Key Issues Conflict over the nature of capitalism New fulcrum of today’s world economy Problem of supply Global revolution Free-market theory Solution of supply problem The Keynesian solution

Conflict over the nature of capitalism The fundamental struggle: capital v.s. labor p39 – The inequalities of wealth and power that Marx decried are marching wider The inequalities of wealth and power p40 – Powerlessness gets expressed in different ways (Stephen J. Silva) – Huligan, kidnapping, looting, job riots

New fulcrum of today’s world economy The shifting of opportunities for wealth and incomes p42 – From older and richer societies to the poorer one – Inequalities between richer and poorer nations are reduced Self-defensive measures and nationalist solution p43 – Stop the reduction of inequalities temporarily – Cause commerce implodes. The only way out of the dilemma p43 – The connection between the first and the last

Problem of supply Exploration of marketplace p44 “The exploration begins in the marketplace, …the approach is grounded not in Marx or macroeconomics, but in the practical, adventurous life of business firms.” Problem of capitalist enterprise: problem of supply p44 “…the problem of capitalist enterprise is always the problem of supply: managing the production of goods in order to maximize profit and the return on invested capital.” Supply vs. demand p45 – Demand exceeds supply – Supply exceeds demand

Global revolution Modernizing process vs. supply problem p46 “…companies adopt the technologies that reduce costs, …result is to enlarge productive capacity. They do this to keep up, though it means supply surpluses will steadily accumulate…” Strategies respond to revolutionary conditions p47 “Continuous suppression of costs, …redeploying elements of production overseas, …reducing the fixed costs…” The crisis of the globalization p47 “Enormous supply surpluses are accumulating across nearly every major sector of industry, …world trade continues to expand, as does overall economic growth.”

Free-market theory The Economic Orthodoxy p48 “…economic orthodoxy teaches that markets always come into balance, and it assumed that the problem resolves itself naturally by market forces” Two observations p48 “Two observations… argues that, once again, the widespread faith in self-regulating markets is a dangerous illusion…” The visible risk in the future p49 “The wider the gap becomes between productive capacity and realistic market demand, the more likely it is that the collapse of optimism will be sharp and shocking.”

Solution of supply problem A gradualist scenario p49 “The present facts could also support an alternative supposition that might be less cataclysmic.” Political intrusion p50 --“Governments will protect markets by limiting foreign goods. “ --“Companies will form producer cartels to limit overall production and divide up sales in the global market.” Hedging strategies p50 “…multinational corporations are pursuing what might be called hedging strategies, trying to deploy elements of production…”

The Keynesian solution Government intervention p51 “The other way out of the supply problem…is the fundamental alternative of addressing the inadequate demand through government intervention…” Two obstacles p52 --“its political improbability in an era of conservative hegemony” --” the dangerous collision it engenders between mass consumption and the natural environment.” Conclusion p52 “nonetheless…the world’s nations must eventually turn to political solutions…”

Question In this chapter, Greider lists two ways that the people will defend themselves against the market forces, governments will protect markets by limiting foreign goods, and companies will form producer cartels to limit overall production and divide up sales in the global market. Is this still the case today? And can you name some examples about this?

Notes 1.Bank for International SettlementsBank for International Settlements 2.John Ralston SaulJohn Ralston Saul 3.Peter F. DruckerPeter F. Drucker 4.Thorstein VeblenThorstein Veblen 5.The Great Transformation: The Political and Economic Origins of Our TimeThe Great Transformation: The Political and Economic Origins of Our Time