The relentless revolution: a history of capitalism (57 page)

Competitors took notice of Walmart’s success and emulated its system. Otherwise three other American discount retailers—Home Depot, Costco, and Target—would not be among the top thirty-five of the Fortune 500 companies. A retailer as extensive as Walmart has greatly enhanced the commercial reach of many American companies like Disney, not to mention introducing a host of foreign goods into American homes. Walmart imports one-third of all consumer durables produced in China.
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Like a great oak that suppresses all growth around it, Walmart stores have made ghost towns of countless small cities by drawing customers to their exurban locations. Walmart has also steadfastly fought off unionization of its 1.4 million employees, an effort that has provoked a vigorous anti-Walmart campaign. Some of those employees took the company to court for violation of wage and hour laws, winning a fifty-two-million-dollar settlement. A substantial number of other Walmart employees share Sam Walton’s linkage of evangelical fundamentalism with free market competition.

The conspicuous difference between America’s number one employer at the end of the twentieth century and the automakers forty years earlier is that Walmart has not pushed its employees into the middle class. Instead it has been a cause and an emblem of a seismic shift in the fortunes of American workers. After World War II, powerful labor unions, buoyed by decades of prosperity, successfully bargained for high wages, worker safety, and generous benefits. Jobs in American industry that had been unsafe and unremunerative became the basis for a generous standard of life. People now regret the loss of all those great jobs in the steel mills, but they have put the horse before the cart. They were lousy jobs before their work force was unionized.
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Over the succeeding decades, a variety of factors battered organized labor: vigorous political opposition from management, a shift of jobs away from industry to the more difficult to organize service sector, failures in union leadership, the intense competition of the world market, and the new technologies that made it easier for producers to move abroad, where there were pools of cheap labor. Most devastating, the American public lost its sympathetic connection to organized labor, no longer viewing a strong labor movement as good for the economy and essential for a vigorous democracy.
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Once this was gone, an endeavor like Walmart could switch public attention away from securing good paying jobs to having access to cheap goods.

Had wages not been driven down in recent decades, low prices would not figure so prominently in people’s calculation of their interest. Globalization, that combination of marketing and messaging, has played its part in the shift of American labor from a coordinated, stable, securely earning group to an aggregation of individuals perpetually uncertain about the next paycheck. Moving in tandem, information technology and globalization have opened up markets and made them more out of the reach of any government’s control. Even profits have been rendered less secure. Dependency upon unseen forces and unexpected shifts in supply and demand have introduced a stratum of worry that undermines the efforts of labor to win back its public voice and bargaining power. In the last decade, union leaders have raised the call for international standards for labor, revisiting the old issues of gaining living wages, safe working environments, and the eight-hour day for a global economy. The rapidity with which cheap labor centers have moved from countries like Mexico to China and then on to Vietnam suggests that this campaign may gather force in the next decade.

Globalization has thrust Western culture into all the communities of the world, evoking a powerful reaction to the intrusive images coming out of American movies and television shows. Criticism often comes from members of the educated elite who seem unable to appreciate that the commercialization of entertainment has delivered a powerful antidote to boredom. With more disposable income, millions around the world are patronizing the products of Hollywood and Bollywood and hundreds of other sites that produce drama and documentaries. Although an important economic force in itself, the American entertainment industry has influenced people’s material aspirations in a way that’s probably been more significant for economic development than its revenues. An alternative way of life comes in with its CDs, DVDs, videos, TV shows, and movies.

More Personal Choices with Capitalism

Capitalism has encouraged countless new drugs and medical procedures. Perhaps the most revolutionary of all for women has been effective birth control. This means that while busy generating wealth, the market has also increased the number of options in people’s lives, setting off what might be called a rebellion of the womb. Birthrates are dropping precipitously, as women in the West and Japan are having fewer children, and many having none at all. This has shocked those who thought that they understood women’s natures. In many countries, there are not enough births to replace the existing population. At the same time, in much of the West the sexual freedom of the 1970s has altered attitudes and practices about pregnancy and marriage. Now half the babies born in France and the United States, for instance, are born “out of wedlock.” While the plight of the single mother is real, it is also the case that in the past illegitimacy carried the onus of a disgrace and one that fell on women more than upon men.

What capitalism has uncovered is what many people really want. The value systems of the past grew out of scarcity and restraint. Traditions prioritized ways to behave and ennobled values compatible with the scarcity of food and other goods. The international press, which capitalism has promoted, has also carried to the most remote places on the globe the spirit of the Helskini Accord on human rights, if not the actual text. In the first decade of the twenty-first century, an eighteen-year-old woman living among the Stone Age inhabitants of New Guinea fled to Papua to assert her right to choose her husband, and a ten-year-old girl in Yemen found a court where she could seek a divorce in 2008.

Pharmaceutical companies in the United States and Europe came into their own with a cornucopia of new drugs in the 1980s and 1990s. Many of them targeted the aging populations around the globe; new antidepressants also became hugely successful among men and women no longer willing to accept melancholy as a fact of life. In addition to the research done in corporation laboratories, European and American universities have devoted billions to finding new cures for old maladies, in some cases eliminating old diseases altogether. The U.S. National Institutes of Health and the Department of Energy launched in 1990 the Human Genome Project, which became an international effort to identify the genes in human DNA. An astoundingly ambitious effort, the project determined the sequencing of the three billion chemical base pairs that make up human DNA. Slated to take fifteen years, it finished early in 2003, when a private geneticist, Craig Venter, turned the project into a race between competitive sequencing efforts. Still undeveloped, genenomics is pushing genetics in new directions, many with commercial possibilities. This has aroused fears about interfering with natural processes. There is also concern that disinterested science will become a thing of the past with pharmaceutical companies lavishing gifts upon researchers. Of the top twenty pharmaceutical companies, twelve are American, two Swiss, and two German. Britain, Sweden, Japan, and France have one each.

Capitalism had proven its adaptability and its capacity to nurture technology and commercialize its findings. Firms, universities, and whole countries have built impressive learning centers, most of them open to outsiders. Curiosity about how the world works has been sustained; talent has often trumped wealth, as the computer revolution demonstrated. Since World War II, institutions to promote development and cooperation among Western nations have gained in influence, but not without generating discontent. The industrialized nations have often played their strong cards with indifference to the other players in the world market, ignoring calls for eliminating domestic subsidies, for instance. Not exactly a tradeoff but relevant has been the decline of violence—both public and private—since 1975. Even with the war stories that clog our newspapers and nightly news shows, casualties on various battlefields are minuscule compared with the first three-quarters of the twentieth century. Forget the carnage on a single day in a World War I battle, and just compare the forty-seven thousand American battle deaths in five years of fighting in Vietnam with the four thousand plus in six years in Iraq.

And then there is the ambiguous link between capitalism and democracy. The United States has been a vocal booster of both. The connection was actually forged much earlier when the market economy in late-seventeenth-century England revealed that quite ordinary people could take care of themselves and make reasonable decisions about their welfare. Over time these observations replaced earlier assumptions that men and women were woefully fickle creatures, derailed by their emotions and cursed with a tendency toward wickedness. With an improved view of human nature, sober thinkers could entertain the idea that rule of the people—democracy—might be a good form of government. The United States put these ideas into practice after its Revolution. A few years later it ratified a constitutional order that sharply curtailed the will of the majority and guaranteed a panoply of civil rights. The joining of capitalism and democracy in popular thinking caused a Russian woman, looking at her empty cupboard, shortly after the collapse of the USSR in 1991, to announce that there would be no democracy in her country until that cupboard was full. To her, evidently, majority rule meant abundance, presumably because both were found in the United States.

The disintegration of the post-World War II synergy after 1973 introduced a period of fluidity and fluctuations in the fiscal and commercial stability of Japan, the United States, and Europe.
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Critics look for structural changes that will undermine capitalism as a system. They often underestimate the two enduring strengths of capitalism, encouragement of innovation and a capacity to create new wealth along with the real satisfactions that wealth brings to a growing population of recipients.

The shame in the flourishing of capitalism is the stark inequality between nations and regions of the world. Measures of well-being like life expectancy, family purchasing power, and children’s nutrition reveal greater inequalities than fifty years ago.
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A statistician might point out that this spread is as much a function of the improvement of billions of people as the want of others. It’s very much of matter where one directs a spotlight, but when you illuminate America’s Rust Belt or Zimbabwe’s child mortality rate, capitalism looks like a failure. Cities like New York, Geneva, Seoul, and Tokyo tell a different story.

The race we know goes to the swift, but we should also be wise enough to realize that the analogy between a footrace and life is imperfect. Lots of evidence indicates that competitive international trade brings wrenching social and moral pain. When the creative destruction of competitive enterprise hits, the losers suffer. We have vigorous preservationist movements because we often learn too late that not all improvements improve. The second millennium went out with widespread anxiety that the computers we had come to depend upon might not be able to make the change from the dates 1999 to 2000. It turned out that they could, and so could we. A year later an attack on one of the symbols of capitalism, the World Trade Towers of New York City, made it obvious that we all were moving into an unknown and disturbing future. Still, the arrows don’t point in the same direction. New threats, new opportunities, new problems, new solutions, new perplexities, and new possibilities abound.

INTO THE TWENTY-FIRST CENTURY

S
EVERAL BILLION PEOPLE
sat dazzled before their television sets on August 8, 2008, when a blaze of fireworks lit up the Beijing sky while 2,000 drummers announced the opening of the XXIX Olympiad. What followed was a feast of color, choreography, sound, rhythm, syncopation, and precision movement. It was thrilling to watch China remind the world of its four great inventions: gunpowder, papermaking, movable type printing, and the compass. State-of-the-art entertainment displayed pottery, bronzes, and cliff paintings dissolving into ink-and-wash paintings with black figures moving across a giant scroll. Another 3,000 singers chanted Confucian sayings while 897 more performers, dressed as Chinese characters, formed the words “peace” and “harmony.” The Communist Party pulled out all the stops to introduce itself to its twenty-first-century neighbors, rivals, and customers. Zhang Yimou, China’s top moviemaker, directed the 15,000 participants in the opening ceremony that cost over one hundred million dollars. The world was impressed. Four months later the Chinese celebrated the thirtieth anniversary of the economic reforms that made this great exhibition of cultural riches possible.

India did not have an occasion to demonstrate with such spectacular showmanship its entrance into the world’s leading economies or the same need to flex its material prowess rather than its muscles. Yet India’s economic growth merits a big celebration too. The dynamism of China and India has shattered major Western assumptions about economic growth. Governments can, it seems, transform fundamental institutions and promote the individual initiatives critical to a market economy. Just as the success of the Four Little Tigers in creating their own capital independent of the West threw a spanner in dependency theory, so the carefully calibrated introduction of private capital, individual decision making, and market-determined prices in totalitarian China has undermined assumptions about the linkage of democracy and free enterprise. The relentless revolution has now swept up the two largest countries in the world, and they may well change the character of Western capitalism.