AN INVITATION TO ANARCHY

Peter Goodchild

© 2000 Peter Goodchild

About 1970 or 1980, a new economic era began: that of global capitalism. By the end of the century, companies such as General Motors, Wal-Mart, Exxon Mobil, Ford, and Daimler Chrysler were richer than entire nations; General Motors’ sales for 1999 were $177 billion. Of the world’s one hundred leading economies, fifty-one were corporations. The following account of the international capitalist economy focuses mainly on the year 2000, for the sake of picking a number, but a report on any other year around that time would be quite similar.

When a multinational corporation wants to build a factory in a new location, it is likely to ask for large government subsidies to buy the land, put up the buildings, and install the equipment. Because of the alleged risks, the company will also ask to be free from taxes for several years. As compensation, it will point to all the jobs that it will supposedly be giving to the local people, and to the boost that it will be giving to the local economy. If the corporation is based in a foreign country, it may even offer a further compensation: a chance to take a peek at its technology.

A typical example of this kind of modern corporate behavior: when Daimler-Benz moved into the dirt-poor state of Alabama in 1993, it received more than $300 million from the state in subsidies and tax breaks, although the company was providing only fifteen hundred jobs. Alabama, in other words, was paying Daimler-Benz $200,000 for each job.

There is, however, no valid reason for giving such money to a multinational corporation. Its top executives are paid in stocks, so that some of them put over half a million dollars (if not far more than that) a year in their personal bank accounts. The company will be making huge profits every year, and none of the multinationals that pretend to be its competitors is about to stand in its way. On top of that, when the company is really established in its latest location, many of the small companies that were there before will go out of business, because they will be unable to compete with that larger company. It will not even be hiring the local people except for tasks that amount to little more than sweeping the floors at night. When it has reached its intended level of automation, even the few local people that it has hired will be laid off. The company will be — or, rather, will remain — just one vast machine making ever-greater profits for an ever-smaller group of people.

There may be resistance. Government officials might not co-operate immediately. Eventually, however, the company will get what it wants — if not there, then in another location. Politicians are not so hard to please, because if the company gets what it wants then it will, in fact, provide a few minor jobs for local people, and these jobs in turn will provide votes, which will help the politicians to keep their own jobs.

If a corporation has branches in several countries, there is no way for a single government to control it properly, particularly in terms of taxation. It is very hard to tax someone, or to impose laws on someone, if he lives everywhere and nowhere. The corporation can make its own decisions about its "real" address and about the location of its head office. The corporation might do most of its production in one country, and most of its sales in another country, but for accounting purposes it will choose a country where taxes are lowest and rules are loosest. A "head office" might be nothing more than a mailbox in Switzerland, Liechtenstein, the Channel Islands, the Caymans, the Netherlands Antilles, Gibraltar, or a similar tax haven, a small and quiet place where no questions are asked.

There is also an important secondary benefit with the use of tax havens. The corporation can set up a small factory or office in a tax haven and then carry on intra-firm operations. A small branch can be used to provide minor goods and services, which are then sold at exaggerated prices to the company’s larger branch. It is quite legal and legitimate for one subsidiary to sell to another. Of course, the small subsidiary is accumulating large amounts of money, the real profits of the corporation.

In large parts of Asia, corporations do not act as pirates and freebooters. In Japan, for example, the giant corporations are tightly controlled: government, business, and labor live in a marvelous harmony that leaves western observers making silly remarks about "the mysterious East." Japan has (or perhaps only "had") a much lower rate of unemployment than the U.S. The "Japanese model" may be humanity’s best hope for salvation from American hyper-capitalism. In order to maintain its harmony and prosperity, however, Japan must export successfully while maintaining strong barriers against importation — cars are the most obvious product to serve as an example. Yet if every country copied the Japanese model, the result might be a destructive form of mutual isolationism and an end to world trade. (I leave aside the much larger question of whether world trade is worth preserving.) In any case, the Japanese model is crumbling: lifetime employment is no longer guaranteed.

Over the last few decades, income inequality — the gap between the rich and the poor — has worsened considerably in the United States. According to the U.S. Census Bureau’s Current Population Survey for the year 2000, the lowest twenty percent of families was earning $10,622 in 1966; by the year 2000 it had still managed to climb only to $14,232. In contrast, the rich became considerably richer during that same period: the mean income for the top five percent of families went from $118,373 in 1966 to $272,349 in 2000 — more than double.

Actually, as Bernstein points out, upper-level incomes do not fully appear in Census Bureau reports: capital gains, executive bonuses, and other perks are somehow not counted as income.

One of the most earthbound of economic lead balloons is the theory that the lot of America’s workers would be improved if their skills were updated by further education. We are expected to believe that the fault for wage decline lies with the workers themselves: if they were to renounce their slothful ways and acquire more-modern skills, their troubles would be over. Somehow America’s laborers can all be turned into systems analysts. What is not explained is where 200 million systems analysts are going to find jobs.

The above-cited figures on income inequality are American, but those for other countries would tell a similar story, and for many countries the figures are much worse. There is also a rougher but perhaps no-less-useful method of looking at the economy: all one has to do is to walk through some of the older streets of any large city and see how many people are sitting on small pieces of cardboard, clutching old sleeping bags, and holding out empty styrofoam cups.

"But it can’t go on," people say. "If the income of workers continues to fall, or if unemployment gets much worse, the workers won’t have enough money to buy the goods that provide wealth for the capitalists. The economy is a circle: consumers spend money, so factory-owners can produce goods, so consumers spend money. When people stop spending their money, the power structure will crumble." Yes, there’s a grain of truth in all that: manufacturers need buyers. Yet there are ways, unfortunately, to create a global society consisting of a small ultra-rich class and a large class of urban peasants: when it comes to running an empire, there’s not much to choose between beating (slavery) and bribery (consumerism). The circle of production and consumption is not sacrosanct. In fact, the poor are not extremely relevant to the world’s economy; that is almost tautologous, since one who has no money plays no part in the circulation of money. Thousands of years ago in the Near East, there were city states and empires consisting of a small but powerful and wealthy class dominating a much larger, weaker, poorer class. That general pattern of social inequality has been repeated many times throughout history.

The human race has entered the trap called the global economy, and the door has started to close. If workers are ever to fight back, they must deal with many problems, not the least of which are psychological: the grief, shame, and frustration of losing a job. Sometimes an economics horror-story in the daily paper ends with a two-paragraph grumble from a union leader. So what? Even the union leader himself knows that his grumble is no more than a formality. Workers end up with a sort of frozen mentality — they can’t move, they can’t think, they just stare into space.

The central myth of the U.S.A., "the land of the free and the home of the brave," has always been that anything is possible for anyone who has a positive attitude and a willingness to work. Because the myth is so prevalent, an American believes that any slip on the ladder must be due to his own moral failing. After all, for two hundred years the myth corresponded fairly closely to reality, at least if one pretended that every American was young, male, and Anglo-Saxon. There is now a class that Hoffer foresaw as the "new poor," those who have not had the generations of practice in the art of destitution, those who feel degraded and frustrated by their new role.

The future will include massive unemployment. It already takes many forms: in recent years the official figures have often been mendacious, and real jobs are increasingly replaced by rather vague forms of employment. In 1995 the official rate of unemployment in the United States was only 5.7 percent. However, that number jumps to about twenty-eight percent if one adds the people who want jobs but are not officially part of the work force; the part-timers who would like to be full-timers; the people who are of the right age to be employed but who live in an economic limbo, without visible means of support; those who work "on call"; those who are day-laborers or seasonal workers; those who try to preserve their former pride by calling themselves "independent contractors" or "consultants"; and those who are in the country with questionable political status.

When compiling a list of global disasters, one can easily overlook unemployment. It lacks the glamor and romance of other disasters, such as the problem of asteroids striking the planet. Unemployment is much closer to home than most other crises, certainly closer than any asteroid. Unemployment is also embarrassing, humiliating, "shameful," not something one valiantly endures. To endure most disasters requires fortitude, faith, hope, and patience, which are virtues; to endure unemployment requires sloth, which is not a commonplace vice but one of the Seven Deadly Sins.

Finally it should be noted that poverty has manifold causes, but that unfortunately there is a common belief among socialists that there is no such thing as human overpopulation; it is said that there is only an imbalance in the distribution of resources. But overpopulation and globalization, while not exactly two sides of the same coin, are nevertheless complementary. To affirm the existence of one problem by denying the other does not help to clarify matters. get richer. The result of overpopulation is that the poor get poorer; the result of globalization is that the rich

The problem of globalization begins with the problem of automation, which has created expansion and acceleration in three areas: production, communication, and transportation — in other words, goods are built, ordered, and shipped with such efficiency that the other side of the world is just a step away. Automation has been hypnotizing humanity since the middle of the eighteenth century. It seemed a great blessing to be producing goods rapidly and at low cost. In the nineteenth century the Luddites went around smashing machinery, in the belief that automation was depriving people of their jobs. Ever since then, the term "Luddite" has been regarded as synonymous with "hopelessly old-fashioned person." As it turned out, the Luddites were right: the machines were of financial benefit to their owners, but not to the workers. In addition, the workers permanently lost their self-esteem, because there were always too many people looking for jobs. In fact, the greater the degree of automation, the smaller the number of workers who were needed. Workers who protested, of course, were always the first to be fired and replaced.

There was once a vision that automation would create a heaven on earth. In 1930 J.M. Keynes was saying that "for the first time since his creation man will be faced with his real, his permanent problem — how to use his freedom from pressing economic cares, how to occupy the leisure, which science [has] won for him, to live wisely and agreeably and well." In 1969, the year of the first moon landing, it seemed as if computers would give us an age of tranquillity and leisure, that we would all be tiptoeing among the stars. If the Luddites were alive today, however, they would tell us that computers are devices for increasing production and decreasing payrolls.

But automation is only the hammer, not the hand that wields it. The fundamental problem of globalization is that large corporations have become more powerful than entire countries. The multinationals are allowed endless tax write-offs, endless public subsidies, endless stock-market manipulations. If a multinational can’t play in one sandbox, he moves to another. All the old rules get ignored. The multinationals are outlaws in a very literal sense: because they cover the globe, they are outside any law.

Karl Marx managed to get most things wrong (as Bakunin says throughout his Statism and Anarchy, a communist dictatorship is no better than any other kind), but he was right about a few things, in a clumsy sort of way. A hundred years after he was writing, most intellectuals could perhaps accept his statement that "the history of all hitherto existing society is the history of class struggles." Middle-of-the-road sociologists and economists also conceded that the worker’s "labor . . . has . . . been alienated from himself by the sale of his labor-power," since Adam Smith had said roughly the same thing. Where most American intellectuals drew the line, however, was at Marx’s claim that capitalist production leads to its own negation, that capitalist exploitation would lead to worldwide revolution and the overthrow of the capitalists.

The twentieth-century argument against Marx was not very strong: capitalists, it was said, had largely prevented revolution by appropriating some of the elements of socialism. Social security became part of orthodox capitalism. During the 1950s and 1960s, when there seemed to be three cars in every garage, that defusing of revolution was fairly effective.

As with other champions of the human spirit, Marx should not be blamed for all that is ascribed to him. The travesty of Marxism in the Soviet Union and elsewhere did nothing to help his reputation as a philosopher. Even today, most of what passes as Marxism is an insult to his name.

Marx was too far ahead of his time. The superficial appropriation of Marxist policies by western governments made people turn to other intellectuals for answers. As the twentieth century drew to a close, however, the "international character of the capitalistic regime" began to appear — the true face of multinationalism could be seen. The shoes people wear on their feet are sold by a company that has its head office in a skyscraper in New York City, but the people who actually make the shoes are living in an impoverished country on the other side of the world. Those workers live in a condition that is closer to true slavery than anything in North America. The concepts of democracy and civil liberty are so unknown there that labor organizers can be imprisoned or killed.

The workers experience great misery, enduring hard labor, long hours, low wages, and unsafe working conditions. "Handmade," in fact, often means "made by the hands of children." There is also misery, however, for people in more highly developed countries, who are chronically unemployed because their jobs have been given to the slaves in poor countries. Of course, even those slaves will have their jobs only until even-more impoverished laborers are found in some other country — or until a machine can take over. Such is the new form of capitalism: the much-heralded "global economy."

International corporations always move their factories to where they find the cheapest workers. A poor country thinks it has hit the jackpot when a rich American corporation comes to set up business. Unfortunately, if the factory starts doing well, it is inevitable that the workers will start asking for slightly more than starvation wages, no matter how many activists are picked up at night to be tortured and killed by government-paid death squads. Even the government itself might start to become greedy. The workers might succeed, and the country’s standard of living might rise. The punishment is simple: the international company packs up and moves to a country where the workers are still "uncorrupted." All this shopping for cheap wages — wage arbitrage — takes jobs away from workers in the United States and the rest of the developed world.

An example of income disparity: in 1992, the basketball player Michael Jordan’s promotional fees from the Nike shoe company were nearly twice as much money as the entire earnings of the 25,000 workers in the various corporations of the Indonesian shoe industry — $20 million versus $12.5 million.

Ironically, most of the wage arbitrage in the 1970s and 1980s, when the problem first began on a grand scale, was due to competition among the developed countries, the OECD countries. It was European workers who first took jobs away from American workers. Now, however, it is the poorest countries who fill this role.

In more highly developed countries, however, the immediate danger is not unemployment but underemployment. With unemployment, workers at least have a chance to search for an alternate way of life, but with underemployment they face a soul-destroying ennui: at five p.m., it is hard to find the energy to change the world.

What can be done to counteract this new, protean capitalism? In terms of the present dominant political parties, not a great deal. Capitalist countries are bogged down in the two-party system, essentially with each party representing one half of the income scale. Each party must churn out endless half-truths in order to survive, because democracy in the absence of wisdom is only demagogy. One party, claiming that "we’ve never had it so good," repeats the old laissez-faire mendacity that honest labor and clean living will lead anyone along the road to success. The other party claims that money grows on trees: utopia will be built by increasing taxes, increasing government bureaucracy, and spending billions of dollars on welfare programs. (The fundamental flaw in liberal politics is that it is not the rich who pay taxes to support the poor; it is the middle class that does so.) Even that dichotomy is becoming obsolete, however, and political platforms are being replaced by the arbitrary demands of lobby groups. For better or worse, one used to know what American presidents stood for, but as the years go by these people bear an increasing resemblance to circus clowns. One day there will be nothing and nobody left to vote for; the removal of the right to vote will then be a mere formality.

There is not likely to be much help from labor unions, who have turned inward for too many decades. The short-sighted greed of the closed-shop contract (you can’t work here unless you’re a union member, and you can’t be a union member unless you work here) and the shrinkage in manufacturing jobs have made union members an endangered species. The unions helped to nail their own coffin back in the 1950s, when they decided that fighting for higher hourly wages was more important than fighting for a work-sharing program and a thirty-hour week. Several decades of battering by governments and corporations hasn’t helped them, of course. There may be a small upsurge in union enthusiasm, but the task may not be easy when most of the workers are living and working somewhere in a tropical jungle.

The World Trade Organization was founded in 1995 as a continuation of the General Agreement on Tariffs and Trade (GATT). Its goal is the "liberalization" of all world trade, the breaking down of all international barriers to commerce. If the WTO has its way, virtually all goods and services will shift from the public sector to the private sector. Even such sacred institutions as health and education will be privatized. Everything will have a price tag. WTO rulings will override most of the laws that protect agriculture, the environment, health, employment, and human rights. Everything will become a "product," crawling the earth in search of a profit, in an endless orgy of "free trade." The big companies will win, the small companies will disappear. When Prime Minister Brian Mulroney said, in 1984, that Canada was "open for business," he forgot to add the word "takeovers." In a world in which everything is for sale, the individual human being becomes the destitute slave of global capitalism.

On a fairly regular basis, one can find newspaper articles and editorials that imply: "Don’t pick on the WTO. It’s not their job to protect human rights. They’re only trying to provide a better environment for business people. Leave human-rights issues to the International Labor Organization and other bodies designed to serve such purposes." There’s a grain of truth in such remarks. Yes, it’s true that the WTO has a single goal: the maximization of profits for multinational corporations. The question of workers’ rights can always be left to institutions that lack the money and power to do anything. But globalization and slavery are two sides of the same coin. The best way to maximize profits is to minimize costs, and the most obvious problem is the cost of labor. Improving the corporate environment means looking for impoverished countries with repressive governments. But the message of the WTO’s purely avuncular role was somehow lost on the sixty thousand protesters who attended the WTO Summit in Seattle in November and December of 1999.

One of the main barriers to economic reform is the lack of information. Free speech is coming to an end. Political campaigns are marked by expensive television advertisements, paid for by large corporations, and the voters have little chance to hear the non-corporate side of any story. The disinformation industry — applied to politics, economics, and the military — has become so sophisticated that most people don’t even know it exists. Today’s news story is usually forgotten by tomorrow. The viewer has the vague impression that something happened somewhere — yesterday’s Public Enemy Number One is today’s Public Friend Number One — but one could change channels all day without finding anything below the surface. Knowing that such a quest would be futile, the average viewer never asks why or how something happened, and the news media never pose such questions. Without free speech, and especially without free and informed choice, there is little hope for the future of either democracy or civil liberty.

American communications media (television, radio, newspapers, magazines, books, the Internet) are owned by an ever-shrinking number of interrelated giant corporations — six at present. As in so much of Corporate America, the real meaning of "deregulation" is mergers, cartels, trusts, monopolies, and price-fixing, and the product sold to the public is a uniform blandness. News that casts aspersions on the news media rarely reaches the public. News that casts aspersions on big business also rarely reaches the public: the sharks may gather when a company is caught breaking the rules of the game, but there is no criticism of the game itself. The companies that own the media are firmly intertwined with the companies that pay for the advertising within those media.

In a totalitarian society, an editor is told not to disparage the rich and powerful. In a modern capitalist society, however, an editor does not need to be told, since he would not have gotten the job if he had not already known the rules of the game. "Good news is no news," and anti-capitalist news is also no news.

There is nothing inherently harmful in watching television, but only if one realizes that what it presents has little to do with reality. There is nothing wrong with reading newspapers, as long as one realizes that many "news items" are just re-worked "press releases" or other forms of advertising, even if the average reader piously believes that news and advertising are two different things. A great deal of so-called news — items on real estate, fashion, sports, or travel, for example — is often merely what journalists themselves refer to as "fluff," designed to put readers in a buying mood, not to inform them of important events.

There have been several excellent analyses of the effects of global capitalism. In most such books, however, the final chapters are marred by a lot of kindhearted but meaningless moral exhortation: the message that governments or employers "should" do this or that. The first problem with saying that the government should do such-and-such is that it is not entirely clear which level of government is under discussion. The municipal government is mainly concerned with lawn sprinklers and dog licenses. The federal government is mainly concerned with what country to bomb next. So exactly which level of "the government" are we talking about? The other problem with waiting for "the government" to do what it "should" do is that governments simply don’t do anything that involves massive social change. Even after seventy years (i.e., since the New Deal) of blending socialist policies with those of capitalism, the actual influence of government on the working lives of most Americans is almost insignificant; about all that comes to mind is the stipulated but pitiful handouts to the unemployed, and the requirements of minimum wage — an amount of money so small that it is barely worth taking. Most idealists have few theories from which to choose, because they are determined to work within the system, determined to fix the unfixable. In reality, a capitalist economy has too much weight (money), too much inertia, ever to be fixed.

One of the most harmful aspects of the global economy is currency speculation, playing the "money market" (also known as the "currency market" or the "financial market"), the practice of exchanging one nation’s currency for another, in order to make a profit from the relative increases or decreases in value. Although currency speculation is rarely the immediate cause of financial crises, it is never absent from them.

In 1973 the main industrial nations ended the practice of fixed exchange rates for their currencies; this innovation was supposed to create greater stability among the world’s currencies, but actually the opposite happened. George Soros, the billionaire head of Soros Fund Management, describes the swing of exchange rates as more like a wrecking ball than a pendulum. Money-market investors — like investors of any other sort — are generally short-sighted, and they are possessed of herd mentality: when a currency starts to gain value, it then becomes attractive to those investors who have not previously bought it, and the result is an even greater increase in value. The same is true of a currency that starts to fall: as soon as the decline becomes a matter of public knowledge, a panic ensues, everyone tries to get out, and the small loss turns into a major collapse.

Every twenty-four hours, roughly two trillion dollars goes into the business of currency exchange, almost entirely for the purpose of speculation. This amount of money is twice as much as the five major central banks (Britain, Germany, Japan, Switzerland, and the United States) could ever cover if there were a panic like that of 1929.

Mexico in 1994, Southeast Asia in 1997, Russia in 1998, not to mention European and American crises of the 1980s and 1990s — in the unregulated environment of modern capitalism, instead of burning brightly, entire nations flare up and then die down to ashes, but we pretend that these are isolated events rather than the start of a worldwide conflagration.

Strange things have happened to money over the last hundred years or so. There was a time when coins served merely as tokens. There was no point for a farmer to carry a bag of grain every time he went to the market, if a few coins would serve the same purpose. The transfer of money meant an agreement to give or receive particular goods or services. In that respect, money served a useful purpose: a purse full of coins was lighter than a sack of grain. But money doesn’t work like that anymore. Marx said that religion is the opium of the people, but the modern opium is not religion but money. Money still represents material wealth, but to a large extent it has taken on a life of its own. The fate of entire countries often has little relation to its material resources, its infrastructure, or its level of education, but rather to the size of its national debt, its ability to postpone (or falsify) repayment, and on the irrational ups and downs of the financial markets. It is as if all the people who once produced useful goods and services had stopped living meaningful lives, had got drunk, and had sat down to an immensely long gambling game, one from which no player could drop out before losing everything and going hopelessly into debt. Entire nations go from rich to poor overnight, not because of any change in their inherent nature, but merely because of the vagaries of that huge gambling game. In the Middle Ages, usury was regarded as a sin, but times have changed.

Since the ending of fixed exchange rates in 1973, no country has been safe from the global storm. Heavily in debt, in 1993 Mexico signed the North American Free Trade Agreement with the United States. It soon became apparent that Mexico would be unable to repay all the loans on which it had been cheerfully offering to pay high interest. In January 1994 the peso lost thirty percent of its dollar value in three days. With some help from the International Monetary Fund and the Bank for International Settlement, Bill Clinton dealt with the disaster by rapidly collecting fifty billion dollars, which at that point was the world’s largest credit layout since the Second World War and the Marshall Plan. The fifty billion dollars, of course, came from taxpayers. The Asian meltdown, starting soon after the Mexican crisis, required an even bigger bailout: 121 billion dollars.

The solution for debt crises is always the same. After a country has been gutted by "free trade" and currency speculation, the banks move in and provide new debts to cover old ones. The IMF and the World Bank demand a "structural adjustment": deregulation of transportation, communication, and energy; reduction of federal spending (particularly for health, education, and welfare); increases in taxes and interest rates; and a shift to export-oriented agriculture. As the level of debt becomes a tidal wave, it is not governments that suffer the most, nor is it the corporations; it is the common people, who suddenly find themselves in horrendous, inexplicable poverty.

But the world economy has become a house of cards, and one puff will send it down. In Franklin D. Roosevelt’s day there was a plan to prevent another stock-market crash. The plan mainly involved making sure that banks could always shore up any collapses. In the course of the last few decades, however, that safety plan has been neglected. There is no longer enough reserve money in banks to support the business world. If there is ever a panic on the U.S. stock market, the result will be like October 1929, but much greater in every way.

"We have to start tightening our belts." We have committed the sin of eating properly, and now we must pay the price. But there is something wrong with the mathematics. The argument seems to be that the government has been spending too freely on social services. Poor people, old people, disabled people, sick people, schoolchildren — all these people have been depriving the nation of its wealth. It is said that all that spending had been based on borrowed money, and that now those debts had to be repaid. Well, yes, part of that is true. The elderly make up an ever-great share of the population, and the costs of pensions and health care are too high. One could argue that it is these social commitments, not economic forces, that are causing the great indebtedness of modern governments. Unfortunately for the theory, the national debt is getting bigger and bigger, even though social services (especially education) are constantly being cut.

Where did all the money go? The farms are still producing crops, the factories are still producing their usual gadgets, and the workers are still more than ready to work. Our nation’s cash certainly didn’t fly up to heaven. There are only four groups of people who can receive the country’s money (in terms of billions of dollars): labor, government, multinational corporations, and financial investors. The first two lost, and the last two won. Corporations won by moving to wherever they paid the lowest wages and the lowest taxes but received the largest government subsidies. The financial investors won by playing a trillion-dollar poker game, but a game in which anyone starting with a large enough stake was guaranteed an average return of at least ten percent, perhaps several hundred percent. The corporations bled the governments dry, and the financial investors moved in and lent the governments money (in the form of bonds), bleeding them even further. The money didn’t just vanish — it was taken. It was sucked upward as if by a giant vacuum cleaner.

Money cannot mysteriously disappear. (Yes, the Federal Reserve can slightly modify the size of the money supply, but that is not directly relevant.) If parents can no longer afford to send their children to college, if hospitals no longer have beds for their patients, if the only new jobs are for those people who are willing to be overworked and underpaid, then there must be a reason. By means of an intricate corporate and financial shell game, the country’s money and the world’s money are drawn upward from the bottom eighty percent to the upper twenty, and more particularly toward the biggest spenders and lenders, the few at the very top of the machinery.

We are rapidly approaching a world in which twenty percent of the population will have money and power, and eighty percent will be kept busy, kept out of mischief, but with neither money nor power. Those who have grown crops for generations are losing their land as the corporate farm replaces the family farm. In the cities, young people are kept busy in colleges and universities, thinking they are on the road to success, but academic standards have fallen so low that a student loan is just a polite form of welfare payment.

Those who are kept busiest, most out of mischief, are an anachronistic group of people who have jobs but do not have money or power: the truly "middle class," those in the median-income range. Both husband and wife must work, while the children are packed off to daycare centers. Household chores take up the evenings and weekends. A large part of their paychecks is bitten into by the mysterious national debt, and the rest is barely enough to cover the mortgage and groceries.

In eighteenth-century Japan, it was said that peasants are like sesame seeds — the harder you squeeze them, the more oil you get.

Of the two greatest international crises that are primarily economic in nature, one is "bottom up," and the other is "top down"; one directly affects the average worker, while the other will first strike those at the top of the financial pyramid. The first is the general problem of globalization, the combination of automation and internationalization that results in wage arbitrage: companies choose their workers from wherever the cheapest labor is to be found. The second is that of "the imminent disintegration of the global capitalist system," to use Soros’s blunt term. Like Thurow, Soros believes that the financial meltdowns of Mexico in 1994, Southeast Asia in 1997, Russia in 1998, and elsewhere, are almost certain to be followed by a similar meltdown on an international level, not merely on a national or regional level as in the past.

The United States is not merely a casual observer of crises in distant countries. Greider calls the United States "the buyer of last resort." The U.S. has a rapidly increasing annual trade deficit of several hundred billion dollars. Such a flood of American money on the world market means that the dollar continually loses international value, and its sacredness becomes little more than a hollow tradition. (A deficit means a debt, whether in the form of government bonds or credit-card payments; America’s multi-trillion-dollar public and private debt is also alarming, although on a per-capita basis at least the public debt is no worse than that of some other countries.) American currency is no longer a safe bet.

The signal for the big crash will be a major run on the American dollar; speculators will be selling dollars in large quantities in exchange for the safer currency of some other country. Previous financial meltdowns, in other countries, were repaired by the rapid input of multi-billion-dollar loans from the IMF, the American government, and elsewhere. Since dollars make up about half of the world’s money, however, a major run on the dollar would be irreparable. The IMF is already short of cash. There is no institution anywhere that would have the sort of money needed to bail out the United States of America. So the meltdown, for American citizens, would be like that in other countries, with massive bankruptcy, unemployment, and so on, but with the significant difference that there would be no bailout, no solution.

Soros gives further details on the mechanics of the breakdown. In general, he sees global capitalism as a sort of international empire, although it is not a political empire. Contrary to the belief of other analysts, Soros does not think the "state" is at all dead, but rather that the state and the capitalist empire act as opposing forces — e.g., when corporations want to deal with problems of taxes, laws, or the cost of labor, it is precisely the question of one state versus another that is critical. Soros also sees the empire of global capitalism as consisting essentially of a "center" (New York, London, etc.) and a "periphery" (most other countries). The problems of the periphery will finally reach inward and become the problems of the center. What happened in Thailand and elsewhere (massive over-speculation, followed by defaulting on loans, followed by huge sell-offs of the local currency and its consequent loss of value, followed by brutal "cures" by the IMF) will start happening to the richer and previously more-powerful nations. There will be a domino effect, a chain reaction — whatever metaphor one prefers.

A significant feature of this centripetal disaster will be the growth of ultranationalism: one of the easiest solutions (or, at least, responses) to the problem of meltdown is to default on one’s loans, to opt out of the global capitalist system, to say no to "free trade," to start closing one’s doors to foreigners. Mexico could have done exactly that, but didn’t. Russia, on the other hand, chose to default, perhaps wisely.

The causes of the Great Depression of the 1930s are somewhat complex, but the critical factor was the collapse of the stock market. That in turn was caused by the creation of imaginary paper empires, excessive speculation in questionable enterprises — in plain English, excessive borrowing. Although the crash of 1929 took place mainly in the stock market, whereas the currency market now plays a major role, the financial crises of the 1990s had that same fundamental problem of excessive borrowing. The present American figures for balance of trade and for growing international debt look terribly familiar.

The present employment situation is complex. At the top of the pyramid are people who are distinguished by their invisibility, unlike the robber barons of the late nineteenth century, who competed in the flaunting of their wealth. Below that, one should perhaps distinguish about three other groups: the "middle class," the part-time workers, and the truly unemployed.

Juliet Schor notes that definitions of class are rather arbitrary and subjective, but for practical purposes she regards those Americans in the top forty percent of the income scale as constituting the affluent, with another twenty percent in the questionable category, defining this entire group largely by its habits of overwork and of consumerism. (The word "middle," of course, becomes rather meaningless, since there is little correlation between "middle class" and "median income," but perhaps that has always been the case.) A member of this group is not allowed to work a mere forty-hour week; double that amount would be more appropriate. To go to one’s boss and ask to work only twenty hours a week would be career suicide. Even if the request were granted, that person would be forever passed over for promotion; to express a desire not to work incessantly is to express a lack of team spirit. He (or, more likely, she — a woman overburdened with both housework and a "real" job) would be a pariah, threatening the fabric of society and therefore the object of justifiable outrage.

Almost no company is going to agree to a shortening of the work week even if it didn’t represent disloyalty. In Marx’s time, the main obstacle was that workers were paid by the day, so every minute that could be added to the day was to the benefit of the employer. Nowadays a bigger problem is the cost of training, of benefits, and of employers’ contributions to government-administered programs: hiring two people to replace one (or even four to replace three) would not be profitable.

As Schor points out in her third chapter, a life of hard labor isn’t how it always used to be. It is one of the great misconceptions about history (one could write an entire book about all the historical "facts" that aren’t true) that life in the old days was nothing but struggle and endurance. The horrors of the twelve- or sixteen-hour working day belong to the Industrial Revolution; Engels’ Condition of the Working Class in England (and the tenth chapter of the first volume of Marx’s Capital) describes the worker’s lot in the early nineteenth century. Yet before the growth of capitalism, before the age of factories and clocks, life was much slower. In medieval times, there were endless "holy days" on which work was forbidden, and the time allotted for a given task was quite vague. The medieval manor was self-sufficient, so there was no "market" in the modern sense of the word; there was no one with whom to compete, so there was no incentive to squeeze more labor out of each unit of time. As we go back further in history and prehistory, again we find no great compulsion to work. The daily life of hunter-gatherers was not difficult, since the working day averaged far less than eight hours. Primitive farmers also work only about four hours a day. (The modern farmer’s problem of overwork is due to the fact that he is not eating his crops but exchanging them for money; "free enterprise" keeps food prices so low that he can survive only by working long hours.)

After Marx’s time there was actually considerable progress in the reduction of working hours, thanks mainly to the relentless struggle by labor leaders and other "radicals" and "troublemakers." Slowly but surely, the average work-week of Americans dropped toward thirty hours, enabling both employment and wealth to be shared more equitably. Somewhat out of character, however, President Roosevelt chose not to support the Black-Connery bill that would have put such a week into law; he later regretted his decision. But then came the Great Depression, when most people were grateful for any kind of paying labor. After that came the Second World War, when it was one’s patriotic duty to ask no questions. And not long after the war, Senator Joseph McCarthy was finishing off any radicals that might still be around. Since then, the work-week has climbed steadily upward.

The second characteristic of a member of the middle class is, as previously noted, the habit of consumerism. ("To consume" — "to eat, to use up, to devour, to destroy." On the day I was born, did I really see myself as a "consumer"?) Middle-class people are paid well, but they are not allowed to keep their earnings. They are pressured to remain constantly in debt. It is not enough to own an automobile; it must be the right brand — it is just not possible to drive an old pickup truck into the executive parking lot. It is not enough to own a house; it must be big enough, and it must be in the right neighborhood. In the 1950s the average American house was 750 square feet, and it had four inhabitants; today it is 2,000 square feet, although it is probably inhabited by only two or three people. It is not enough to have obedient children; one must enroll them in the right private school. There are clothes to be bought, there are clubs to belong to, there are the latest electronic devices to be bought. The middle class is affluent, but it is never affluent enough, because spending always races ahead of income. The effect of consumerism — the endless cycle of work-and-spend, work-and-spend, life in the squirrel cage — is like that of an addictive drug. The small pleasure it gives is not long-lasting, and the dose must be constantly increased. Keeping up with the Joneses is impossible, because the Joneses are also peeking out of their window. And even if the Joneses could be defeated, the pleasure would soon turn sour.

I am also tempted to believe that the urge to buy is fostered by the fear of poverty: the fear of "not having" is the fear of facing an abyss, the fear of a cosmic emptiness. If I can surround myself by things, I can prove that I am not poor. If I can calm the anxieties fostered by advertising, if I can surround myself with a wall of sheer "things," I can save myself from whatever lies beyond. And yet what if I thought otherwise? Would it not be possible to believe in "voluntary poverty"? Perhaps I can live without things, not because I lack the money to buy them, but because I choose not to have them cluttering up my house.

Wouldn’t it be nice to say no to Christmas, that guilt-laden orgy of potlatching? And wouldn’t it be nice if moving from one house to another didn’t require an arduous month of packing?

At first glance it seems almost contradictory to say that people are buried in mountains of plastic and metal "stuff," yet they are poor — even the overworked bourgeoisie who seem to have so much money to burn. And if the acquisition of money is the ultimate goal, how did it happen that capitalism allowed so much of it to fall into the hands of the less-powerful? But there is no great mystery to all that. The key word is "profit." To paraphrase the Gospel, it is more blessed to sell than to buy. The person who sells a sofa gives up a sofa and the money that it costs to make that item; the person who buys it gains a sofa and loses the money that he hands to the seller. But the real winner in that transaction is the seller, because he is making a profit. (In a sense, the buyer is losing twice, since he is not only spending more money than the seller, but also he is gaining only a useless material object, one which he will ultimately have to give away or destroy.)

The Roman caveat emptor acquires a new meaning: that the best way to "save, save, save" (as we are perpetually commanded to do) is to "stop buying, stop buying, stop buying." One of the corollaries of that maxim is that two people might begin with almost the same income, yet in a short while one person can become much richer than the other. What happens is that the first person uses most of his income to buy ordinary goods and services, whereas the second person uses his slightly-greater income, not to buy "things," but to make profitable investments: Mr. and Mrs. Lower-Middle-Class must sell their car (which they so proudly bought) at a fraction of what they paid for it, while a business can easily be sold for several times what the founder has spent, since the price tag is based on projected future earnings.

There are several reasons why one cannot easily drop out of the rat race and get a part-time job. The principal reason is that one would be ostracized, one would be cast out of decent society. But the other reason, closely related, is the lack of real choice. Part-time jobs are largely service-sector jobs, low in status, therefore depriving the worker of any sense of control of his life. They are also low-paying: going from a full-time job to a part-time one would mean experiencing, on average, a sixty-percent drop in hourly pay. Cutting one’s work-week in half, therefore, would mean plunging from affluence to utter poverty. In fact, those who have spent their lives in the ghetto of part-time employment often need to work simultaneously at two or three such jobs; the term "part time" then, of course, becomes rather meaningless.

And below all these people, there are the truly unemployed, an ever-growing number, about whom there is little to be said, just as there is little to be discerned in their expressions of vacant despair.

The first practical oil drill was developed in Titusville, Pennsylvania, in 1859, by Edwin L. Drake. Now, only a short while later, the planet Earth is running out of oil, without which almost nothing in twenty-first-century civilization can function. A number of scientists and engineers have pointed out that the world’s oil production will peak soon after the start of the millennium; it may have already done so.

The human race now consumes about thirty billion barrels of oil per year, quite unaware of the fact that it will not be long before there is nothing to put in the gas tanks. In the entire world, there are perhaps a trillion barrels of oil left to extract — which may sound like a lot, but isn’t. And more optimistic projections of global oil reserves are based on falsified 1987 and 1989 data from OPEC, when some of those countries wanted to justify increasing their shares of production through the quota system.

When newspapers announce the discovery of a deposit of a billion barrels, readers are no doubt amazed, but they are not told that such a find is only twelve days’ supply. Nor are they told that all the big discoveries are far in the past. American production peaked in 1970, and even Saudi oil won’t last much longer. The production of oil is beginning a perpetual decline, while demand will continue to increase. The only event that could reduce demand for oil would be a global depression; reduced oil consumption would then be part of the overall collapse of the world’s economy.

As the years go by, new oil wells have to be drilled deeper than the old, because newly discovered deposits are deeper. Those new deposits are therefore less accessible. But oil is used as a fuel for the oil drills themselves. When it takes an entire barrel of oil to get one barrel of oil out of the ground, as is increasingly the case, it is a waste of time to continue drilling such a well.

Coal and natural gas are also disappearing, although coal will be available for a while after oil is gone. Coal, however, is highly polluting and cannot be used as a fuel for most forms of transportation; the last industrial society will be a bizarre, crowded, dirty, impoverished world. Natural gas is not easily transported, and it is not suitable for most equipment.

Alternative sources of energy will never be very useful, for several reasons, but mainly because of a problem of net energy: the amount of energy output is not sufficiently greater than the amount of energy input. Alternative sources simply don’t have enough "bang" to replace thirty billion annual barrels of oil.

A further problem with alternative sources of energy is that conventional oil is required to extract, process, and transport almost any other form of energy; a coal mine is not operated by coal-powered equipment. It takes "oil energy" to make "alternative energy."

The use of unconventional oil (shale deposits, tar sands, heavy oil) poses several problems besides that of net energy. In the first place, even if we optimistically assume that about 700 billion barrels of unconventional oil could be produced, that amount would equal only about fifteen years of global oil demand. Secondly, the pollution problems are considerable, and it is not certain how much environmental damage the human race is willing to endure. Thirdly, since conventional oil is still cheap and profitable, government and industry will not be motivated to begin serious work on the development of unconventional oil until conventional oil is no longer available — at which point any effort will be too little, too late. In fact, at the moment, unconventional oil is only a tiny fraction of the world’s petroleum production, and there are no major technological breakthroughs in sight. Even if all these problems could be solved, the human population will soon be doubling again, developing nations will be trying to industrialize, and the demand for fuel will be much greater than it is at present (unless, of course, there is a global depression that eliminates the demand for oil). With unconventional oil we are, quite literally, "scraping the bottom of the barrel."

More-exotic forms of alternative energy are plagued with even greater problems. Fuel cells cannot be made practical, because such devices require hydrogen derived from fossil fuels (coal or natural gas), if we exclude designs that will never escape the realm of science fiction; if fuel cells ever became popular, the fossil fuels they require would then be consumed even faster than they are now. Biomass energy (perhaps from wood, animal dung, peat, corn, or switchgrass) would require impossibly large amounts of land and would still result in insufficient quantities of net energy, perhaps even negative quantities. Hydroelectric dams are reaching their practical limits. Solar, wind, and geothermal power are only effective in certain areas and for certain purposes; such types of power, in any case, are only of significant value when converted into electrical energy, requiring the use of disposable batteries — a practice as ecologically unsound as the use of fossil fuels. Nuclear power will soon be suffering from a lack of fuel and is already creating serious environmental dangers.

Petroleum, unfortunately, is the perfect fuel, and nothing else even comes close. There will never be a solar-powered airplane. The problem with flying pigs (as in "when pigs can fly") is not that we have to wait for scientists to perfect the technology; the problem is that the "pig idea" is not a good one in the first place. To maintain an industrial civilization, it’s either oil or nothing.

Another unrealistically optimistic thought is that we are shifting from an oil-based culture to an information-based one: computers, we are told, will soon replace trucks. To say that high technology reduces mankind’s need for petroleum, however, is an act of faith that is not born out by the figures: world consumption of oil steadily increases, and will continue to do so until production can no longer equal demand.

Modern agriculture is highly dependent on fossil fuels for fertilizers, pesticides, and the operation of machines for harvesting, processing, and transporting. The Green Revolution was the invention of a way to turn petroleum into food. Without fossil fuels, modern methods of food production will disappear.

Petroleum is the blood of our civilization. Even a bicycle, that ultimate symbol of an "alternate lifestyle," requires petroleum for lubrication, for paint, and for plastic components. The vehicle that delivers the bicycle runs on petroleum, over asphalt that is made of petroleum. "Rubber" tires are often made of petroleum.

The problem of the world’s diminishing supply of oil is a problem of energy, not a problem of money. The old bromide that "higher prices will eventually make [e.g.] shale oil economically feasible" is meaningless. This planet has only a finite amount of fossil fuel. When that fuel starts to vanish, "higher prices" will be quite unable to stop the event from taking place. At most, the later twenty-first century will be an age of coal, and a portrait of that future era can be found in any story by Charles Dickens.

As Michael T. Klare has shown in Resource Wars, much of modern warfare is about oil, in spite of all the pious and hypocritical rhetoric about the forces of good and the forces of evil. The real forces are those trying to control the oil wells and the fragile pipelines that carry that oil. A map of recent American military ventures is a map of petroleum deposits. When the "oil wars" began is largely a matter of definition, though perhaps 1973 would be a usable date, when the Yom Kippur War led to the OPEC oil embargo. When those wars will end is even harder to say, but it cannot be many decades from now.

Roughly six thousand years ago, the New Stone Age gave way to an era of large, settled communities, which evolved into about a dozen empires, rising and falling, bubbling and collapsing. America is the last, the final empire. After that, there can be no other. Human beings will find a way to live — quite happily, perhaps — but it won’t resemble what we now know. The next hundred years can perhaps be envisioned, but the distant future is, quite literally, unimaginable: we cannot imagine it.

"Ah, these doomsayers — somehow humanity always manages to squeak through." Yes, it does: the Roman empire survived long years of war, famine, plague, ignorance, superstition, and cruelty. An empire can keep running in neutral for a long time, but that does not make its demise any less real.

The problem of the loss of petroleum will, of course, be received in the same manner as most other large-scale disasters: widespread denial, followed by a rather catatonic apathy. The centuries will pass, and a day will come when, like the early Anglo-Saxons, people will look around at the tumbled ruins, the scattered stones, and regard them as "the work of giants."

Capitalism — unrestricted ownership of the means of production — was never a planned program for any society. It is merely a monstrous excrescence that grew in the dark, sustained by greed and selfishness. It is corporate greed that puts advertising on everything from apples to zeppelins, convincing us to buy things we don’t want and don’t need. It is corporate greed that ensures that reporters give us the "who" and the "what," but not the "why." It is corporate greed that impels politicians to bomb other countries for "world peace" — and their resources. It is corporate greed that defines "free enterprise" as "the freedom to destroy the planet" and then tells us that we must use our diminishing paychecks to pay for the products of that destruction.

Capitalism preys on, and fosters, human ignorance. The consumer is told to "Save, Save, Save," when the obvious way to save is to stop spending. The consumer’s intelligence is insulted — or lack of astuteness is celebrated — when an item is priced at $99.99 rather than $100.00. Our educational institutions have glass walls that are not merely decorative.

Finding a new world for tomorrow means finding a way of life that respects Nature, a life that is more attuned to the land, the sea, and the sky. There is no way for any small group of people to reduce the immense power of the multi-trillion-dollar global economy, although it will disintegrate by itself over the next half century. For now, there is only one direction, and that is out. We must literally step out of the global economy, and by "we" I mean those few who are clever enough to make a decision, those people who actually make the effort to pack their bags. We must get out of town, and keep going until the highway ends, and then keep going a little more.

We must stop being part of "society." We must take a few lessons from the Amish, the Hutterites, and other groups who are "anarchist" in all but name, or to the extent that such a word is ever useful. Like them, but perhaps in a more secular sense, we must remember that we are pilgrims and wayfarers in this world.

Ultimately it would be best to give up using money, at least money as we now know it, since it is money that chains us to the global economy. At the moment, however, there are so many rules, from building codes to insurance regulations to sales- and income-tax laws, that make it difficult to provide oneself with food, clothing and shelter without spending money. Politicians disparage the age-old practice of barter as "the underground economy," "the gray economy"; such a way of doing business is illegal, unless the participants pay sales tax on their transactions, since barter would allow people to provide for their daily needs on a local basis, without the dubious assistance of governments or corporations.

1: The Modern Corporation: Everywhere and Nowhere: Anderson 3; Greider 93-97, 246; Martin and Schumann 61-64, 196-201.

2: The Rich and the Poor: Bernstein et al. vii, 2, 53-54; Hoffer 26-27; Thurow 165-66; United States Census Bureau.

3: Capital and Labor: Greider 390, 496n; Keynes 367; Martin and Schumann 142-47, 151-53; Marx 624, 836-37; Marx and Engels 7; Rifkin 84-86; Schor 76-78; Thurow 172-80.

4: Open for Business: Barlow and Clarke 7-20.

5: No News Is Good News: Bagdikian x, 136-37, 152-53, 164-65, 177, 191-92, 201.

7: International Poker: Barlow and Clarke 18, 60-65; Greider 192-223, 245; Martin and Schumann 1-5, 40-45, 47-52, 72, 139-41; Sansom 518-19; Soros 103-05, 119-23, 126, 134, 142, 168-74; Thurow 96-105, 135-36, 148, 220-31.

8: The Squirrel Cage: Bird-David 116; Blainey 162-67; Gever et al. 160; Heilbroner and Thurow 186-88; Lee 52; Pimentel and Hall 3-4; Rifkin 28-29; Sahlins 32; Schor 74-75, 109-11, 113, 135, 145.

9: The End of Oil: Campbell; Deffeyes; Gever et al. 23, 50-73, 127-32, 147-76; Klare.

          Peter Goodchild's book Survival Skills of the North American Indians is published by Chicago Review Press.

          He can be reached at: peter.goodchild@sympatico.ca