The Work Of Nations by Robert B Reich

The Work Of Nations by Robert B Reich was published in 1991, written, therefore, prior to that year. In the book, the author describes the role of the business enterprise, with specific reference to what we used to call companies or corporations, in what was already by then an established process we now call globalization. At the time, the significance of the term and its reality was only just dawning within the popular imagination. 

But this is a book that goes beyond mere description of the functions of the global economic system. Via its analysis of national economies, and how they interlink, The Work Of Nations also deals with concepts such as national identity, the potential for political action and, fundamentally, how economic classes are formed, how people identify with them and their inter-relationships.

It is worth pausing again to place Robert Reich’s book in context. In 1991 the world had just seen the end of the Soviet Union, but there was no real indication of what might emerge from the debris. The Internet did not emerge until a couple of years later. China’s emergence as a global economic power was underway, but Japan was still by far the biggest economy in Asia. Put simply, after thirty years of an emerging and wholly new world, The Work Of Nations ought to be thoroughly out of date. It isn’t. And the fact that it still has much to offer in the analysis of our contemporary societies is testament to the quality of the author’s vision, which is inspired as well as enduring.

At the heart of the book’s analysis are two fundamental concepts. One is that the old model of the corporation, which implies a vertically integrated organization that brings a product to market via a workforce employed directly by the company and in competition with other similar corporations, is long dead. Secondly, this changed economic structure of developed societies has resulted in a fundamental change to social class formation. Gone is any assumption that masses of nationally resident blue-collar workers are automatically created by pyramids of employment and inverted pyramids of earnings.

In 1991, The Work Of Nations was already describing corporations that cooperated across national borders, shared investment and risk, and moved production or even registration as circumstances provided opportunity. Crucially, Robert Reich was already describing the existence of an international class already formed, comprising professionals, problem solvers and solution identifiers whose status and earnings were determined by their education, their skills and their performance. Over forty years earlier, Michael Young’s The Rise Of The Meritocracy described a world where the benefits accruing to such a class would result in deep social divisions, to the extent that allegiances would become primarily determined by class rather than nationality.

In the 2020s we can see the results of this ideological realignment in the way groups of electors in democracies coalesce around certain types of policy, such as the overtly nationalistic, the anti-immigrant, and, on the other side, liberalism and internationalism.

Does, for instance, this passage remind anyone of more recent preoccupations in American politics? “In the life of a nation, few ideas are more dangerous than good solutions to the wrong problems. Proposals for improving the profitability of American corporations are now legion, as are more general panaceas for what ails American industry. Politicians and pundits talk loosely of ‘restoring’ or ‘restarting’ American business, as if it were a stalled, broken-down jalopy in need of a thorough tune-up. Others offer plans for regaining America’s competitive edge and revitalizing the American economy. Many of these ideas a sound. Some are silly. But all form vestigial thinking about exactly what it is that must be restored, restarted, regained, or revitalized. They assume as their subject in American economy centered upon core American corporations and comprising major American industries - in other words, the American economy of midcentury, which easily dominated what limited world commerce there was. But as we have seen, this image bears only the faintest resemblance to the global economy at the end of the century, in which money and information move almost effortlessly through global webs of enterprise. There is coming to be no such thing as an American corporation or an American industry. The American economy is but a region of the global economy - albeit still a relatively wealthy region. In this light, then, it becomes apparent that all of the entities one might wish revitalize are quickly ceasing to exist.”

And precisely who benefits from the neoliberal economics that rollback the state? “While average working Americans may just feel that they have been surrendering a larger percentage of their earnings in taxes … tax burdens on Americans overall have not increased since the mid-1960s. Total tax receipts amounted to 31.1 per cent of gross national product in 1969, 31.1 per cent in 1979, and 32 per cent in 1989. It is just that the burden has been shifted from relatively wealthy Americans to relatively poor Americans.”

More recently, Thomas Picketty has analyzed inequality as reflected in asset and income distribution. He has identified, even within traditionally entrenched ownership relations, an emerging class of people who, by virtue of their education and skills, command significant earnings. Even in 1991, Robert Reich saw them as an emerging social class.

Robert Reich’s The Work Of Nations is not only still worth reading: it ought to be an essential text. It still has much to say that still needs to be said about the disorganization of national economies in our own time.

Vermeer´s Hat by Timothy Brook

Vermeer’s Hat by Timothy Brook is not really about Vermeer, or hats, or art for that matter. It’s a book about globalization sixteenth century-style. Using elements from a few of the Dutchman’s paintings – plus some others from the period – the author identifies evidence of global trade, of the economic history of a century that saw the opening up of commerce on a scale the world had previously not known. And unlike the more academic studies of Wallerstein or Gunder Frank, Timothy Brook’s book is accessible even to the casual reader.

Its approach is highly original; its style is lucid and clear; its scholarship is nothing less than phenomenal. Early on in the text the author reminds us of the fundamental difference between the passing image and the narrative of art. ‘Paintings are not “taken”, like photographs;’ Timothy Brook writes, ‘they are “made”, carefully and deliberately and not to show an objective reality so much as to present a particular scenario.’ Objects in a painting are there for a reason. They are part of a narrative or comment that the artist chooses to relate, perhaps consciously. Our tasks as observers are partly to interpret as well as respond, as well as merely see. And make no mistake, the process is intellectual, not just aesthetic.

With an admirable eye for detail, Timothy Brook thus analyses seventeenth century paintings for evidence of international trade. But this is only a starting point for a truly global tour. A beaver hat, for instance, leads him to relate the story of how French expeditions into Canada sought pelts to feed demand for high fashion in Europe. It was the beaver’s fortune – or perhaps misfortune – to be born with a fur that, when transformed into felt, remained waterproof, and hence kept its shape in the rain. 

The consequences of this trade – apart from the obvious ones for the beavers – included conflicts with indigenous people, followed by subjugation and, in some cases, annihilation. A Chinese vase, a Turkish carpet and other artefacts around the house lead to the history of trade with the east and thus into how China developed into a manufacturing centre that sucked in Spanish colonial silver from South America to pay for its wares. A discussion of the galleon trade leads to Spain’s annexation of Manila and later the whole of the Philippines. In order to compete the Portuguese establish in Macau and the Dutch colonise the spiced islands.

What impresses the reader of Vermeer’s Hat is Timothy Brook’s skill – an artist’s skill, no less – in assembling potentially disparate scenes into an engaging and ultimately convincing narrative. Economic history thus becomes an engaging story that makes perfect sense. By the end of the century the British were also on the scene, having taken advantage of victories over the competition. We follow the spice trade, the spread of tobacco, trade in silk and ceramics and, of course, the lives of people who pursued and controlled the commerce. We learn how administrators and rulers reaped their own rewards, how illicit goods were smuggled in the same holds as declared cargoes. We see fortunes made and lost, ships sailed and sunk, reputations created and destroyed. And certainly we recognise the world as we know it, a modern world where only the technology is different. Vermeer’s Hat is a must for anyone who thinks that globalization might be a recent phenomenon.

History Repeated - Globalization and its Discontents by Joseph Stiglitz

Globalization and its Discontents has now been around for ten years. In 2002 the book was published as the tech bubble burst. It was five years since the Asian financial crisis in 1997. It was the better part of two decades since the Third World debt crisis of the 1980s effectively removed the livelihoods of masses in Latin America and Africa. And it was also ten years since the demise of the Soviet Union and its bloc. Joseph Stiglitz’s book analyses the response of the world’s major financial institutions, especially the World Bank and the International Monetary fund, to these crises.

National aid programmes and commercial banks also figure in the discussion. His conclusions were clear at the time – and remain so today. The ideologically-driven policy orthodoxy promoted by these bodies has repeatedly proved to be counter-productive. I lived in Asia at the time of the crisis.

I remember arguing with a Malaysian colleague about the need to take the medicine, as the IMF’s prescriptions were described. Integrate fully, open your markets, remove controls and accommodate foreign interests: this was the orthodoxy. When Malaysia did the opposite, I scoffed. The Malaysian economy subsequently contracted less than others, its people suffered less pain and recovery came quicker.

Thailand in particular swallowed the prescribed pills and continued to suffer. And, by the way, during the debt crisis of the 1980s, a number of Western banks became insolvent and had to be rescued. In that era, however, most measures were put in place behind closed doors so we never got to know the lurid details. We did, however, notice the recession.

Joseph Stiglitz illustrates how the right-wing ideology of perfect, self-regulating markets, liberalisation and privatisation failed to deliver in the past. He repeatedly shows how ensuing liquidity crises were treated with adjustment loans that undermined their own goals. He repeatedly shows how a range of measures calculated to address several angles of the problem simultaneously tended to produce better results. The evidence he presents is compelling.

So why, in 2012, do we again seem to be in the same tightening trap? Wherever lack of regulation or deregulation has been applied, it seems to produce the same results. Couple that with the reality of imperfect markets where no-one feels they will ever have to answer for either greed or risk and, it seems, you finish with a crash and then recession. And those who suffer are rarely those who created the problems. Those who ignore history are condemned to repeat it. And what about those who ignore advice? Why use again a treatment that kills the patient? Here we go again.