Occupy Wall Street and Globalization

Global protests show OWS to be more than a national event

There is immense confusion over the “Occupy Wall Street” movement.   The left embraces it, though they’re not sure where it came from or what it means.   The right ridicules it, though efforts to say it’s a bunch of “lazy losers” who “envy the rich” are laughable.  Those involved don’t make things easier because they tell multiple stories, ranging from professional anti-globalization demonstrators along for the ride and Ron Paul supporting libertarians who want to break the big money big government nexus.

37% have positive reactions to the movement in the US, only 18% actually oppose them.   People are frustrated and the taste of corporate bailouts and shady financial instruments leaves Wall Street one of the least popular set of institutions in the US.    The fragility of the global financial system which over leveraged itself and seemed oblivious to the danger it was creating for the entire system has shocked people from Frankfurt to Beijing.   There is a sense that something has gone wrong and leaders are clueless on how to respond.

Given the surprising rise of this movement and its capacity for quick expansion, I believe that we are not seeing a moment of rage that will pass when the weather gets cold in winter, but the start of a global movement to critique the power of big money and the lack of voice so many people have in an era of globalization.   It will not be a movement of socialism, but of democracy.   It will not have a clear ideological focus but an evolving agenda.  It will persist even after Zuccotti park empties and Manhattan returns to normal.

Globalization is the name that was given to “complex interdepedence” in the late eighties as it became clear that the growing links between economies noted by scholars of international relations in the seventies (most notably Keohane and Nye in their 1976 work Power and Interdependence) were expanding beyond what anyone had anticipated.    The two most important aspects of this was: a) the technology/information revolution; and b) the internationalization of capital.

Up until the 80s most investors were national.   To invest outside ones’ own borders was risky and difficult, and often faced legal obstacles at home.   Between 1980 and 1990 that changed completely.   In 1980 foreign direct investment in the developed world totaled $390 billion, while $302 billion went to the third world.  By 2008 developed world FDI was over $10 trillion, while in the developing world it topped $4 trillion.  Portfolio investment also grew rapidly.

Investors no longer had any reason to be loyal to their home state, corporations expanded to use whatever advantage they could to minimize cost and maximize profit.    In many ways these are good developments, naturally reflecting the way in which the instantaneous exchange of information can allow greater flexibility.   Toyotas now can be made in the US rather than having to be shipped from Japan, consumers can enjoy the fruits of inexpensive goods from countries with low labor costs, and with linkages between states growing, the chance for major war declines.

Yet there is a clear loser: the state.   States no longer have as much control over their economies, have less capacity to create strong social welfare systems and find it harder to create regulations they believe necessary to protect their publics or the environment.   Whether or not one agrees with those policies, the fact of the matter is the state is not as powerful as it used to be.   And, as political leaders become both dependent on financial and business institutions and vulnerable, they listen very closely to what Wall Street or Frankfurt or Tokyo insiders say.   Whether in the World Trade Organization, IMF or US Congress, the influence of big business and big finance has never been greater.

This also means that democracy is weaker in states with democratic traditions.    Law makers no longer have the power to give people what they want if what they want flies in the face of economic realities of the new globalized political economy.    We can’t save the paper mills in rural Maine if foreign competition leads those investors elsewhere; to try we have to make wages low and avoid even almost all regulations.    That’s economic reality.

Beyond that, if politicians listen more to big money in a world where political campaigns are often just marketing campaigns with slogans and focus group tested themes, elections become almost meaningless.   No matter what the candidate says, once in Washington (or Berlin, Paris, etc.) the candidate is limited to a rather constrained set of options.   Thus emotional rhetoric painting the other side as horrid and ignorant hides the real problem.   There isn’t a lot the politicians can do.

As long as the economy was growing, people didn’t care.   They had jobs and their retirement accounts were healthy. Even those middle class who had to have two incomes rather than one and whose high paying factory job was replaced by low wage work at a call center at least had cheaper than ever goods from Walmart.   As wealth inequity grew rapidly to its peak since the 1800s, the rush of new technology and economic bubbles hid the reality:  both the public and even the politicians were not really in control of where this ride was heading.

Meanwhile the financial sector, over leveraged and under regulated, set up the perfect storm that hit in 2008, turning what should have been a normal recession into near economic collapse and a long term slow down as de-leveraging spread.    This crisis came from the same folk who brought us cheap clothes and global connection – the global financial and business elite.

It’s not that they are bad people.   They are doing what they are supposed to do, trying to maximize profit, innovate, and make money.   It’s just that markets are not magic, and without regulation from the state, insiders are able to rig the game and hide the risks, altering what capitalist theory says markets should do.    Moreover, public values that may be different from raw market outcomes become irrelevant – democracy becomes weak and impotent.

That’s the motivation for OWS.   It’s a public effort to stand up and say there has to be a counter balance to big money and its ability to shape the system.    Except for a few on the fringe it’s not an attempt to demonize or destroy big money; for all the faults of the system, globalization is both a good and an inevitable thing.   Rather, it’s a demand that democracy not be sacrificed, since if it is, the only voice that matters will be those with the resources to shape the market.   And while there are market romantics who believe that somehow markets magically gives us what is best, such faith does not stand up to historical scrutiny.

Don’t expect OWS or the core demand for more transparency and democracy to go away.   Now that we’ve seen the damage big finance can do to the economy and the need for regulation, as well as concern for human rights and a sense of justice, these efforts will persist and grow as part of the global civil society.   They may push governments to reach agreements allowing for more political control, they may create local responses to the standardizing influence of globalization.   We don’t yet know where this will lead, or how the emerging global order will function.   We’re living at the dawn of a new era, and OWS reflects a logical response to the weakening of traditional state-centric democracy.

One can’t understand OWS or the changing global order through the lens of twentieth Century perspectives.

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  1. #1 by renaissanceguy on October 25, 2011 - 15:37

    Scott, who says that markets magically give us what is best? Such a person should be put in the looney bin. So should the person who says that governments magically give us what is best.

    Markets are markets. They do whatever the people involved with them do. They do not guarantee success. It is up to people to get whatever success they can–in whatever form it takes for them.

    There is no system. There are just people making, buying, and selling things.

    There is no way for people to rig the game unless the government interferes. Otherwise, everyone must live with the consequences of their own actions and play by the same rules. In other words, if there is no referee, then there is no referree to bribe (in exchange for votes) in order to rig the game.

    And how do you know what the OWS want? I have not heard one cogent statement from anyone claiming to represent the protest.

  2. #2 by Scott Erb on October 25, 2011 - 17:39

    I don’t see how one can logically say only governments can rig the game. Resource allocation, access to information, and the capacity to manipulate others all create the capacity for some people to privilege themselves — and historically this happens all the time. Except for very small custom/tradition based systems there is no example of a market able to be self-sustaining and functional. Logically, I think it is an impossibility.

    If we leave it to markets, we give the wealthiest and most powerful the capacity to run the game. There will always be power relations, those with power have advantage. Under pure markets those who “win” can rig the game and will probably create government too. Constitutional Democracy holds that citizens through a democratic process can reflect on outcomes of the market (or of custom, etc.) and make collective decisions based on the values and interests decided through constitutional democratic processes. That’s worked better than anything else that’s been tried, though its hard to put in place.

    Yet get away from village farmers markets and it’s much more than making, buying and selling things. I think a romantic notion of markets comes from over-simplification of the economic system, hiding the advantages information, resources, power and position in society give to various actors. That’s why class mobility is low, power matters – power inherent in how society is structured.

  3. #3 by renaissanceguy on October 25, 2011 - 22:07

    “Resource allocation, access to information, and the capacity to manipulate others all create the capacity for some people to privilege themselves — and historically this happens all the time.”

    But that IS the game. That’s not somebody rigging the game, that’s everybody playing the game. As long as the government doesn’t entitle certain people to do it and prevent other people from doing it, it is possible for anybody to get into it and play. There’s no guarantee that any given person will score the most points, just as in some actual game. It is up to that person’s talent and motivation and diligence.

    The best cure for envy, I think, is to do as well or even better than those that one envies–not hold them back by imposing restrictions on them through the democratic process (or any other government process). That stifles the economy for everbody. The only way, for example, for a person like me to break into business would be in an economy where the currency is strong and captial is available and I could afford to higher people. (I have no plans to do so, and it would make me evil in your eyes, I suppose. I would be “rigging the game.”)

    When you say democratic process, it sounds like mob rule. After all, the majority of people will always be less wealthy than the minority; therefore, they will always vote for ways to get more of what the minority has.

  4. #4 by Scott Erb on October 25, 2011 - 22:22

    But the point is, after the first play the game already is skewed. The winners have advantages and can build on those advantages. Over time they and their children can structure the game to assure they are advantaged, while early losers face ever taller odds. After awhile it takes far greater effort, luck and brains from those who are disadvantaged to succeed, while those from the advantaged group find it relatively easy.

    I don’t think envy is a real problem, it’s a red herring used to call names at those who might point out the unfairness of the structure of the game. It’s argumentum ad hominem, whether or not the game is structured properly isn’t connected to individual emotion.

    Now, if you want to say the most successful system of government — constitutional democracies — is mob rule, go ahead. That’s a bit silly, and it won’t have much credibility. Also, you make another very serious error. People like me are ideologically close to people like you in that we are all (in the classical sense) liberal. We all believe in markets, we all think business is a good thing, we all admire entrepreneurial spirit and believe that hard work and innovation should be rewarded. So when you try to make it seem like I’m suggesting business to be evil you’re painting my view as something different than it is, at base I agree with a market economy and individualism.

    Where we disagree is I think you do not understand power relations in society and how markets work in the real world. You seem to have a romantic vision of them as they might work in some small setting where power and wealth differentials are minor, the processes are transparent, and people have equal access to the information and processes by which to succeed. I don’t think you can even approach a functioning market without a strong regulatory state, and even then a constitutional democracy deals with VALUES.

    Values transcend material issues. For example, in a pure market economy abortion is neither good or bad, either something that is demanded or not (and if there is a demand, there will be a supply of abortion doctors). Yet many people feel that’s an issue that requires government action. There are many other issues about what we value, issues that cannot be determined by the market. (One can rationalize why one issue is OK to have government involved and not another, but that’s a definition/rationalization game — the only way to really make that call is politically, through constitutional processes, there is no objective answer).

    So I am saying your view is ultimately anti-market because you don’t understand that not having a strong state allows powerful actors to pervert markets and use their power to create quasi permanent advantage for themselves and their progeny. I’m saying that the market is dysfunctional now because of lack of effective regulation and oversight. Moreover, since markets give power to those who have wealth, democratic government is necessary so as to give voice to everyone in value judgments, even those without wealth. If democracy is a ‘mob’, then markets left without sufficient oversight and regulation yields the equivalent of organized crime.

  5. #5 by Alan Scott on October 27, 2011 - 00:11

    Scott,

    Do you still believe that OWS is just like the Tea Party, only different ? Did the Tea Party stage a riot in Oakland California ? I and others predicted OWS would become violent. Of course it was the Police that were at fault, right ?

    Did the Tea Party leave squalor , like OWS does every place it occupies ?

    Your anarchist buddies are just getting started .

    • #6 by Scott Erb on October 27, 2011 - 00:22

      Actually I think the tea party is fading and OWS is going to spawn a longer lasting movement. OWS doesn’t leave squalor, they actually in New York have sanitation removal committees and work hard on keeping things clean. You’re listening to right wing sources that cherry pick just the negative and ignore all the positive. When so many cities around the globe host protests, you might have one place get dirtied, or some rowdies take over in another spot. No big deal. OWS is not anarchist and no matter how much the right wishes they could pigeonhole the movement into that narrative, they’ll fail. Meanwhile, the tea party is so last year.

    • #7 by Scott Erb on October 27, 2011 - 15:39

      Yikes, Alan, I finally read some stuff about what went on in Oakland, but I think a strong case is being made that it is the police who were out of line and who will suffer a loss of reputation.

      • #8 by classicliberal2 on October 28, 2011 - 14:15

        It’s well past time the various police thugs who have been attacking and brutalizing OWS demonstrators since this began be taught, in a very stern way that leaves no doubt in their minds, that they are few and the demonstrators are many.

  6. #9 by Alan Scott on October 27, 2011 - 02:43

    Scott Erb,

    You are at least partially right. Unlike other groups the Tea Party was not about power for it’s own sake . It was a reaction to the runaway train that is Obama and the Democrats . Now that the train has been slowed down there is less need for it . Even the freshmen Tea Party Congressman took votes that reflected why they were sent to Washington and less about entrenching themselves in power. They will go away if Obama inc. is defeated . If Obama and his OWS friends succeed, the Tea Party or another incarnation under a different name will oppose them . There is historical precedence of when the country goes far left, a Conservative movement rises .

    I am truly amazed at your state of denial about OWS . They are provoking clashes with authority . Instead of the initials OWS, they really should go by the title OINK, because they are pigs. There is no way you are going to take large groups of people, who are not experienced campers, have them stay in tent communities in cities for weeks, and not have sanitary disasters .

    Just who do you think OWS is ? It is college students who now want their college loans forgiven . It is Anarchists and Marxists. It is the big unions, counter attacking the GOP and the Tea Parties . It is the rich crony capitalists like Soros. It is the Democratic Party . It is the Obama media who dutifully write positive pieces and run stories on income disparities . It is positively amazing how all of a sudden so many stories on that topic are ” independently ” being aired .

    • #10 by Scott Erb on October 27, 2011 - 02:54

      Its because I have been following OWS and know that what you focus upon isn’t the main part of the movement (though it is what right wing pundits have been trying to push as the narrative). It doesn’t fit that narrative. The New York group has a budget, they work on sanitation (have volunteers and even clean up after large groups have gathered), and have a wide range of views. That attempt to ridicule and mock them isn’t working because that’s not what OWS is. I know that’s frustrating to the right (just as tea party success in 2010 frustrated the left) and even top Republicans are changing their rhetoric about OWS, recognizing that it is getting support and striking a nerve. It’s also gone global, and I think it’s a movement that will be around for quite awhile, even after they abandon the actual occupation sites, mobilizing youth. It’s driven by the fact that democracy has been weakened due to corporate power, and that fact assures that a lot of people who pay taxes and support market capitalism will agree with the theme of the protests.

  7. #11 by renaissanceguy on October 27, 2011 - 07:33

    “I don’t think envy is a real problem, it’s a red herring used to call names at those who might point out the unfairness of the structure of the game.”

    But your language still indicates that you think of economics as a game in which there are the participants and then somebody outside of the game making and enforcing the rules. The way I see it the words “the unfairness of the struture of the game” have no meaning. In a free market, the game has no structure, for it would have to be imposed by somebody from the outside. There is no fairness or unfairness, although there are ethical and unethical actions–such as breach of contract or theft.

    In a free market, the only way to feel bad that somebody got richer than you (if they did so ethically) is to feel envy toward them and/or disappointment with yourself. Any other view means that you want somebody to give you some handicap or advantage to “level the playing field.”

    “Now, if you want to say the most successful system of government — constitutional democracies — is mob rule, go ahead.”

    Well, what do you call it if the majority of people use the power of government to take away property from the minority of people? I stand with Thomas Jefferson: “A democracy is nothing more than mob rule, where fifty-one percent of the people may take away the rights of the other forty-nine.” I don’t say that it has to be that way, but it certainly can be, and when it comes to redistribution of wealth and unfair regulatory policies, it is that way.

    “We all believe in markets, we all think business is a good thing, we all admire entrepreneurial spirit and believe that hard work and innovation should be rewarded.”

    Forgive me if I am all wet, but I think our problem is one of basic assumptions. I value freedom above markets, entrepreneurism, innovation, or any of the other things you write about. For me, it’s not a starry-eyed emotional belief that a free market system makes everybody healthy, welathy, and wise. For me it is about a core principle that freedom is good and control is bad.

    By the way, hard work and innovation will bring their own reward. Nobody has to reward them. Other people just need to refrain from punishing them.

    “For example, in a pure market economy abortion is neither good or bad, either something that is demanded or not (and if there is a demand, there will be a supply of abortion doctors).”

    You are mixing categories. You are talking about criminal law. I thought that we were talking about economic systems.

    One thing that we agree on but with a sublte but important differences is “government involvment.” I agree that a free market thrives best in a place where there are laws and where the rule of law is respected. Laws should be based on preventing (or trying to prevent) one individual or group from violating the rights of others. Not only does that have nothing to do with either rewarding or punishing those who produce wealth, laws that punish or hinder them are contradictory to that principle.

    People like to tell libertarians (the ones who are not anarchists) that we do agre with government regulation–because we believe in contract law and laws against various forms of theft. That’s not regulation of business. That’s creating a just society in which businesses can operate freel from interference.

    • #12 by Scott Erb on October 27, 2011 - 12:22

      Structure emerges naturally, it isn’t imposed. Social structures come from the fact power permeates all social relations, some have more power, others less. That power gives them capacities that others do not have. If there is no government, there is still structure.

      Freedom as a concept is complex. I think it is misleadingly simplistic to think that freedom from government rule is the primary definition of freedom. Governments are people, just as corporations are people and all social relations come from people interacting. Freedom (both positive and negative) is constrained or enhanced depending on the structure of those relationships.By oversimplifying to focus only on government you have I believe a false concept of freedom, and you miss the constraints on liberty imposed by social relations due to power differentials and social structure.

      I value freedom as much as you do. I see it as a far more complex concept than you do, and I see the role of government to help assure true liberty to all, even those disadvantaged by the structural power relations within a society.

    • #13 by classicliberal2 on October 28, 2011 - 02:04

      “I stand with Thomas Jefferson: ‘A democracy is nothing more than mob rule, where fifty-one percent of the people may take away the rights of the other forty-nine.’”

      Actually, by offering up this, you just embarrass yourself with a rather shocking display of ignorance. Not only is that a notoriously PHONY quotation–Jefferson never said any such thing–it also directly contradicts Jefferson’s very-often-stated views on the subject (Jefferson was a democrat).

      Your analysis of government involvement in economic matters is just as flawed. Economies function within rules established by governments. Such rules aren’t neutral, tend to emerge from, shall we say, more grounded considerations that mere philosophical abstractions, and, among a great many other things, the power they confer to wealth means that extreme concentration of wealth is, inherently, a violation of the rights of everyone. That last IS something Jefferson understood, and he argued governments should actively combat such concentrations.

  8. #14 by Alan Scott on October 27, 2011 - 21:31

    Scott,

    ” Yikes, Alan, I finally read some stuff about what went on in Oakland, but I think a strong case is being made that it is the police who were out of line and who will suffer a loss of reputation. ”

    My father was a city cop and my uncle was a small town Chief of Police so I have sympathy towards the cops. I’ve had my own run ins with cops, so I’m not totally in the bag for them. I am holding off judgment on the Veteran who is critically injured until the true facts are out . However, I am guessing that the cops were severely provoked and the press is flat out lying about some of this .

    I find it amusing that the real problems are occurring in California, the most looney toon leftist of the 57 states . Obama said there are 57 and who am I to dispute it .

  9. #15 by Don on October 30, 2011 - 12:28

    Globalization requires ever increasing ship traffic. Conflict continues festering in the United States over whether to follow the International Maritime Organization policies or create strong adequate national legislation that would protect American waters from virus and bacteria being dumped in our waters as foreign ships deliver their manufactured products. Cholera thrives in brown marine algae and brown marine algae can thrive in the deep sea where mid ocean flush’s take place. Sadly the only way to be sure and stop ballast systems from continuing to spread pathogens is mandatory installation of sterilization equipment on ships. Unfortunately International shipping is needed for continued economic globalization to support the worlds economies. The problem is no where close to being resolved because, internationally, countries including the US follow the rules and guidelines of the International Maritime Organization, and the IMO is an international organization made up of diverse governments and international economic interests. They are not even close to adequately addressing the problem because of the monetary inconvenience. In other words they would rather let people continue to die than spend the money. Increased growth of the worlds economies will require increased ship traffic and the problems of waterborne disease will continue to be spread by ballast system. It is known that migratory birds spread influenza virus from one body of water to another. Ballast systems should not be allowed to help spread fecal material containing virus, as this may prove helpful in spreading the next world pandemic if anyone ever bothers to check. Currently there has been an enormous PR push by the shipping industry consisting of fear mongering about an alleged loss of jobs. The reality about raising the cost of foreign imports with strong national ballast water regulations helping to make America more cost competitive manufacturers can be understood by the following excerpt from a report prepared for congress in 2009. “Although estimates of the costs of ballast treatment may be imprecise and vary from vessel to vessel, there is some general agreement on average costs.14 For example, it may cost an estimated $400,000 per vessel for modification of container/bulk vessels to use onshore ballast water treatment facilities at California ports. More generally, the cost of retrofitting vessels to treat ballast water has been estimated at between $200,000 and $310,000 per vessel for mechanical treatment and around $300,000 for chemical treatment.15 Most of this expense will be borne by foreign shipping companies, as the U.S. flag fleet is a small percentage of the global fleet,16 and likely passed along to consumers of products imported on these ships.”

  10. #16 by Alan Scott on November 5, 2011 - 21:09

    Scott,

    Apparently your Occupy DC protesters are now running into cars. Attacking them with their bodies.

    http://www.washingtonpost.com/blogs/post_now/post/occupy-dc-protesters-block-streets-near-convention-center/2011/11/04/gIQA05vunM_blog.html?hpid=z3

    ” He said witnesses told police that the three pedestrians “either ran toward or jumped in front of the moving vehicle.” He said one pedestrian jumped on the hood of the car. One of them was cited for being in the roadway. “

  11. #17 by Scott Erb on November 5, 2011 - 21:15

    Of course, I could give you a list of atrocities committed by American troops in Iraq, starting with the Abu Ghraib scandal. But those are a minority and I would be wrong to use those cases to paint America’s military to be evil, or that those were typical. The same goes for any large group, even protesters.

  12. #18 by Alan Scott on November 6, 2011 - 02:50

    Scott,

    I agree with you that misdeeds committed by American troops in Iraq were atypical. I do not agree that a few bad apples among the Occupation are besmirching their good name. Trust me the OWSers are going to get more violent as their protests fall on deaf ears. Your OWSers do not have a good name . They are not Quakers, Boy Scouts or even mild mannered Tea Partyers .

    They are interfering with other people’s livelihoods . The Tea Partyers never did that . The Occupy DC protesters were trying to prevent people from leaving a Conservative event at the Walter E. Washington Convention Center. Tea Partyers never did anything to impede fellow citizens from coming and going to anywhere .

    I am even seeing cracks in support among bloggers who are far left of you . I monitor a lot of sites on the left and the right . I do not believe you are keeping up with fast changing developments .

    • #19 by Scott Erb on November 6, 2011 - 04:08

      The tea party is all but dead. I think you’ll be surprised where this goes. And unlike the US military in Iraq, no innocents have been killed thanks to OWS! I’m not saying that to criticize the military, only to provide perspective. Citizens protesting is part of the American ethos afterall.

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