Saturday, January 10, 2004

What's Nader up to? By now you've probably heard the rumors that he may run as an independent and not a Green.
See his exploratory committee web site for his own explanation.

Other views:

Norman Solomon 1/8/03

Response to Solomon from Tarek Milleron (Ralph's nephew, worked on 2000 campaign)

Ted Glick
(National Coordinator of the Independent Progressive Politics Network)

Green Party

Matt Rothschild
(editor of the Progressive and old friend of Ralph's, plus Green Party responses)

Micah Sifry (who wrote Spoiling for a Fight -- a book about Third Parties)
After the New Economy
By Doug Henwood

Economics deserves its reputation as “the dismal science” for being so dismally disconnected from reality. In Mexico they call mainstream neoclassical economic theory (learned by elite Mexican scholars and policymakers at the University of Chicago) “chalkboard economics" because it looks good on the chalkboard, and may even improve the national GDP (on paper). But Mexicans don’t eat chalk or paper, they eat tortillas.

Most economists write so dismally that non-insomniacs rarely read their work.

That’s why Doug Henwood’s After the New Economy, while nowhere near as comprehensive as his previous tome, Wall Street, has been worth waiting for (he announced it years ago, delaying publication when the bomb began). This is the most entertaining critical deconstruction of the U.S. economy in recent years .

Henwood, who lives in New York City, is editor of the Left Business Observer. His previous experience working on Wall Street is unusual for a radical economist. But he doesn't write from the gut until he's had a chance to research and evaluate the statistical facts, a methodology which allows him to cut through all the cant about class mobility, “shareholder democracy” and shared prosperity. The statistics alone make this book a useful reference.

Armed with the facts, Henwood exposes the fallacy of arguments put out by well-known pundits and activists across the political spectrum. He not only takes on the New Economy's biggest boosters, but its most vociferous critics -- including those who would have us believe that "globalization" is something radically new, instead of just late-stage capitalism.

Of course, most of the fire is appropriately directed at people like George Gilder and other easy targets on the right who never seem to go away. It's amazing how all the post-materialist fantasies about the "overthrow of matter," the "End of History" (Fukuyama) and the Dow hitting 36,000 (James Glassman, who continues to pick stocks for the Washington Post) have done nothing to ruin their authors' reputations. Henwood dutifully reminds us of these and other hysterical fantasies of the "new economy." Readers of The Baffler and Boob Jubilee will recognize the tone here.

Yet combining that kind of research and critical bemusement is a diffcult balancing act. His gadfly tendencies can sometimes get the best of him. The problem is that Henwood’s contrarian editorializing is often erratic. It can either be spot on or a bit too cranky.

In his chapter on globalization, for example, one of his points is this notion that globalization is nothing new (itself not a new point, but the explanation is better here than in most writing you’ll find out there, and the notion that globalization is new -- rather than just late-stage capitalism -- is still a common myth). But his examples aren't always the most convincing.

For instance, he accurately quotes World Bank statistics to show that multinational corporations are not investing in the poorest countries of the Third World, but mostly in each other and middle-tier countires like Brazil and Mexico. He's right to point out that this pattern of investment is not a repeat of what Lenin described as the super-exploitation of the third world. (MNCs, as a rule, don't go to the poorest countries unless they harbor certain resources like oil.) What he fails to mention is that this same data points to a failure of the dominant development model, as pushed by the World Bank itself, along with the IMF. The World Bank, whose mission is to help poor countries develop, is the leader of the banking pack. Where its investments go, MNC investments often follow. MNCs rarely invest in countries unless the bank has been there first. In effect, the bank does due diligence on third world risks for the multinationals. The problem is that most of the Bank's money (particularly investments from the IFC, the World Bank's own corporate investment bank) has gone to middle-tier countries, despite its professed mission to help the most impoverished areas of the world. Most of the Bank's loans and investments in poor regions like Africa go for export-oriented development projects rather than for projects that develop the infrastructure needed to feed and otherwise provide for the basic needs of the majority of the population. And the Bank's own studies have demonstrated that certain corporate investments in the third world -- especially as oil, mining and gas -- lead not to the enrichment of countries that have an abundance of such resources, but just the reverse -- corruption and impoverishment. A similar phenomenon occurs with trade. As CEPR economist Mark Weisbrot has pointed out, an increase in trade in Latin American countries like Brazil and Mexico in the past 20 years has not helped those countries' economic growth rates -- in fact just the reverse, in comparison with the previous two decades (1960 to 1980) when they didn't follow the IMF/Bank's prescriptions for growth so closely. Unfortunately, Henwood leaves these points out. It's almost as if he wishes to ignore the strongest arguments of the left, or sets up a sectarian straw man to argue with.

Henwood also makes fun of Wayne Ellwood’s No-Nonsense Guide to Globalization (by quoting this passage:

“Whether you walk the streets of New York or Nairobi, Beijing or Buenos Aires, globalization has introduced a level of commercial culture which is eerily homogenous. The glittering, air-conditioned shopping malls are interchangeable; the fast food restaurants sell the same high carbohydrate foods with minor concessions to local tastes. Young people drink the same soft drink, smoke the same cigarettes, wear identical branded clothing and shoes, play the same computer games, watch the same Hollywood films and listen to the same Western popular music. … Welcome to the world of the multinational corporation, a cultural and economic tsunami (tidal wave) that is roaring across the globe and replacing he spectacular diversity of human society with a Westernized version of the good life….In the worlds of the sociologist Helena Norberg-Hodge, there is a ‘global monoculture which is now able to disrupt traditional cultures with a shocking speed and finality and which surpasses anything the world has witnessed before.' ”

Henwood’s response:

“Really? Let’s read this text closely. According to the World Bank, Kenya’s average income is about 3% of the U.S.’s, China’s about 11% and Argentina’s about 32%. I doubt there are as many air-conditioned shopping malls in China as in the U.S. or that many Kenyan kids are playing video games. But even within New York City, there isn’t anything like a monoculture; Queens, one of the five boroughs that make up New York City, is one of the most ethnically and culturally diverse jurisdictions in the world, wth Chinese, Indians, Central Americans, and third-generation descendants of Italian migrants living side by side.”

There’s something a bit tendentious in an argument that concedes nothing. Queens does have its McDonald’s and Subways (though not as many Starbucks as Manhattan). And the upper middle class in virtually every country -- as slim a sliver of the demographic pie as that may be -- is increasingly captive of commercial culture. Rich Argentines shop for the same brands in New York and Europe that they can find in Buenos Aires. The upper classes may be a tiny part of Kenyan society, but it’s a huge and growing class in China, and they have many shopping malls where western brands are rapidly being introduced (even authentic, non-knock-offs).

There’s nothing wrong with a sober reconsideration of globalization, but Henwood undermines his point by taking a lot of fairly gratuitous swipes at key leaders of the anti-globalization movement without acknowleging (or realizing) that they have often made the same points he does. For instance, he seems willing to pick on David Korten’s work without acknowledging its strongest points, particularly Korten's useful deconstruction of neoclassical economics and its betrayal of Adam Smith in When Corporations Rule the World.

Or take this paragraph:

“Among NGOs and intellectuals working on development issues, there is talk of apartheid South Africa and Smith’s Rhodeisa as models of a possible autarkic delinking from the world economy, and admiration for Mahathir’s capital controls in Malaysia during the 1997-98 Asian financial crisis. It’s often overlooked that Mahathir is a repressive bigot, and that the Southern African examples were part of strategies to sustain horrible societies. Any “progressive” alliance with national capitalism in the name of resistance to international capitalism can get very smelly.”

There’s a similarly snarky remark about Ralph Nader’s alliance with right-wing protectionists like textile tycoon Roger Milliken on the next page: “That’s bad enough, but Naderite trade rhetoric about how the [WTO] threatens U.S. sovereignty is pretty bad too; the world has suffered from too much U.S. sovereignty and could do with a little less.”

Just five pages later, Henwood describes the WTO (along with the IMF and other trade agreements like NAFTA) as “the cells of an embryonic transnational state,” a point that could have been lifted from Nader’s speech. But why bother explaining how the WTO serves the interests of transnational corporations, a good third of which are American (the threat of the WTO and other trade pact provisions NAFTA Chapter 11 is to the sovereignty of all nations, including the U.S., not to mention the decision-making authority of local and state governments here in the U.S. (Nader's point, the nuance of which Henwood doesn't bother with.)

And what about Mahathir’s capital controls? Would they be useful (and worthy of consideration) if applied by a more progressive democracy? Henwood won’t say. The contrarian’s purpose is less to sort through these issues than to expose the hypocrisy of activists who fly half way across the world to talk about local solutions and the fallacy of their and others' arguments. That's where the balance between solid, objective research and critical enterprise becomes lost.

An attempt at the end to avoid being labeled a cynical curmudgeon is unconvincing: he finds optimism in Hardt and Negri’s book, Empire. But if the two Marxists are to be faintly praised for not being “gloomy and resigned” like much of the left, the reader is still forewarned that they are often “uncritical and credulous.” That's not a ringing endorsement. Nor does it leave the reader with the idea that there's much with any concerns about economic justice (no mention of groups like United for a Fair Economy).

Nevertheless, if you're looking for an entertaining response to right-wing popular economists like George Gilder (he's an easy target), answers to questions like why the U.S. has such a polarized income structure, and a quick explanation of how Enron can be viewed as the logical outcome of the economic hysteria (the market bubble burst a year before Enron declared bankruptcy), this is a useful read.

Incidentally, Robert Pollin's new book, Contours of Descent: US Economic Fractures and the Landscape of Global Austerity might be better, if you're looking for a more sweeping structural economic critique of Clintonomics and how the U.S. economy fits within the global capitalist economy of the last decade.

PS for a group-blog discussion of this book see Crooked Timber (1/27)