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PARIS The specter of Anglo-American
market capitalism dominated France's student unrest in March and April, and
motivated popular rejection in France a year ago of the proposed new European
Union constitution.
The election that has just given Italy a fragile center- left
coalition, and recent conflict in German industry, involved the same
question: how to remodel national economies, or whether to remodel them at
all.
Advocates of the new model capitalism, and the globalization
project that goes with it, like to present it as an _expression_ of historical
necessity, rooted in classical economics and embodying irrefutable laws. It
is progress itself, they say. Those who do not conform to the rules of modern
market capitalism, and do not offer the human sacrifices of lost employment
and diminished living standards that the market demands, will fall by the
wayside of history.
This is simply untrue, although most of those who say it
undoubtedly believe it.
The new American and British market capitalist model, which
dictated deregulation of industry and privatization of state enterprises in
the 1970s, and globalization of international markets in the 1990s, exists as
a result of free political decisions and ideological choices that were
anything but inevitable. History may one day describe them as having been
perverse and socially destructive.
Two of the most important influences on the new capitalism were
academic in origin, and the third, improbably, was an instance of
romanticized egoism.
The first influence was monetarist economic theory. This in
principle excluded social considerations from economic policy decision.
Government economic policy was to be made chiefly in response to a single
objectively determinable factor, the money supply. The effect of this new
theory was to "dehumanize" economic policy, previously held to be
closely related to political considerations, as was the case with the
Keynesian tradition that monetarism challenged.
The second influence was primarily political, a reaction to 20th-century
totalitarianism. Working in London in the 1930s, the Austrian political
theorist and economist Friedrich von Hayek began as a critic of Keynes, but
eventually widened his argument so as to assert as a matter of principle that
state intervention in society, even in democratic political systems, amounted
to a "Road to Serfdom" (the title of a book he published in 1944).
State intervention in economy and society threatened human
liberty. The free market produced economic efficiency and human freedom.
Hayek had a great influence on Margaret Thatcher.
The third influence was an eccentric one, important in the
United States. It was the creation by a Russian-American novelist, Ayn Rand,
of a "philosophy" of heroic egoism and pursuit of individual
self-interest (against the mob and the weak) by superior persons. Her ideas
responded to the longings of impressionable college students (including Alan
Greenspan) and her views became something of a mid-century American cult, if
not a sect.
This is what underlay the transformation of American corporate
culture, and of the American business corporation from an institution with
national identity, constrained to reconcile interests of owners, employees
and community, into the modern global corporation, effectively controlled by
its managers and mandated to the single objective of producing
"value" for stockholders, while handsomely rewarded its executives.
This change transformed labor into an anonymous commodity and
put both blue-collar and white-collar staff into competition with an
effectively unlimited global labor supply, resulting in employment
insecurity, reduced or static wages, diminished or eliminated benefits and
pensions, and the destructive social pressures of falling living standards.
In the United States, the new model of corporate business has
evolved toward a form of crony capitalism, in which business and government
interests are often corruptly intermingled, the system resistant to reform
because of the financial dependence of both major political parties on
contributed money.
Frequently described by its supporters as a progressive step in
the development of a new international economy, the political-economic system
that has evolved in the United States has proved regressive in crucial
respects, as well as inefficient and abusive of the public interest.
Europe, one would think, should be looking for social and
economic evolution on its own terms. It is perfectly capable of doing so, as
a modern industrial society that in aggregate terms is larger and wealthier
than the United States, as well as less shackled by obsolescent ideology and
entrenched special interests - its problems with union corporatism
notwithstanding.
In the longer term, for Europeans to embark on this project,
instead of conforming to the currently received wisdom concerning the
globalized economy, would serve the international interest as well as that of
the European Union. It might even prove a service to the United States, whose
future is now jeopardized by economic error and excess, as well as
unachievable global political and military ambitions.
PARIS The specter of Anglo-American
market capitalism dominated France's student unrest in March and April, and
motivated popular rejection in France a year ago of the proposed new European
Union constitution.
The
election that has just given Italy a fragile center- left coalition, and
recent conflict in German industry, involved the same question: how to
remodel national economies, or whether to remodel them at all.
Advocates
of the new model capitalism, and the globalization project that goes with it,
like to present it as an _expression_ of historical necessity, rooted in
classical economics and embodying irrefutable laws. It is progress itself,
they say. Those who do not conform to the rules of modern market capitalism,
and do not offer the human sacrifices of lost employment and diminished
living standards that the market demands, will fall by the wayside of
history.
This
is simply untrue, although most of those who say it undoubtedly believe it.
The
new American and British market capitalist model, which dictated deregulation
of industry and privatization of state enterprises in the 1970s, and
globalization of international markets in the 1990s, exists as a result of
free political decisions and ideological choices that were anything but
inevitable. History may one day describe them as having been perverse and socially
destructive.
Two
of the most important influences on the new capitalism were academic in
origin, and the third, improbably, was an instance of romanticized egoism.
The
first influence was monetarist economic theory. This in principle excluded
social considerations from economic policy decision. Government economic
policy was to be made chiefly in response to a single objectively
determinable factor, the money supply. The effect of this new theory was to
"dehumanize" economic policy, previously held to be closely related
to political considerations, as was the case with the Keynesian tradition
that monetarism challenged.
The
second influence was primarily political, a reaction to 20th-century
totalitarianism. Working in London in the 1930s, the Austrian political
theorist and economist Friedrich von Hayek began as a critic of Keynes, but
eventually widened his argument so as to assert as a matter of principle that
state intervention in society, even in democratic political systems, amounted
to a "Road to Serfdom" (the title of a book he published in 1944).
State
intervention in economy and society threatened human liberty. The free market
produced economic efficiency and human freedom. Hayek had a great influence
on Margaret Thatcher.
The
third influence was an eccentric one, important in the United States. It was
the creation by a Russian-American novelist, Ayn Rand, of a
"philosophy" of heroic egoism and pursuit of individual
self-interest (against the mob and the weak) by superior persons. Her ideas
responded to the longings of impressionable college students (including Alan
Greenspan) and her views became something of a mid-century American cult, if
not a sect.
This
is what underlay the transformation of American corporate culture, and of the
American business corporation from an institution with national identity,
constrained to reconcile interests of owners, employees and community, into
the modern global corporation, effectively controlled by its managers and
mandated to the single objective of producing "value" for
stockholders, while handsomely rewarded its executives.
This
change transformed labor into an anonymous commodity and put both blue-collar
and white-collar staff into competition with an effectively unlimited global
labor supply, resulting in employment insecurity, reduced or static wages,
diminished or eliminated benefits and pensions, and the destructive social
pressures of falling living standards.
In
the United States, the new model of corporate business has evolved toward a
form of crony capitalism, in which business and government interests are
often corruptly intermingled, the system resistant to reform because of the
financial dependence of both major political parties on contributed money.
Frequently
described by its supporters as a progressive step in the development of a new
international economy, the political-economic system that has evolved in the
United States has proved regressive in crucial respects, as well as
inefficient and abusive of the public interest.
Europe,
one would think, should be looking for social and economic evolution on its
own terms. It is perfectly capable of doing so, as a modern industrial
society that in aggregate terms is larger and wealthier than the United
States, as well as less shackled by obsolescent ideology and entrenched
special interests - its problems with union corporatism notwithstanding.
In
the longer term, for Europeans to embark on this project, instead of
conforming to the currently received wisdom concerning the globalized
economy, would serve the international interest as well as that of the
European Union. It might even prove a service to the United States, whose
future is now jeopardized by economic error and excess, as well as
unachievable global political and military ambitions.
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