Globalisation

vimothy · Jul 15, 2007

gek-opel said:
Actually oil will never be entirely used up- rather at a certain point the remainder is so hard to extract that it is no longer economically viable to do so, and this point is reached prior to the resource being fully exhausted.

Actually, it is a point of fact that as the price of oil rises (comensurate with demand), hard to extract oil will become more profitable, leading to the development of better extraction technologies and the revisiting of old wells (as well as stuff like oil shale). For example, a friend working in the Australian oil industry tells me that on average at least half the oil in any given well is unextracted due to cost (collapses and the like). That means that the oil is unextractable only for now in today's economic climate. It doesn't mean that it will never be profitable to do so.

gek-opel · Jul 15, 2007

True up to a point- the last drop will never be extracted tho. Eventually the use-value of oil will decline as its underlying value as the vital energy source of an entire system of living will be eroded by scarcity- at certain price point oil cannot be used in a widespread manner. It has no intrinsic value outside of the system it supports, and once oil hits a certain price (albeit probably much higher than it is at today) that very system will collapse, and with it the oil market itself.

vimothy · Jul 16, 2007

A trade system that is self regulating, and is not subject to an external regulatory system. Although as you point out, in the real world markets are never completely unregulated. So in practical terms, it means the least-regulated market of the ones currently available.

Interesting that you say self-regulating... I'm going to come back to that.

I take a market to be a place or arrangement where people can meet to trade goods or services. So a free market would be a market where people can trade goods and services with no government interferrance. However, this is mostly a hypothetical descripton used for heuristic purposes. The market also has another very important function, which is to create and facilitate the sharing of infomation between buyers and sellers (and anyone else).

Thinkers who's view of the free market is characterised by qualities more often associated with religious worship, such as:

Universality - Irreducability - Omnipresence - Dichotomy - Evangelism

Personally, I don't recognise this mystical and patronising characterisation of liberal/libertarian economics writers at all (though I will try to bear in mind with regard to my own posts), although I guess this is how people talk about "neo-liberals". I do think that, for instance, that the market is better at regulating and organising resources (my sense - not necessarily commmodities) than the government, and that the free-er a market is, the more responsive it is and the better it represents those who trade and those who are traded within it. Whether that is a religious and universalist view of the market is for you to deside, but I think it is a little silly to claim that "free-market evangelists" have a "religious" attachment to the free market such that they want to apply it to every field of human endeavor or activity. (I don't even know what you mean there, to be honest). A market is for buying and selling stuff, and for finding out about the buying and selling of stuff.

Irreducability and omnipresence are even more mystically inclined criticisms of this movement (of yours) given that economic freedom is essentially one of degree (and which you say you recognise).

There's not really much point in my addressing the last two... I'm just going to say that the stakes are very high and economic liberalism is in no way the inevitable result of policy, and if we have a strong attachment to our values, we have also learned that many have a strong dislike for them as well. Liberty has enemies - that's not paranoia, just recognition of a fact. Globalisation is not even particularly widespread, probably being at roughly similar levels to the era pre the rise of collectivism and world war in 1913. It should be encouraged, because (free) trade is an important and beneficial activity for all societies that participate.

Hayek and Freidman weren't free market evangelists, but many of the current commentators on the american right who owe allegience to their ideas are. Even academic thinkers such as Landsburg have a tendancy to move towards an evangelical position when writing for the lay reader. From what you've posted here and in the Moral High Ground thread, I'd class you as a free market evangelist.

I don't see much difference between, say, Hayek and Reisman, or even Reisman and von Mises. If you want to reduce liberal or neo-classical economics to a religious cartoon or to a paranoid misrepresentation like "neo-liberalism" (all the easier to dismiss, all the easier to ignore), then it's really up to you.

And it's all really up to the voters and the policy makers. At the end of the day classical liberalism is simply better, IMHO, than any other system. It's had some success in recent years (the collapse of collectivism - also not irreversable, despite its bankruptcy), but it's not the only game in town and it's not even necessarily likely in today's global climate (i.e. given widespread mistrust of liberalism and the looming Sino-US trade war).

I suppose that at least you are actually reading Hayek and other liberal economists and writers, which is a step in the right direction. However, I have to wonder - cf "free market evangelists" - how much you have taken on board, given that the real struggle is not between "sceptics and true believers", but between market freedom and government control, between two competing modes of economic organisation. (And given that both modes can be and are mixed together as desired; and given the consitution of liberalism as a political doctrine. But whatever, I'm pretty argumentative anyway so I'm just going to go with it).

I'm talking about economic globalisation, rather than the wider cultural definition. I don't necessarily see the latter as being an inevitable consequence of the former. Economic globalisation is the process of removing obstacles to trade between all nations or groups of peoples on the globe. It is therefore the furthest logical extension of cross-border trade, which has been a facet of human interaction for most of it's history.

So you're going to miss the point of globalisation and the point of this thread. This thread is about a process, a process of cross-border economic integration which begins in the relatively recent past (the liberal 19th century), not the inevitable culmination of the movement of history. (Who's getting religious now)? Of course trade has existed throughout history, but the growth and power of international trade in economic terms has expolded in the last two hundred years. It does have a historical symmetry, however, which shouldn't be ignored.

Looking at commodity prices, convergence was strong for all the basics by the end of the 19th century. Prior to the 19th century, I don't think that there is any evidence for price convergence. (See Kevin O'Rourke, "Europe and the Causes of Globalisation, 1790 to 2000"). According to O'Rourke the latter part of that century featured "the most impressive period of economic integration which the world has seen to date". Similarly, international trade was an important source of revenue for some, prior to the industrial revolution (energy!), but generally not a massive earner, in a large part due to the cost of transport.

I can see where you're coming from with the distinctions between the terms 'globalisation' and 'free markets' - I'd agree with them to some extent, if we're talking about the wider, cultural sense of globalisation, 'all nations becoming more alike'. But in the modern usage, 'globalisation' is shorthand for 'globalisation of american/western values' - no one talks of Jihad as Islamic Globalisation, for example. So economically, globalisation means free markets. And to the free market evangelist, the universality of free markets naturally implies globalisation. So I'd suggest that the two concepts are interchangable at an economic level. Since we're clarifying terms though, let's go for Free Markets because it's less ambiguous.

I think that we should go with "globalisation", because "free markets" is too open to misinterpretation. However, economically gloablisation does mean the liberalisation of trade restrictions, so if you understand "free markets" to include globally un-free markets becoming globally free-er, and having a separate meaning regarding a hypothetical and specific market, then I guess I'm ok with that.

Oh yeah, and you're wrong about no one talking about Jihad as Islamic globalisation. We talk about that a fair bit.

I'm not sure precisely what I'm suggesting - I'm still making my mind up, and posting on this thread is a part of that process. But generally, I support lightly regulated free trade in markets where the individual acts alone or in small groups as purchaser, and can be reasonably informed about the purchase without specialist knowledge. I think the free trade model breaks down in markets where the timeframe and capital involved takes the decision out of the individual's hands (defence and energy) or where the technical barriers to informed purchasing cannot be reasonably overcome with layman's knowledge (specifically pharmaceuticals and energy, but an increasing problem in all markets as our society becomes more technological).....

In a wider sense, I object to the view implicit in free market evangelism that the free market is the natural arbitrator in all human experience, that it has a moral dimension, or that it is an inevitable precurser to positive political phenomena like democracy and fair governance. To me, the free market is an economic tool that is appropriate in some situations and not appropriate in others. It can be broken down or combined with other market models as befits any given situation.

These seem like the real issues, so I will try and focus another post on the role of the market in an economy, to try to show why "free market evangelists" or "neo-liberals" think that it has a regulatory social function and why it might be better at that than the government. I don't think that you're characterising classical liberal opinion fairly though. The market is obviously an economic tool - regardless of partisan alignment. Who would suggest otherwise? And as far as I can see, there are only really two choices: market control (by government) or market freedom. They represent opposite points on a scale, and policy normally picks how far in either direction it wants the pendulum to swing.

vimothy · Jul 16, 2007

No, that's far too limiting. Cross border trade has been a fixture of civilization since prehistoric times. The ancient world drew most of it's copper from Cyprus, most of it's tin from Cornwall, it's gold largely from west Africa, and spices and luxury goods from all over what is now Asia. The cathedrals of the medieval world were built by roaming crews of craftsmen and labourers. Economic migration in the form of slavery has been a constant throughout history.

It isn't the same as sustained globalised economic integration though. What percentage of total economic output did global trade consist of prior to the 19th century? What evidence of price convergence can you cite to support the notion of free international markets in any commodities (or other goods) in the centuries preceeding the last two hundred?

Yes, "globalisation" has existed for as long as humanity, if we understand it to mean that to mean global movement and interaction of people. But
we're talking about something more specific. At least, I am.

EDIT: Basically what I'm saying is that there is a qualitative difference between globalisation throughout history, and "globalisation" as has occured over the last two hundred years.

Recorded history has seen at least two major shifts from cross-border trade to protectionism - one following the collapse of the Roman empire, and a second following the shift in the relationship between european and non-european powers from one of trade to one of colonial rule around the Eighteenth century. Cross-border trade and protectionism are conflicting philosophies, and arguments between them are as old as trade itself.

As far as I'm concerned there was a trend to liberalisation of international trade restrictions throughout the 19th century. Protectionism was the default setting prior to this. These began to be reversed in the years leading up to the Great War. Following the ruin of Europe, the Bretton Woods era produced another period of global integration, and following its collapse, another era of globalisation has sprung up in its wake. That's my reading. There are parallels with Rome, of course.

Protectionism only becomes important when you have something to protect and someone to protect it from. (European cotton mills were under little threat from cheap Chinese labour markets in the 18th century, for example).

Again I disagree.... Almost everyone in the pre-industrial world would have had some experience of a market economy, even though thier level of daily interaction with it was obviously far less than our own.

And again it seems as though we're having two different conversations. This is not my understanding of a market economy, and not what I am in favour of. Yes, trade is entirely natural, but the market economy has been developed and it is modern.

The crux of my argument is that I'm flipping that around - I would say that your concept of demand is limited by it's specificness. In a hypothetical situation where a commodity such as iron or oil ran out tomorrow, the demand for that commodity would still be there in our economies and our societies - that's a common sense statement. There is no supply, no trade, hence no price or contract between buyer and seller. But the demand still exists.

But it would be demand for a non-existant raw material, and as such would be meaningless. Or at least, it would be abstract, hypothetical. It could not be measured or have any sort of quantity or value, and it would be only one of a countless number of other abstract demands.

The trade relationship is not the reason for the existance of demand - rather, it's the light that illuminates demand in such a way as to allow the economist to quantify it. But economists, like all logical thinkers, are prone to neglecting the effects of forces that they can't quantify. Even in the physical sciences, this is a limiting mindset - that's where the Einstein quote about imagination being more important than knowledge comes from. But in the human sciences it's absolutely fatal, because so much of human experience is unquantifiable. And economics is not a physical science, it's a study of human behavior. The great economists like Hayek, Gilbraith and Hobsbawm never forget this, but minnows like Landsburg are constantly losing sight of it.

Ha! Those a pretty bold words, considering that Landsburg is a professor of economics at a prestigious university with numerous articles in academic journals and a published journalist. But whatever, it's easy to ignore the religiously insane.

Why is it not the case? This isn't as self evident to me as you seem to think it is.

Scarcity and the nature of the market economy.

...got to go to bed... try and post something proper in response to this soon... differences between a market and command economy... how these respond to scarce resources, including finite resources and including commodities... + a couple of people who have posited similar enviromental, existential crises for the capitalist mode of production.... might take a while....

vimothy · Jul 16, 2007

gek-opel said:
Your argument also rests on other assumptions- primarily that reducing mean absolute poverty is the primary goal of human society. This seems to be an absolute with which it is impossible (in your opinion of course) to disagree. I'm not certain that this is the case, or that comfort at any cost is a goal which is a moral one.

Tell that to Gabba Flamenco Crossover

gek-opel · Jul 16, 2007

vimothy said:
Ha! Those a pretty bold words, considering that Landsburg is a professor of economics at a prestigious university with numerous articles in academic journals and a published journalist. But whatever, it's easy to ignore the religiously insane.

You've gotta understand Vim that the bulk of neo-classical economics basically functions as a religion- its a faith which has almost zero correspondence with the real world- its a falsely mathematized pseudo science rather than a consistent social science as it ought to be.

vimothy said:
Tell that to Gabba Flamenco Crossover

Que?

Gabba Flamenco Crossover · Jul 16, 2007

vimothy said:
Personally, I don't recognise this mystical and patronising characterisation of liberal/libertarian economics writers at all (though I will try to bear in mind with regard to my own posts), although I guess this is how people talk about "neo-liberals".... If you want to reduce liberal or neo-classical economics to a religious cartoon or to a paranoid misrepresentation like "neo-liberalism" (all the easier to dismiss, all the easier to ignore), then it's really up to you.

Well, I'm just calling it as I see it. I could link to any number of cartoonish and paranoid misrepresentations of neo-classical economics on right-wing american websites. I've made a clear distinction between the founding thinkers of neo-classicisism, who's thinking I often admire, and thier more simple mided followers. And I've spent god knows how long posting on this thread over the past week, I don't really think you can accuse me of dismissing or ignoring anything!

vimothy said:
I do think that, for instance, that the market is better at regulating and organising resources (my sense - not necessarily commmodities) than the government, and that the free-er a market is, the more responsive it is and the better it represents those who trade and those who are traded within it. Whether that is a religious and universalist view of the market is for you to deside...

No, I think that's a measured statement that debaters from all sides can get to grips with. But it's a lot more qualified than your position at the start of the thread, which is that globalization will ensure liberty and annihilate poverty - that statement, without qualification, does have an air of mysticism about it (not that mysticism is per se a bad thing... we all have to believe in something).

And look at this from Reisman:

Out of this larger gross product comes a correspondingly larger supply of capital goods, which makes possible a further increase in production, resulting in a still larger supply of capital goods, in a process that can be repeated indefinitely so long as scientific and technological progress and business innovation continue and an adequate degree of saving and provision for the future is maintained. The article shows that from the very beginning, the process of globalization serves to promote capital accumulation simply by dramatically increasing production in the countries in which foreign capital is invested, out of which increase in production comes an additional supply of capital goods.

That's not an argument... it's an incantation!

Still, your later posts are more qualified and conciliatory - so I'm downgrading you to a free market enthusiast, I hope that goes down better! Seriously, don't get hung up on my terminology, that's not the point of the argument.

vimothy said:
So you're going to miss the point of globalisation and the point of this thread.

That's a fair criticism. I can only say that the process of debating globalisation starts by breaking it down into it's constituent parts. For me, the obvious barrier to globalisation being the force for good that you claim it to be, is that free market economics (which are the economic basis for globalisation) have no way of dealing with finite resources. But, yes, I'm aware I'm missing the bigger picture of globalisation. That's why I wanted to go with the term 'free markets'.

vimothy said:
Oh yeah, and you're wrong about no one talking about Jihad as Islamic globalisation. We talk about that a fair bit.

OK, but I reiterate: the modern understanding of the word 'globalisation' is shorthand for 'globalisation of american/western ideals'. For example, you intended the title of the thread to be understood in this way.

I don't want to go too much into our different views of the timeline of globalisation, cross-border trade and the market economy. Firstly because it's only tangental to the real debate I want to have, which is about the free market mechanism for dealing with finite resources.

Secondly, now we've clarified our arguments, I'm not sure we're really opposing one another. You seem to be saying "globalisation over the last few centuries has been on such a larger scale to anything seen before, that it deserves to be treated as a seperate phenomenon". I'm saying "OK, but it's not justifiable to treat globalization as if it fell out of a clear blue sky - there are historical precedents". Neither statement disproves the other, so lets move on.

vimothy said:
But it would be demand for a non-existant raw material, and as such would be meaningless. Or at least, it would be abstract, hypothetical. It could not be measured or have any sort of quantity or value, and it would be only one of a countless number of other abstract demands.

OK, this is the real meat of the argument. What I'm saying is that you can't assume that just because something can't be measured or quantified, it is abstract, hypothetical and meaningless - certainly not when you're studying human behavior. If you do that, you'll come to some very distorted conclusions.

vimothy said:
Ha! Those a pretty bold words, considering that Landsburg is a professor of economics at a prestigious university with numerous articles in academic journals and a published journalist. But whatever, it's easy to ignore the religiously insane.

Bold words maybe. But holding prestigious professorships and publishing lots of articles is no guarantee at all against foolish opinions or muddled thinking.

The thing that really pissed me off about the article you posted was the way he attempts to quantify absolute poverty using dollars as units. Maths is the language of absolutes - the units you use have to be constant and unchanging, otherwise your calculations are worthless. But the dollar isn't worth the same now as it was when I started typing this sentence, and 400 years ago it didnt even exist. Landsburg would say that he adjusted his figures for inflation, but that's not the point - he's using maths to make a figurative statement (that people of the past were much poorer that they are today). Someone who does that is either intellectually dishonest, or they fundamentally don't understand what maths is. I'm a bit hard line about this, but to me that's a blatent academic howler, and it undermined my confidence in the whole piece.

But I wouldn't go as far as to say he's religiously insane, that's you putting words into my mouth. And actually I didn't find it very easy to ignore - that's why I posted several hundred words about it four days ago.

vimothy said:
Scarcity and the nature of the market economy.

You're making me sound like a stuck record here Vim - a scarce resource is not the same as a finite resource. I've asked you how the free market proposes to deal with the problem of finite resources. I'm looking forward to reading what you come back with.

gek-opel · Jul 16, 2007

@vimothy:

OK then, lets talk about globalisation (specifically). And obviously here we are talking about that defined in its predominantly economic aspects- the increasingly free movement of goods, services, resources, and labour across borders... the role of the trans-national corporation?

Point one I would make is the issue of labour. As technology enables outsourcing of ever more complex white-collar roles, does this represent an absolute limit to the possibility of globalisation, the point when western governments will put up the protectionist shutters to prevent the politically unacceptable position developing of the effective rape of the middle classes (ie- their electorate)?

Also: if much growth has been achieved only by exploiting newly developed pockets of incredibly cheap labour, is there another limit to be reached when we run out of third world to exploit (in both the neutral and pejorative sense, natch)? When China and India and the far-East develop to a position where their labour is no longer competitive for relatively menial tasks, presumably the next zone will be Africa. And then what, exactly?

vimothy · Jul 17, 2007

gek-opel said:
Que?

You need to put a stop to this kind of horseshit. No one is against the annihilation of world poverty.

(....)

Your argument also rests on other assumptions- primarily that reducing mean absolute poverty is the primary goal of human society. This seems to be an absolute with which it is impossible (in your opinion of course) to disagree. I'm not certain that this is the case, or that comfort at any cost is a goal which is a moral one.

vimothy · Jul 17, 2007

Well, I'm just calling it as I see it. I could link to any number of cartoonish and paranoid misrepresentations of neo-classical economics on right-wing american websites. I've made a clear distinction between the founding thinkers of neo-classicisism, who's thinking I often admire, and thier more simple mided followers. And I've spent god knows how long posting on this thread over the past week, I don't really think you can accuse me of dismissing or ignoring anything!

I think that you are jumping to conclusions about modern classical liberalism. When I think of my favourite contemporary economists, writers, think tanks and blogs (Cato Institute, Reason Magazine, Econlog, Daniel Drezner, Virginia Postrel, Tyler Cowen, Martin Wolf, Reisman, Brink Lyndsey, Bruce Bartlett, Mises Institute, Adam Smith Institute, Globalisation Institute, Mont Pelerin Society, etc, etc...), none of them strike me as being "simple minded". One of the great joys of economics, it seems to me, is rather its reliance on quantitative analysis (as opposed to the normative analysis advocated upthread) to come up with often startlingly counterintuitive conclusions - conclusions that often earn economists a good amount of public or political ire. You have posted a lot to this thread (which is all to the good) and are obviously interested and engaged, but I'd be lying if I said that I didn't regard your instant dismissal of Landsburg (a minnow!) with a wry smile, given that you described your own reading of the literature as "hardly exhaustative".

No, I think that's a measured statement that debaters from all sides can get to grips with. But it's a lot more qualified than your position at the start of the thread, which is that globalization will ensure liberty and annihilate poverty - that statement, without qualification, does have an air of mysticism about it (not that mysticism is per se a bad thing... we all have to believe in something).

If globalisation as described by Reisman takes full effect, then necessarily it will include the end of poverty, because that's the process that Reisman describes. I posted his article because it's positive hype about globalisation, something not often heard in today's culture of pessimism, and because I wanted something provocative to start a thread with. If globalisation only reaches a percentage of the level that Reisman describes, it's going to be head-explodingly fantastic. There's no iron law that says that it can't happen, and happen well.

And look at this from Reisman:

[snip!]

That's not an argument... it's an incantation!

The whole article is a description of how we can use capitalism to globally manage our resources and so enable massive wealth generation. Bottom line argument: properly affected (in the D&Gon sense) globalisation is the best outcome available for the developing world, and equally, for the developed world as well.

Still, your later posts are more qualified and conciliatory - so I'm downgrading you to a free market enthusiast, I hope that goes down better! Seriously, don't get hung up on my terminology, that's not the point of the argument.

Not sure I don't prefer "free market evangelist" now, enthusiast makes me sound like someone playing with their train sets! (Actually I rather like "radical for capitalism", but that's just me).

That's a fair criticism. I can only say that the process of debating globalisation starts by breaking it down into it's constituent parts. For me, the obvious barrier to globalisation being the force for good that you claim it to be, is that free market economics (which are the economic basis for globalisation) have no way of dealing with finite resources. But, yes, I'm aware I'm missing the bigger picture of globalisation. That's why I wanted to go with the term 'free markets'.

So your question is really about whether the "finititude" of raw materials acts as a limit to the growth of globalisation?

In any case I am going to post some data (sorry!) regarding economic growth in the last two hundred years, at some point, because there does seem to be some confusion over what (economic) globalisation represents.

OK, but I reiterate: the modern understanding of the word 'globalisation' is shorthand for 'globalisation of american/western ideals'. For example, you intended the title of the thread to be understood in this way.

Actually, not true. I was refering to nothing more than international economic integration, not to cultural globalisation at all. (Not that I'm against cultural globalisation either. And not that it will be particularly "American" when it really kicks in. There's already a Japanese globalisation, with Indian, Chinese, Brazilian and so on, beginning to rise).

I don't want to go too much into our different views of the timeline of globalisation, cross-border trade and the market economy. Firstly because it's only tangental to the real debate I want to have, which is about the free market mechanism for dealing with finite resources.

Secondly, now we've clarified our arguments, I'm not sure we're really opposing one another. You seem to be saying "globalisation over the last few centuries has been on such a larger scale to anything seen before, that it deserves to be treated as a seperate phenomenon". I'm saying "OK, but it's not justifiable to treat globalization as if it fell out of a clear blue sky - there are historical precedents". Neither statement disproves the other, so lets move on.

Agreed

OK, this is the real meat of the argument. What I'm saying is that you can't assume that just because something can't be measured or quantified, it is abstract, hypothetical and meaningless - certainly not when you're studying human behavior. If you do that, you'll come to some very distorted conclusions.

Your conlcusions will be more distorted if they are based on hypothetical and unverifiable assumptions.

Bold words maybe. But holding prestigious professorships and publishing lots of articles is no guarantee at all against foolish opinions or muddled thinking.

No, but it does mean that the good professor has at least a degree of knowledge about economics, economic analysis, the economy and the mechanisms of international trade and finance - a degree of knowledge probably an order of magnitude larger than anyone posting on this thread. I'm not appealing to authority, but can recognise this fact (and wouldn't dismiss Stiglitz out of hand, for e.g., for the same reason). It's not really the point, though.

The thing that really pissed me off about the article you posted was the way he attempts to quantify absolute poverty using dollars as units. Maths is the language of absolutes - the units you use have to be constant and unchanging, otherwise your calculations are worthless. But the dollar isn't worth the same now as it was when I started typing this sentence, and 400 years ago it didnt even exist. Landsburg would say that he adjusted his figures for inflation, but that's not the point - he's using maths to make a figurative statement (that people of the past were much poorer that they are today). Someone who does that is either intellectually dishonest, or they fundamentally don't understand what maths is. I'm a bit hard line about this, but to me that's a blatent academic howler, and it undermined my confidence in the whole piece.

But I wouldn't go as far as to say he's religiously insane, that's you putting words into my mouth. And actually I didn't find it very easy to ignore - that's why I posted several hundred words about it four days ago.

Ok fair enough, you didn't ignore it. But using real wages to compare different periods in time is non-controversial and a necessary analytical tool if you want to measure their economic differences. Surely you can't object to that? People were poorer in the past, and it is hardly intellectually dishonest (or figurative) to say that or to provide evidence in support. Otherwise, we are left with the rather strained situation of having no evidence base for our arguments.

You're making me sound like a stuck record here Vim - a scarce resource is not the same as a finite resource. I've asked you how the free market proposes to deal with the problem of finite resources. I'm looking forward to reading what you come back with.

It's coming, though I think you may have actually answered your own question already.

gek-opel · Jul 17, 2007

vimothy said:
You need to put a stop to this kind of horseshit. No one is against the annihilation of world poverty.

(....)

Your argument also rests on other assumptions- primarily that reducing mean absolute poverty is the primary goal of human society. This seems to be an absolute with which it is impossible (in your opinion of course) to disagree. I'm not certain that this is the case, or that comfort at any cost is a goal which is a moral one.

I didn't claim that people argue against the reduction of global poverty. Clearly I am asking whether this is the primary goal of human society. Either now, or historically, or globally or in specified locations. And I think it is very far from obvious that this has been or ever will be the goal. You take it as an assumption that this is an eternal verite, which it is not, or if not that certainly it is the underlying motivic factor behind all western activity in the present day- now that, my friend, amounts to naive or deluded equine excrement of the first order! This has never been the primary goal of human society, ever (except perhaps and with famously limited success in certain Communist societies). At best the dogmatic Adam Smith-ite will claim it is an externality, a by-product of activities conceived with alternative motivations (on the level of the individual to increase their own wealth, or on the level of society to maximise their dominance, political power and wealth of its citizens). Even if we agree with another of your assumptions (that indeed consumer-capitalist economic activity will eventually lift all out of poverty) then we are left with the problem of the logical limits, the costs incurred by such a strategy. The issues relating to resource crisis, climate change, and problematic implications from globalised labour markets don't just disappear by a stroke of pedantry.

vimothy · Jul 18, 2007

You misunderstand me, and capitalism! It is necessary for it not to be a primary goal -- indeed, it is necessary to have no primary goals or guiding intellegences. The chief genius of capitalism is that it harnesses individuals, acting in only their own self-interest, for the good of society. It does this without struggling for or even recognising such an outcome - there is no such intent, "to end poverty". Nevertheless, I believe that, were liberal capitalism given planetary reign for, say, half a century, the end of poverty is what we would have, because capitalism enables the most efficient allocation of resources and is thus the economic system most likey to enable positive-sum growth (i.e. what the radical left fear most - endless capital accumulation, endless profit, limitless progress - is actually capitalism's little recognised egalitarian side; i.e, it's what's necessary to continually improve conditions for the poor(er) without worsening conditions for the rich(er)).

Mr. Tea · Jul 18, 2007

vimothy said:
The chief genius of capitalism is that it harnesses individuals, acting in only their own self-interest, for the good of society...

This may sound like a facile point, but I'm not too keen on the idea of being "harnessed"!

vimothy · Jul 18, 2007

Gek-opel:

Labour - will governments allow globalisation to continue if it means the loss of white collar jobs and the progressive impoverishment of the middle class? Is the free market in labour a limit to globalisation?

Obviously, I have no way of knowing the answer to that. However, it's worth remembering a few things (off the top of my head):

If this is a limit, it is political, not absolute.
As with many things, out-sourcing of skilled labour is subject of much hype, i.e the amount of fear it generates (in the wealthy western midle class - those at the top of the global pile) is not necessarily commensurate with its actual effect.
And in fact, many of the figures for amounts of white-collar outsourcing are highly speculative (see for e.g. the famous Forrester Research studies of 2002 and 2004 - estimating 3.3 million white-collar jobs moving overseas - which were based on nothing more scientific or objective than the opinions of business leaders).
Equally, people are mistaking the effects of the business cycle for the effects of a globalised labour market. ("There are no jobs, because they have all gone to India")!
Off-shoring doesn't only create jobs in the developing world, it also creates jobs in the developed world. It restructures labour. So a firm employing Indian software developers might also hire westerners to do the more difficult design-work, while out-sourcing the simpler tasks of implementation or testing.
Because firms can purchase labour cheaper, they can sell products for less and afford to diversify and employ other workers in the developed world. In fact, off-shoring marginal activities (whether skilled or non-skilled) can allow firms to focus cost and resources on core business.
Services are much less transportable than goods. Although modern communications and transport have perhaps done a lot to reduce this, it is not so easy to off-shore services as manufactoring.
By definition, skilled workers have an asset that they can use to find new employment, should their jobs become lost to cheap off-shore labour pools.
Comparative advantage - see for instance this report (registration required), which finds that for every corporate dollar spent in India, the US economy gains $1.14 and captures three fourths of the benefit. This is due to savings from "increased operational efficiency, equipment sales to Indian outsourcers, the value of American labor reemployed to higher-wage jobs, and repatriated earnings by U.S. companies that own Indian outsourcing firms." The net effect is going to be little different to the historical impact of technology on our economies.
This is fundamentally because globalisation is not a zero-sum game. It is non-zero-sum. We don't just lose jobs to cheaper markets and that's it. When we outsource labour we benefit in other ways.
If it's a choice between out-sourcing and going out of business (due to whatever market factors), out-sourcing is clearly the correct option.
The population in the developed world is getting old so out-sourcing to new labour markets will be increasingly inevitable.
The global labour market is much less integrated than it was in the 19th century, in any case. Citizenship in a western market economy is probably one of the most valuable, sought after things a person can possess. Perhaps it would be nice if that were not so, but I don't see western voters letting go of that with any great speed. As a consequence, expect the labour market to continue to globalise at a much slower pace than markets for goods or capital.
And it's a knee-jerk reaction to fear globalisation because it will create middle class job opportunities in the developing world. Wage convergence is a moral good!

gek-opel · Jul 18, 2007

vimothy said:
You misunderstand me, and capitalism! It is necessary for it not to be a primary goal -- indeed, it is necessary to have no primary goals or guiding intellegences. The chief genius of capitalism is that it harnesses individuals, acting in only their own self-interest, for the good of society. It does this without struggling for or even recognising such an outcome - there is no such intent, "to end poverty". Nevertheless, I believe that, were liberal capitalism given planetary reign for, say, half a century, the end of poverty is what we would have, because capitalism enables the most efficient allocation of resources and is thus the economic system most likey to enable positive-sum growth (i.e. what the radical left fear most - endless capital accumulation, endless profit, limitless progress - is actually capitalism's little recognised egalitarian side; i.e, it's what's necessary to continually improve conditions for the poor(er) without worsening conditions for the rich(er)).

Yeah yeah, I know the spiel... But "efficient" is not in any sense an unproblematic term here. It is efficient only in terms of neo-classical economics, in so far as totally free markets enable the supply/demand to reach a perfect equilibrium point. But even if we take this to be so, the conditions necessary for this to occur are as rare as hens teeth-- and liberal capitalism produces conditions which most often veer radically away from this (ie massive start-up costs, monopolistic power accumulation etc). If we don't take "efficient" to mean this very limited sense, and construe it more holistically, then there are even greater massive gaping voids in your argument: the apparent by-products of the exhaustion of resources, growing relative wealth inequalities etc.

I also believe that you have deliberately misunderstood the meaning of the term "egalitarian".

gek-opel · Jul 18, 2007

vimothy said:
Gek-opel:

Labour - will governments allow globalisation to continue if it means the loss of white collar jobs and the progressive impoverishment of the middle class? Is the free market in labour a limit to globalisation?

Obviously, I have no way of knowing the answer to that. However, it's worth remembering a few things (off the top of my head):

If this is a limit, it is political, not absolute.

As with many things, out-sourcing of skilled labour is subject of much hype, i.e the amount of fear it generates (in the wealthy western midle class - those at the top of the global pile) is not necessarily commensurate with its actual effect.

And in fact, many of the figures for amounts of white-collar outsourcing are highly speculative (see for e.g. the famous Forrester Research studies of 2002 and 2004 - estimating 3.3 million white-collar jobs moving overseas - which were based on nothing more scientific or objective than the opinions of business leaders).

Equally, people are mistaking the effects of the business cycle for the effects of a globalised labour market. ("There are no jobs, because they have all gone to India")!

Off-shoring doesn't only create jobs in the developing world, it also creates jobs in the developed world. It restructures labour. So a firm employing Indian software developers might also hire westerners to do the more difficult design-work, while out-sourcing the simpler tasks of implementation or testing.

Because firms can purchase labour cheaper, they can sell products for less and afford to diversify and employ other workers in the developed world. In fact, off-shoring marginal activities (whether skilled or non-skilled) can allow firms to focus cost and resources on core business.

Services are much less transportable than goods. Although modern communications and transport have perhaps done a lot to reduce this, it is not so easy to off-shore services as manufactoring.

By definition, skilled workers have an asset that they can use to find new employment, should their jobs become lost to cheap off-shore labour pools.

Comparative advantage - see for instance this report (registration required), which finds that for every corporate dollar spent in India, the US economy gains $1.14 and captures three fourths of the benefit. This is due to savings from "increased operational efficiency, equipment sales to Indian outsourcers, the value of American labor reemployed to higher-wage jobs, and repatriated earnings by U.S. companies that own Indian outsourcing firms." The net effect is going to be little different to the historical impact of technology on our economies.

This is fundamentally because globalisation is not a zero-sum game. It is non-zero-sum. We don't just lose jobs to cheaper markets and that's it. When we outsource labour we benefit in other ways.

If it's a choice between out-sourcing and going out of business (due to whatever market factors), out-sourcing is clearly the correct option.

The population in the developed world is getting old so out-sourcing to new labour markets will be increasingly inevitable.

The global labour market is much less integrated than it was in the 19th century, in any case. Citizenship in a western market economy is probably one of the most valuable, sought after things a person can possess. Perhaps it would be nice if that were not so, but I don't see western voters letting go of that with any great speed. As a consequence, expect the labour market to continue to globalise at a much slower pace than markets for goods or capital.

And it's a knee-jerk reaction to fear globalisation because it will create middle class job opportunities in the developing world. Wage convergence is a moral good!

Well, it hasn't really even begun yet in earnest- the call centres and such are just the tip of a potential iceburg, are they not...? ...Of course only certain services can be easily out-sourced- hairdressing is likely safe for example. I don't fear this form of globalisation, indeed it is absolutely key, and I view it as entirely fair that if we are to impose such an ideology, eventually it must be applied to all things, including its darkest implications. However, the political is not so easily brushed away here, for as long as we have govts and electorates, this issue will be there, so in terms of liberal democracy it IS an absolute. And whilst profits may be accrued over all (otherwise why would anybody engage in such activities) in terms of the citizenry of the freshly out-sourced nation, the newly destitute middle class- this is of little concern to them surely?

Globalisation

vimothy

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