Marx argued that capitalism is inherently chaotic and crisis-prone, with a constant drive for profits leading to mechanization and the exploitation of workers. He also believed that capitalism’s focus on creating and satisfying arbitrary desires would lead to a society driven by a constant need for more and more products, even if they are not truly necessary. In addition, Marx predicted that capitalism would lead to globalization, with companies searching for new markets and cheap labor around the world, and the concentration of market power in large monopoly firms. He also believed that capitalism would lead to increasing inequality and the alienation of individuals from the work they do and the products they produce. While Marx was wrong about some aspects of capitalism, his analysis correctly predicted several aspects of contemporary capitalism.
Tag Archives: globalization
Why ideas – not labor or capital – will decide countries’ economic success in the future
New World Order
Labor, Capital, and Ideas in the Power Law Economy
By Erik Brynjolfsson, Andrew McAfee, and Michael Spence
Recent advances in technology have created an increasingly unified global marketplace for labor and capital. The ability of both to flow to their highest-value uses, regardless of their location, is equalizing their prices across the globe. In recent years, this broad factor-price equalization has benefited nations with abundant low-cost labor and those with access to cheap capital. Some have argued that the current era of rapid technological progress serves labor, and some have argued that it serves capital. What both camps have slighted is the fact that technology is not only integrating existing sources of labor and capital but also creating new ones.
Machines are substituting for more types of human labor than ever before. As they replicate themselves, they are also creating more capital. This means that the real winners of the future will not be the providers of cheap labor or the owners of ordinary capital, both of whom will be increasingly squeezed by automation. Fortune will instead favor a third group: those who can innovate and create new products, services, and business models.
The distribution of income for this creative class typically takes the form of a power law, with a small number of winners capturing most of the rewards and a long tail consisting of the rest of the participants. So in the future, ideas will be the real scarce inputs in the world — scarcer than both labor and capital — and the few who provide good ideas will reap huge rewards. Assuring an acceptable standard of living for the rest and building inclusive economies and societies will become increasingly important challenges in the years to come.
LABOR PAINS
Turn over your iPhone and you can read an eight-word business plan that has served Apple well: “Designed by Apple in California. Assembled in China.” With a market capitalization of over $500 billion, Apple has become the most valuable company in the world. Variants of this strategy have worked not only for Apple and other large global enterprises but also for medium-sized firms and even “micro-multinationals.” More and more companies have been riding the two great forces of our era — technology and globalization — to profits.
Read more » Foreign Affairs
Learn more » http://www.foreignaffairs.com/articles/141531/erik-brynjolfsson-andrew-mcafee-and-michael-spence/new-world-order
Russia-China deal: Even energy pivots East
The thing about globalization is that it involves the whole world. Hence Russia exercises its option to pivot East when faced with an obdurate West.
Bubbles share a core attitude of mind: complete incapacity to recognize that the real world may not correspond to your immediate surroundings. Thus investors become absorbed by manias from tulip bulbs to the South Sea, the internet et al, and fail to realize that ‘asset’ values have fundamentally decoupled from reality.
Read more » http://rt.com/op-edge/160212-russia-china-gas-deal-east/
Will the Japan trade deal revive globalization?
Japan Trade Deal May Revive Globalization
By the Editors
The U.S. and Japan agreed to terms last week allowing Japan to join talks on the Trans-Pacific Partnership, another step toward creating the world’s most important free-trade initiative. The emerging pact has far- reaching implications for domestic policy in Japan and elsewhere, and could offer a new approach to global as well as regional trade liberalization.
Japan’s participation would widen the TPP to 12 members, accounting for 40 percent of global gross domestic product. The Japanese economy is bigger than all the other non-U.S. members combined. By taking part, Japan is making a commitment to long- overdue domestic economic change. Supply-side reform is one of the “three arrows” Prime Minister Shinzo Abe has promised will revive Japan’s stagnant economy (the others are monetary stimulus and fiscal expansion). In the long term, it’s the one that matters most — and it’s the one that the TPP can provide.
Abe deserves much credit for pressing this part of his program so determinedly. Special interests, especially farming, have supported protectionism in Japan for years. (Rice farmers are shielded by tariffs approaching 800 percent.) The TPP will mobilize Japan’s manufacturing exporters, which will gain directly from the deal, as a countervailing political force.
Farmer Resistance
According to the government’s estimate, annual farm and marine production might decline by 3 trillion yen ($30.3 billion) under the TPP, though other sectors would expand more than twice as much, raising aggregate GDP by 3.2 trillion yen. That’s probably an underestimate, because the benefits would build over time. One independent study puts Japan’s potential gain at more than $100 billion a year (2 percent of GDP) by 2025. ….
Read more » Bloomberg
http://www.bloomberg.com/news/2013-04-14/japan-trade-deal-may-revive-globalization.html?alcmpid=view
Collapse Of World Economic Order???
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