Suicide Capitalism

William Pfaff
March 24, 2009

The globalization of the international economy launched by the United States
as an accidental policy of the Clinton administration has since been much
lauded as benefiting (some of) the poor of the world by drawing them into the
international capitalist system. This is not actually what it was designed to do.

It has proved, like the god Janus, to have two aspects. The second face now
has been revealed. Economic globalization has, as its second result,
impoverished (some of) the rich of the world.

The free market originated in 19th century Britain in what is called by
historians the Great Transformation. As the English political philosopher John
describes it in “False Dawn,” a prophetic book (in 1998) on the
destructive effects of globalization, that transformation tore from their local
roots the economic markets that since medieval times and before had been
tied to communities, and had evolved through the needs and adaptations
of those communities and their immediate neighbors.

Because of their origins, these markets were constrained by the need to
maintain social cohesion. In mid-Victorian England, in part because of the
development of transportation and communications, these community-rooted
markets—“embedded in society and subject to many kinds of regulation and
restraint”—were destroyed.

They were replaced by deregulated markets that ignored social and
communitarian constraints, and functioned only according to the rules that
suited themselves. Because of their inter-communication and interaction,
they no longer set prices according to what the farmer, artisan and community
could bear. The free market created a new economy in which the prices
of all goods, including labor—or, probably one should say, labor above all—
were set or changed without regard to the effects upon local society.
Welcome to the world of capitalism “red in tooth and claw.”

This was the capitalism that provoked the critiques and analyses of the
great classical economists of the Scottish and British Enlightenments,
generally read today (in Washington think tanks) chiefly in order to justify
injustice, and in deliberate disregard of the social responsibility that was part
of the work of such men as Adam Smith and David Ricardo.

This was the capitalism that gave birth to the Communist Manifesto, in
which Marx and Engels wrote: “All old-established national industries have
been destroyed or are daily being destroyed. … Everlasting uncertainty and
agitation distinguish the bourgeois epoch from all earlier ones.” It provoked
socialism and every variety of radical and religious reform meant to restore
human values to economic life. Over the years, this version of capitalism
was civilized, or half-tamed, until the arrival of globalization.

With globalization, technology once again was eagerly used to destroy
existing capitalism by repeating the two crimes of assassination that
had destroyed the pre-capitalist economy: the use of technology to expand
markets so widely as to destroy existing national and international
; and, second, once again making labor a commodity.

Labor was no longer a social or economic “partner” in manufacturing,
industry and business, which meant a human collaborator. Labor became
simply a “cost,” to be reduced as far as possible, or to be eliminated.

This was rationalized with two contestable euphemisms. The first was that a
progressive process had been set in motion by which the profits of
globalization would “trickle down” so as to benefit the entire workforce.

This is unimaginable if labor is a commodity of unlimited supply, as it
tends to be today—a specific characteristic of globalization. Destroyed was
the power that labor had possessed when industry was forced to hire from a
given pool of workers in a given location.

In addition, the tendency of globalization is to exploit a given workforce
until it no longer has a margin of survival (Ricardo’s “iron law of wages”),
and then move on. See Rust Belt industry and trailer-home former towns.

The second of the three self-destroying (indeed suicidal) qualities of
globalization has proved to be the inner dynamism driving it to expand by
means of the division, subdivision and quasi-universalization of the
distribution of risk until this process broke through the barrier of professional
dissimulation. This means that the risk has no accountability, because it is
effectively unidentifiable—which was the unconscious or unavowed purpose
of the process.

This is what has happened in international finance, where the accepted
and normal framework of exchange between risk and responsibility, which is
inherent in capitalism, has become indecipherable. Neither banks, the
international financial institutions nor governments—and certainly not
investors—are capable of assigning value to certain tradable paper or
commodities, so that economic exchange comes to a halt. Today we stand on
the brink of that fatality.

The third suicidal quality of globalized capitalism has been its creation of
an organization of greed and individual acquisition of power that, because of
the internationalization of the global economic system, has become not
only unconscionable but unassessable. There is no assessable value in it. Thus
the literally irrational pursuit of objectively meaningless rewards by some
of those captains of finance now on the way to jail.

Welcome to the newest version of internationalized capitalism: the suicide
version. It now is on display in Washington and other parliamentary and
judicial inquiries and tribunals, with consequences that we and our children
will now live with.

William Pfaff is the author of eight books on American foreign policy,
international relations, contemporary history, utopian thought, romanticism
and violence, nationalism, and the impact of the West on the non-Western
world. These include Barbarian Sentiments, Condemned to Freedom and The
of Hysteria
. Pfaff is a columnist for the International Herald Tribune
based in Paris. Visit Pfaff’s website at
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