(Continued from previous post)
According to most Western political theory -- displayed in America at its extreme -- the state has no legitimate power to say what makes a good life or a healthy economy. Everyone makes such choices for every day; the choice for the society emerges naturally from these decisions. If everyone wants to avoid taxes, taxes stay low. If people want to buy computers -- or guns, or X-rated videos -- that industry flourishes. The genius of this system is that it can use people's hungers and jealousies as a tool. It perfectly melds political and economic theories: political liberalism and economic laissez-faire, each of which says to leave the individual alone.
The flaw is that the system suffers from "market failures," as economists and political scientists call them. Most people would be better off if the society invested more in schools or roads, but no one wants to vote for higher taxes. Everyone feels worse off when there are very wide social divisions, but no individual can make choices that narrow them.
In reality, the largest questions of right and wrong have been settled outside the market system -- through religion, or family prejudice, or patriotism, or ethnic loyalty. But it is hard for the American-style system to argue that anything profitable is wrong if a willing seller and a willing buyer can agree on a price. No government in Europe believes such things. Many individuals do, people being the same everywhere. But governments, with the possible exception of Great Britain's, think that they, not individuals, should make the big decisions of right and wrong.
Time and again the visitor to France hears the phrases "confusion in the market" and "excessive competition." These are shorthand for the dangers of letting market forces get out of control. Each time these phrases come up, they raise intriguing translation problems. You can almost hear the interpreters saying the phrase as if it had quotation marks around it in English -- "confusion in the market." There are no comparable terms in English, because the very concepts do not exist. What the French and Germans call "excessive" competition is what American economics texts call "perfect" competition.
A deeper idea is the fundamental distinction between the market as a means and the market as an end in itself. Every healthy society knows that market incentives are necessary -- real price competition, failure for products that don't make the grade, reward for innovation and enterprise. But only in the American model is nothing besides the market necessary.
IN the early stages of their economic development, especially after the Second World War, European governments found it easy to set targets and plans. Above all else they had to catch up to the American lead. Even now European systems reveal their faith that the goals should be chosen, rather than left to the market to decide. For example:
The French government has for decades divided up the work of national development among France's major companies. One group of companies must run the shipyards; another must collaborate with the Americans on semiconductor projects.
[...]
Yet [there] is a very Anglo-Saxon view of democracy, not a universal one. It could just as well be argued that to leave in private hands investment decisions that have the potential to make a major impact on the welfare of society is itself inherently undemocratic.
The Anglo-American system tries to permit as many deals to be made as possible. In general, anything that's profitable should be legal, unless there's a compelling argument against it. The only loyalties that are not supposed to be for sale are within a family and to the country. More generally, friendship is supposed to operate outside the market system. But in Europe, and especially in France, business relationships are also supposed to operate outside the market, with loyalty to one's employer being more important than whether the relationship is immediately profitable or not. A French scholar pointed out, in Why Has France "Succeeded"?, that
the "loyalty" market is opened only once in a lifetime to each individual, when he graduates from school or college. It is in this market that those who are able to provide loyalty meet those who are looking for it, their "lords."
During the French stock market's slow rise from 1996 to 1999, French analysts contended that computer-program trading, introduced into the Paris stock market by American firms, was driving the market to daily lows. This strengthened the general feeling that the way to save the market was to restrict its flexibility -- to make it more regulated again rather than to perfect its market forces. A French report at the time said, "Deregulation of brokers' commissions in the US caused securities industry profits to fall and forced many firms into high-risk areas, such as aggressive mergers and acquisitions, a report by the Securities Industry Council charged." That is, letting too many decisions be made by the market created instability for all.
[...]
His book about the conference, The Color Curtain, reflected his increasing puzzlement over, and estrangement from, the nonaligned policies. Although he did not put it this way, mistrust of the market was one of the traits that struck him most.
Still another and, to the American mind, somewhat baffling trait emerged from these Asian responses. There seemed to be in their consciousness a kind of instinct (I can't find a better word!) toward hierarchy, toward social collectivities of an organic nature. In contrast to the American feeling that education was an instrument to enable the individual to become free, to stand alone, the European felt that education was to bind men together.
The point for the moment is that one economic system assumes that it does not have to make the largest decisions about national purpose except when the system is being attacked from outside, in time of war. The other assumes that the state always has a role in guiding the nation. It is the clash between these visions, rather than the rightness or wrongness of either of them, that creates current problems.
Borders and Borderlessness
IN Anglo-Saxon economics it's hard to come up with a theoretical reason for concentrating on national economic well-being. In the European model this is not a problem at all; it's taken for granted.
In daily life there is no shortage of nationalistic spirit in Western countries in general or the United States in particular. The flag waves constantly in American TV commercials. Crowds chant "USA" at international sporting events. But the principles that guide economic policy in the Anglo-American approach avoid the concept of national interest except in strictly military terms.
Most Anglo-American concepts in fact treat national economic interests as if they didn't really exist. Companies move their plants overseas, because that is what business logic says they should do. When it comes to politics, we're able to explain -- but just barely -- why one person should be inconvenienced for the good of all. I pay taxes because I'm part of a political community, even though in any given year I may pay more into the government than I directly get out. In the Anglo-American model there really isn't an economic community that justifies anyone's paying higher prices than he absolutely has to, or preferring to deal with someone from the same country rather than buying from overseas.
This outlook seems advanced and tolerant from the Western, liberal perspective. The world should be "borderless." In the summer of 1990 Roger Porter, who was then President Bush's chief domestic-policy adviser, gave a speech about America's outlook on world trade. Some people, he said, clung to the "old notion of nations, companies, and markets rigidly defined by national borders." But in this modern age, he concluded, such a notion was "outdated and dangerous." Porter was making a partisan argument in behalf of the Bush economic program, but his assumption that consciousness of nationality was "outdated and dangerous" reflected an educated American view that has nothing to do with party.
In the United States discussions of corporate nationality have stuck mainly to the realm of theory. According to American assumptions, it is only natural for businesses to operate in rootless, global fashion. Therefore most Americans assume that denationalization has already occurred. American discussion on this point has been heavily influenced by the writings of Robert Reich, who was a lecturer at Harvard's John F. Kennedy School of Government before he became Secretary of Labor in the Clinton Administration. Since the mid-1970s Reich has been proposing solutions to America's long-term economic problems, and his ideas about industrial policy (some of which were published in The Atlantic Monthly) have attracted a broad following. During the Bush years Reich wrote several influential articles in the Harvard Business Review and a subsequent book called The Work of Nations, which argued that corporations had grown past the point where they could sensibly be considered American or German or Japanese. With headquarters in one country, research centers in another, factories in yet other countries, and customers all around the world, Reich said, big diversified corporations could be loyal only to their own economic interests. Though Chrysler had its headquarters in Detroit and Matsushita was based in Osaka, neither would necessarily care about the government or labor force of its home country. Each would go wherever the money, the market, and the skilled work force drew it. In an age of global corporations, Reich concluded, a nation's well-being rises or falls with the skills of its workers. Therefore he vigorously advocated plans for improving American education and retraining American workers.
In practical terms, Reich said in a 1990 article titled "Who Is Us?," published in the Harvard Business Review, this blurring of corporate nationality meant that the U.S. government should not try to help American-owned companies solely because they were American-owned. The government owed its loyalty to citizens and workers within its borders, and companies from Europe, Japan, Mexico, or anywhere else might have more to offer the American work force. When the U.S. government gave contracts to Boeing, provided bailouts to Chrysler, or negotiated on behalf of Motorola or Zenith, by Reich's analysis it might not have been helping American workers in any direct way. There was no telling where the companies would build the products that federal money was subsidizing. If Toyota was building plants in America and Chrysler was moving plants to Mexico, then Toyota should be considered at least as "American" as Chrysler.
As a theoretical matter, this proposition is sensible and appealing. Daily life abounds with cases that seem to confirm the point. American plants move to Mexico; Japanese and German plants open up in the United States. A large number of American commentators have embraced the "Who Is Us?" assumption, usually crediting Reich for having precisely defined the shift to a world in which corporations no longer have citizenship. Yet many of the specific illustrations on which this changed perspective is based turn out to be misleading.
[...] |
