Customer Reviews

In Defense of Global Capitalism

5 star:		(15)
4 star:		(3)
3 star:		(2)
2 star:		(1)
1 star:		(0)

 

 

Having lived and come over from the left, Norberg makes a compelling case for globalization as a model for success. Contrary to the negative review from the Swedish "assassin", globalization works. The assassin's list of dysfunctional democracies is, even at its worst, a list of democracies and, contrary to his opinion, examples of good progress towards economic and political freedom.

Globalization has become capitalism without borders. Capitalism means the right to own and the right to trade -- freely. The problems have more to do with what can and can not cross borders in a world economy where geopolitics and terrorism limit the rights or possibilities of people to move freely. There is still a strong urge to maintain national integrity and the natural defense of one's borders and culture. And, given the choice, people head for countries with greater economic and political freedom, not just where the natural wealth and resources exist. People are now the world's greatest resource and they are more mobile than ever.

Norberg pulls together multiple, massive statistical studies of real progress in the world resulting from greater political and economic freedom. They go hand in hand. They serve the liberation not only of countries and cultures, but also women who, one hundred years ago left any country short on its claim of true democracy by prohibiting them the ballot and/or the right to economic freedom and ownership.

David Landes' "Wealth and poverty of nations" made this case from an historic perspective. Countries and their people and institutions need to be able to produce things of value, educate their young, innovate in their methods, emulate success, discriminate based on merit, and allow people the right to retain (some or much of) the fruit of their labor. Globalization and capitalism, like democracy, are the worst of all possible forms of economics, except, as Churchill advised, for all other forms of economics that have been tried from time to time.

All these data and global views can be a bit dry at times and it should be safe to assume that English is not Norberg's first language (although he writes better than most American university students with English as their first language!) yet it is well worth the detail. He questions conventional (i.e., casual) wisdom. Anecdotes are illustrative and global.

"When I say that I mean to defend capitalism," proclaims Norberg, "what I have in mind is the capitalistic freedom to proceed by trial and error, without having to ask rulers and border officials for permission first."

He erects a barrage of facts and figures to make the case that trade is good. For example, real incomes among the top quintile of income earners have risen 75% over the past three decades and real incomes among the bottom quintile have increased 106%. Life expectancy in developing economies has increased, infant fatalities have fallen, and people living in developing economies are eating better and obtaining more education. Read the book to learn why the widening "gap" between rich and poor is a falsehood. Although most of the world is still poor compared to the West, their hardship is not because of the West. According to Norberg, "The uneven distribution of wealth in the world is due to the uneven distribution of capitalism."

Protectionists predict that capitalists will locate plants in countries where wages or environmental standards are lowest. Capitalists are not only intent on paying lower wages. "If they were," points out Norberg, "the world's aggregate production would be concentrated in Nigeria." Multinational corporations also seek "social and political stability, the rule of law, secure property rights, free markets, good infrastructure, and skilled manpower." There is evidence that the quality of the environment worsens in the early stages of development. However prosperous people can afford cleaner air and water. Norberg reports that "the turning point generally comes before a country's per capita GDP has reached $8,000." When people earn more than that, their governments adopt environmental regulations. The point is that trade and growth are the means to a cleaner environment.

In addition to trade issues and capitalism, one may also learn a lot about developmental economics and international finance. Norberg observes that people fail to appreciate global capitalism during the good times and then blame the process when the going gets tough. "Globalization will not keep moving under its own steam if no one stands up for it," he asserts. In Defense of Global Capitalism is perhaps worth a ton of coal in the engine of global capitalism.

The first book to rebut - systematically and thoroughly - the world picture and tenets of the anti-globalisation movement has been written by a 27-year-old Swede - and former anarchist. It quickly became a bestseller in Sweden after its publication in May 2001, and now there is this English version.

For some time, opponents of globalisation have been able to spread myths about capitalism. They say that free trade and free markets make the world a more unequal place, that capitalism holds people in poverty, that economic growth harms the environment, that multinational corporations keep wages and labour standards on a low level, and that free financial markets cause crises.

This is not correct. In Defence of Global Capitalism is the book that systematically challenges and refutes the anti-capitalist assumptions. With hard facts, statistics and simple graphs, Johan Norberg explains why capitalism is in the process of creating a better world. But the book is also personally written, with an emphasis on values, and the fact that globalisation gives opportunities and freedom to the world's poor. The book illustrates this with concrete examples of people and countries that have prospered thanks to globalisation, and those that have suffered because of isolation.

Johan Norberg shows that the diffusion of capitalism in the last decades has lowered poverty rates and created opportunities for individuals all over the world. Living standards and life expectancy has risen fast in most places. World hunger, infant mortality and inequality have diminished. This is because of an economic and technological development that is the result of free market policies. The poor countries that have liberalized their economies have shown impressive results, while those that have not are stuck in deep misery. Therefore, we need more capitalism and globalisation if we want a better world, not less.

The Swedish writer, Johan Norberg, has an MA in history of ideas. He is the author of books on human rights, the history of liberalism and the Swedish author Vilhelm Moberg. Johan Norberg is devoted to globalisation and individual liberty. ...

In this illuminating and accessible book, Norberg offers a systematic, detailed and complete rebuttal of the claims of the enemies of capitalism and globalization. Backed up by verifiable facts from a huge variety of reputable sources, he demolishes every lie of the leftists and environmentalists. He also investigates the other side of certain half-truths and gives an optimistic assessment of how capitalism, freedom and globalization are improving human lives around the globe.

Norberg looks at certain deceptive ideas, for example the one that claims the rich are getting richer and the poor poorer, giving us the good news of rapidly diminishing poverty and pointing out that the measure should be how well one is doing, not how well situated one is in relation to others. He explores the facts concerning issues like hunger, education, freedom and equality. Improvements have been particularly spectacular in China and India since these countries started reforming their economic systems.

He shows how the walls against ideas, people and goods are collapsing with dictatorships and how women benefit from the spread of capitalism. The best cure for poverty is growth; prices and profits serve as a signalling system in the market economy whereby the worker, the entrepreneur and the investor all benefit. The importance of property rights are pointed out, with reference to the work of De Soto, and the author compares the success of the Asian Tigers with the sorry state of Africa, although even here the open societies like South Africa, Mauritius and Botswana are doing well.

Norberg dismisses the hoary old argument that western countries are rich because they stole the resources of Third World countries in colonial times. The affluent world has grown faster since shedding its colonies, many rich countries (like Sweden and Switzerland) never had any colonies, whilst some of the world's least developed countries (Nepal, Liberia) have never been colonies. Nor have countries with natural resources as a rule grown as fast as those without, for example Singapore. A brilliant example of free trade success is Estonia, which soon after independence in 1992 abolished all tariffs.

The 20 economically most liberal countries have a per capita GDP of approximately 29 times that of the economically least liberal. The uneven distribution of wealth in the world is due to the uneven distribution of capitalism and the losers of the world are those that have been left out of globalisation.

Norberg attacks agricultural subsidies in the affluent countries, showing that this ridiculous practice harms those countries themselves and the developing world. He demonstrates the absurdity of Europe's Common Agricultural Policy, a bureaucratic nightmare that channels nearly 40% of the entire EU budget to less than 1% of the population. Latin America still suffers from decades of privilege and protectionism, but Chile is a good example of how quickly a country can transform itself with the right policies, to create a high standard of living.

Norberg investigates a vast range of issues, from development assistance (It is wasteful in that it normally involves the transfer of money from poor people in rich countries to rich people in poor countries), child labour and working conditions. He argues convincingly that free trade and capitalism alleviate social problems. He also proves that prosperity is beneficial for the environment, refuting the spurious claims of environmentalists and quoting from Bjorn Lomborg's remarkable book, The Skeptical Environmentalist: Measuring the Real State of the World.

Norberg considers every angle, including issues like "cultural imperialism" and the risible notion of the "dictatorship of the market", showing how capitalism and democracy go hand in hand in creating a better world. The book includes an index and 14 pages of notes. The text is enhanced by graphs demonstrating the facts and arguments. He concludes the book on an optimistic note, i.e. that people are beginning to wake up to the fact that they aren't just the tools of society but ends in themselves and that freedom and democracy will spread and continue to improve the lives of everyone on the planet.

On The Wealth of Nations (Books That Changed the World)

Capitalism: The Unknown Ideal

When a guest of my wife's saw this book on a table in our living room, he sneered "who needs to defend capitalism? It's *everywhere*!"

I start this review with that anecdote because apparently the title of this tome mustn't be terribly successful. Mr. Norberg spends 300 pages telling us in crushing detail why it isn't 'everywhere'--and more importantly, why not.

And a solid defense it is. The book is well researched and simply relentless. Page after page buries us with statistics telling us why capitalism is (in Churchhill's paraphrased words) "the worst system of government, except for all the others." Mr. Norberg tackles globalization late in the book to fill out the picture but never strays far from his main thesis: that freedom, free enterprise, democracy and the free movement of capital are mutually reinforcing.

For an American to read a vigorous defense of capitalism coming from a European was almost as exciting for me as discovering some of Mr. Norberg's references: the French economist Patrick Messerlin, for example, who points out that the $180 billion a year in EU subsidies of agriculture and basic industrial manufacturing goes to "save" 3 percent of jobs in these sectors. That comes out to a cool $200,000 per worker--a pretty fine price to keep out competition. Given these (and many, many more) eye-popping numbers, Norberg often strays from simply reporting statistics to morally defending his subject. As an answer to the "yes, but ..." critics, this was wholly welcome.

Still, the book is far from perfect. The statistical emphasis, while impressive, is occasionally numbing and I could almost hear the left wing counter-arguments ("statistics are necessarily selective" ... " you can use them to prove anything") in my head while reading. The section and chapter organization appears haphazard and the chapter titles give little or no information ("... and it's no coincidence," "Race to the top"). To be fair, these semantics could be from translation--as could an occasionally defensive tone.

Overall, however, these defects don't tarnish the overall case. Mr. Norberg has done his homework and anyone interested in a thorough--if a bit actuarial--defense of economic liberty will enjoy this read. As a bonus--if tackling this cover-to-cover becomes a bit much--a superb index lists almost every economic issue imaginable (from 'Absolute Poverty' to 'Zimbabwe') and serves as an excellent reference.

I give this book 4 stars because it is a fine restatement of that which is already known but unfairly ignored. It is a work of exposition, not of discovery; it does not truly break new ground.

If Norberg had studied any economics, the jacket blurb would mention that fact, if only to enhance his credibility. Yet the only stated qualification of the author is an MA in the history of ideas, not an education likely to make one sympathetic to economic reasoning. From the fact that the blurbs are silent about any training in economics, I conclude that Norberg has none. If so, that is utterly remarkable: Norberg is an exceedingly rare instance of someone who reasons like a very competent applied economist without having studied the subject. This is all the more remarkable given Norberg's avowed bohemian past, and his hailing from that erstwhile social democratic paradise called Sweden. (Two quick historical asides: (1) nationalized firms are rare in Scandinavia; (2) the Vikings soon came to prefer trade to plunder, selling amber, furs, and iron.)

Along the way, Norberg acquired a fascination with economic and social science data, about which he is a bit undercritical. For starters, it is a nontrivial exercise to compare the standard of living of nations with different currencies. GDP per capita is a defensible starting point, but converting data in different currencies into US$ using exchange rates can be highly misleading. In the jargon of economics, the problem here is the total failure of absolute PPP, and the failure of relative PPP for all but the very long run. There are ways around this problem, but the results can be trusted only when comparing nations whose economic and industrial sophistication are within hailing distance of each other, e.g., Japan and Korea. It remains highly problematic to compare the per capita GDPs of these nations with, e.g., China's. For starters, how reliable is calculated GDP for China, when the legality of many ordinary business transactions is untested there?

I do agree, however, that the extant data bear out the thrust of Norberg's argument. Freedom and private property promote scientific and social progress. Nor do I wish to deny that China has made astounding material progress since Mao's death. Newsmagazine photographs of downtown Shanghai clearly attest to that (and put my home city to shame!!) But this progress is not an end in itself. Will Chinese universities train and hire philosophers worth studying? Will the Chinese write novels worth reading closely? Will a Chinese computer scientist invent the next dominant computer programming language?

I won't say anything here about Norberg's defence of globalism, because I view restrictions on trade with the Third World as utterly reactionary. The commodities and labor-intensive goods of poor nations must be allowed a place in the sun in the world marketplace. With the proceeds of such exports, poor nations can import some technology-intensive goods, including medical supplies, from the First World. And thus trade affords such nations a chance to pull themselves up by the bootstraps, as it were.

If one grants Norberg's argument, the European Union is in trouble: it has become in effect an attempt to protect Europe's high-cost social democracy from cheaper foreign competition. In recent decades, more and more social democratic policies have become all-Union bureaucratic norms. Hence any single EU member cannot gain competitive advantage by attenuating those policies. Moreover, cheap imports from non-EU nations are greatly restricted. Europe's "work optional" benefits culture, short work weeks, early retirement age, high minimum wages, and worst of all, restrictions on layoffs, are all doomed; the EU will only delay the inevitable.

When evaluating political and economic arrangements, the question to ask is not: "does the contemplated policy satisfy some ideal?" but rather "how does the policy stack up when compared with concrete alternatives?" A representative democracy in which most firms are privately owned, and all firms are keen to trade with the citizens of other nations, should not be held up as an ideal state of affairs. What is desirable about such an arrangement is the ensuing relative freedom persons enjoy to discover, to make defining choices, to reinvent themselves.

At this juncture, let me define capitalism: it is the extension of the concept of private property (excludability, alienability, protection by state force) to the financial liabilities of firms, including an active secondary market in such liabilities. Hence the stock market is the quintessentially capitalist institution.

I now let Norberg speak for himself at some length, as per pp 16-17 of his book:

"Basically, what I believe in is neither capitalism nor globalization... I believe in man's capacity for achieving great things and in the combined force resulting from encounters and exchanges. I plead for greater liberty and a more open world... because it provides a setting which liberates individuals and their creativity as no other system can. It spurs the dynamism which has led to human, economic, scientific, and technical advances, and which will continue to do so. Believing in capitalism does not mean believing in growth, the economy, or efficiency. Desirable as these may be, these are only the results. Belief in capitalism is, fundamentally, belief in mankind.

"...My aim is freedom and voluntary relations in all fields. The market economy is the result of this in the economic realm; in the cultural realm it means freedom of expression; in politics, democracy and the rule of law; in social life, the right to live according to one's own values and to choose one's company.

"...The important things in life - love, the family, friendship, one's own way of life - cannot be valued in money... It is not a desire for lucre that moved me to write a book about globalization... I write this because it is something in which I believe, because to me it matters. And I wish to live in a free society because it grants people the right to choose what matters to them."

An exceedingly well crafted and cogent volume, Norberg supplies a collection of essays that each discuss in researched detail the benefits and costs of a freemarket economy. Norberg carefully examines and measures truths and falsehoods associated with all views of the topic at hand. He also does so with a understanding of the different scales of time and geography and population upon which freemarkets act. This book would well serve to be a textbook in secondary, advanced, and also post-graduate education.

If you want to know how to rid the world of poverty and oppression, answers can be found in this powerful little book. No matter your politics or world view, you'll want to read In Defense of Global Capitalism for the way it is written. Presented as a series of short logical arguments, Norberg shows, in clear concise English and very simple charts, the correlation between economic freedom and prosperity, not just economic prosperity but longer lives, better nutrition, higher education, better working conditions and an improved environment. A smart book, easy to read and easy to understand; give it to a friend.

I was familiar with most of the issues and arguments and evidence presented in this book, but loved it because the book takes an unusual tact in defending capitalism and free trade. Most defenses focus on the good achieved by capitalist societies in terms of wealth and well-being, and this book does hit those topics. This book takes a different angle though that I found incredibly compelling which is to argue the issue from the point of view of liberty.

What an individual does with their property is their business, and almost every issue's first defense in this books was to point out that protectionism, hyperregulation, and scores of other anti-capitalist positions espoused by the left worldwide are in fact all abridgements of individual liberty.

Only after making those points does the author go on to refute (usually quite capably) the 'greater good' arguments that anti-capitalists use to justify their positions.

One issue I was hoping would be better addressed was the protectionist view that wealthy countries are injured when trading freely with poorer countries. The author does go into that, but only touches that base briefly, and not resoundingly enough to sway the skeptical. Instead he argues principally from the perspective of someone interested in how to lift the world's poor out of poverty, which is a fine position, but convincing rich country protectionists is a necessary step along those lines.

Globalization is good: that's the message of Johan Norberg's In Defense Of Global Capitalism, an informative and knowledgeable guide to global capitalism which rebuts the basic tenants of the anti-globalization movement by showing how the spread of globalization has resulted in newfound opportunities for world advancement and freedom. The focus on capitalism's positive effects on world poverty go far in refuting the common perceptions and arguments, providing a reasoned discourse rebutting anti-globalization naysayers.