As Ms. Freeland noted yesterday morning, we now have a situation of wealth disparity within the wealthy 1% as the merely wealthy are left behind by the rapidly expanding fortunes of the new global super-rich. Forget the 1 percent; Plutocrats proves that it is the wealthiest 0.1 percent who are outpacing the rest of us at break-neck speed.
While it's true that fragmentation of wealthy from the über wealthy is a novel development, we've known about the risks of globalization and what it means to average citizens for at least 15-20 years. Commentator Ian McDonald, writing in The Barbados NATION (Aug.14 1998, p. 8) may have articulated the threat most compellingly:
"We should cease making speech after speech accepting that our fate and the fate of the world, will inevitably be decided by impersonal,market controlled forces and the sooner we accept this the better off we will be. Instead we should be denying most strongly, in every forum available to us, that such a fate is inevitable.... That instead the world deserves a better future than the one on offer from the the ruthless money men and sleaze-ridden free trade marketeers, who are making this terrible bid to dominate the world.
Do we really believe for one moment that those who preach free trade and the inevitable triumph of market forces have anything other than their own increased wealth and aggrandisement in mind? Do we honestly believe they think the system they espouse is fundamentally a good one for all concerned? Are we so naïve as to think if, by any chance, the system were to operate against their interests, that they would not make sure it was changed or abridged to suit them?
Are we so innocent and trusting that we cannot recognize bullying and crude self-interest when our noses are being rubbed in it constantly?"
McDonald wrote this some 4-5 years after the primary globalization machinery was put into place, including the World Trade Organization, G.A.T.T. and NAFTA. All of these ensured what most citizens never foresaw at the time: a massive race to the bottom. Author Willaim Greider's take is equally pungent ('Who Will Tell The People-The Betrayal of American Democracy', Touchstone, 1991), p. 401:
"It does not require great political imagination to see that the world system is heading toward a further dispersion of governing power so the closet dictator of the marketplace can command things more efficiently, from everywhere and nowhere. The historic paradox is breathtaking: At the very moment when Western democracies and capitalism have triumphed over the communist alternative, their own systems of self-government are being gradually unraveled by the market system."
And further (ibid.)
"..what is emerging now is a power system that more nearly resembles a kind of global feudalism- a system in which the private economic enterprises function like rival dukes and barons, warring for territories across the world and oblivious to local interests.......In that event, vast throngs of citizens are reduced to a political position resembling that of the serfs....who followed church or nobility in the feudal system."
Again, what neither Greider or McDonald could foresee was: 1) the fact that multi-national corporations would become more powerful than nation states and hence be able to leverage almost total power to their benefit, and 2) that a coterie of plutocrats associated with these multinationals, or using them to speculate (as in hedge funds) would amass such vast fortunes as to compete with the legendary Croesus.
All Freeland is doing in her book, as she noted on Chris Hayes' 'Up' , is pointing out how absolutely ridiculous wealth has enabled and promoted a detachment from the social bond. In other words, the Über Plutocrats no longer feel any civic allegiance or social obligation to the average citizen. While in decades past, the massively wealthy acknowledged on some level the need to contribute to the welfare of the whole society via just taxation, they no longer believe so. They now (as Mitt Romney does) employ complex tax avoidance schemes to park their money in places like the Caymans and in Swiss Banks where it can metastasize unseen and basically unreported.
The primary aim of these plutocrats is now merely to compound their own wealth - and whereas before, in earlier decades - they used that wealth (at least part of it) to create jobs for their fellow citizens, they now have abdicated the role of Job creators and prefer instead to increase their capital by hedge fund investing, buying art or blood diamonds, or spending tens of millions to purchase influence in political campaigns (as Sheldon Adelson is now doing, along with the Koch brothers). In other words, the plutocrats have left their fellow citizens to suck salt or pound sand. In some cases these scum have even opted to divorce themselves from their fellow citizens by giving up their U.S. citizenship - explicitly to avoid further payment of taxes for the commonweal!
What is the economic basis for this malignancy? Author John Gray (False Dawn, The New Press, 1998) put it in the context of misapplied Ricardian comparative advantage. Thus, deliberately applying Ricardian comparative advantage EXTERNALLY (where it was never intended to be applied) as opposed to internally. As Gray notes:
"Ricardian comparative advantage applies internally in trading nations, not externally between them. It implies that in a regime of unrestricted free trade the allocation of resources will be maximally productive within each trading nation and thereby, by inference, throughout the world. Insofar as the world then becomes a single market, efficiency and productivity in every country will be maximized."
In other words, David Ricardo would never have remotely conceived of allowing American furniture, clothing, toys, and other (e.g. software) products to be manufactured in China or India. He'd have regarded that as an economic abomination, and further he'd have warned that the country so foolish to do such a thing risked the health and integrity of its own markets, as well as its citizens welfare. He'd have added that those moving such manufacture outside and thereby lowering wages and benefits inside risked demolishing capitalism in said nation - by virtue of the fact that citizens-workers would no longer be able to spend as much on the consumer goods distributed- hence it would slow GDP. We'd have a crisis in aggregate demand which is precisely what we behold now. Yet, under G.A.T.T., NAFTA etc. that's exactlly what we've done.
Indeed, in one treatise ('On The Principles of Political Economy and Taxation') Ricardo observed:
"the fancied or real insecurity of capital, when not under the immediate control of its owner, together with the natural disinclination every man has to quit the country of his birth and connections, and intrust himself with all his habits fixed, to a strange government and new laws, checks the emigration of capital".
Thus, Ricardo perceived the innate preference of nations (that are sane) for their own laws, culture, customs and economic benefit - which perception would naturally limit the flow of capital outward for other extraneous nations' benefit. The problem is that the global Plutocrats felt no such allegiance, becoming instead the equivalent of economic traitors and terrorists. Thus, in order to earn more profit and do it globally, they shifted jobs, markets to the cheapest place with the cheapest labor costs and least regulations. It was win-win for them.
As this process accelerated, and more and more nations were ground under in the global 'race to the bottom', the plutocrats' wealth increased.
Of course, nonchalant citizens have played into this as well, and aided and abetted the plutocrats' goals. They have done this by over-reproducing, and thereby creating a global over supply in labor.
On account of procreating a vast surplus labor pool, people - ordinary citizens - have also procreated themselves out of jobs, including decent paying jobs with decent benefits. Now, with so many competing with the same skill sets across the globe, the plutocrats can basically pick and choose winners and losers, as well as 'winner nations' and 'loser nations'. As we approach a global populace of some 8 billion the situation will only get worse - with only Peak Oil or a runaway greenhouse effect to slow it down. In each case, up to two thirds of humanity is likely to be extirpated (see also www.dieoff.org ) which means in any new "rebuilding" world - assuming such is even feasible, the plutocrats - if any remain- will not be able to leverage labor against itself.
Recall that it was Vladimir Ilyich Lenin ( 'Imperialism, the Highest Form of Capitalism', 1916) who first sounded the warning that mobile finance capital was designed to continually leverage labor to the lowest common denominator.
Perhaps, the best thing people across the globe can begin to do to assist themselves is to cease having kids beyond maybe one per family. To do otherwise is to continue to procreate a surplus labor pool that ensures poverty and destitution for many decades to come .....and which no politico, no matter how clever ....will be able to repair.
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