Please explain how capitalism is responsible for war crimes and terrorism

[Demosthenesian]

*Originally posted by CyberPundit *
Demo,
I didn’t say that all capitalist countries have been democratic but just gave counter-examples to the proposition that capitalism undermines democracy and unions. As it happens the rise of both democracy and trade unions in the West coincided with a period of a more or less unfettered international capitalist system before WW1. Could you give evidence for your proposition that global capitalism undermines democracy and trade unions.

Ahem. My argument was that capitalism and democracy can have tension at times, and that democracy is not necessary for capitalism. As neither of those remotely imply the “capitalism undermines democracy” argument you attributed to me, I don’t see the need to defend it. I will, however, argue that democracy can undermine capitalism: for proof, simply turn to any of your favorite pork barrel projects.

The race to the bottom argument assumes that regulations don’t contribute to productivity. I thought your argument was that some regulations can contribute to productivity. If they do there is not much reason why firms will move out.

You’re confusing short term vs. long term benefits here, and I’m not quite sure if you understand the idea of a public good. Many public goods (like education, a clean environment, national stability, personal security, etc) are benefits only in the long term, whereas the price of them affects the profitability of a corporation (and therefore its investors) in the short term. You end up with the problem of free riders: one firm can stay and pay the short-term costs of improving the country in question, whereas all of its competing firms merely move in after the long term benefits have kicked in and enjoy the benefits without suffering any of the costs. Since the company that stayed is at a serious economic disadvantage and since any intelligent businessman would know this, no company stays around. The goods (such as education, stability, environment, etc) I mentioned above are not provided by the market, and therefore the market fails.

The only way to get around market failures such as this is to spread the short term costs around to all so that all can receive the long term benefits. This is the role of the state. The problem is that this system breaks down if the state can not exercise its coercive power to assure that these costs are spread around. Hence the problem with global capitalism, and the “race to the bottom” I mentioned earlier- because no state has coercive power outside of its borders, that market failure I mentioned earlier is practically inevitable. The only way for states to resolve this problem is to either impose tariffs that make it more attractive to stay in the country and pay those short term costs for those long term benefits, or for states to coordinate each other so that they can deal with market failure in the global market in the same way that they dealt with market failure in national markets. Neither solution is being entertained by the current trade regime, and therefore I have to conclude that under the current system the “race to the bottom” is inevitable. No state, or group of states, could stop it.

Besides there is competition on both sides so it’s not clear why you believe that multinational firms are as much bargaining power as you say they do.

The competition is why there is a problem, as I said earlier.

Can you give examples of this “instability”. Besides this is an example where competition will tend to increse labour regulation so it goes counter to your general argument.

You’re asking me whether national stability is a good thing? That would seem to be self-evident. State, business, and citizenry all benefit from a stable country, but nobody wants to pay for it.

“If regulation is to be at all meaningful, it must be universal.”
This is a rather strong assertion for which you have provided no evidence. The basic reason why you can’t have the same regulation in rich and poor countries is that poor countries simply can’t afford the level of regulations that rich countries can. None of your arguments are so strong that they offset this basic point.

On the contrary, the problems in poor countries only exacerbate the necessity of regulation on a global rather than national scale. Arguing that “they simply can’t afford it” begs the question of when they will be able to afford it. Most of the profits from the added value of the labour and capital in your typical third world country go to the investing corporation, not to the workers or the state in that country. There is nothing wrong or evil about that, but it means that there is precious little money available to the state to improve the situation in said country. As I said earlier, there is no way the corporation is going to pay for it: on the contrary, the problem of other corporations free-riding the productivity growth after you’ve made your improvements makes it incredibly bad business sense to invest in the country to any degree more than absolutely necessary. No matter how much you benefit from that investment, you’re still at a competitive disadvantage.

And don’t forget that poor countries often have a lot of regulation. There is little evidence of global capitalism forcing a “laisser-faire” regime on them.

Are you aware of the conditions imposed on your typical IMF or World Bank loan? Or the requirements for membership in the WTO? Your knowledge of the current economic climate seems sharply limited.

Now, for some of your other points:

Actually workers in the organized sector get some benefits even in the poorest countries. Even if they don’t they can be made to work more.There will almost always be some margin for adjustment.

You are not aware that workers have burned to death because of being locked inside their factories, and that the Mexican Maquiladoras are among the most polluted and most dangerous parts of the world to live?

“Of course employers sometimes have to reduce profits!”
And how often does this happen especially in the long run compared to the other adjustments according to you? Like I said if the industry is competitive profits can’t be hit much.

Of course they can, if the company’s costs aren’t being being unfairly subsidized. That is what pollution is, after all: a cost (to the environment) that the company in question doesn’t have to pay. Dealing with charging business for externalities is also the job of the state… unless, of course, the game has been rigged so that the companies can work on a global scale and the state cannot.

“Because perhaps better-offfactory workers will themselves create demand; or more productivity.”
If regulations make workers more productive there is no reasons why firms will object to them. Can you give some academic cite for regulations which increase productivity?

An academic cite is necessary to show that something like education increases productivity? This forum is anal retentive about cites, isn’t it? Another example would be land-use regulations and building codes: both increase productivity by eliminating the costs of locating the wrong types of development too close together or of rebuilding shoddily constructed capital investments. I’m sure that you aren’t going to argue that urban planning is a bad idea.

Minimum wages and regulations don’t increase aggregate demand and in any case poor countries are typically not constrained much by aggregate demand. I challenge you to find any mainstream economist who says that increasing the minimum wage increases aggregate demand.

Regulation can certainly increase aggregate demand, depending on the regulation. The demand for housing in the example I gave above for example: properly built and situated housing is not only a public good in that it adds to the livability and organization of a city, but those living in housing that isn’t likely to fall down and that is sanely situated are more likely to spend money improving it and to work to improve the safety and stability of their neighborhood.

The problem is that you’re trying to argue that the problems of a specific form of regulation (such as the minimum wage) necessarily apply to all forms of regulation. Needless to say, that sort of inductive reasoning is unbelievably flawed.

“Cyberpundit, these kinds of arguments were continually made during the nineteenth-century”
A great era for the science of Economics.

Indeed. We’ve moved on. Quite a bit. Just this year, in fact: do you know what assymetrical information is?

The majority of economists continue to believe similar things about labour market regulations especially for developing countries though with some nuances and analytical bells and whistles. Can you point to major economists who believe that increasing the minimum wage or more regulation is a good way of promoting growth in those countries?

Adam Smith provided for a role for government, did he not? And I seem to recall a fellow by the name of John Maynard Keynes who had something to say about the government having some greater or lesser part to play as well. Oh, and if you’re praising nineteenth century economists, you’ve just brought Marx into the equation.

Ouch.

In any case the arguments are considerably more nuanced than “if we reduce the working day from 12 hours to ten we’ll all go out of business and there won’t be any employment” You haven’t really bothered to address my arguments or give any reasons for your belief that most of the adjustment will happen on margins beneficial to workers.

Perhaps, although I believe I have. Unless you have a convincing argument that urban planning is a bad idea, your assertion that regulation is necessarily inefficient is inaccurate.

BTW your Nation article probably doesn’t mention that China and India with more people than Latin America have increased their growth rates significantly after they opened their economies to foreign capital and trade. India , in particular , had a very successful IMF stabilization programme after which growth rates have been higher than before.

India is vastly different than most third world economies (if it even truly counts as a third world economy), and even then still has more than its share of problems. If you believe the IMF’s reforms are so useful, perhaps you can explain why Japan’s situation was worsened by them, and what the use is of their strategy of fighting inflation in a deflationary economy. And kindly hurry, because right now I can’t think of the IMF as anything but a tragic joke.

[CyberPundit]

Sigh In case you haven’t noticed this discussion was about labour market regulations like the minimum wage not about every conceivable government policy like education,urban planning and the like. Most of your post is therefore completely beside the point.

Minimum wages don’t address a market failure; they are a redistributionist tool and usually an inefficient one at that.

“The competition is why there is a problem, as I said earlier.”
No. Competition is not a problem if it is on both sides. Companies are also competing for scarce profit opportunities and are in no position to dicatate policy. Can you please provide some cite or evidence for your repeated assertions about this.
“You’re asking me whether national stability is a good thing?”
No I am asking for examples where differences in regulation by themselves caused such massive migration so as to cause instability.

“Are you aware of the conditions imposed on your typical IMF or World Bank loan? Or the
requirements for membership in the WTO?”
Indeed I am and neither of them is even remotely close to “laisser-faire”. Your understanding of that term appears to be sharpy limited.

        "Regulation can certainly increase aggregate demand, depending on the regulation."

No the main policy measures which affect aggregate demand are fiscal and monetary policy. Your example shows you don’t even understand what aggregate demand is. I suggest you refer to some introductory macroeconomics text.

        "India is vastly different than most third world economies (if it even truly counts as a third world
        economy), and even then still has more than its share of problems"

India not a third world economy? LOL. You are quite the expert aren’t you? And India has problems therefore the IMF stabilization was a failure? Perhaps you need to review your logic textbook as well.

“If you believe the IMF’s reforms
are so useful, perhaps you can explain why Japan’s situation was worsened by them,”
And when exactly did the IMF carry out reforms in Japan?

You understand , don’t you, that IMF stabilization programs are for primarily for developing countries experiencing a BOP crisis. You think that a rich country with huge current account surpluses needs the IMF?

[Demosthenesian]

Oh, and BTW Minty… I think I can answer your OP. Keep in mind that this is an explanation of how capitalism can be responsible… it definitely isn’t the only factor.

Ok,first: Most terrorists come from fundamentally unstable countries. Either there is a unstable regime which uses violence and repression to retain power or there is no regime at all but merely civil war. The reasons for the problems of the regime (or lack of such) are largely political, but there is usually economic reasons for the relative amount of instability: as the case of a country like Singapore shows, authoritarian regimes can stay in power and reign over a relatively peaceful country if that country is economically successful. It is also usually the case that these economic problems are unequally distributed along ethnic or national lines, which often leads to grinding poverty for the the same groups that are marginalized politically. It is from these groups that terrorists (and, for that matter, religious extremists) usually spring.

But, you ask, where does global capitalism fit in? These countries are economic basketcases, yes, but why is capitalism responsible?

Well, it’s partly a case of past causation and partly a case of current ideology. It’s partly a case of past causation for two reasons: Mercantilism(a form of capitalism) cutting its way through much of the third world and leaving little behind but arbitrary borders, plundered resources and a variety of interesting diseases; and aftereffects of the Cold War which was fought, as you know, as a war between capitalism and communism. Capitalism won the cold war, though, and from that comes the other part: current ideology. There are plenty of people who think that since capitalism “beat” communism that free markets are a cureall and that any perceived flaws in the free market system are due to “not enough capitalism”. This means the same thing in the third world that it did in North America: government interference in the economy is either evil or pointless. State action to deal with the inequalities created by capitalism becomes unfashionable at best- at worst (which would be the IMF) it becomes literally impossible. The idea that free markets are curealls is ludicrous, of course: any successful market requires a host of institutions to support it, and at the very least a system of civil and political rights. But thanks to our zealous and halfwitted free marketeers, they get the entire third world to play with before they find out why they’re wrong.

So, what does this state of affairs mean for our marginalized friends? Well, first, it means that their situation isn’t getting any better vis a vis the people they’re marginalized from. If it were the society that could actually support a free market, they might be better off, but by and large it isn’t. The only thing this “free market” is doing is lining the pockets of the elite. There might be some more employment, but it probably won’t be for these guys, it’ll be for the members of the majority. If they do get jobs, it’ll likely be the worst job of the lot. If they don’t, though, the government won’t be able to help them. Even if it wanted to.

(And then there’s the possibility that the working conditions could kill them. If they die, that just ticks off more people. If it’s somebody’s kid, it would probably take half the staff to pull them off the foreman)

Second, it means that the government in question has a convenient target for blame: the West. The government would like to help, it says, but can’t because the West won’t let it. They can’t actually do anything about the government in question, because they have little to no political rights (and more often than not the government is being propped up by the U.S. in order to maintain regional stability). Without an avenue for peaceful protest and political change, they become radicalized.

Third, it means that they’re easy meat for whatever demagogue (religious or secular) decides to exploit them. If they’re Muslims (a group very often marginalized) it’s even better, because they’ve got an international network of people who are absolutely foaming at the mouth to exploit them for personal gains. Either way, though, you’ve got people with nothing to lose: their economic situation is bad and getting worse and their political rights are nonexistent. The only hope they think they have is violence.

So, one of two things happens. Either they’re aimed at the regime in question, and they start warring against it. If they’re organized and well armed enough, they actually rebel. It becomes a military conflict. If they aren’t, they do the next best thing and start terrorizing in hopes of attracting enough support and/or fear to actually get something done. This is especially problematic if they are religious, because death isn’t an issue.

If they’re aimed at the West, well…we know what can happen.

Does this mean all people in this situation will become terrorists? Nope. Some will get decent jobs, and some will avoid the demagogues that prey on people like this. Some will emigrate, and become refugees somewhere else. Some won’t be zealous enough to attack the government (or “other tribe/religion/nationality” as the case may be), and still more won’t be zealous enough to attack the west. The problem is that some will be.

So to get back to your main point, minty, capitalism isn’t the sole determinant or maybe even the greatest one. The problem is that the unthinking application of a “free market” in a country without the structures for one can turn a bad problem worse, and provide a legitimate reason for someone to hate the westerners that imposed these insane rules on them. If the regime is being propped up by the West it gets even worse, although it’s not necessarily required. All it takes is a push in the right direction by someone who knows all the right words, and every American now personally knows the awful fury of those that feel they have been wronged and violated.

One caveat: I don’t necessarily believe that the WTC bombers fit this profile. I don’t, however, believe this invalidates my point: as I said earlier, capitalism can be a factor, but doesn’t have to be the main one. It doesn’t even have anything to do with classes: it can take advantage of divisions that already exist.

[Demosthenesian]

Cyber, if you’ll refer to Minty’s post, she said she included “three very specific items: wages, the environment, and worker safety”. The original post said nothing about it being merely about “labour regulations” and you did not specify “labour regulations” in your own post, yourself using the word “regulations”. Mind explaining how this is about labour regulations if neither the original post nor the original poster were discussing that? And mind explaining why you keep on asserting that all labour regulations=minimum wage? I’m smelling an inductive fallacy here, and you were the one complaining about my logical inabilities here.

The competition is why there is a problem, as I said earlier."
No. Competition is not a problem if it is on both sides. Companies are also competing for scarce profit opportunities and are in no position to dicatate policy. Can you please provide some cite or evidence for your repeated assertions about this.

My argument was that companies will indeed invest in improving markets, but only to the minimum extent necessary and no farther than that: any public goods that result from that would benefit any company that took advantage of that country but didn’t pay for it earlier. The company that did would be at a relative disadvantage compared to the other ones, as it solely paid for a public good.

What do you want me to cite, exactly? The free rider problem? The concept of public goods? Externalities and subsidies of cost through them? The fact that if you pay for something you have less money than somebody who doesn’t, and that corporations tend to avoid investments that return no value? Perhaps you should be the one picking up economics and logic texts, not me. I would think that basic concepts wouldn’t need cites. There is no need nor point to asking for cites if I’m not appealing to an authority. If I had quoted statistics or specific examples it would have been different. I did not.

I would appreciate an explanation of what you meant by “aggregate demand” though. After all, I was kind enough to explain my reasoning.

If you want a criticism of the IMF, I cite you Joseph Stiglitz, although if you’re up on the issues you should already know his arguments.

http://www.thenewrepublic.com/041700/stiglitz041700.html
Enjoy!

(Frankly, cyber, I’m disappointed. You glossed over most of my post with that “it’s not about minimum wages” nonsense, picked up little bits here and there that you thought you could attack, and didn’t even get your spacing or spelling right. I know I’m new here, but I expected more.)

[Demosthenesian]

One concession to you, cyberpundit: although the attempts of western economists to “reform” the japanese economy fit the model I mentioned (anti-inflationary techniques on a deflationary economy) I can’t actually credit or accuse the IMF in that situation, as I don’t have a source for that. Not overly unnecessary, though, as the Stiglitz link backs up my main point, which is that the IMF’s techniques are poorly applied, dogmatic, fail to take into account specific situations and often worse than useless: the very picture of zealous neoliberalism.

[Demosthenesian]

Ack. Not overly necessary, that is.

[CyberPundit]

Demosthenesian,
If you read my first post it was very clearly referring to “global labour standards”. This refers to things like the minimum wage but also things like worker safety regulations,minimum mandatory benefits and the like. While you can make some kind of market failure argument for the latter sometimes, the principle idea is that the legislation is a method of improving the standard of living of workers. There is an implicit belief that the costs of those standard s won’t fall on the workers themselves and this is frequently not true.

In any case my basic problem is your contention that market failures in the labour markets are best solved at the global level when market conditions are always different. Also some type of cost-benefit analysis why mandatory legislation is the best solution to any market failure and indeed the magnitude of the specific market failures you are referring to. Just throwing around terms like “public good” isn’t an answer; it only shows how little you understand.

For instance have you ever heard of a Tiebout process which explains how competition between governments can lead to an optimal allocation of public goods under certain conditions. Would you care to explain why the logic of the Tiebout process doesn’t work here and the magnitude of any market failure involved. If you can’t I suggest you be a little less cocky with your extremely limited expertise.
Aggregate Demand=Consumption+Investment+Government Spending+Net Exports.
Again there is large literature about how exactly policy can increas AD and it is usually more complicated than just increasing one kind of spending. Again if you don’t understand this, a little less cockiness would be in order.
Stiglitz. Some of what he says is valid; a lot of it is gross exaggeration. In any case he is not an expert on OpenEconomy Macroeconomics. Someone who is is Rudi Dornbusch.
See his web page:
http://web.mit.edu/rudi/www/editorials.html
In the 2000 section there is a brief critique of Stiglitz.

[B.Gardner]

Even a casual glance at the historical record reveals that terrorism and war crimes were in very plentiful supply WELL before the advent of capitalism, rendering this entire discussion foolish and moot.

[minty_green]

My point exactly, B. Gardner. In all of Demosthenesian’s theorizin’ s/he failed to explain why capitalism in particular creates the conditions for terrorism and war crimes. “Marginalization” happens to someone in every economic or political system, so if that’s all it takes, capitalism is no different than any other system in this regard.

[Mandelstam]

My goodness! It’s rather nice to wake up and find that one hasn’t go so much to do. Demos, to say the least, your intervention has, um, boosted my productivity ;).

Minty: “WTF? Who said anything anything about protective tariffs or undefined mercantile regulations? I addressed three very specific items: wages, the environment, and worker safety. Since you addressed none of those items in your reply, how is it that I’m “completely incorrect”?”

How? Because “mercantalist regulation” isn’t, as you may have assumed, exclusive to matters of trade. In Britain it included all kinds of worker regulations, albeit of a markedly pre-modern kind. The price of bread, for example, was regulated; and poor rates (taxes) were levied to make certain that the agricultural laborers (who were being driven from common use of the land) didn’t rebel (as did their French counterparts). These regulations were only gradually removed as the British industrial economy became strong enough to shift into its laissez-faire phase. It was from that point on that workers had to fight to get for themselves the modern counterpart to the protections that mercantilist governments had provided for them.

Another inaccuracy is your assumption that those worker-driven benefits didn’t come until late in the twentieth century. The process was indeed gradual but there was always some kind of agitation against strict laissez-faire, sometimes enhanced by humanitarian sympathizers: e.g., for education for factory children, for the reduction of children’s factory labor, eventually for the reduction of the adult day. From the 1890s - 1910s the British government was beginning to move into full welfare state mode: school meals for poor children, old-age pensions, unemployment insurance.

Significantly, one of the reasons they did this was that their workforce had become uncompetitive vis a vis Germany’s where Bismarck’s corporatist approach to state welfare had been providing such things since the 1870s. So, CyberPundit, if you’re reading, this is an historical example of how state intervention boosts productivity (in the long-term, as Demos reminds us). The counterpart to this in the US was the progressive era with some similar legislation for US workers; and certainly the New Deal in the 1930s went further still.

Another point is that you (and perhaps erislover as well) seem to assume that there is one unique path, based on Western history, towards industrial development: from early industrialization (with laissez-faire and a certain amount of suffering), to increased prosperity with, at last, the ability to deepen democracy and social welfare. Not only is this a very superficial way of understanding Western history, there is no evidence whatever that it could be replicated under the current conditions of the developing world. In fact, the evidence suggests quite the contrary since, as I said, no nation has ever managed to industrialize under laissez-faire conditions.

Rather, mercantilism boosted industrialiazation just as the “economic nationalism” of Asian countries did prior to the Western imposition of economic “liberalization” in the 1990s(described well in the Stiglitz link provided by Demos). In the 18th and 19th centuries, colonialism was another factor: the British basically shut down native Indian manufacturer and turned India into a source of raw materials and resources for their economy, and the Indian people into consumers of their goods. The US of course had a giant and resource-rich continent to subjugate and later got into the imperial game.

So, even if it were true–which it is not–that these governments did nothing but leave market forces to themselves as industry developed, how can you possibly compare these conditions to that of developing countries? Reminder: most of the manufacture being done in developing nations is through foreign (multi-national) corporations with little or no interest in investing in the region or its workforce. These companies can and often do leave or threaten to leave the country just when the workforce is beginning to organize in the manner of nineteenth-century Western precedents.

Conclusion: it’s absurd to extract the myth of laissez-faire conditions from the history of the West and impose it on developing nations struggling to compete with wealthy Western nations, and under the thumb of powerful corporations and Western-dominated institutions such as the IMF. Absurd and also counter-productive since, as I’ve said again and again, our economy positively needs these workers to be able to purchase goods from us as wel do from them.

Cyberpundit: “I challenge you to find any mainstream economist who says that increasing the minimum wage increases aggregate demand.”

Well, as Demos has already argued, you have narrowed the broader issue of improving living standards for developing workers in the long-term, to a very narrow question of minimum wage in the short-term. This suggests that I think of the minimum wage as some kind of silver bullet: which I do not. Or as the first thing on the agenda of any developing country: which I do not. In fact countries like Mexico already have a minimum wage, and it’s not clear to me that it’s been decisive in reducing the hardship of Mexican workers. (It’s also the case that millions of Mexicans work illegally beneath the Mexican minimum wage.)

As you seem to like citations, I’ve found some for you. I should mention that I’m not an economist, but an historian (and now something else as well), but I read lots of books by economists. Generally speaking, I would say that Lester Thurow is a mainstream economist who addresses the importance of investing in workforces to increase productivity and overall long-term economic prosperty; Krugman certainly has diverged from the IMF’s dictates here and there; Weisbrott, the author of the Nation piece is an economist with the Economic Policy Insitute. And, of course, Amartya Sen, an econometrist, has argued widely that economists models need to be revamped because they’re predicated on hidebound and unrealistic notions of human economic behavior.

Now for the cites:

Now here’s something from the founder of a citzen’s group. I have no idea if he’s an economist or not (and I want to add that I haven’t yet decided that what’s best is the kind of global minimum wage that he’s calling for - of $1/hour). But here’s what he writes:

“Factories will stay in Mexico, China, Indonesia, Vietnam and India even with a dollar per hour wage. In countries where the current minimum wage is currently 25 cents per hour, like Indonesia, jobs will remain there. Nike, one of Indonesia’s largest employers, will have no where else to go. Its workers in Vietnam will also get large raises. But won’t that increase the price of shoes? Yes, but not much. Currently, labor costs represent only about four percent of the retail price of a pair of Nike shoes. If labor costs are increased four-fold, the price of shoes should only go up 12 percent. Nike will actually see more of their shoes sold because their own workers, for the first time, will be able to afford to buy a pair.”

http://www.populist.com/00.1.joseph.html

Now some more “official sources”:

Here’s something from a report from the Economic Policy Institute. It explains how the US Congress has already enacted provisions that would include guarantees of workers rates in trade agreements. It explains, though, that these things are blocked by neo-liberal bureaucrats.

"*Congress has clearly recognized that trade and investment agreements without complementary provisions that assure core worker rights can deform the domestic social compact represented by our own labor relations legislation. It has therefore provided in U.S. trade legislation that recipient countries must effectively assure core worker rights, generally understood to mean the right of free association, the right to collective bargaining, the right to strike, the right to a safe workplace, the provision of a minimum wage, prohibitions on forced labor, and limits on child labor, in the country that is the recipient of the trade preference. (Examples include the Omnibus Trade and Competitiveness Act (1974 as amended, particularly Section 3.01); the General System of Preferences (GSP); and the Caribbean Basin Initiative (CBI). The legislation governing the Overseas Private Investment Corporation, or OPIC, contains similar worker rights provisions.)

Congress has also recognized that worker rights in trade and investment policy cannot be separated from development finance."*

Economic Policy Institute

So basically, the IMF is no more accountable to the US Congress than it is to you or me. I presume, CP, that you’re British since you spell “labour” funny ;).

Also: I don’t see how you can possibly use China as an example of the success of neo-liberal economic policies since it is basically a fascist state. In exchange for total obedience, workers’ lifestyles are substantially subsidized beyond what is earned by workers themselves. India is a better example though it’s not clear to me that India has completely bowed to IMF rules, nor that it’s as dependent on them. India has functional democratic institutions and other infrastructural requirements that reach back to its colonial past. I believe that may be what Demos meant when he said that it’s third-world status was of a special variety.

For more on the Russian debacle, see this article in the Nation:

http://past.thenation.com/cgi-bin/framizer.cgi?url=http://past.thenation.com/issue/980601/0601wedel.shtml

That about finishes the direct replies to me. Some additions to Demos’s more recent posts.

Minty I concur with just about everything Demos said on the matter of where unregulated capitalism in developing nations creates conditions that ferment extremism and terrorism. And I also agree that Osama bin Laden & co. require a much more complex historical picture: not entirely reducible to oil, imperialism, capitalism, US foreign policy, or any other single factor. (But neither is it reducible to “evil” Islam)

Just so you know that this notion–that is, the notion that there’s a connection between economic inequality and terrorism–isn’t whacko and fringe, here’s an article from the Christian Science Monitor in which US ally Tony Blair makes the case.

Injustice seen as fertile soil for terrorists

CyberPundit: From your latest.

“In any case my basic problem is your contention that market failures in the labour markets are best solved at the global level when market conditions are always different.”

Here and elsewhere you apply a circular logic again and again. You argue that there is no way to help workers without also hurting them. The main reason this is so is that they are bound to nations whereas transnational corporations are not. This is a classic tautology since exactly the problem that Demos is trying to address is that workers are bound to the nations whereas transnational corporations are not!

Like erislover, but with more technical knowledge of economics, you seem to assume that only capital and corporations can take advantage of globalization whereas citizens must remain wedded to concepts and structures that developed several centuries ago. While I don’t at all advocate a centralized world-state to dictate planning for the entire planet, I do, as I’ve said, not only advocate but also foresee the rise of supranational alliances such as the EU for developing nations.

In all of your posts you use positivist assumptions from economics–a social “science” predicated on all kinds of abstract assumptions and reductive mathematical models–to argue, in effect, that nothing can change unless the market deems it can change. This view betrays little knowledge of history, and a luddite view of social relations. If I really believed capitalism were as rigidly tied to present orthodoxies as you seem to believe, I would be opposed to capitalism. As a historian, though, I believe that human beings actually play a considerable role in shaping their own history. The path of economic history is strewn with the fallen reputations of prophets of doom

B. Gardener, Even a casual glance at your post is sufficient to reveal that you have nothing to contribute to this thread–which has so far been conducted in an exemplary spirit of good faith (despite the inflammatory thread title). If you have some historical case to make about terrorism and war crimes prior to the 18th century, and its application to the specific arguments that have so far been made, by all means make it. Otherwise, please don’t waste your time and ours.

[Mandelstam]

Minty: “My point exactly, B. Gardner.”

Was that your point, Minty? This assumes that you haven’t yet noticed what both Demos and I have made clear again and again. We’re not talking about some “other system” in contrast to capitalism. We’re talking in both economic and historical terms about what works best within capitalism itself. I think if you would put aside the assumption that either one of us is speaking from some anti-capitalist radical socialist point of view–bent on seizing the means of production, nationalizing all property or some other socialist procedure–you’d realize that what’s being described here is a way to extend “the system” that you seem to admire both for its own benefit and for the benefit of the majority of people in the world.

[minty_green]

Re: “My point exactly.” That was the point of my OP, as well as my response to Demo’s attempt at explaining why capitalism could be responsible for terrorism. If it is not uniquely responsible for creating an environment that leads to such acts, then I fail to see how it is “responsible” at all in any relevant sense. Those comments, of course, have nothing to do with the specifics of the economic debate that has consumed most of this thread, and I did not intend it to be taken as such.

Be back soon after digesting your latest attempt to transform 18th-19th century regulations into something relevant to the three specific types of regulations I identified earlier.

[CyberPundit]

Mandelstam,
You still don’t provide specifics about how exactly tying labour regulations to trade will improve anything in the third world.

The statement about workers being able to afford their own production is just bogus economics in fact a well known economic fallacy. First of all you ignore my point about why developing countries are constrained by aggregate demand anyway. If they aren’t then boosting aggregate demand beyond aggregate supply will just cause inflation. Second the author seems to be cluless about the micreconomic adjustments to a minimum wage which will usually offset any increase in purchasing power among one group with a decrease elsewhere. Believe me, even the minority of economists who support the minimum wage don’t think it increases aggregate demand. They support it on redistributionist grounds.

While economists like Krugman have criticized the IMF, I don’t believe there are too many economists who advocate imposing standardized labour regulations across different developing countries via the trade system.
“I don’t see how you can possibly use China as an example of the success of neo-liberal economic
policies since it is basically a fascist state.”
Huh? This doesn’t make any sense. Why should the fact that China is authoritarian(and has always been authoritarian) negate the fact that its economic policies of the last 20 years have produced spectacular growth. No has denied that authoritarian countries can produce economic growth when they open to trade and foreign investment.
“India is a better example though
it’s not clear to me that India has completely bowed to IMF rules, nor that it’s as dependent on them.”
Well during the stabilization programme it followed IMF prescriptions quite closely. In any case many countries ignore some aspect of IMF prescriptions. There are always politicial constraints regardless of whether you are a democracy or not.

How does the Indian experience square with your general assertion that countries which follow IMF policies are screwed. India clearly did quite nicely for itself after the IMF stabilization programme.

Incidentally India like most developing countries is strongly opposed to global standards. Would you make an excpetion for them? China? There is no way any global standards would work without these countries. How exactly do you intend to force them to adopt the policies you want.

How does South Korea fit into your scheme? They had a pretty successful IMF programme a few years ago and they have had huge growth rates in the last 20 years by tying their economy into the world economy.

Chile is the most free-market oriented economy in L American and has had growth rates of 5-6% for 20 years. Really there is absolutely no evidence for the simple-minded “IMF and neo-liberal policies are ruining the poor countries” analysis of the Nation.
“Here and elsewhere you apply a circular logic again and again.”
Absolutely not. You don’t seem to understand the argument at all since you have barely responded to it. It doesn’t depend on any internatinal context but is simply a standard piece of microeconomic analysis which applies just as well to a closed economy. Basically when the government imposes a labour regulation, there is going to be a market adjustment. 3 of the adjustments don’t really benefit workers and can harm them. Only one (the most theoretically dubious) benefits workers. Your basic thesis appears to be an assertion,without any evidence, that the beneficial adjustment will be dominant and that you are so sure of this that you are willing to impose standard labour regulations across a wide swathe of nations with very different situations.

BTW I am not British.

[Mandelstam]

Minty: “Re: “My point exactly.” That was the point of my OP, as well as my response to Demo’s attempt at explaining why capitalism could be responsible for terrorism.”

Fair enough.

“If it is not uniquely responsible for creating an environment that leads to such acts, then I fail to see how it is “responsible” at all in any relevant sense.”

Well, because when there are multiple historical determinants for an event, all of those historical determinants are, to a degree, “responsible.” If you read any kind of textbook account of the conditions that produced a war whether it be the French Revolution, the US Civil War, WWI or what have you, you will usually find about 7 different contributing causes given. What does this imply? Well, by all means let’s address all things that contribute to terrorism. But in doing so let’s not feel compelled to absolve any one of them just because none of them is uniquely responsible.

Here (from the link I already posted) is what Tony Blair, ever eloquent, has to say on the matter:

““One illusion has been shattered on 11th September: that we can have the good life of the West, irrespective of the state of the rest of the world,” said British Prime Minister Tony Blair in a major foreign policy address earlier this month.”

The author explains:

*"Not that anyone is suggesting that Osama bin Laden, accused of masterminding the Sept. 11 attacks, was acting on behalf of the world’s poor, or that he conceived the atrocity as a way of drawing attention to the growing disparities between the richest and the poorest countries. Nothing he has said or done, before or after the attack, supports such an idea.

But his vitriolic brand of anti-Americanism resonates with resentful and dispossessed people. “The war against terrorism…needs to be a series of political actions designed to remove the conditions under which such acts of evil can flourish and be tolerated,” Mr. Blair told his audience. “The dragon’s teeth are planted in the fertile soil of wrongs unrighted, of disputes left to fester for years or even decades, of failed states, of poverty and deprivation,” he added."*

There is nothing here inconsistent with what Demos described for you. So is Tony Blair also, as you seem to want to insist, determined to supplant capitalism with some “other system”?

[erislover]

Obviously that doesn’t mean that Rolls Royce employees drive Rollses (though many Mercedes employees do drive Mercedes), or that Boeing employees own their own jets.

Obviously? In what way is that obvious? I see no distinguishing characteristic between toys and Rolls Royces in your statement, “industrial capitalism doesn’t flourish without producing workforces capable of purchasing what is being manufactured.”

Seen historically, globalization has weakened the collective power of average citizens in the West, and the next logical step is to have citizens organize transnationally as many NGOs and trade unions are already trying to do.

That sentence makes no sense to me. Western workers have lost their power so they need to submit themselves to a transnational movement? And this is supposed to empower them in what way? I know many people who work for the unions… and I mean, work for the unions. The unions pick the jobs, the hours, etc. I find that amusing. See, me—not working for a union—choose where to work and under what conditions, but these persons have to pay the union to tell them where to work. No thanks I don’t want that kind of “power.”

So actually, from a labor point of view you are a luddite with your antedeluvian notions of the nation-state, and your 18th-century attachment to laissez-faire.

[to minty]That’s the beauty of globalization: you can’t simply localize the problem of repression and blame it on bad old non-Weterners and their unenlightened ways.

But I thought you said the deciding factor in England and America was the ability for workers to organize. Changing your tune?

Like erislover, but with more technical knowledge of economics, you seem to assume that only capital and corporations can take advantage of globalization whereas citizens must remain wedded to concepts and structures that developed several centuries ago. While I don’t at all advocate a centralized world-state to dictate planning for the entire planet, I do, as I’ve said, not only advocate but also foresee the rise of supranational alliances such as the EU for developing nations.

Oh dear. I agree: I think there will be nation-spanning labor movements gaining speed as the world economy becomes more of a single unit. I also have no problem with that. Why do you think I do?

[B.Gardner]

<b>Mandelstam</b>.

Must have hit a nerve there, huh? My point is fairly straightforward - the targeting of the civilian populations and the infliction of atocities upon another population by beligerents are hardly byproducts of capitalism alone. It is an act of the purest historical myopia to suggest that neither terrorism or war crimes existed prior to capitalism.

I would, in fact, argue the complete opposite. That voluntary moderation in wartime and the creation of international accords limiting wartime behavior can be DIRECTLY correlated with the advent of capitalism. Certainly from a straight chronological perspective wartime savagery was the rule not the exception prior to the widespread adoption of the capitalist model.

As to citations, Ceasar at various times during his campaigns against the Gauls: killed every man, woman and child of a given tribe, sold all the survivors of a given tribe into slavery, and cutoff the hands of all the survivng soldiers of a given tribe. While an exception doesn’t disprove the rule, this behavior was the norm, not vice versa.

[minty_green]

*Originally posted by Mandelstam *
Because “mercantalist regulation” isn’t, as you may have assumed, exclusive to matters of trade.

I have assumed no such thing. Hell, I haven’t even addressed it. You asserted early on in this thread that three things were necessary to “stabilize, democratize and spread prosperty”: “trade union movements, environmental and human safeguards, living wage standards.” I replied that none of those factors were necessary to the stabilization, democratization, and prosperity of the Western economic powers. So why do you continue to tell me about all kinds of regulations other than trade unions, the environment, human safeguards, and living wage standards? You’re attempting to respond to my point by redefining my point, and it’s not a tactic that I’m particularly fond of.

Now I admit that your latest post does tangentially address some of those concerns. Price controls and welfare might be, I think, relevant to “human safeguards,” although you never defined that term and I initially took it to mean (as I posted) worker safety. But where’s your evidence that “a living wage” was necessary to stability/democracy/prosperity (“s/d/p”)? You’ve offered no examples of this, nor of environmental regulation, nor of trade unions (which are the one subject you originally mentioned that I think might reasonably be argued to be necessary to your s/d/p triumverate).

Instead of addressing those concerns, you’re again dragging up all kinds of items that were far outside the scope of my original point about prerequisites for stability/democracy/prosperity. Education? School meals for poor children? Pensions? Unemployment insurance? All fine and dandy by me, but certainly not germane to “trade union movements, environmental and human safeguards, living wage standards,” that list of items that you asserted were necessary for stability/democracy/prosperity. Hell, even if school meals and unemployment insurance were relevant to unions, living wages, and the environment, you haven’t given me any reason to believe that those things are necessary for s/d/p, i.e. that s/d/p could not occur in the absence of school meals and unemployment insurance. (Which, incidentally, begs the questions of what level of unemployment insurance is necessary, and of who should pay for it–rather important considerations, don’t you think?)

Another point is that you . . . seem to assume that there is one unique path, based on Western history, towards industrial development: from early industrialization (with laissez-faire and a certain amount of suffering), to increased prosperity with, at last, the ability to deepen democracy and social welfare.

I never stated any such thing, and I certainly hope I did not imply it. To the contrary, I would hope that my questioning of your assertion of the necessity of “trade union movements, environmental and human safeguards, [and] living wage standards” would demonstrate that I do not believe there is any one path to stability, democracy, and prosperity.

In fact, the evidence suggests quite the contrary since, as I said, no nation has ever managed to industrialize under laissez-faire conditions.

Laissez-faire is, at least as it concerns my own position, completely a strawman. I believe in an important role for government in the development of any nation into a stable, democratic, and prosperous society. That I believe in a far more limited role for government than you apparently do by no means translates into a laissez faire position on my part.

[Gadarene]

This seems like an appropriate time for my habitual invocation of Friedrich List, a nineteenth century economist who advocated a partitioned system of global free trade. In such a system, developing countries would be allowed to maintain protectionist policies until such time as their political, social, and economic climates were robust enough to withstand full liberalization.

James Fallows wrote a fantastic article about List for The Atlantic; it can be found here. I strongly recommend that it be read by participants on both sides of this debate.

[Mandelstam]

Greetings Gadarene, Thanks for the links. I’ve read some really interesting stuff on List by (I think) Michael Lind (in The New Yorker and the Nation). I look forward to reading what you’ve posted as I agree that FL has something important to say to the present day.

CP and Minty, thanks for your latest. I promise to get back to you but must do so later.

I’ll just reply briefly to B.Gardener:

"“Must have hit a nerve there, huh?”

Not in the least. I welcome anyone to the discussion who is willing to read posts carefully in answer in good faith. The problem is that you show signs of doing neither.
Hence, it’s tedious to reply to you since it involves restating what’s been said and said clearly.

“My point is fairly straightforward - the targeting of the civilian populations and the infliction of atocities upon another population by beligerents are hardly byproducts of capitalism alone.”

And my point is that no one in this thread has said this. Now if you believe otherwise, please carefully read this thread (and the other to which it is linked) and show us from where you’ve developed this inference.

“It is an act of the purest historical myopia to suggest that neither terrorism or war crimes existed prior to capitalism.”

Indeed, which is probably why you’ll find no one in this thread making any such allegation. Again–please don’t waste our time or your own.

[Demosthenesian]

Pundit: I was “throwing around” the concept of a public good because of your apparent belief that regulations only make things worse. You’re right, I’m not an economist, but I do know enough to know the role of the state in dealing with such issues, and I also know a faulty inductive argument when I see one. It an argument that you’re still engaging in, in fact: your argument that minimum wages are a bad idea is in no way germane to the argument over whether such things as, say, worker safety are a public good.

I’m going to turn the argument around, Cyberpundit. How do you propose that these issues be handled? Judging by your quotation (and consequent lack of explanation) of the Tiebout process, you appear to have a clear idea of how states should handle this, and why there is no “race to the bottom” as corporations find the cheapest states to do business in. ALL the issues, Cyber, not just whatever you appear to have the strongest basis on. You already admitted that these problems can be public good issues- how do you get around that? As in government, it’s much easier being the one attacking than defending. If nothing else, kindly do me the favour of explaning how the Tiebout process works.

Come to think of it, that’s probably why minty set this thread up as a question for Mandelstam.

Minty: my point (and I’m a “he”) was that the problems with capitalism is currently a contributing or exacerbating factor in this marginalization process. Does this mean this always was the case historically? Hardly. Different causes can lead to the same effect in different situations. Still, I was, as pointed out, just “theorizin’”. There’s no way to empirically prove this, and I neither have the resources nor the time to try to turn this into a serious hypothesis. The problem, I think, is that most of the serious proposed links between capitalism and terrorism that I’m familiar with get, um, a little Marxist. I’m not as predisposed to dismiss Marxist analysis out of hand as I imagine most are on this board, but I didn’t want to write all that stuff only to have some joker dismiss it out of hand because of the use of the “M” word.

Two questions: I had thought that terrorism as we understand it is a fairly modern enterprise, and certainly no older than capitalism. And when was the concept of a “war crime” introduced? Acts of war are not war crimes: for something to be a crime, there needs to be the rule or law against it. The geneva convention does not predate capitalism.

And isn’t it possible that the rules for successful growth now are likely different than they were during the time of the growth of the Western economic powers? Among other things, they could colonize, and most of them had barriers against trade up of some form or another.

Erislover: I don’t know what you do, but most people I know get a job and go in when and however long their boss tells them to. If they don’t, they’re canned. While this isn’t universal, I’m sure you’d agree that historically unions have served a useful purpose. There’s a reason we don’t have sixty hour work weeks.