to meet students chastened by their experience. Nothing undermines capitalist ideologies faster and more effectively than capitalist crises. No critique of capitalism can be more penetrating than the depredations of unemployment, immiseration, homelessness that it inflicts on its victims. So recently victimised at the very centre of global capitalism perhaps, Americans might learn to empathise with victims elsewhere in Africa, Asia and Latin America who have been ravaged by this system for centuries.
Capitalist ideologues will be working overtime to deflect American anger away from the system to a few villains, to a few rotten apples. Congressional hearings will identify scapegoats; they will hang a few 'witches.' A few capitalist barons will be sacrificed. As public anger subsides, attempts will be made to shift the blame to feckless homebuyers and compulsive consumers. At all costs, the system must be saved. The capitalist show must go on, with as little change as possible.
Quite apart from this crisis, however, new technologies, in combination with the irreversible shift of sovereignty to some segments of the capitalist periphery, have been changing the dynamics of unequal development. The high-wage workers the so-called middle classes in the developed countries have been losing the protection they have long enjoyed against competition from low-wage workers in China and India.
More and more global capitalism will enrich some workers in the 'periphery' at the cost of workers in the 'centres' of capitalism. In the years ahead, the great alliance that was forged between capitalists and workers in the centres of capitalism will come under greater strain. More and more, the interests of these two classes will diverge.
Powerful corporations will still insist on openness, while growing ranks of workers will press for protectionism. This revival of class conflict in the old capitalist centres will strain existing political arrangements.
As growing segments of high-wage workers in the rich countries become the new victims of capitalism, will they slowly learn to see capitalism from the standpoint of its victims? In this new emerging reality, will orthodox economics migrate from its old centres in London, Cambridge and Chicago to new centres in Bangalore and Beijing?
A curious world this will be when seen from the old centres. In truth, this will only be a long-delayed correction to two centuries of unequal development, dominated by Western centres. Sadly, the correction will not go far enough: it will leave much of the world mired in poverty and disease.
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