IN THESE TIMES -- APRIL 3,1995 MONEY ISN'T EVERYTHING -- By Art Hilgart How is it," Sir James Goldsmith asks, "that nearly two hundred years after the birth of the Industrial Revolution, which produced humanity's greatest period of economic expansion, the absolute number of those living in misery, both material and social, has grown exponentially?" This is a rather interesting question, especially considering its source. Goldsmith, a man who epitomizes the modem paper capitalist, accumulated a very large fortune before tuming 50, mostly through corporate takeovers, stock speculation and generous rewards for not taking over companies. He consolidated his holdings and gave up business for politics in 1987, forming l'Autre Europe, a European Parliament coalition of assorted leftists and conservatives from several countries opposed to the growing power of Brussels. If it seems a little out of the ordinary for an ex-Master of the Universe to rhetorically question the justice of capitalism in its golden age, that is because Goldsmith is himself a bit of an odd fish, a character of seemingly contradictory inclinations. A vigorous proponent of national distinctiveness, Goldsmith is himself cosmopolitan. French-bom, Goldsmith observes with delight that the English think he is French and the French think he is English. While he describes his religious views as a blend of the Far East and Native American, he notes that Catholics think he is a Jew and Jews think he is a Catholic. A financial speculator, he was the darling of socialist prime minister Harold Wilson, who was ultimately responsible for Goldsmith's knighthood. In The Trap, which reprises a series of interviews with Yves Messarovitch, the economics editor of Le Figaro, Goldsmith decries the brand of globalism now purveyed by transnational corporations and First World governments. It is a globalism that, in his view, subordinates human interests to the unlimited pursuit of profit by transnational corporations and that, through the indiscriminate use of technology, transforms people into disposable commodities. Goldsmith questions a fundamental premise of ortholox economics, the idea that the primary objective of society is growth in gross national product (GNP). One pitfall of endowing growth figures with too much evaluative significance, he notes, is that they can give a misleadingly incomplete picture. Any money transaction will boost GNP, regardless of whether it truly represents an augmentation of social well-being. Growth in prison building and nuclear waste disposal boosts GNP, as does transferring child care from families to paid workers. More importantly, GNP growth is indifferent to the distribution of wealth. Not only in the Third World but in England, France and the United States, poverty has grown along with GNP. Goldsmith blames this growing maldistribution of income in large part on free trade among nations and the industrialization of agriculture. Traditionally, free trade theory has rested on Ricardo's principle that aggregate production and consumption are maximized when each country produces goods for which it is best suited. Nations with abundant coal resources, for example, should export steel because they can produce it more cheaply than countries without coal. A country's prosperity rests on its ability to identify and exploit such "comparative advantages." Goldsmith observes that this principle is becoming less relevant in modern economies because the important factors in modern comparative advantage - - money and technology -- are now universally transferable. Intemational competition has thus been reduced to a search for cheap labor. The clothing trade illustrates his point: many "American" clothing manufacturers now move equipment back and forth between countries like China and Guatemala in their quest for the lowest costs. This competition for work creates downward pressure on wages globally -- including those of workers in the First World -- and brings in its wake the grinding poverty and urban slums so common throughout the world. Part of the solution to this problem, says Goldsmith, is to allow the free movement of capital and technology, but not goods. If Ford wants to sell cars in Mexico, then it should be required to build plants in Mexico and make the cars there, with access to patents, know-how and funding from anywhere; the U.S. market, in the meantime, should be served with cars made in the United States by American workers. This may be in the strictest sense less efficient, but it serves the human needs of both countries. Mexican industry would have a chance to develop, and American labor would preserve its living standards and working conditions. In modern economies, lower production costs do not necessarily lead to lower prices. Patents, copyrights and trademarks confer monopoly pricing power on sellers, and the latest GATT agreements extend this control over prices globally. In an aside about pharmaceutical prices, Goldsmith recognizes this power of transnational corporations to set prices unilaterally, and he proposes instead the compulsory licensing of technology rights to potential competitors. Opening markets to several sellers would restore the basis for price competition. The other principal cause of contemporary disruption, according to Goldsmith, is the rapid destruction of traditional patterns of agriculture. The spectacular increase in North American agricultural productivity in this century did not lead to less work and higher living standards for the rural population. Surplus workers were left to migrate to the cities, a difficult displacement that was moderated only by explosive growth in manufacturing industries. In the Third World, where industrial employment cannot begin to absorb displaced farmers, consolidation of land ownership and extension of modern agricultural techniques are devastating. Vast urban slums proliferate around the world, and Goldsmith predicts that current trends in rural depopulation will add another 2 billion people to the metropolitan shantytowns. In fact, we may witness the process directly in the next few years if, thanks to NAFTA's removal of trade barriers, cheap American corn destroys rural Mexico's economic base. The goal of agricultural policy, Goldsmith concludes, should be the preservation of rural communities, with change introduced gradually to accommodate natural grown in urban employment. While Goldsmith criticizes industrial agriculture primarily for its baleful social consequences, he also notes that synthetic fertilizers, pesticides and chemically treated animals damage the enviromnent and corrupt the food. Related to Goldsmith's advocacy of economic self- sufficiency is his belief that political stability depends in large part on a respect for cultural integrity. Had he been Japanese, he would not have let Conunodore Perry get off his ship. Goldsmith likens GATT to the conquistadors who plundered Latin America and the missionaries who followed them to destroy language, identity and religion. But his advocacy of community is not based on ethnocentrism or nostalgia. He argues that well- being depends first on the small community and secondarily on a nation where people share a common culture and sense of identity. He regards immigration as beneficial to people and nations, but opposes mass migrations that inevitably lead to hostility, intolerance and conflict. Communities have economic importance as well, and Goldsmith opposes the transfer of power from the countries of Europe to the European Union. He bristles at outgoing European Commission President Jacques Delors' boast that eventually 80 percent of all laws governing the social, economic and fiscal affairs of Europeans will originate in Brussels. A single currency would be particularly harmful, since healthy growth in some countries might be stifled by the monetary authority to fight inflation elsewhere. There is a radical flavor to Goldsmith's views on labor -- one expects him to come right out and say "alienation" -- and secular humanism seems to underlie his general perspective. In the end, though, Goldsmith undercuts this brief flirtation with ideology to re-emphasize the value he places on the intelligent use of technology in support of human well-being in communities -- communities seeking not domination over nature but harmony within it. Many of us reluctant to abandon a faith in one world shared by one people will be troubled by Goldsmith's belief in the importance of cultural communities. The failure of several generations of imposed unity in Eastem Europe to obliterate ethnic hatreds, however, is a practical challenge to that hope. The examples of Bosnia, Croatia, Serbia and Chechnya tragically lend support to Goldsmith. The real world continues to confirm Goldsmith's views on trade. The excellent publication of the Institute for Policy Studies, NAFTA's First Year, reports that Mexican concentration on production of food for export has increased rural unemployment while forcing up domestic food prices. Americans are not getting cheaper tomatoes (retail prices are controlled by processors and distributors), but American tomato workers are losing their jobs. While NAFTA advocates can find several hundred new American jobs that can be attributed to NAFTA, the authors identify several thousand that have been lost -- just in the first year. (The report can be ordered by calling 202-234-9382.) In The Trap, James Goldsmith grabs the purveyors of conventional globalism and unbridled capitalism by the lapels, forcing them to confront the realities of the world they've created. The book has its flaws: it's short on implementation and strategy, and many of its arguments have been advanced more thoroughly elsewhere. As a counter to the dangerous nonsense being peddled by the Intemational Monetary Fund, though, it is valuable. Goldsmith's blending of related issues is as welcome as it is rare, and his background will gain him credibility among audiences unfriendy to radical views. One wishes there were a cheap paperback edition to send to members of Congress and the Clinton administration. It's short enough, at least, for their attention spans. Art Hilgart is a writer living in Kalamazoo, Mich. His work has appeared in The Nation and other publications.
