[saymaListserv] Good vs. bad capitalism

[Larry Osborne]

Friends,

There has been some conversation on this list lamenting the negative
opinion many modern Quakers alledgely hold about business.

Another way to frame the discussion is about what kinds of business are
good and what kinds are bad.  E.F. Shumacher took this approach.  Rather
than uncritically condemning or embracing capitalism, he tried to
discern what scale of economic endeavor was best, with "best" defined as
community health rather than size per se or the wealth of corporate
executives and investors.

In my mind, my father owned a "good" business, one that provided support
for my family and those of 6-8 other people.  He lived in the community
in which his business was located and worked tirelessly on behalf of the
common good through various groups like Rotary International.  In
Appalachia where I live, it is easy to see examples of "bad" business
that extracts wealth from the region, destroys the land and viewscape,
and pays back little in terms of wages or taxes for local social
infrastructure like schools.  A historic study around 1980 found that
the extent of absentee ownership of wealth in Appalachia was inversely
related to a county's well-being in terms of such measures as poverty,
income, and social capital.

Here is a provocative article by David Harvey critiquing current trends
in today's business world.  While it may appear negative to business, I
see it as trying to discern a happy medium between greed and
impoverishment.  Hope you find it informative.

Peace like a river,

Guy Larry Osborne


"Neo-Liberalism And The Restoration Of Class Power"

> Submitted to Portside by
>  
> David Harvey
>  
> With every other justification for the invasion of Iraq
> discredited, President Bush has increasingly resorted
> to the argument that at least Iraq is free.  "Freedom,"
> he says, "is the Almighty's gift to every man and woman
> in this world" and "as the greatest power on earth we
> have an obligation to help the spread of freedom."
> But, as Matthew Arnold long ago argued, "freedom is a
> great horse to ride but to ride somewhere."  So where
> are the Iraqis supposed to ride their horse of freedom?
>  
> The US answer was spelled out in September 2003, when
> Paul Bremer, head of the Coalition Provisional
> Authority, promulgated decrees that included the full
> privatization of the economy, full ownership rights by
> foreign firms of Iraqi businesses, the right of foreign
> firms to take profits abroad and the elimination of
> nearly all trade barriers.  The orders applied to all
> areas of the economy, including public services,
> banking and finance, the media, manufacturing,
> services, transportation and construction. Only oil was
> exempt. A regressive tax system much in favor with
> conservatives in the US known as "the flat tax" was
> also imposed. The right to strike was outlawed and
> unionization banned in key sectors.
>  
> This amounts to the imposition of a particular kind of
> state apparatus - called neo-liberal - on Iraq.
> Interestingly, the first case of neo-liberalization
> occurred thirty years earlier in Chile.  In the wake of
> a violent US supported coup by General Pinochet against
> the democratically elected Salvador Allende in
> September 1973, US economic advisors espousing the neo-
> liberal doctrines of Milton Friedmann went to Chile to
> help set up an almost identical state structure to that
> now decreed for Iraq.
>  
> The era that separates the violence in Chile and Iraq
> has seen the creation of neo-liberal states -
> capitalist dream regimes as the Economist calls them -
> all around the world by mixes of coercion and consent.
> Britain's Margaret Thatcher was the first world leader
> freely to embrace free-market fundamentalism when
> elected in the spring of 1979.  She attacked trade
> union power, diminished the welfare state and reduced
> taxes.  She sought privatization, to liberate
> entrepreneurial energies, and argued that social well-
> being depended upon personal responsibility and not the
> state.  "There is no such thing as society," she
> famously said, "only individuals and their families."
> She accomplished all this by democratic means.
> "Economics are the method," she said, "but the object
> is to change the soul."  And change it she did.
>  
> In the fall of 1979, Paul Volcker, then Chair of the
> Federal Reserve under President Carter, shifted the
> target of monetary policy in the US from full
> employment to curbing inflation.  He raised interest
> rates to a very high level and plunged the US into
> recession.  In the event of any conflict between the
> integrity of the financial system and the welfare of
> the population, he signaled, the former interest would
> prevail. President Reagan, taking office in 1981, took
> the necessary political steps to consolidate Volcker's
> move.  He attacked union power, dramatically reduced
> taxes, cut back on state benefits and failed to enforce
> regulatory laws covering consumer rights, occupational
> health and safety, consumer protection, the minimum
> wage, and the like.  With two of the major capitalist
> powers going neo-liberal could the rest of the world be
> far behind?
>  
> Neo-liberal orthodoxy, pushed by both Britain and the
> US, swept through the international financial
> institutions after 1980.  The International Monetary
> Fund became a prime agent in the promotion of neo-
> liberal  "structural adjustment" policies whenever it
> had to deal with a credit crisis.  As a result,
> countries like Mexico, Argentina, Brazil and South
> Africa were swept into the neo-liberal camp.  The price
> of entry into the global economic system for much of
> the old Soviet Empire was privatization and the
> assumption of a neo-liberal stance.  Global competition
> has drawn many other countries, even China and India,
> into something approximating a neo-liberal state
> structure.  There are still some states, as in Europe
> and Scandinavia that are holdouts for social democracy
> and in East Asia many states have managed to combine
> neo-liberalism externally with concern for equity at
> home.  But some variant of the neo-liberal state now
> dominates world-wide. This all happened in part because
> of a crisis of capitalism in the 1970s. Profit rates
> were low, inflation and unemployment were everywhere
> soaring upwards when the economic consensus (called
> Keynesian) of the 1960s said they should offset each
> other.  Financial systems were in a mess, the stock
> market was in decline, and there was a fiscal crisis of
> state expenditures (with the bankruptcy of New York
> City in 1975 being emblematic).  The "social
> democratic" state form that had emerged after 1945
> could not cope. Something new had to be invented. Neo-
> liberalism won out as the answer. But has it been
> successful?  In terms of stimulating growth it has been
> a dismal failure.  Global growth rates in the 1950s and
> 1960s stood at around 3.5 percent and fell in the
> troubled 1970s to around 2.4 percent.  But in the 1980s
> they came down to 1.4 percent and fell even further in
> the 1990s to 1.2 percent and since 2000 have barely
> made it above 1 percent.  So why are we so persuaded of
> the benefits of neo-liberalism?
>  
> There are two main answers.  Firstly, neo-liberalism
> has introduced considerable volatility into the global
> system so there are usually some places that are doing
> well while the rest do badly.  In the 1980s it was
> Japan and West Germany that led the pack and the US was
> in the doldrums, but in the 1990s both fell behind with
> Japan suffering from a decade of severe recession.  In
> the 1990s the US, Britain and some of the "tiger"
> economies of Southeast Asia came out on top.  Then
> Southeast Asia crashed in 1997 followed by the collapse
> of the "new economy" in the US and now China and India
> seem to be racing ahead.  In a Darwinian world, the
> neo-liberal argument runs, you fall behind because you
> are not competitive. You only survive if you are fit
> enough.  There is nothing systemically wrong.  The
> fault lies with you.  You are not neo-liberal enough.
>  
> Secondly, and more importantly, the richest income
> groups have become infinitely better off under neo-
> liberalism. Social inequality has increased rather than
> diminished.  In the US, for example, the top one
> percent of income earners claimed 16 percent of the
> national income before World War Two but during the
> 1950s and 1960s this fell to 8 percent and the failures
> of the 1970s threatened their power even more.  But by
> 2000 this group was back to claiming 15 percent of the
> national income and this may shoot up to 20 percent in
> the near future if the tax cuts stand.  Similar trends,
> though not quite so dramatic, can be detected in other
> countries.
>  
> So neo-liberalism has been about the restoration of
> class power to a small elite of financiers and CEOs.
> And since that class has overwhelming control of the
> political process and of instruments of persuasion, of
> course it insists that the world is a much better
> place.  And it is, for them.  Yet in the US, as
> elsewhere, most of the people are worse off than they
> were in 1970, particularly when access to decent public
> education, health care, and the like is factored in.
> In those countries that have recently turned to neo-
> liberalism, like China, Russia and India, we see the
> emergence of extraordinarily rich oligarchies at the
> expense of the rest of the population.
>  
> But if aggregate growth is so low, how does the upper
> class accumulate such wealth?  They largely do so
> through predatory practices, by dispossessing others.
> This "accumulation by dispossession" takes many forms.
> Cheap labor is everywhere preyed upon and the cheaper
> and more docile the better. Profit rates of US
> corporations are twice as high abroad as they are at
> home. Common property rights (water, land, etc) get
> privatized. Peasant populations get thrown off the
> land.  Environments are degraded.  Patent rights on
> everything from genetic materials, seeds,
> pharmaceutical products to ideas allow rents to be
> extracted from low-income populations.
>  
> Fundamental goods like education and health care get
> commodified and user fees escalate.  The list goes on
> and on.  But most important of all the credit and
> financial system is actively used to accumulate wealth
> at one pole while extracting it from another.  Family
> farms are foreclosed even in the US. Pension rights are
> privatized (Chile pioneered with social security) and
> then all too often diminished or erased (as with Enron
> or in China most recently).  Even more dramatic are the
> violent financial crises that have periodically wracked
> much of Latin America, Central and East Europe, and
> East and Southeast Asia.  These allow productive assets
> to be bought up by wealthy investors for a song.  Neo-
> liberalism has seen a massive transfer of asset wealth
> from the poor to the rich.
>  
> These injustices have sparked innumerable protests
> around the world, loosely knit together in the anti-
> globalization or global justice movement. The neo-
> liberal response has often been state repression.
> Mexico, for example, is advised by the US to crush the
> Zapatista movement for indigenous rights. Given its
> class basis, the neo-liberal state is understandably
> antidemocratic.  In some cases, such as Singapore and
> China, it never bothered with democracy at all.  And in
> the West, it easily morphs into neo-conservative
> authoritarianism.  The so-called "war on terror" now
> provides a cover for the extension of police
> surveillance, militarization and authoritarian
> measures.
>  
> Curiously, the protest movements against neo-liberalism
> often accept its terms.  Before 1980, individual human
> rights were a fringe interest, but neo-liberalism's
> emphasis upon individual responsibility has sparked a
> huge wave of interest in them in recent years.
> Evocation of such rights can provide a rhetoric for
> progressive politics. But this can also legitimize
> interventions in sovereign states by imperialist
> powers. Furthermore, since most individuals cannot
> bring their cases to court a vast apparatus of advocacy
> has emerged. The rise of the NGOs to political
> prominence has been another stunning consequence of the
> neo-liberal turn.  NGOs sometimes aid and abet the
> withdrawal of the state from social provision.  In
> other cases they offer tough critiques of neo-liberal
> policies. But, unfortunately, NGOs are no more
> democratic and transparent than the neo-liberal state
> they criticize. The rise of human rights discourses and
> of NGO power provides a limited terrain upon which to
> mount effective opposition.
>  
> The fear of social dissolution under an individualizing
> neo-liberalism has also sparked the search for a moral
> high-ground from which to secure the restoration of
> class rule. Appeals to nationalism (China, Japan, USA),
> to superior cultural values ("American," "Asiatic."
> "Islamic"), to religion (Christian, Confucian, Hindu)
> or to ethical commitments ("rights" and cosmopolitan
> ethics) erupt into the discussion.  The so-called
> "culture wars" - however misguided some of them may
> have been - cannot be sloughed off as some unwelcome
> distraction. The transformation of moral repugnance
> towards the  alienations of neo-liberalism into
> cultural and then political resistance is one of the
> signs of our times. Social movements against neo-
> liberalism, for example, frequently articulate their
> opposition in moral economy terms.  But purely moral
> argument is at best a weak ground on which to contest
> the alienations and anomie that neo-liberalism
> produces.
>  
> We have, in short, lived through an era of
> sophisticated class struggle on the part of the upper
> strata in society to restore or, as in China and
> Russia, to reconstruct an overwhelming class power.
> The turn to authoritarianism and neo-conservatism is
> illustrative of the lengths to which that class will go
> and the strategies it is prepared to deploy in order to
> preserve and enhance its powers.  The mass of the
> population has either to submit to this overwhelming
> class power or respond to it in class terms.  If this
> looks like, acts like and feels like class struggle
> then we must be prepared to name it for what it is and
> act accordingly.
>  
> Though class movements may make themselves, they do not
> do so under conditions of their own choosing. These
> conditions are currently highly diverse and fragmented.
> Finding the organic links between highly variegated
> oppositional social movements is an urgent task.   The
> links are there. The gap between the promise of neo-
> liberalism (the benefit of all) and its realization
> (the benefit of a small ruling class) increases. Class
> and regional inequalities both within states (such as
> China, Russia, India and Southern Africa) as well as
> internationally pose a serious political problem.  The
> idea that the market is about competition is negated by
> the facts of monopolization, centralization and
> internationalization of corporate and financial power.
> The idea that neo-liberalism is about fairness is
> brutally offset by the extensive facts of
> dispossession.  The idea that neo-liberalism is about
> individual freedoms confronts the increasing
> authoritarianism of the neo-liberal and now neo-
> conservative state apparatus. The more neo-liberalism
> is revealed as a failed utopian project masking the
> restoration of class power for the few, the more it
> lays the basis for a resurgence of mass movements
> voicing egalitarian political demands, seeking economic
> justice, fair (rather than "free") trade and greater
> economic security.
>  
> The profoundly anti-democratic nature of neo-liberalism
> is becoming a potent political issue.  The democratic
> deficit in nominally democratic countries is now
> enormous. Institutional arrangements, like the Federal
> Reserve, are biased, outside of democratic control.
> They lack transparency. Internationally, there is no
> accountability let alone democratic control over
> institutions such as the IMF, the WTO and the World
> Bank. To bring back the demands for democratic
> governance and for economic, political and cultural
> equality and justice is not to suggest some return to a
> golden past. The meaning of democracy in ancient Athens
> has little to do with the meanings we must invest it
> with today.   But right across the globe, from China,
> Brazil, Argentina, Taiwan, Korea as well as South
> Africa, Iran, India, Egypt, the struggling nations of
> Eastern Europe as well as in the heartlands of
> contemporary capitalism, there are groups and social
> movements in motion that are rallying to the cause of
> democratic values.
>  
> The Bush Presidency has projected upon the world the
> idea that American values are supreme and that values
> matter since they are the heart of what civilization is
> about.  The world is in a position to reject that
> imperialist gesture and refract back into the heartland
> of neo-liberal capitalism and neo-conservatism a
> completely different set of values: those of an open
> democracy dedicated to the achievement of social
> equality coupled with economic, political and cultural
> justice.
>  
> David Harvey is Distinguished Professor of Anthropology
> at the Graduate Center of the City University of New
> York.  His most recent book is The New Imperialism
> published by Oxford University Press. 18
> _______________________________________________________

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