[this piece is part of a work in progress on the topic of "Globalization for the Common Good: how the underlying features of globalization have made it incompatible with 'common good'"]
I would like to examine some of the 'myths' that are continuously advocated by the proponents of the capitalist system for the purpose of engraving them into the constructed social consciousness of the time. Almost all of these 'myths' are backed by the science of economics.1 Interestingly, one of the rarely talked-about facts is that the science of economics is fairly new: a twentieth century phenomenon. 2 The mother science of the field of economics is what is known as political economy: “the knowledge and practice required for governing the state and managing its population and resources.”3 The main difference between political economy and economics, in my view, is that economics tends to strip itself from any form of human consideration. The sience of economics is a textbook example of a science that dismisses human realities for it strives to generate a fake reality and sell it to the public. And it is at best diappointing to see how successful economics has been in creating what Marx calls the “social consciousness” of our time. Social consciousness is a sense of reality that is not challenged by the majority of the public. It is thus imperative to questions many of such held beliefs and encourage the populace to ponder upon them.
More is better:
One of the so called 'underlying assumptions' that one is taught to always remember while solving any economics problem is the principle of “more is better.” This principle is in fact the most important axiom of game theory. Science of economics teaches us that there is no limit to the concept of “want.” However, when it comes to political economy, which is a much more realistic science, it is recognized that any individual is willing to pay more for the first unit of any desirable good compared to the second unit of the same good. But economics dismisses this fact and by doing so, it has created one of its most destructive myths. Science of economics teaches us that two carpets is always better than one, three is better than two and there is no point where “n+1” is not better than “n.” In real life, if granted a moment of reflection, the person may at one point ask: more for what. But capitalist economy advocates the principle of state of emergency and thus deprives the individual from that moment of reflection. Using the underlying problem of “prisoner’s dilemma,” the idea of asymmetric information, capitalism encourages people to go for the next unit of every and anything in case the other actor(s) is also thinking about the same thing. In other words, capitalist theorists are telling us that one should not hesitate about acquiring the next carpet because the other person (who we do not have any info about) is probably thinking about acquiring that one extra unit. Therefore, not to fall behind, one should go for the acquisition of more without delay. We are made to believe that we either will have a chance to sell that carpet back to next person at a higher price (since there is more demand) or worst case scenario, we still have an asset that will not lose value. And the story continues: after the carpets have filled out all the rooms, a larger house will become necessary to accommodate even more of them. Then, when the larger house is filled, a second and third and fourth houses will be bought to accommodate even more. This process, also advocated by the proponents of globalized capitalist economy, should remain endless to materialize capitalist ambitions.4
Over-consumption in the U.S. is the result of this mentality. How many of us would hesitate in placing the second item of nearly anything in our cart, if there is a buy one-get one free offer on that product? Do we ever think about the underlying principle of this socially accepted action?
As the pie gets bigger, everyone is better off (the pie principle):
Another perpetuated myth of the capitalist economy is that: as the pie gets bigger, every one will be better off (and based on the previous principle, this is necessarily a good thing). Economics, as mentioned before, is not concerned with the human aspect of the society and therefore not concerned about distribution. Thomas Friedman, in pages 123 to 125 of his book 'World is Flat,' explains how he believes off-shoring is in fact not making American’s worse off. He claims that off-shoring rather makes the U.S. better-off by making American products more competitive. Based on the pie principle, it follows that more competitive products means a larger pie and therefore everyone is automatically better off. I have several objections to his argument but what I would like to highlight here is his argument’s lack of regard for the human aspect of this globalization phenomenon. In criticizing those who argue against off-shoring (since it results in more unemployment in the U.S), Friedman fails to address the issue of the real and immediate victims of off-shoring of major industries: the working poor. What he explains, really, is the enlargement of the pie, which manifests itself in additional money for American entrepreneurs. He may be right in saying that a part of the savings that will result from paying the Chinese worker $150 as opposed to the $3000 that would have gone to the American worker will be re-injected in the U.S. workforce. But this workforce is comprised of highly skilled managers, most of whom already benefit from decent pay levels anyway. He totally fails to tell us how the factory workers who were laid off as the result of the off-shoring are going to afford years of further schooling (in a privatized market of education) to come back to the job market as managers only to compete with those who have taken over their low-paying-jobs-turned-high paying many years back.
Friedman also deprives us from another part of reality: more job-seeker chasing the same job will drive wages down (another fundamental economic principle, which is conveniently ignored by Freidman). The exclusion spiral of capitalist economy will in most cases grab these laid-off workers and push them further into poverty as they fail to pay back their loans, pay for healthcare and education costs for their children and stumble into depression and possibly crimes. And this is all happening in the wealthiest country of the entire human history.
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1 Martin Wolf, the author of Why Globalization Works, complains that "By now, an immense literature of complaint, on these lines, has grown up, almost all of it distinguished by disregard for facts and professional economic analysis." I have no doubt that this is true. I also have no doubt that using economic theories to criticize capitalism will at best lead to minimal improvements of the status quo. That is merely due to the fact that science of economics is capitalism’s child. I will do my best to actually bring in some of the principles of economics and show that qualitatively, they do not make any sense.
One of the reasons why many opponents of globalization refuse to use economics as their argumentation tool is because they are concerned with something that the science of economics has no concern for: human beings. Economics does not give you the tools that are necessary for a human-centered argument.
Another reason why proponents of globalization recruit economic theories to justify their arguments whereas opponents don’t is the fact that academics have a tendency to “bend the evidence to fit the ideas of those in charge.” (Stiglitz, Joseph. Globalization and Its Discontents, p. x) More often than not, academics’ lack of touch with the reality enables them to draw whatever they like out of the box without realizing or sometimes even caring about the real life effects of their intellectual production. Therefore, economists are more likely to side with those who are in power and hold the money compared to those who hold nothing but a concern for humanity and the future.
2 Timothy Mitchell argues in “Rethinking Economy” that “rival metrological projects brought the economy into being.”
3 Timothy Mitchell, “Rethinking Economy”, 2007.
4 Please refer to footnote 4 of the previous posting (April 20) for Thomas Friedman’s theorization of the sate of emergency.
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