Outlook: Marx was right
Friday 03 December 1999
Still, there is a coherent message that international policymakers would be unwise to ignore. The 20-year-old process of globalisation and financial deregulation has brought great economic benefits, especially to those poor countries that have started to engage in world markets through trade and cross-border investment. Future gains could be even greater if the new technologies fulfil all their promise.
However, there are caveats. The lesson of history is that unbridled free market capitalism eventually and inevitably ends up in an orgy of excess with often disastrous consequences. Unless adequately regulated and constrained, capitalism has a tendency to destroy itself and the very prosperity it has created. On this, if nothing else, Karl Marx was right.
The last example of this phenomenon was the 1997-98 Asian crisis, the result of an investment bubble permitted by currency liberalisation and economic growth. The crisis has resulted in modest reform of the International Monetary Fund, but there is plenty of unfinished business. The focus of reform has moved on now to the WTO.
One way of interpreting the wave of anti-trade protest is as a classic distributional tussle. Many multinationals and big US companies have enjoyed extremely healthy profits growth over a long period of time. It is normal for workers to seek to increase the labour share of the cake after such an episode; this time that attempt is taking place across borders, as might be expected in a globalised world economy. The positive side of protest is that it creates pressure for reform. International policy makers ignore these warning signs at their peril. A new inclusive approach is called for, and if they value their long term future, all right-thinking capitalists should be embracing it.
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