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Global Processes, Local Systems
E. Paul Durrenberger
2003
Urban Anthropology Vol 32(3-4):253-279
Abstract
I analyze factors at work in the global political-economic system to situate
ethnographic treatments of local processes. After showing how the classic upward spiral
of capitalist development can turn into a downward spiral, I analyze the relationships
among interest rates, government borrowing, social programs, inflation, jobs, taxes,
foreign loans, prices of export and import goods to show how their interactions result in a
quasi-random system. I show how finance gains power over productive capital in this
system and how this contributes to global randomness so that we can understand these
processes without being able to predict them with any degree of accuracy.
Key Words: globalization, political economy, finance, random systems, complexity.
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Global Processes, Local Systems
Humanity has been awash in global flows since we started walking, but they
became exponentially faster with boats and printing, then with airplanes and telegraphs,
and now with electronic, fiber optic and wireless networks and computer technology.
Nowadays cultural artifacts move across the planet at the speed of light. Pálsson and I
(1996) asked how such categories as ethnicity and nation are generated, what are the
economic and political realities that lead to ethnic cleansing, mass rape, and homicidal
and suicidal terror and war. Rather than asking why people were willing to die and kill
for ethnic notions such as nations, we proposed asking what the alternatives are for the
people in those landscapes, what interests they contest, who defines the issues and
alternatives and by what means, what power, and what relationships stand behind and
ratify that power. In this paper, I want to take another step toward answering some of
these questions.
As in the past, the challenge to ethnography in the post-modern age is to locate
relevant systems, understand their components and relations, and the people in them
without giving up the strengths of classical anthropology (Durrenberger and Pálsson
1996). The information revolution makes possible networks of relationships based on
global markets for capital. This in turn enables corporations to invest in distant lands to
integrate productive processes as intramural transactions. This defines supra-national
levels of technical and economic organization that dis-articulate rather than integrate
local, regional and national economic systems, the bases of governmental control. These
processes alter social relationships and cultural representations, undermine local bases of
social cohesion, and make local politics and economic systems less relevant. The bases
of identity and livelihood change with the dislocations of people, wealth and relations of
production and power. The chaotic and quasi-random global flux of culture and cultures
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based on the new technologies and economic and political realities is one foundation of
post-modern ideologies and theories.
This article is not ethnographic. It is an attempt to understand the relationships
among parts of the global system, why they are chaotic and quasi-random, and how that
affects what we do as anthropologists. I start with a theoretical discussion, move to a
description of the complexities of a chaotic global system, and then discuss ethnographic
consequences. While my discussion of the complexities of the global system is abstract,
I return in the third section to concrete ethnographic examples.
The subject matter may be somewhat frustrating because it does not entail linear
relationships—ones in which results are proportional to causes—double the input, double
the output. Such relationships are highly structured. At the other end of the continuum
of structure to non-structure is the lack of relationship or structure that we call
randomness. Structures that we can understand in terms of deterministic relationships but
which are so complex and irregular that we cannot predict them to any extent are chaotic.
Chaos theory is the attempt to describe and understand such systems. Such systems are
deterministic, but sensitive to their starting points or initial conditions. Slight differences
at any time can lead to can lead to very different end end-results. Some systems are so
sensitive that we cannot measure the variables sufficiently accurately to predict their
trajectories.
Some of the relationships are self-intensifying. An increase in the value of one
variable causes an increase in the value of another. The increase in the second variable in
turn causes an increase in the first. The classic example is the population of dividing
organisms such as yeast. An increase in population causes an increase in progeny which
causes an increase in population. The more yeast there are, the more they make. So the
population of yeast is self-intensifying, characterized by an exponentially rising curve.
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No such exponential curve is sustainable. Self-intensifying systems cause their own
collapse.
The more yeast, the more their waste-products—alcohol—until they poison their
environment and all die. So in this paper I shall discuss chaotic systems, some of which
entail self-intensifying processes, systems which are therefore not sustainable. They are
not predictable, but they are understandable, and that is the objective of this paper.
It is increasingly clear that some of the important topics that anthropologists must
understand are not accessible to our classic ethnographic approach. States and global
systems are two of them. Because those are two of the central concerns of this paper, it is
not very ethnographic. That does not mean that I advocate a retreat from ethnography, as
I hope will be clear by the end of the essay, but I do advocate a supplement to
ethnography.
Anthropological theory
Eric Wolf (1999) argued that understanding cultural forms is only half the task of
anthropology. In addition to specifying ideologies in cultural terms, we must also know
how these cultural forms engage with the material resources and organizational
arrangements of the world they try to affect or transform. Wolf wrote his book (1999) to
explore the connection between ideas and power because he thought that anthropologists
have only rarely grappled with the ways cultural configurations articulate with the power
that arranges the settings and domains of social and economic life, especially the
allocation and use of labor. He points out the mutuality of culture and power—powerful
people shape culture and culture defines realities, even for the powerful. His goal was to
understand and analyze the ways the power relations that organize economic and political
systems also shape how people make the world intelligible through their cultures and
symbols. Like Sahlins (2000), he returns to the necessity for ethnographic treatments.
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Hannerz (1996) suggests that anthropologists celebrate the vitality and resistance
of the local and conceptualize globalization in terms of a relationship between global and
local. He concludes that the central questions are, though, how to identify the component
relationships of emergent social structures that may cover great distances and cross
national boundaries and understand how these relationships are related to one another.
That is the goal of this paper. I start with an observation of minor local results of global
forces.
While I was studying union locals in Chicago, I heard a story of a raccoon hiding
out under the porch of a suburban resident’s house and causing all manner of mayhem.
The very next Sunday the there was a story about it in the Chicago Tribune (July 11,
1999). The Russian Ruble had collapsed with the collapse of the Russian banking
system, and with it, the price of raccoon pelts. Illinois had been one of the top wild fur
exporting states sending 80% of its 300,000 raccoon pelts every year to Russia. When
the price of pelts dropped from $30 in the 80s to $15 in the 90s to $3, trappers quit. In
1997 Illinois issued 25,000 trapping licenses; in 1999 fewer than 4,500. With less
trapping there were more raccoons--a population explosion--and the raccoons started
looking for homes in the suburbs with the yuppies. This story has a happy ending. The
trappers who got $4 for a pelt now can get $75 to remove a pesky raccoon from an attic
and don’t have to skin the animal and prepare the pelt (Smallwood 1999).
Select any area—Thailand, Mexico, Korea, Japan, Mississippi, Alabama,
Chicago, Iowa--select any topic--fisheries, agriculture, manufacturing, services, rural,
urban--and similar global forces are at work.
With today’s communication and media connections, some anthropologists such
as Appadurai (1996), focus on the global as an autonomous realm of experience.
Appadurai discusses relationships among flows of persons, technologies, finance,
information and ideology that animate global cultural systems. Ethnography, he
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suggests, must deal with the changing social, territorial and cultural reproduction of
identities as groups migrate, regroup, construct and reconstruct their histories, and are no
longer associated with localities. If ethnography produces thick descriptions of
knowledge in locales, what of perspectives that transcend the local? Severing links
among wealth, people and areas changes the basis for the reproduction of culture so the
subject matter of cultural studies is the relationship between expression and economic,
social, and political realities. Appadurai focuses on the imagination and suggests that to
describe the role of imagination, ethnography must focus on the complex lives of
individuals rather than on locales.
Appadurai (1996:27) calls our attention to "the facts of the modern world,” but
struggles ambivalently with notions of causal relationships. Because he brings no
empirical methods to bear he cannot draw any conclusions except to suppose that "our
current theories of cultural chaos are insufficiently developed to be even parsimonious
models . . . much less to be predictive theories . . . " (1996:47). That is, after all, not the
point of chaos theory. It cannot predict. It can understand, it can explain, but it cannot
predict because it is not possible to know all possible outcomes of all possible trajectories
of all determining forces. That’s what chaos theory is about. The point is to understand
how the complex components of systems interact, even if we cannot predict outcomes.
Appadurai's quandary is a consequence of his postmodern ideology’s disdain for
empirical methods.
Using Kroeber’s idea of the ecumene to designate an “interwoven set of
happenings and products,” Hannerz (1996:7) asks how transnational connections in the
organization of meanings and actions hang together. The impinging of previously
separate populations and social structures on one another’s living conditions and the
global flows of meanings challenge the idea of culture as a set of organic relationships
among populations, areas, political organizations, languages and coherent assemblages of
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meanings--a notion that derives from nationalism. Cultures are not integrated wholes
with edges. Different symbolic modes have different boundaries. Hall (1997) for
instance, shows the different boundaries of political-military relations, bulk goods
trading, prestige goods exchanges, and information in world systems.
Hannerz (1996) argues that thinking of culture as what we learn by participation
in social life does not require borders. Writing against culture, he argues, is no help. He
makes the case that understanding other people and cultures does not imply any
disrespect for them. Thinking of culture as our internal representations of our everyday
life, he argues, does require that we recognize that everyday processes generate even such
seemingly obvious and axiomatically true ideas as individuality. The concept of
individuality is itself not an observable fact of nature but rooted in our experience. Our
experience is shaped and determined by historically given systems of relationships.
It has become commonplace to observe that like the people we study,
anthropologists are afloat in a sea of global capital, labor, and images. But the
commonplace is the subject of our discipline and it has become obvious that if we would
understand people anywhere we need to understand these global processes and how they
affect everyday lives.
I think this is the end result of a long process of our struggle to transcend the local
to understand the details of our ethnographic observations. The trade and traders,
mission and missionaries are peripheral in Malinowski’s (1922) work but focal in the
Comaroffs’(1992). Leach (1954) did not write of Kachin villages but of the whole region
as a means of understanding particular villages as well as larger geographic and temporal
processes. Julian Steward thought in terms of even wider contexts. Consider his
contemporary-sounding words published in 1963 as a foreword (vii) to F.K. Lehman’s
study of Chin in Burma:
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This larger context today obviously includes the many-faceted influences
from the emerging world industrial culture—a complex that includes
developing technology, mass production, increasing occupational
specialization, greater transportational facilities and education, enhanced
social mobility that arises from ever changing occupational specialization,
and new ideologies that relate to the altered underpinnings of society.
Such features are affecting all parts of the world. . . .
Wolf (1957) analyzed the characteristic forms of community life common to Java
and Mesoamerica as consequences of colonial policy. Robert Murphy and Julian Steward
(1956) showed how groups in Brazil and Canada developed similar forms in response to
markets and suggested that the tendency for aboriginal peoples to give up their crafts to
devote efforts to producing trade goods to obtain industrial goods is so regular that any
departures would require special explanations. More recently Lucian Hanks (1972)
described the dynamics of a Thai village in terms of global events, while Sidney Mintz’s
(1985) understanding of the history of sugar is global in scope.
As greater economic and electronic integration affect social organization and
culture, Wilk (1997) suggests that the core issue in globalization is the relationship
between culture and economy. He argues that a myth blinds us. The myth is that there
are natural integrated autonomous and bounded local cultural-social-economic-ethnic
systems. The myth continues that outside forces have transformed these systems to
create new cultural forms. This myth blinds us to how economic integration affects local
groups so that we don’t link our local studies into an understanding of global processes.
Instead, he argues, we maintain our romantic dichotomy between the local autonomous
system and the impact from outside.
Blanton and Peregrine (1997) point to Malinowski’s understanding of a complex
intergroup process from the perspective of one local system rather than as a system in
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itself. This set the stage for a wider failure of anthropologists to contribute to theories
about extra-local systems.
When Julian Steward found that he could not understand Puerto Rico in terms of
local ecological factors, he viewed extra-local interactions as another environment for the
adaptation of households and communities but failed to develop any insights about the
extra-local system itself. Blanton and Peregrine find that all such studies of economic
analyses beyond local systems share the assumption that some features of any social
formation may be consequences of interactions across local boundaries. They argue that
the consequences of these interactions vary in time and place, but they avoid the
assumption that sociocultural change is primarily a result of endogenous causal factors.
They urge an understanding of the larger systems themselves rather than from the point
of view of local systems.
Some made connections beyond locales via ecological understandings. Barth
(1956) discussed the relationship between economic forms, ecological possibilities,
ethnic identity, and political organization. Those interested in markets and economic
transactions have shown how they cover great areas via periodic markets, traveling
merchants, and relationships of credit. Skinner (1964. 1977) showed that the Chinese
villages clustered within three miles of a market town formed a meaningful unit of
kinship, marriage, and culture. These units themselves clustered around larger ones
related through the literate elite. This example provided an apt illustration of central place
theory.
Following Skinner, Smith (1984) discussed central place theory in her analyses of
regional economic and political structures that global forces influence. She
differentiated different market functions and sizes in her meticulous empirical study of
the types and locations of Guatemalan rural markets to show the dynamic relations of
regional systems that enmesh villages (Smith 1985). Others, (e.g. Appleby 1985)
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expanded these concepts of regional and central place analysis to different geographic
areas. Greenwood (1973) analyzed the political and economic structures of what he
called “peasant states,” to variations in communities and how they are related on the one
hand to households and on the other to larger levels of organization. Small and
Tannenbaum (1999) have expanded that view.
Winslow (1997) points out that anthropologists have been encountering structural
adjustment programs in the field. This requires us to go beyond the organization of
production, consumption and exchange at local and regional levels to include and
understand national economies and their relations with global systems by attention to
flows of peoples, goods and information.
Furthermore, global and national economic systems respond to various kinds of
policies. We do not see the consequences of larger economic shifts in the short run of
fieldwork. To understand local responses we must understand the past as well as the
present because responses to global forces are rooted in relationships that have developed
over long periods of time. Attention to local detail helps to explain the connections
between the lives of people and global systems (Winslow 1997).
Because we find states at work in fields, fishing boats and local communities we
have integrated them into our ethnographies. Because they transcend the local, we do not
know states ethnographically. To bridge the gap between the abstract power of states and
the concrete experience of states on the ground in local systems of relationships,
Anderson (1981 [1991]) wrote of imagined communities. With national languages,
nationalist ideologies, and media, states create communities of the imagination that no
one ever experiences, notions of kindreds of related people, all one nation that transcend
locales. Americans may have felt this kind of presentation most strongly in the wake of
the attacks on the Pentagon and the World Trade Center of September 11, 2001.
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Herzfeld (1993) analyzed how privileged bureaucrats develop attitudes of
indifference in dealing with everyday problems of their national kinsmen of this imagined
community. Scott (1985) showed how peasants and other underlings receive the
ideological moves of elites to create rhetorics of justification and deliver them via
religion, media, and schools. He argues that peasants are aware of the disjunctures
between rhetoric and reality and vote with their feet in various forms of resistance.
Investigating the history of the traditions of states—the pomp and ceremony and custom
that “has always been and will always be” Hobsbawm and Ranger (1983) showed who
invented these forms and traditions and for what purposes. They spoke of invented
tradition. Indifference, resistance, invented tradition, are all conceptual moves to make
visible the hand of the state that remains elusive to our observations of people in locales.
When Gísli Pálsson and I (Durrenberger and Pálsson 1996) were seeking to
analyze modern Iceland we focused on images to understand the lived experience of
people that anthropologists discover in the realities of local landscapes. We found
Ingold’s (1993) metaphor of landscape useful. He argues that we construct identities
from positions within a continuous field of ongoing relationships, each of which defines a
unique point of view within the process. If we include only those who share the same
vantage points, we create boundaries. Those who are within the boundary are similar;
those who are not are different. Gísli Pálsson and I argued that ethnicities are not
primordial natural groups, but consequences of affiliations in which identity is defined by
patterns of mental representation—cultures.
Hannerz (1996) argues that the notion of identity within social fields that Wilk
(1997) objects to as a blinding myth is a projection of states’ preoccupations with
boundaries and borders. The notion that groups share different cultural blueprints
suggests that landscapes are uniform but the people viewing them are different by virtue
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of their different cultural representations. Ingold (1992) suggests that our categories
are fleeting and contingent on our purposes and what is useful in our landscapes.
The variety of purposes contributes to heterogeneity. Because purposes even in a
single landscape can be varied, there is no consensus, as Anthony Wallace pointed out
(1961). Just because people can make categories does not mean that we obsessively
categorize the world as some of the ethnoscience literature suggests (Durrenberger and
Morrison 1979). Insofar as we have insisted on consensus without measuring it,
anthropological theorizing has reflected the state’s demand for homogeneity within
boundaries. People in different rhetorical, political, work or everyday situations may
appeal to different principles of classification and creatively invent new ones. If
cognitive anthropology bored itself to death, as Keesing (1972) suggested in a premature
obituary notice, it may be because it had not situated itself in the world of action and
experience (Lave 1988).
In Iowa in the past, a pig grew up where it was born, ate corn the farmer
produced, and died in a slaughterhouse not far away. Today, the semen of a non-resident
boar inseminates a sow produced in a massive ‘multiplier’ unit to insure her genetic
make-up. The sites for farrowing, nurseries, and finishing may be separated by a few
yards, a few miles, or a few hundreds of miles. The pig may grow fat on corn and protein
supplements from distant locales before being trucked to a slaughter house. The waste
products of swine and pork production become toxic wastes rather than nutrients for
crops. The boxed pork can go anywhere on the planet. The capital for these processes
likewise may come from anywhere on the planet. The effects are local, but the locales
are separated. To study these processes, Kendall Thu and I had to map out relations that
took us well beyond the barn-yards where we are most comfortable with our
ethnographic work (Durrenberger and Thu 1996a, 1997a).
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The challenge was, and remains, how to bring ethnography to bear on such
global issues as the international capital that has organized industrial swine production in
Thailand and Mexico as well as Utah, Iowa, Oklahoma, Texas and North Carolina. We
see the local consequences in the demise of independent farmers across the Middle West
(Durrenberger and Thu 1996a,1996b), the pollution of ground and surface water
(Durrenberger and Thu 1994a, 1994b), and the corruption of political systems
(Durrenberger and Thu 1994b, 1997b).
Manufacturing moves to those places that promise low costs for taxes, labor and
regulation. If one place enacts or enforces environmental laws, the facility moves to one
without such burdens. Smithfield moves its pork production unit from Virginia to North
Carolina (Barboza 2000, Durrenberger and Thu 1997a, 1997b); General Motors moves
auto production from Michigan to Mexico. As the industrial sector wanes in the
Northern Hemisphere, the service sector waxes. With an international market for labor,
the unions that organized labor locally lose influence in the process. Here, even more
than in fisheries and agriculture, it is clear that national polices and international relations
define local conditions. Unions try to regain political and market influence by organizing
service employees including public workers. When they organize public workers
effectively, agencies privatize the work; when they organize the private sector,
corporations hire temps or move the work to other locales. But, like ethnography, unions
have been rooted in local conditions and processes (Durrenberger and Erem 1997a,
1997b, 1999a, 1999b, 2000, Durrenberger 1997).
Like the locales we study ethnographically, unions are tied by invisible but
powerful relationships to states by law, policy, practice, and political maneuver. If
anthropologists have not developed theories of states, sociologists have them to spare.
Bonnano and Constance (1996) classify these as those theories that cast the state 1) as an
instrument of the capitalist class, 2) as an institution with some autonomy from capitalist
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domination, 3) as an autonomous institution, and 4) as an institution that is a mix of
instrumentalist and autonomous roles.
The first asserts either that 1) because bureaucrats are of the ruling class, they are
bound to that class through socialization, or 2) that the capitalist class exercises control
over the state by means of its control over the economy. The second, relative autonomy
view, holds that the state balances the accumulation of capitalists on the one hand with
the state’s legitimation of itself via ideology and allocation of resources to other class
interests on the other while maintaining relative autonomy from class interests. The
third, autonomy view, follows Weber that the state maintains its own agenda and interests
apart from the capitalist class or any other. Bonanno and Constance favor the fourth,
mixed approach. Capitalism is not possible without state participation because the state
maintains the conditions for the reproduction of capital. But the state mediates other
interests to legitimate itself. The state in this view is not autonomous because it is
dependent for its resources on accumulation through economic growth.
Accustomed to thinking of non-state systems and different kinds of states and
economies, anthropologists will note the short-term nature of these sociological
representations because they all center on the role of states in capitalist systems. When
we add a historic dynamic of globalization that expands commodity relations around the
planet (Wolf 1997), we see that the conditions of accumulation and the roles of states
continuously change as different kinds of political and economic roles rise and fall at
different times and in different places. With the globalization of production, some
owners of capital pressure those sates that have maintained conditions favorable for
capital by controlling labor and protecting capital to adopt protectionist measures while
others push in other directions.
By the late 1960s to remain competitive in the global manufacturing system
American multinational corporations had to decrease the price of their goods by either
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increasing productivity or finding some other way to reduce costs. Many focused on
reducing the cost of labor by a sustained attack on organized labor (Gottschalk 2000) or
by exporting jobs to third world countries that offered plentiful low cost female labor for
labor intensive manufacturing processes in textiles, garments, shoes, toys and electronics.
European countries were protected by tariff barriers and inexpensive migrant labor as
well as access to the cheap labor of North Africa, the Mediterranean, and Ireland.
Japanese corporations increased productivity by revamping manufacturing methods and
increasingly used low cost labor in Taiwan, South Korea, Thailand, and Malaysia
(Wilson 1992).
Some countries tried to become self sufficient by producing locally products that
they were importing—import substitution. In Latin America, industrial workers
organized to demand a share of the fruits of industrialization. They joined with growing
urban middle classes and the influxes of rural migrants to produce populist movements.
These countries were not attractive to corporations that were looking for places to
assemble goods for re-export. Corporations wanted a labor force that either did not
expect or could not demand an increasing share of the wealth they created. Hong Kong,
Taiwan, Singapore and South Korea maintained authoritarian control over their middle
classes and workers, often with direct military and police assistance from the U.S.
(Wilson 1992).
Thus, the policies of different states created different environments, more or less
attractive to multi-national corporations. National trade policies exposed first-world
corporations to competition or protected them from it. As the global system expanded
the role of states changed, sometimes quickly. Where there were few linkages among the
productive activities of a locale there was no integrated economy that state policy could
control. When states had to approach the World Bank for loans, they lost control of their
economic policies.
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So, as Bonanno and Constance (1996) point out, there is no single role for
states. Some set the rules, others adapt to the consequences. The overall trend has been
toward the development of other sources of power besides states and the redistribution of
power within them. Corporations have waxed and many states have waned. Some speak
of Fordism, often coupled with Taylorism, the development of manufacturing by the
separation of management from work and the differentiation of manufacturing into
minute single processes that management coordinates. Some speak of the alternatives to
the vertical integration of manufacturing that developed as post-Fordism. All agree that
there is a global system that incorporates and transcends locales and states.
How does this system work?
The reason the global system is chaotic and not given to prediction is that the
forces are complex and contradictory. For instance, we cannot specify a single set of
functions for all states. States gain influence. States lose influence. American foreign
policy sets the stage for oppression of labor in Asian lands. Asian lands offer
opportunities for corporations seeking low wage labor.
Contradictory things can be true--both x and not-x--especially at different times,
or different states of system. This violates our sense of logic and invites idea of the
absurd as reality--as though there were no reality, as though everything were a big joke,
and everything is ironic, absurd. So some anthropologists cannot write without noting,
“it is ironic to note that. . .”
This complex system with chaotic elements that sometimes seem random is the
material basis of the post-modern ideology—especially the condemnations of science and
denials of any possibility of reality-based knowledge (Kuznar 1997; Spiro 1992, 1993,
1996) . We can explain events after they happen in terms of system dynamics, but when
the system is very complex, we cannot predict with any degree of accuracy. Thus it
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appears that events are unique, and this resonates with the hyper-relativism of
postmodernism that maintains that cultures and events are unique (Spiro 1992). Because
familiar linear logics are not predictive in complex system, some, who equate science
with the understanding of linear processes, conclude that science is not applicable. I
return to this theme at the end of the essay.
Processes of globalization affect all of our consciousnesses. Market women in
Ghana, Yourba city dwellers in Nigeria, farm workers in Egypt and families in Oaxaca
talk about and understand currency reform, negative growth, foreign exchange, and
national economic crises (Winslow 1997). But the connections can be indirect. People
of Belize have responded to such forces by creating a Belizean culture though it mis
represents many economic relationships (Wilk 1997). Shrimpers in Mississippi and
Alabama are aware of the impact of imported pond-raised shrimp on their livelihoods, but
tend to think in terms of vague conspiracies rather than a global economic system
(Durrenberger 1992, 1996).
It may be true, as Geertz (1973) suggested, that people are suspended in webs of
meaning, but those webs are not always of their own making and are often irrelevant. To
return to Malinowski, Steward, and Wolf, we ask what is the material base? What is the
system and how does it work?
The global system is based on world wide instant communications--microchip and
communications technology. We see the consequences most clearly in areas most linked
with communication--media, entertainment, cultural productions, and finance. I think
this is why when anthropologists turn to the global system, we usually discuss cultural
productions. In the dazzle, economic and political relations recede into the dimness of
the background. It is these I want to describe, not the dazzle. For this I have consulted a
number of redundant works, and will not assess the virtues of each here or cite them
individually since I have simply put together here ideas that are widely available in many
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1
sources . Perhaps the most accessible of them is William Greider’s One World, Ready
or Not.
Figure 1 illustrates the classic upward spiral of capitalist production that Eric
Wolf discusses (1997). People invest capital in technology that increases productivity
and thus create profits that they can use as capital to put back into the process. As the
technology develops, it enlarges productive capacity and reduces costs and thus protects
the producer’s share of the market. Those who control capital strive to produce as
cheaply as possible so they can sell their product for a smaller price and control larger
shares of the market. As their market share increases, producers enlarge productive
capacity, and thus increase productivity to further enhance profits, which can re-enter the
cycle.
As this process continues, higher producers use profits to increase demand by
lowering prices. Thus, there are more profits, more capital, more efficient technology
and higher productivity, more production, lower prices, and increased demand.
Especially if labor is sufficiently organized to make collective claims, such benefits may
be passed along as increased wages. Lower prices mean more buying power and greater
consumption that fuels demand. The system spirals upward much in the way Marx
envisioned in Capital.
/Figure 1 here/
But, the enlarged productive capacity results in surpluses that the producers
cannot sell. This initiates the downward spiral that Figure 2 illustrates. Producers need
to reduce costs, so they cut costs of labor by making greater investments in technology to
increase productivity even more. They combine efforts with competitors for research and
development. They begin to sell their plants, shrink middle management, convert
permanent jobs to temporary ones, and contract out as many processes as they can.
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Katherine Newman’s ethnographic studies of unemployed middle-class workers (1988,
1993) have shown the results of these processes for white-collar and managerial workers.
/Figure 2 here/
Producers look for new markets where demand is greater than supply and relocate
production in polities where they can gain political favors to control wages and taxes and
to provide access to markets. Here, state policies may be more or less attractive to
companies. Those states that practice Draconian control of labor and middle classes are
more attractive (Wilsonl1992) as are those that offer concessions (Bonanno and
Constance 1996)
Through these processes and through global auctions of capital, finance gains
power over productive capital as Figure 3 illustrates. Financial decisions become more
central, more important than productive ones to the point that the Wall Street Journal
(November 8, 1999) can proclaim that “making things is out of fashion.” As productivity
increases there is less return per unit manufactured, and thus less profit.
Those who gain capital in the global auctions must pay for it. The interest they
pay for the use of capital reduces their profits. The reduction of profit leads to pressure to
reduce wages, and to corporations borrowing more capital. The interest they pay on
borrowed capital reduces profits, so there is a self-intensifying process of less profit,
borrowing capital, paying interest, less profits.
At the same time, corporations enlarge productive capacity to increase
productivity. This requires more capital, and increases the pressure to borrow capital and
provides a second entrance to the same self-intensifying process. As these processes
intensify, power shifts from corporate management to financiers who control the flow of
funds to corporations and finance gains power over productive capital, the machines and
plants that produce things. As an example, the percent of earnings for capital in the U.S.
decreased from 34% in 1960 to 15% in 1990.
20
/Figure 3 here/
Financial value of corporations is determined by profits and debt repayment as
well as accumulated savings as Figure 4 illustrates. To raise capital, there are global
auctions for finance capital. The price of finance capital on these auctions is influenced
by U.S. and European government debt, industrialization in emerging nations, the status
of multinational firms, and the interrelationships of these variables. Thus, the financial
value is un-coupled from productive capacity. As financial value is un-coupled from
productive capacity, it no longer rests on transparent economic computations and
projections. It becomes a semi-autonomous domain of myths, stories, symbols, fads, and
other cultural constructs. As this process accelerates, financial value becomes less
predictable and more quasi-random.
/Figure 4 here/
From the point of view of their home polities, corporations trade jobs for access to
markets in other polities. But this allows corporations to diversify their manufacturing
sites and isolate the total process from any local and regional fluctuations. The
significant unit is the corporation, not any of the polities where its operations are based
for the moment. Thus the corporation insulates itself from impacts of local events in any
single polity. In response to an upheaval in Burma, for instance, a corporation may move
its operation to Sri Lanka or Mexico or Israel.
One consequence of this process is to erode the manufacturing base of industrial
lands. Another consequence is that the unit of production and consumption of raw
materials and manufactured goods is the corporation that straddles a number of polities.
The systemic connections, what economists call forward and backward linkages, are
within the corporation, not within the polity (Wilson 1992). Thus as corporate economic
systems are articulated and integrated, local, regional, and national economic systems are
dis-articulated as Beckford (1972) pointed out in the Caribbean.
21
Wilson’s (1992) analysis of maquilador factories in Mexico shows how isolated
multination assembly facilities are from the economies of the areas where they are
located. At the same time they are important to the economy of the region because they
provide jobs and income that people can spend for their subsistence. From the point of
view of national or regional planning, however, the maquilador remains isolated from the
rest of the economy. The linkages—supplies of components and markets for final
products—are not in the region. If the enterprises are based on raw materials, bauxite
and bananas, to use Beckford’s examples, then economic activity in those two sectors do
not influence each other, there are no economic linkages, and the region’s economy is not
articulated. He termed this process “dis-articulation.”
There are three major ways that polities can control their economic systems:
fiscal policy (adopting or rejecting social programs that require government spending),
tax policy, and monetary policy (interest rates). All of these have multiple determinants
as figure 5 shows. The three policy processes are interest rates, social programs, and tax
policy.
Social programs vary directly with taxes—more taxes, more programs; fewer
programs, less taxes. But they have opposite consequences for demand for goods. The
more social programs, the greater the demand; the more taxes, the less the demand. As
demand increases, inflation increases when people bid up the prices of goods. But as
demand increases, the number of jobs increases, and as the price of labor increases with
the number of jobs, inflation increases.
As the number of jobs increases, demand increases because more workers and
their families have more money to spend. As inflation increases, interest rates increase.
As social programs increase beyond tax revenues, governments must borrow to support
them, and this adds to inflationary pressure and increases interest rates. As interest rates
increase, interest becomes a greater portion of the national budget and government
22
borrowing increases. Increasing interest rates attract foreign lenders and suppliers of
capital.
/Figure 5 here/
Figure 6 illustrates that the value of the currency increases in turn as foreign loans
and capital increase. As the value of the currency increases, it is more attractive to
foreign buyers and investors so interest rates increase. And as interest rates increase, the
value of the currency increases. These variables mutually enhance one another. As
currency value increases relative to others, export prices increase and import prices
decrease. Thus there is less demand for exports and more demand for imports. Imports
increase and exports decrease.
The trade deficit is a measure of the balance of imports and exports, so it
increases as the price of exports increases (and income from them decreases as sales fall
off) and decreases as the price of imports increases and there are fewer imports because
people cannot afford them. As the prices of imports decrease, and people import more,
the trade deficit increases, which decreases the value of the currency which in turn,
increases the price of domestic goods and exports, and makes for fewer exports and a
greater trade deficit.
/Figure 6 here/
Figure 7 indicates several interrelated self-intensifying processes that link trade
deficits, relative prices of imports and exports, interest rates, inflation rates, foreign loans,
government borrowing, social programs, tax rates, and jobs. The trade deficit is inversely
related to the value of currency—the greater the deficit, the less the value of currency.
The value of the currency is positively related to interest rates—the higher the value of
the currency the higher the interest rates and the higher the interest rates, the higher the
inflation rates. There is also a direct inverse relationship between currency value and
inflation.
23
/Figure 7 here/
Though the concept is not familiar to Americans, as Hannerz (1996) points out, in
many polities, the government derives its legitimacy from a sense of serving its citizens, a
more or less implicit social contract. When people lose jobs, state policy provides for
social programs to take up the slack, so as there are fewer jobs in such a polity, there is
greater expenditure for social programs. The more social programs expend, the greater
are taxes. Governments can also cover the cost of social programs by borrowing, a policy
that increases inflation. The greater the cost of social programs, the greater the rate of
inflation by virtue of both increased demand and increased government borrowing.
The more people have jobs, the more they create demand for products and bid up
prices to create inflation. The more people have jobs, the more they pay in taxes. As
government borrowing and inflation rates increase, interest rates increase. As interest
rates increase, inflation increases.
These relationships show the interface of the political and the economic.
Governments can attempt to control these variables by policies and institutional
arrangements to control interest rates, expenditures for social programs, and taxes. But at
the same time polities lose control of their own territorially based economic systems as
the systemic connections are concentrated within multi-national corporations rather than
polities.
Another source for the declining influence of some governments is international
agencies that control the conditions for lending and the conditions for importing and
exporting goods—trade arrangements. These agencies can and do set strict limits on the
policies of governments in return for access to foreign capital (Hackenberg 1997,
Greenberg 1997). A source of increasing power in other polities is their ability to set the
conditions for the operation of international institutions such as the World Bank. Some
24
(Bonanno and Constance 1996) suggest that all states lose power as these alternate
institutions gain it.
Figure 8 summarizes the consequences of these interrelated processes. Among
these I include irrelevance of government policy in “developing” lands, and if policy is
irrelevant, who makes it and how they make it is irrelevant, so political processes are
irrelevant whether they be participatory or not; whether they be democratic or not—does
not matter. Other consequences are disarticulation of local economic systems, increased
reliance on employment rather than household economies for subsistence and well being,
increased unemployment, deterioration of well being, widening gap between rich and
poor, deterioration of social contract, rise of populism, rise of localism and identity
politics, ecological deterioration, disarticulation of the link between finance and
production, and a quasi-random process in global financial markets.
/Figure 8 here/
As finance gains control over productive capital and as polities become more
responsive to fiscal policy, finance gains control of both corporations and polities.
Governments of countries that receive loans, of lands that receive industrial plants and
other “development” thus become less important in the global scheme and less
consequential in their own lands; even corporations become less influential, and flows of
finance become more decisive. With this is an increasing importance of the institutions
that control flows of finance such as the World Bank and the institutions that control the
rules of international trade, GATT.
These systems are cultural artifacts that other more powerful national policies
create. Different national accounting policies and practices make for different corporate
behavior. Japanese corporations borrow from banks and therefore have long term profit
horizons. U.S. firms raise capital on the stock market and have to pay dividends to keep
25
value of stocks up so they can return to the same source for more capital. Thus, they
have quarterly profit horizons, short by Japanese standards.
For all their talk of “the real world,” of “realism,” and “being hard-nosed,”
financers are the shamans of the modern world. Sahlins’s (2000) label for the Kennedy
administration’s outlook is appropriate here as well--“hard-headed surrealists”--because
their “reality” is a network of bizarre cultural assemblages.
Money is a cultural artifact and financier-shamans are suspended in irreal webs of
meaning, their heads in the cultural ozone, their feet dangling in the stratosphere, never
treading the ground of productive relationships much less food production. Even so,
international finance has far-reaching material consequences for instance, in setting
relative values of currencies. It has the power to render fertile fields sterile and
productive factories ghost structures, to move peasants into factories and factories to
distant lands, to determine government polices and stay the hands of revolutionaries.
Ethnography cannot focus on a global system that has no place, no locale. In
Chicago I talked to a financier whose project was to decide whether to buy certain notes
for his firm. To do this, he had to assess real estate in the Rio Grande valley. Participantobservation doesn’t get us very far. We cannot go be financiers, or corporate executive
officers or world leaders. If we did, we would buy into the system, and it would define
our reality. We would not then question it.
We have to rely on ethnography which we can extend by surveys and comparative
work to gain an appreciation for the range of cultural constructs. For some questions we
have to use other sources such as the Wall Street Journal and Forbes as C. Wright Mills
did in the 1960's. We can expand this coverage by looking at corporate reports and the
internet. We can piece together ethnographies of many places to see patterns and keep
one eye on the local, where we can see clearly empirical details working out day by day
26
as Malinowski and Boas did, but we enlarge the view as Steward did until it is global
scope as Wolf’s work was .
Does this mean we should close up our anthropological shop and send our
graduate students to business schools? No, no more than we send our students to
seminaries to understand priesthoods. The business schools are the seminaries of the new
religion of finance. It is always good to have an inside view. But we should follow the
wisdom of Malinowski and develop the external view as well.
We should remember as Alf Hornborg (2001) argues, that money is a part of a
reality that conceals social facts. Our tacit agreement to grant such categories
epistemological power by granting them ontological reality gives them reality in the
sense that we all participate in our cultures. The agreement of Inca peasants, if we can
call it agreement, to grant their emperor superhuman status gave him power. Though it
derives from cultural symbols, that power is as real and as great for modern financers as
it was for Inca. But, as Wolf argued, the symbols of Inca and financier alike are rooted in
relations of power. They don’t descend from the ozone to the earth. That’s why it’s
reasonable to question whether any but the ruling classes have choices to exercise.
The challenge of anthropology is to be able to see beyond such folk models to the
underlying social relationships that organize productive processes and to understand the
consequences of different understandings of reality for action. We need to understand the
consequences of different actions on social relations of production and the social and
natural environments. We cannot understand the myth if we buy into it. If we repeat it, it
simply seems natural—as natural as markets and money to financers and as their gods
were to Inca.
27
Consequences
All who are interested in the production and provisioning of food have struggled
with the relative importance of local ecological factors, organizational proclivities,
markets, administrations and larger political and economic forces. As anthropologists
and others committed to the ground-truth-testing of ethnography encounter the
reverberations of globalization in the locales where we work, we can either retreat into a
romantic localism or contend with the realities as they present themselves to us and the
people we are trying to understand. We anthropologists have just recently acknowledged
that nations and states are important and tried to conceptualize them and now, like the
people we try to understand, we are flung into the chaos of global relations. Apostle et
al. (1998) compare historical backgrounds and structural necessities that underlie the
similarities and differences between Norway and Atlantic Canada.
They argue that community is the realm of interpersonal ties and egalitarian social
networks characterized by multiple overlapping identities and complex relationships.
State is the sphere of policy, law and government distinguished by hierarchic and
bureaucratic relationships of authority that are professional and one-dimensional. The
market--the area of competition, economic efficiency, and rationality--is decentralized
and egalitarian typified by fleeting, impersonal, task-oriented social relationships that
lack inherent value. Globalization, they argue, is the process of the expansion of the
market and the contraction of the state.
They show how globalization dis-articulates local economic systems. Canadian
policy caused fisheries to bifurcate into an inshore fishery dependent on household
welfare payments and a vertically integrated industrial offshore fishery supported by
corporate welfare payments. In Norway, policy supported fisher organizations and
influence in policy making, so household production persisted. Threats to the resource
28
on both sides of the Atlantic ushered in two decades of fisheries management of the
70s which gave way in the 90s to the forces of globalization.
Apostle and his colleagues leave no doubt that the different policies and political
climates determine different histories that determine the different outcomes. Emphasis
on local or even regional ecologies would be misleading. In the Canadian Maritimes
local factors helped buffer fisheries against economic depression and provided
alternatives and barriers to organization. In Newfoundland, where occupational
alternatives and conflicts of scheduling between fishing and farming work thwarted
organization, the Fisherman’s Protective Union failed after it evolved into a commercial
empire with no member participation. In Norway, fewer alternatives, emphasis on full
time fishing, and the decentralization of power along with a different political and policy
climate almost demanded that fishers organize.
Paradoxically, the federal system of Canada, with power anchored in the
constitution, allows for more centralized control than the unitary state of Norway in
which interested groups work closely with government officials. In Norway, fishers exert
influence through their associations; in Canada with its fragmented fishers, there is little
consensus or mobilization of common interest to contest centralized decision-making
(Apostle et al. 1998: 200).
Corporate welfare has encouraged the development of large-scale harvesting and
processing capacity in both Canada and Norway. When corporations get into trouble
they have sufficient political clout to persuade politicians to rescue them. Thus, in spite
of mighty propaganda that preaches that markets determine all, these firms are not
exposed to the rigors of the marketplace.
The global economy dis-articulates coastal communities and economic systems.
Privatization has become a policy catchword. Whereas individual quotas may solve
short-term problems of too many boats chasing too few fish they are also associated with
29
increased economic and social stratification. With the withdrawal of the state, fewer
resources are available to fishing communities. All in all, “The breakdown in the
relationships tying state, market, and coastal communities together point towards social
and ecological disintegration” (Apostle et al. 1998:338).
The powerful conclusions of this collaborative work are that because they are
marginalized by market forces or fisheries management decisions, the viability of coastal
communities and fishing as a way of life is threatened (Apostle et al. 1998:341). The
market is not a politically neutral institution but a socially constructed, politically
maintained institution functioning according to rules that reflect culturally specific values
(Apostle et al. 1998:342).
Greenberg (1997) shows that we cannot expect uniform effects of these processes.
For instance, Structural Adjustment Programs may set prices for imports, but the
administrative levels between the state and the locale may not insure that middlemen in
regional marketing systems pass them on to farmers. Even if policies have negative
impacts on households, it doesn’t follow that they are ecologically deleterious. If the
policies force marginal smallholders to abandon farming it may aid environmental
recovery.
Different rural producers have different endowments of land and capital and
differential access to labor because of variability of household formations. Structural
Adjustment Programs may push some households toward unsustainable uses of their
environments, and others into diversification with lower risk activities with greater
potential returns. Only quantitative local studies can provide this kind of information,
and there have not been many of those (Greenberg 1997).
Thus for all their differences of outlook and emphasis both Eric Wolf (1997) and
Marshall Sahlins (2000) urge ethnographic understanding of global systems. Sahlins is
intent to show that the West did not simply dominate the Rest with the onslaught of
30
capitalism, but that each locale, each people, responded according to their own lights.
The Europeans provided the means to achieve locally meaningful cultural goals. Surfing
the global economy in service of their own cultural aspirations, peasant and tribal people
created new synthetic formations that Western social scientists, he argues, did not
recognize. Western researchers saw urbanization, migration, remittance dependency,
labor recruitment, ethnic formation and not the translocal cultural whole (2000:522).
We can get a sense of the variability of responses by comparing Venezuela and
Sweden from the work of Monica Lindh de Montoya and Miguel Montoya (in press).
The wealth of Sweden is based on manufacturing while Venezuela’s is from oil.
Sweden’s revenues depend on taxation while Venezuela’s depend on the world market
for oil.
What hurts the Swedish economy is plants relocating to areas of cheap labor and
eroding the employment opportunities for Swedish workers as well as the tax base of the
polity. What threatens Venezuela is dips in the world price of oil. Sweden, however, has
maintained its social services while Venezuela has had to have recourse to government
borrowing and IMF mandated reforms.
In Sweden there has been no upheaval while in Venezuela a populist president has
been elected. In Sweden savings are freed for investment while they are not in
Venezuela. Under Swedish law, corporations in Sweden must be transparent.
Venezuelan firms can be as opaque as their managements or owners want. Thus half the
people in Sweden are investors while only 5% of Venezuelans are.
When Volvo threatened to move its facilities from Sweden, investors could have
an impact on the decision while investors can have no impact on Venezuelan corporate
decisions. In Sweden there is a tradition of ethical investing in line with the notion of
social contracts among workers, government, and firms while there is no such notion in
Venezuela.
31
So while it is true that different locales, even different households respond
differently, they are responding to similar forces, and it behooves us to take the step
beyond the local to understand those forces as a system so that we can better appreciate
the variety of local responses.
When we do this, we see that the spread of market isn't autonomous or natural,
but consequence of state policies to allow these developments. State policies are at the
foundation of globalization processes. But in this all states are not equal. The policies
that count are those of the participants in the Breton Woods agreements that established
the World Bank and the current system of world trade. Other polities lose influence even
over their own economic systems as they become disarticulated and as their governments
are controlled by IMF Structural Adjustment Program policies. As the local governments
lose their influence, so political processes become irrelevant. As local governments
break the social contract with their people, the people respond with fundamentalist,
separatist, and populist political manifestations to rectify their situations.
As the populations of First World nations take refuge in media formed escapes, as
educational policies inculcate historical amnesia, as people increasingly believe that
markets are natural forces and business does only what it must, the people of the first
world are surprised when these processes in distant lands reverberate upon them
personally. Then governments seize on this response to amplify the sense of amnesia and
separation by quasi-religious rhetorics of combating evil in the world to protect their
citizens. This reminds one at once of Jules Henry’s (1963) conclusion that American
education made students stupid and Marvin Harris’s(1974) that witchcraft in medieval
Europe was used by the ruling classes of Europe to control alienated citizens by
promising to protect them from this source of evil.
The states that establish the rules of globalization serve the interests of
corporations--but at the same time, they bring governments into confrontation with their
32
inability to serve public interest—to protect environments or to insure economic
welfare of people--and this causes tensions in democracies—those states in which
governments have to be elected. There is a tension between the interests of corporations
and interests of populations. That's what we see playing out in process of globalization
as numbers of people gather from around the world to protest where ever international
bodies meet to discuss policies of world trade. If we want to understand these
movements and their manifestations from protest to suicidal attacks, we must understand
the systems that gives rise to them.
A return to anthropological theory
This we cannot do by the appeal to irony, illogic, or hyper-relativism of
postmodernism. It is not just another joke. The criterion of understanding is not whether
one “gets it” or not (Durrenberger and Tannenbaum 2002). Postmodernism in this
context becomes another obscurantist ideology in service of the powerful (Durrenberger
1995b).
Salmon (2001) sees postmodernism as more than a distrust of grand theory and
emphasis on the local. After all, reflexivity and an explicitly interpertivist stance also
characterize Malinowski. Melford Spiro (1993) summed it up when he said that what is
new about postmodernism is not true and what is true about postmodernism is not new.
In conversation, Laura Nader commented that the problem with postmodernists is they
don’t know much about anthropology. In addition postmodernism challenges the
assumption that it is possible to describe other cultures and supposes that such
descriptions must necessarily misrepresent and disrespect them (Barrett 1996).
While one may accept the classic points of view that people continually
involved in self-construction embedded in standpoints derived from social relations and
identities, that knowledge is historically contingent and shaped by values and interests,
33
that people negotiate meanings, and that historical experiences and social locations
shape identities, it remains true, as Alford (1998:3) observed that, “The postmodern
critique of the orthodox conception of scientific method offers us few clues about how to
do our work.”
To be sure science is the fuel of globalization from the atomic bomb to the
microchip; from the steamship to the telegraph; from the railroad surveyor to the rocket
scientist placing communications satellites our missile platforms in orbit. Some conclude
that science must thus must be ethically bad, a tool of hierarchy. May be. But the same
could be said of religion if we put all religion in one category. We know that science,
like religion is variable and can serve different interests from warlike to peaceful.
Science can serve one person’s or culture’s concept of the just or the unjust
The vast variability within single religious traditions from reactionary
misogyny to liberation theology should make us cautious about sweeping statements
about religion and religions. And so for science. Like religion, science can be put to
variable purposes and those with anti-scientific agendas should guard against
condemning a way of knowing by the uses of its knowledge.
Tom King and I concluded our introductory comments to our book on fisheries
management (2000:15) by suggesting that there is no general relationship between policy
and practice. We argued “that abstract theoretical constructs are likely to be misleading
rather than enlightening.” This means that “adaptability and long-term system viability
are likely to be local and not generalizable.” Because we reject grand theory does not
mean we reject ethnography. On the contrary we hold, as I do in this paper, that
ethnography is the only way we can understand the on the ground realities of polices or
of global systems.
But we need to situate our ethnographies in terms of what we know of those
larger systems. My concluding point, then, is not the abdication science and ethnography
34
of postmodernism, understandable as that might be, but rather a call for more and
better ethnography and more and more powerful scientific understandings of humanity.
35
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INCREASE DEMAND
CREATE CAPITAL
LOWER PRICES
TECHNOLOGY
PRODUCTIVITY
INCREASE WAGES
PROFITS
REDUCE COSTS
PROTECT MARKET SHARE
ENLARGE PRODUCTIVE
CAPACITY
FIGURE 1: CLASSIC UPWARD SPIRAL
47
TECHNOLOGY
PRODUCTIVITY
PROFITS
REDUCE COSTS
PROTECT MARKET SHARE
FIND NEW MARKETS
CUT LABOR COSTS
RELOCATE IN POLITY
WITH POLITICAL
FAVORS TO CONTROL
WAGES, TAXES AND
PROVIDE MARKETS
JOIN /COMPETITORS
FOR R&D
ENLARGE PRODUCTIVE
CAPACITY
SURPLUS SUPPLY
NEED TO REDUCE COSTS
SELL PLANTS
SHRINK MIDDLE MANAGEMENT
CONVERT JOBS TO TEMPS
CONTRACT OUT
LOWER WAGES
LESS DEMAND
SOCIAL AND
POLITICAL PROBLEMS
FIGURE 2: DOWNWARD SPIRAL
FEWER JOBS
48
PRODUCTIVITY
LESS RETURN/UNIT
ENLARGE PRODUCTIVE CAPACITY
LESS PROFIT
MORE CAPITAL REQUIRED
BORROW CAPITAL
PAY INTEREST
PRESSURE TO RECUCE COSTS
POWER SHIFTS FROM
CORPORATE MANAGEMENT
TO FINANCIERS
% OF EARNINGS FOR
CAPITAL
1960=34%
1990=15%
FIGURE 3: HOW FINANCE GAINS POWER OVER
PRODUCTIVE CAPITAL
49
PROFIT
+
FINANCIAL
VALUE
+
ACCUMULATED
SAVINGS
+
+
DEBT
REPAYMENT
GLOBAL AUCTIONS FOR FINANCE CAPITAL FOR
1. U.S. AND EUROPEAN GOVERNMENT DEBT
2. INDUSTRIALIZATION IN EMERGING NATIONS
3. MULTINATION FIRMS
FIGURE 4: DETERMINANTS OF FINANCIAL VALUE
50
+
INTEREST RATES
FOREIGN LOANS & CAPITAL
+
+
+
GVT BORROWING
INTEREST AS % OF NTL BUDGET
+
+
SOCIAL PROGRAMS
+
+
+
INFLATION
DEMAND
+
+
JOBS
+
TAXES
-
FIGURE 5: WAYS TO CONTROL A NATIONAL ECONOMY
+
51
EXPORTS
EXPORT PRICES
TRADE DEFICIT
CURRENCY VALUE
IMPORT PRICES
IMPORTS
FIGURE 6: FINANCIAL INFLUENCES ON IMPORTS AND EXPORTS
52
CURRENCY VALUE
INTEREST RATES
FOREIGN LOANS & CAPITAL
FIGURE 7: HOW POLICY LINKS WITH EXPORTS THROUG CURRANCY
VALUE
53

IRRELEVANCE OF GOVERNMENT POLICY

IRRELEVANCE OF POLITICAL PROCESSES

DISARTICULATION OF LOCAL ECONOMIC SYSTEMS

INCREASED RELIANCE ON EMPLOYMENT VS. HOUSEHOLD ECONOMIES

INCREASED UNEMPLOYMENT

WIDENING GAP BETWEEN RICH AND POOR

DETERIORATION OF SOCIAL CONTRACT

RISE OF POPULISM

RISE OF LOCALISM/IDENTITY POLITICS

ECOLOTICAL DETERIORATION

DISARTICULATION OF FINANCE AND PRODUCTION

QUASI-RANDOM PROCESSES IN GLOBAL FINANCE
FIGURE 8: CONSEQUENCES
54
1
The sources I have consulted include Eckstein 1989, Barner and Cavanagh 1994, Klitgaard 1990, Hadden and Shupe 1989,
Longworth 1998, Greider 1997, Spero 1990, Ohmae 1995 and Athanasiou 1996.