>We are in unchartered waters. We are correct to be sceptical about the
>New Paradigm and globalization, yet something important is afoot. Much
>work to do -- at least in theory.
> --
>Michael Perelman
>Economics Department
>California State University
>Chico, CA 95929
>
>
Suppose, for argument, that during much of this century the main problem of capitalist stability has been not the rate of investment per se, but the link between the rate of investment and the cost of bringing labor to the capacity generated by that investment--industrial, agricultural and intellectual. Think of capitalism in this century rewsting on an abundance of capacity, such that there is an excess amount of capacity in many nation states at different times (and for different amounts of time). This meant the existence of large numbers of people in most countries with few prospects of stable employment. So far, this is the old story of excess capacity and marginalized labor. But assume further that because of the relative inflexibility of movement of both capacity and labor (moving manufacturing plants and processes, agricultural seasons, intellectual products and people was much more costly then as compared to now) the political pressure within nation states and between then to somehow bring capacity into line with consumption was always greater than it may be now. National elites had fewer options to protect businesses from collapse and bankruptcy than they do now, if for no other reason then there was no acceptance until recently in the international banking community of the need to figure out how to write off staggering losses without damaging the ability of companies to raise capital and conduct business as usual, while also maintaining social stability. This kind of capitalism was profoundly provincial (Nazism was the greatest of western provincialisms.). Capitalists then had many fewer ways to deal with the tensions of capitalism than they do now.
Now, the cost of bringing the right kind of labor to the right kind of capacity has been reduced enormously by several factors: construction of plant now goes oninexpensively in many more places than ever before (build the plant in Indonesia, rather than bring Indonesians to Pittsburgh); international finance and western military power now encourages and protects the fungibility not only of money but of production facilities (Nike plants here there and everywhere are more or less the same; strawberries from New Jersey or Chile, it's all pretty much the same); intellectual products and processes are now much more convertible from place to place than even twenty years ago (enter the so-called computer revolution); military and ideological hegemony on a scale not seen for some time makes labor equally convertible (Haitian labor today, Korean tomorrow and so forth). One consequence of this change is that excess capacity may find employment faster than before, and if not, it can be absorbed as a loss by the world financial system in a way never before seen (has there ever been a time in the last 200 years when some enormous concentration of capital has disappeared without throwing business as usual into a panic?) At the same time, enormous numbers of workers may be thrown into a social crisis that doesn't really disturb the world system because however large the number is locally, it may amount to a relatively small percentage of the total available world labor force--this is another new fact of life. The crisis of the 1930s took place where overcapacity could not be reduced slowly by capitalists working in concert and without the benefit of being able to control some large concentration of disgruntled workers in some province of the world economy because the governments that managed these people could not survive such a social catastrophe (now Suharto is massaged out of power with a nice pension, his clique also provided for, the national economy aided by world institutions, and the local military supported by all sorts of allies to help with whatever social upheaval comes along--a temporary blip in the markets, but nothing to worry about, really).
Steve Cohen
********************** Steven R. Cohen lomco at pipeline.com