The new attention given by the media to protectionist lobbying by the American steel industry, led by Bethlehem, is illuminating about globalization, monopolies, and competition. Domestic steel is pushing for protective tariffs in the name of saving jobs in the US. Both capital and labor are united in this aim. In fact, labor is shouldering most of the lobbying cost (80%) in the form of campaign contributions. The American auto industry, led by GM, and other steel-using manufacturers, led by Caterpillar, are on the side of steel importers, namely Japan, South Korea, Brazil and Russia, against US steel producers. Current price of hot-rolled steel has dropped 50% to $200/ton from it peak of $400/ton in 1994, and import's market share has risen from 23% to 35%. Clinton raised the steel issue in Tokyo last November and threatened fast trade action. The Administration's concern is driven more by domestic politics than by international econmic consideration. Falling oil prices to below $10/barrel are creating similar problems, although protectionist solutions for the domestic oil industry have not been an option for decades, since the industry is one of the most globalized. There is no competition between global financial institutions beyond the crony relationship level, with general acceptance of a genteel system of cartels and market leadership in all specialized financial markets. Even the markets and stock exchanges themselves are merging. Your theory of national mergers to strengthen cross-border competition is very dated.
Henry C.K. Liu
Rakesh Bhandari wrote:
> Dear HENRY C K:
>
> Before I begin, let me inform those who do not know; I am finishing my diss
> this year as grad student in the Dept of Ethnic Studies at UC Berkeley
> whose companion is an asst prof here.
>
> 1. I do name drop; I feel so guilty after having done so I am forced to
> actually read what I have cited. It disciplines the mind.
>
> 2. End to national competition?
>
> A. The use of international division of labor, e.g., the world car, by
> competing multinationals does not ipso facto mean that 1. corporate
> practices converge on one global model (see new book by Simon Reich, et al.
> or at least the first 50 or so pages) and 2. national competition has
> abated or even not intensified (as underlined by the new rash of dumping
> charges by US corporations or the assault on national ownership rights in
> Asia--a massive global centralization of capital that you suggest is
> insigificant, forgetting that imperialism remains the political expression
> of the centralisation of capital on a world scale).
>
> B. transnational mergers are not proof of 2b: the point of such mergers may
> be to consolidate position at home so the merged company can engage against
> a third competitor or European mergers may have their driving force in
> competition from American capital, e.g., European mergers in the defense
> industries.
>
> C. the world is not breaking up into self enclosed regions--this again
> reveals your one sided formal apprehension of the nature of things; for
> example the point of NAFTA is to provide US capital with a protected market
> in which to reap superprofits so that it may subject its rivals in other
> markets to ruinuous competition or that it may blackmail its rivals to give
> up access to their markets in order to access the North American market-- a
> genuine free trader like Jagdish Bhagwati raised this concern years ago. If
> he, a thoroughly bourgeois ideologue can see this, why can't a practical
> hands on bidnessman like you get a clue?
>
> D. that monopolies may not be able to call upon the state to use monetary
> policy or price stabilization to their benefit does not mean that the state
> will not support the imperial expansion of monopoly capital in other forms.
>
> Your rosy peaceful world of global capitalist integration, albeit at a high
> level of inequality, will not materialize. You seem to hope that the world
> will evolve to the model in Vol I of Capital--only workers on one side and
> capital on the other with no internal differentiation. But you won't get
> such a beautiful dialectic in the real world which will instead by wracked
> by intra capital conflict all along the way as people are sacrificed in
> slaughterous competition on the world market.
>
> The bourgeois world is not only more violently destructive than you
> imagine, HENRY C K; it more destructive than a bourgeois fixed on hedging
> strategies for firms undertaking FDI could imagine.
>
> You think imports from the third world are insignificant in relation to US
> GDP; but you never consider that US "production" in retailing and
> advertising--that sizable part of the GDP-- is often only value deducted
> from these consumer and intermediate good imports, bought well under value,
> that are now ravishing the industrial heartland though there are jobs in
> the circulation of these imports. And you seem never to have heard of the
> debate Adrian Wood commenced about whether the unemployment effects from
> third world imports have been underestimated for various reasons--see
> Galbraith's index.
>
> You paint the US as an island entirely on to itself, playing no aggressive
> role in the world and little affected by goings on elsewhere.
>
> By the way, the monetary theory of overinvestment and crisis you sketch to
> explain how the pegged exchange rate system in Hong Kong led to very low
> interest rates and thus overinvestment seems roughly similar to Hayekian
> theory (I am not saying that I actually do understand what you were getting
> at or that I agree.) By the way, Paul Krugman provides a response to
> Austrian liquidation theory. Krugman conflates Hayek's and Schumpeter's
> theories despite their important differences; accuses Hayek of not having
> thought of a problem he gave considerble attention to (why a sudden shift
> to consumption as savings are no longer forthcoming to finish more
> roundabout methods necessarily means there must be unemployment); and
> proposes his own liquidity preference theory of recession in a few words.
>
> While Hayek's "exogeneous" monetary theory of is surely inferior to
> Schumpeter's which itself is based on the mad idea of mad men heroically
> breaking through a non existent value based equilibrium every once in a
> while, Krugman's "critique" is a pretty sad performance, something that
> would have probably got laughed out of court as an undergraduate paper by
> someone like Meghnad Desai, a sort of Marxist economics professor at London
> School of Economics.
>
> But it gives you a sense of the taste for theoretical argument in the US
> economics profession. Jeez, I don't Laura Tyson ever defined capital in my
> Econ I course, much less mention the Austrian-Post Keynesian Controversy.
> Much less Marx or Veblen. It's the narrowest apologetics imaginable. You
> have to a high respect for authority to continue in a discipline where no
> attempt is made to clarify in a critical and profound manner the basic
> concepts. But no wonder Economics is attracting more and more people along
> with Depts of Criminal Justice. Authoritarianism and obsequiousness--those
> remain the fundamental problems.
>
> I thank you for the reading recommendation of Fareed Zakaria, now trying to
> give his slimy brown imprimatur to imperialist despair about the explosion
> of global poverty in a world left to rot. Who will you recommend next?
> Max Boot, deputy editor for the Wall Street Journal. I have had the
> privilige of meeting both, and I am glad to have been reminded of it.
>
> Yours, Rakesh