My posts on this are going to be constrained by this
being a out-of-worktime activity for me (see my
signature) despite the topic being close to my heart.
Here's a few comments on the messages that have flown by
since my last. Sorry if it's a bit long - it's quicker
for me that way!
1. Doug Henwood wrote (2 May) "I agree that financial
activity can be destructive, but I don't think that case
can be made simply by citing figures about turnover. I
think it has to be made a lot more carefully than that
...."
An interesting example from New Zealand: a U.S. Bankers
Trust dealer, Andrew Krieger, claimed that in late 1987
he "played" several hundred million - possibly as much as
a billion - New Zealand dollars against New Zealand's
currency, leading to a fall by 10% of the value of the
New Zealand dollar ("The Money Bazaar - inside the
Trillion-dollar world of Currency Trading", Andrew J.
Krieger with Edward Claflin, Times Books N.Y., 1992,
p.93ff).
New Zealand politics is very conscious (perhaps hyper-
conscious) of the ability of financial dealers to
manipulate the economy, and it has been used as a scare
tactic frequently during recent elections.
2. Doug also wrote (4 May) in reply to my comments that
the recent changes in the New Zealand economy were due to
opening it, i.e. globalisation: (mentions Jane Kelsey's
book and Bruce Jesson) "... But I thought that one reason
the New Zealand economy developed problems in the 1970s
was that Britain stopped buying butter and lamb, causing
tremendous dislocations. Was that relation to Britain pre-
globalized?"
In fact it was. (The problems of the 1970's actually were
a mixture of the above and the oil "crisis" but that
distinction probably doesn't matter here.) Until WWII,
New Zealand's exports were almost entirely meat and dairy
products to Britain under privileged trade arrangements
which suited Britain because they provided cheap food.
>From the 1940's until the 1960's the rest of the New
Zealand economy was heavily protected - most
distinctively by import controls. That had two purposes:
to protect developing industry, and to prevent a current
account blowout due to the demand generated by
(genuinely, believe it or not) full employment. Not your
6% NAIRU this - only a few thousand out of work at any
time.
This protectionist policy (developed by one of the few
genuine nationalist settler New Zealanders that New
Zealand has ever had, Bill Sutch, later falsely accused
of being Soviet spy in order to discredit him) was
developed very consciously to counteract the
"globalisation" effects of unpredictable farm produce
prices - the aim was to balance the reliance on farm
produce with industry in order to achieve full
employment.
One reaction to the entry of Britain to the EEC (which
stopped the privileged arrangements) could have been to
continue with the protectionist policies while new
markets were found (as markets have been). Instead the
then (Labour) government borrowed abroad, and that policy
continued, in the end being one of the pressures for
fully opening the economy in 1984. So in a sense, Doug
you are right: there always have been globalising
pressures. But in the past we've been able to resist the
worst effects of them.
Then Doug says in response to my comment that the
Keynesian revolution of the 1930s was to try to protect
against earlier forms of globalisation, at least in New
Zealand, "Wasn't one of the most characteristic features
of the 1930s the collapse of world trade? That is, wasn't
`de-globalization' both a cause and a symptom of crisis?"
Certainly a symptom, but in New Zealand's case (and more
generally) there were national solutions found. Isn't the
fact that national economies are no longer able (or
allowed) to find such solutions an indication that
globalisation has intensified? And sure WWII is a
confounding factor here, but again, I think in the case
of New Zealand-sized countries that wasn't necessary for
recovery.
3. Colin Danby (4 May) wrote regarding Foreign Ownership,
that "the claim seems to be that foreign owners are less
rooted and less vulnerable to local pressure, and that
previously-existing worker-capitalist compacts, overseen
by social-democratic states, are thereby jeopardized." He
suggested that required an industry-by-industry analysis,
and that foreign competition may be just an excuse for
recessionary policies. Bill Burgess (4 May) makes a
similar point.
What most distinguishes "foreign" owners is not their
foreign-ness but their footloose-ness. Locally owned
transnationals have the same characteristic: that they no
longer depend for their own workers (to oversimplify) for
demand for their products. Even where they do (in
service industries) they can still credibly threaten to
move somewhere more profitable. The same logic applies to
an extent to exporters, though what moderates that is the
degree to which they also supply the domestic market
(their own workers). Thus both FDI and increasing
dependence on exporting have the effect of breaking the
link of mutual dependence that Keynes pointed out and
which is the strongest guarantor of capitalist support
for social-democracy: capitalists need to sell their
goods to make profits, consumers need jobs or social
welfare to buy them. Both increasing FDI (inward or
outward) and exports are hallmarks of globalisation.
To give a New Zealand example, our farmers have always
exported most of their produce. Their leaders (not
necessarily all farmers by any means) have always been
amongst the most implacable opponents of social welfare
and increased government spending - though they have been
quite happy to build highly developed cooperatives and
government-protected marketing boards (which I support).
Rakesh Bhandari (3 May) quoted Krugman as believing that
"wages will eventually rise abroad as a result of
increased productivity and that equilibrium will slowly
be restored." If that happens (after a very long and very
painful transition) then the Keynesian relationship will
be restored. A new international bourgeois "democratic"
form of government will have to be created to enforce the
social-democratic relationship: an interesting topic for
debate!
4. Finally I appreciate my statistics being appreciated
by Louis Proyect (4 May) and others. I find the list
stimulating even when I don't understand most of it and
remain silent (i.e. most of the time). Keep it up!
Cheers
Bill Rosenberg
