Amid all the blather about V-shaped and U-shaped economic recoveries, it's become pretty clear that we don't have any recovery at all. And that there's none on the near horizon. It looks, in fact, like we're screwed. What's less clear is exactly what happened.
A housing bubble and bust? Sure, but DeVry University history professor Jerry Harris says that's only one piece of a much bigger picture. According to Harris, we're undergoing a change so profound it portends the decline not only of America, but of the nation-state as an institution.
This startling development is the rise of global capitalism, complete with a transnational ruling elite that operates through nondemocratic bodies like the World Trade Organization, the G-20, the IMF, and the World Bank, Harris said in an Open University of the Left lecture at the Lincoln Park branch of the Chicago Public Library last month. In other words, the escape of big money from its historic national anchors and the social obligations that went with them.
The enabler is our friend technology. Both the Chicago Tribune and the New York Times carried stories this week about how technological innovation is taking jobs away rather than increasing them, as many experts expected. But that's not news to Harris, who began studying the economy after he was laid off from U.S. Steel's South Works plant in 1982.
”There are more corporate headquarters in the Cayman Islands than there are people there.“
"We lost a lot of jobs to technology before we lost them to other countries," Harris says. At U.S. Steel, where he started out in the blast furnace and then became a machine-shop apprentice, he recalls that the skilled workers he was training with "came in one day and found computer boards attached to their machines." During that decade, in factories across America, skilled labor was replaced by microchips, middle management was eliminated, and productivity skyrocketed. "By 1988," Harris notes in his 2008 book, Dialectics of Globalization: Economic and Political Conflict in a Transnational World, the U.S. required only 40 percent of its blue-collar labor force to produce an amount of manufactured goods equal to that produced in 1977."
And then, IT advances made it practical to manage production anywhere in the world, and—whoosh.
Democracy and capitalism had grown up together, rooted in the French and American revolutions and bound by a socioeconomic contract that balanced property rights with personal rights, Harris says. "For many decades we had a nation-centric economy," with companies that identified themselves as loyal corporate citizens. Remember the slogan 'What's good for General Motors is good for the country'? At that time, the majority of General Motors' employment, sales, and assets were all inside the United States. Now the reverse is true: a majority of their employment, sales, and assets are outside their home country. And that's the case for all the major corporations around the world."
This should not be confused with that quaint old thing we once knew as the "international economy," Harris cautions. That was based on the export of products made in one country and sold in another. "Today, companies produce, invest, and employ everywhere, so what you have is a transnational corporation and a global assembly line. And in that scenario, he adds, as production moves to whatever country offers the cheapest sweatshop, "we're seeing the economic and social contract ripped up."
Harris says he doesn't "want to overstate the case" (i.e., nations aren't dead yet), "but transnational corporations and those who run them have less and less invested in any one particular country. They can make money anywhere, and the logic of capitalism itself drives them to lower their cost of production and increase their efficiency. If they don't do that, they become less competitive. They're driven to globalize, and as they do, they're less invested, for example, in the education system at home. They don't need as many engineers and scientists coming out of the United States when they can use Chinese, Indian, and Brazilian graduates at lower cost. The same logic drives their tax strategies. There are more corporate headquarters in the Cayman Islands than there are people there."
Meanwhile, we have a shrinking middle class here and growing poverty. "That has political implications that we're seeing, for example, in the Occupy protests," Harris says. "There's a feeling of alienation, a sense that the national government is controlled by corporations. We gave billions to the banks (including foreign-owned banks), which they used to increase their own bonuses. What if that money went into infrastructure development, hiring people to build bridges, sewer systems, roads?
"We're not in the same situation as the southern European countries, but when you see the inability of the Obama administration to get the jobs bill through, and the whole discussion at the congressional level goes toward debt rather than stimulus, I think that's totally ass-backwards. About 76 percent of the people in polls say, yeah, raise the taxes on the wealthy and superrich, and yet not one Republican will do it. So where's the democracy in that?"