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Laissez Faire Economics and Unregulated Plumbing,
This review is from: End of the Line: The Rise and Coming Fall of the Global Corporation (Hardcover)
Barry Lynn's End of the Line is a superb volume that shows why economic analysis should not be left to economists. There are several occupational hazards of being an economist, the most irksome being that you have to pretend that politics and economics are not only different but actually separate. This sort of thinking is fine when one is engaged in a certain type of scientific economics - the dispassionate explanation of an aspect of our economic arrangements - but is a disaster when it comes to explaining real life economies. Market societies, for better and worse, are the product of deeply rooted economic imperatives that play out against institutions built in political - power - struggles between people with opposing interests and disparate means to achieve their ends. Economies are jerry-rigged, improvised institutions that sometimes work well and sometimes work very, very badly. Because Lynn is not an economist, he is less inclined to worship at the altar of free markets and more inclined to look at how the self-interested actions of leading business men and women, government officials and the general public combine to create risk as well as opportunity in our global economic commons. Lynn's lack of free market piety will earn him critics among the acolytes of laissez faire economics, but the rest of us should be grateful that he writes about the real world in these confusing times.
Lynn's point in End of the Line is to remind us that the global economy is, like all human creations, a grand improvisation that creates and distributes wealth in ways that are beyond the control of its designers in business and government. Lynn has penned a wise, witty and at times angry look at globalization that departs from the stale argument about whether global capitalism is good or bad in favor of a far more subtle, and scary portrait of a risk laden production system that is, at least for now, beyond any government's control. End of the Line is a meditation on what happens when short term self-interest leads global businesses to make bottom line decisions that enhance their own profitability in ways that increase the vulnerability of the system as a whole, and governments abdicate their responsibility to monitor and manage an economy - even a global economy - for the sake of the common good.
Lynn asks us to see the global economy as a vast and intricate system of economic plumbing that links suppliers and customers in every corner of the globe. This plumbing system is nothing but an ever evolving set of connections that becomes denser when corporations outsource their operations to producers in lower cost countries in order to provide customers with high quality products at low prices. The global growth of free trade, with relatively little regulation or oversight by governments in the interest of global prosperity, has been an immense boon to the fortunes of millions of previously desperately people around the world, whose incomes and life chances have blossomed because they are making goods and services that people in rich countries want and need.
Yet, common sense tells us that an unregulated plumbing system, left to grow by itself without any supervision or rules, is bound to develop all sorts of problems that mushroom into total system failure under the wrong circumstances. Imagine the eventual public health disaster that would happen in a city that let all building and homeowners make their own connections to the main water and sewer lines. The resulting mess would poison our water and cities with filth because no agent was responsible for managing the system in the interest of the community as a whole. A smooth flow of water and sewage requires regulation of the rational plumbing system in order for everyone to prosper from the use of water and the proper management of waste.
End of the Line makes an urgent yet curiously under-appreciated point: The contemporary global economy is a very leaky plumbing system that is subject to catastrophic breakdown because its evolution is driven by the private interests of global corporate managers rather than the common good. This leaky plumbing system is the result of a deliberate choice by the global government - the United States - to refrain from managing the world economy in our nation's interests in favor of a utopian vision of a planet wide free market that would regulate itself, and thereby eventually enrich the world. Lynn has bad news for all who believe that the free market is all the world needs to have peace, security and stability: the breakdown of the global economy's plumbing will lead to the same kind of mess as an unregulated system of city plumbing unless we are smart enough to realize that a free market requires a strong, smart and wise government to deftly manage the world economy with a light but competent touch.
End of the Line is not an anti-globalization screed about how global capitalism is destroying the world's poorest people, or poisoning our environment, or generating corruption on an epic scale. Instead, Lynn wants to alert us to the fact that we have created a global economy where a natural disaster or political conflict could disrupt the entire system in ways that threaten the well-being, or in extreme cases, the lives of millions of people. The culprit here is the old conflict between the private and the public interest, this time played out on a global scale. Lynn wants us to see how our love affair with the free market has, inadvertently but predictably, created economic insecurity that can only be handled by government or governments.
The lesson that Lynn drives home is clear and difficult to avoid: either the leading power in the global economy - the United States - will step up to the task of managing capitalism in its own interest in light of its sense of the legitimate interests of the rest of the world or some other power will take over global leadership. If, no when, the global system's plumbing breaks down in the future, some nations or group of nations will fix the resulting mess, and promulgate rules and regulations to reduce the likelihood of system failure in the future. The US cannot afford to wait so long that some other power or powers, with the approval of the rest of the world, offer a credible alternative vision for managing the global economic system in light of their own interests as well as their understanding of our interests. Such a circumstance is a sure road to conflict - hot or cold, or both.
End of the Line is also an announcement of a new type of American economic nationalism, where Lynn makes a case for a strong American role in the management of the global economy in the interest of the American people. According to Lynn, the threats to global economic security and American prosperity are the result of the deliberate policies of the Clinton administration, which foolishly downgraded the role of the US government in building and managing global trade in favor of free market ideologies that ignore the historical fact that markets function best when governments intervene with the right mix of wisdom and restraint. The Clinton administration portrayed in End of the Line looks less like the interventionist, big government liberals bent on supplanting free markets with government power in the interest of some idea of justice or the social good and more like a successor to the Reagan/Bush the Elder administrations' project of restraining and rolling back the New Deal in favor of the revival of capitalism "red in tooth and claw". Sections of End of the Line suggest that Clinton and his associates are better seen as the second of three successive Bush administrations - with Clinton et al as the not-well-loved but useful adopted children of the Elder Bush and disdained siblings of Bush the Younger - bent on rationalizing and consolidating the Reagan revolution against a strong US government in economic affairs. This indictment, which will outrage as many Democrats as Republicans, is essentially right: Clinton was the kinder, gentler Bush whose paternalistic worries about the common man and woman never deflected him from the path of opening the US economy to the gales of creative destruction and globalization which drive growing income disparities at home and, according to Lynn, increasing economic insecurity in the global economy overall. Lynn treats Clinton and the Democrats of his era as people who try to soften the blow that the global march toward capitalism must deliver to weak Americans rather than a force trying to create a new social contract that spread the fruits of wealthy widely while preparing us all to live a very competitive economic world.
This book is, among other things, a powerful salvo in the war between Democrats over the future of the party, and therefore the nature of progressive politics in this country. Let the fight over the future of the Democratic Party - or more likely, its successor - begin in earnest.