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A Rising Tide Sinks All Boats

Date: January 19, 1997, Late Edition - Final
Byline: By Matthew Miller
Lead:

ONE WORLD,
READY OR NOT
The Manic Logic of Global Capitalism.
By William Greider.
528 pp. New York.
Simon & Schuster. $27.50.

Text:

Most thinking Americans, and even some investment bankers, get wind of events in today's global economy and aren't sure what it all means. If you've been baffled by the whirlwind but haven't known where to begin, I wish I could say that William Greider's new jeremiad, ''One World, Ready or Not,'' is the one book you'll need. But it's only half of it.

The truth is there won't be another book this year that grapples more ambitiously with the big picture in political economy -- or which fluctuates so maddeningly between brilliance and fallacy in its analysis. Mr. Greider, the populist critic (and onetime David Stockman confessor) who writes for Rolling Stone, predicts an almost apocalyptic reckoning if upheavals in commerce, finance and societies worldwide go unchecked. The problem is that for all his impressive reporting, imaginative syntheses and moral conviction, Mr. Greider's economics are often sloppy or worse. The result is a paradox. Usually books like this feature compelling diagnoses followed by lame cures. Here, though Mr. Greider mischaracterizes many of our troubles, he's full of important ideas about what we should do about them.

It's hard to do summary justice to Mr. Greider's many-layered argument, but here goes. We live at the dawn of a new age, in which technology has brought transport, communications and computing costs low enough to make production and capital flows truly global. Governments, heeding the Wall Street types who control the terms of public borrowing (and who benefit most from globalization), have pushed the process along through deregulation. While global integration brings undeniable marvels and progress (Islamic women get bank accounts thanks to Motorola's training; British homeowners get cheaper mortgages thanks to George Soros's war on the pound), it also brings social havoc and power that is accountable to no one (Islamic men ask what happened; Brits ask who elected Mr. Soros anyway).

If this sounds a little like the creative destruction of capitalism and its discontents, it is. But Mr. Greider goes farther. New features of global capitalism, he argues, will bring unparalleled inequality and exploitation. The coming power of new computer chips makes job losses from automation look piddling. Worldwide competition drags wages in advanced nations down toward those of the poorest countries. Capital, answerable only to itself, seeks maximum returns, regardless of the dislocations its sudden flight brings or the chaos its burst speculative bubbles can shower. As poor nations race to get into the industrial game and rich ones innovate to stay ahead, the globe is flooded with chronic overproduction, sure to bring mass plant closings and unemployment. With labor unorganized or suppressed, inhuman treatment becomes routine.

Worse, Mr. Greider says, there's no obvious fixer. At the dawn of this century, a time of similar abuse, governments could step in with minimum wage, child labor and workplace safety laws that saved rampant capitalism from itself (and the states from bidding against one another to get jobs). No international authority exists that can similarly temper the global market's excesses. Instead, governments everywhere are in retreat, unable to appease angry constituents yet scaling back services, tax bases and safety nets to lure multinationals and keep bond traders happy. All in all, Mr. Greider concludes, it's a recipe for social meltdown and financial disaster, unless we reverse our unthinking deference to the dictates of global business and capital, and fast.

While spinning out this cataclysmic vision, Mr. Greider's rich reporting brings the global economic beast to life in all its splendor and horror. The biggest assembly plant in the world -- a hundred acres of Boeing engineering miracles under one giant roof -- inspires awe at human ingenuity; girls locked and killed inside a tinderbox Thai sweatshop prompt revulsion at human indifference. Mr. Greider shows the perpetual ambiguity of events from the global citizen's point of view: when Boeing transfers production to China in exchange for access to its market, Mr. Greider is torn between lamenting the loss of good American jobs and cheering the Chinese, for whom plane building offers a path out of poverty. He also denounces the hypocrisy of global elites, like financiers who preach the virtues of free markets 364 days a year, until Mexico collapses and they need a little ''big government'' to bail out their bad bets.

But while the social concerns raised by Mr. Greider's reporting are surely valid, his almost Marxist prophecies of doom flow from some basic economic confusions. His contention, for example, that wages here will inexorably fall to third-world levels ignores the fact that American workers are still far more productive than their counterparts (and thus can earn far more without pricing American goods out of world markets). For all the talk of globalization, moreover, tradable goods account for only one-fifth of our economy. If you're a textile worker in South Carolina, yes, you're in trouble; but most workers' wage woes have more to do with getting United States productivity moving even higher and the premium new technologies place on having greater skills.

In addition, while certain industries, like steel, see new factories mysteriously financed even in the face of existing surplus, there's little evidence of the global supply glut Mr. Greider repeatedly stresses. If he were right, we'd expect Depression-era rates of unemployment, plummeting prices and stock markets, and very low interest rates, thanks to the savings surplus that would accompany underconsumption. We have none of these. Similar fallacies mar Mr. Greider's views on many other issues, from trade deficits and the economy's growth potential to the structure of demand and the causes and cures of our Great Depression. Readers otherwise sympathetic to Mr. Greider's ambitious project will learn to bleep over them.

But economists (whose role as the arbiters of much public debate Mr. Greider regrets) will seize on these errors to dimiss the book outright. That's a mistake. You don't need to agree we're facing apocalypse soon to know we're facing spiraling unfairness already, or to admit that Mr. Greider's right when he says all whose Christmas list included Asian-made toys are probably complicit in exploiting the weak. Indeed, his moral passion is a rebuke to the petty obsessions of many modern economists, and a tonic for today's fainthearted debates.

Mr. Greider rightly calls on governments to moderate (not derail) the pace of this latest industrial revolution and push the global system toward more equitable outcomes. This means refusing to yield a society's destiny to multinationals or financiers unfettered by social obligation. He'd restore some controls on capital flows; tax wealth more heavily while slashing payroll levies that punish work; ask trading nations to honor labor rights or face tariffs; and subsidize low-wage employment to assure a decent life for those not equipped to thrive in the high-tech age. A new commitment to ''lifting the bottom'' is Mr. Greider's sensible answer to the downward pressures the global economy brings.

Like James Fallows and Clyde V. Prestowitz Jr. before him, Mr. Greider urges American elites to wake up and pursue a Japanese model of national interest, rather than cling to pretty trade theories that sanction the loss of major industries. He'd renew Louis O. Kelso and Senator Russell B. Long's worthy efforts to increase employee ownership, steps that might let market incentives triumph while making everyman a capitalist. And his plea for our best minds to fashion a new ideology for a world now truly indivisible (''global humanism,'' he tentatively calls it) is inspiring.

Many of Mr. Greider's proposals -- such as transaction taxes to damp currency speculation, and labor agreements in trade deals -- would take multilateral action to work, no small feat. And some of his tics, like his endless Fed-bashing, are off base. But challenges like Mr. Greider's to establishment nostrums and powerful interests are rare. In a season when politicians seem determined to make no large plans, Mr. Greider's ideas deserve wide debate. They made me question many of my assumptions. Given the choice between economists with little passion for justice and progressive journalists like Mr. Greider with little patience for economics, it's the latter who stand the best chance of pointing us to a brighter world.