Chrystia Freeland (who wrote the Atlantic story about the “new global elite” a few months ago) wrote about a recent paper (pdf) from the Council on Foreign Relations by economist Michael Spence and researcher Sandile Hlatshwayo. Her takeaway is that “Global capitalism isn’t working for the American middle class” and that this isn’t the consequence of any market anomaly but of globalized markets working precisely as expected.
Spence says that as he was doing his research, he was often asked what “market failure” was responsible for these outcomes: Where were the skewed incentives, flawed regulations or missing information that led to this poor result? That question, Spence says, misses the point. “Multinational companies,” he said, “are doing exactly what one would expect them to do. The resulting efficiency of the global system is high and rising. So there is no market failure.”
If that’s so, that means the justificatory economic arguments for pro-globalization policy must be pitched at hiding the consequences of who benefits and who doesn’t. Globalization has helped capital and impoverished workers in developing economies, but has hurt every one else in the U.S. Maybe U.S. voters are egalitarian and internationalist in their outlook and would happily stagnate so that China could build a middle class of its own. But it may be that if voters knew that, as Spence puts it (and these quotes come from Freeland’s article), “many of the middle-income group ... are seeing employment options narrow and incomes stagnate” thanks to neoliberalism, perhaps they would demand a different sort of policy. Spence writes, “One possible response to these trends would be to assert that market outcomes, especially efficient ones, always make everyone better off in the long run. That seems clearly incorrect and is supported by neither theory nor experience.” In other words, there are winners and losers, and one doesn’t need to spend too much time studying the income distribution in the U.S. to figure out who is winning here.
Steven Pearlstein, in a Washington Post piece about the same paper, regards it as a prescription for the return of industrial policy. But I was intrigued by the implications of something Freeland mentioned. She paraphrases something AT&T CEO Randall Stephenson said at a CFR talk: “Stephenson enthused that the technology revolution was the most transformative shift in the world economy since the invention of the combustion engine and electrification, leading to a huge increase in ‘the velocity of commerce’ and therefore in productivity.” I would need to have someone explain to me why productivity is linked to the “velocity of commerce”—I see why faster commerce would lead to more things being exchanged, but not how it would lead to more being made with less. What Stephenson is saying implies that mere circulation of goods leads to their “valorization”—leads value to be created—or in other words, exchange itself is a form of production.
It makes sense that a communications company CEO would suggest that is true. Their consumers make the end product by exchanging language among themselves, and of course the more people talk, the more they need to say to clarify what they actually mean, and so on to infinity. (See, Derrida has important economic implications!) Will Davies has several good essays that get at the way telecoms try to prompt us to increase the amount of communication we engage in. “As the scarcity of Everything gradually wanes, the companies are becoming bolder in their branding of the infinite… Infinite opportunity to say, share, broadcast everything all the time anywhere has to be sold as a positive achievement, with a tangible result”—though he argues it only leads mainly to restless anxiety, a twitchy subjectivity. (I also like how he updates Žižek’s definition of neoliberalism—“‘you can do whatever you like, as long as it involves shopping” to “you can do whatever you like, as long as it involves an iPhone.” Is it our destiny to turn shopping and self-fashioning and communicating about it constantly into the fulfillment of our species being?)
Anyway, Davies writes about the importance of an “ethic of inconvenience”: slowing down the pace of commerce that is facilitated by communications technology, since this acceleration tends to push people toward a kind of one-dimensionality—fixated on quantity and not quality, etc. This becomes a potentially more compelling idea in the macro context provided by the Spence paper, which suggests that increasing the “velocity of commerce” initiates a chain of consequences that ends with middle-class stagnation.