Greider's Crisis of Overproduction and Underconsumption

William Greider contends in his book One World, Ready or Not: The Manic Logic of Global Capitalism that "the global political economy faces an overproduction/underconsumption crisis and that this impending crisis is being aggravated by the development of unstable global finance" (Dannehl 2005). His argument is a systematic analysis of both the economic and political causes leading to the present crisis. He offers valuable insight into how each variable contributes to the problems that the global economy is currently facing and those it will encounter in the future if nothing is done to intervene. In addition, his writing style, adapted from his former employment position as National Editor for Rolling Stone, makes the book an uncomplicated read for even the general population.

As stated previously, Greider's consideration for contributing variables is extensive. He assumes that nothing is ever strictly political or economic in nature, but explores both academic disciplines for an explanation to the situation facing the global economy today. The first part of this paper will seek to qualify his success at identifying origins of the existing predicament. Next, it will examine Greider's prospects for averting the crisis and analyze the credibility of his predictions. In addition, it will attempt to provide other "specific, concrete solutions" to the impending disaster (Dannehl 2005).

As Greider claims, economic revolutions usually begin with a single technological innovation; in this case, the silicon chip (Greider 1997, p. 27). This invention helped to streamling production and created an entirely new technology sector in one fell swoop. Looking to history as a guide, Greider correctly identifies that through advancements such as the silicon chip, as well as the engine and mass production line before it, "two other fundamental dimensions of industrial revolution" react in response (Greider 1997, p. 27). These two areas are the subsequent "migration of capital" and the mobilization of "business and finance ... to play an aggressive form of politics" (Greider 1997, p. 27). These two consequences of technological advancement are what Greider believes were the catalysts for the real problems presented later in this book. Most significantly, "the development of unstable global finance" has aggravated the circumstances (Dannehl 2005).

With the advent of the silicon chip, the ability of capital to conduct business at vast distances between operations was considerably increased. A traumatic result of this was capital flight in search of cheaper labor and more open trade boundaries. The search for cheap labor was in response to the ever-growing influence of unions. Greider refers back to Marxist philosophy, when he reiterates that "the fundamental struggle ... is between capital and labor" (Greider 1997, p. 38). When capital chooses to move or close its enterprise in one location it eliminates a number of jobs and leaves an infrastructure that may have been dependent upon the income generated from its operation. In addition, the overall consequence of extensive capital flight from many sectors and in numerous places across the globe results in the loss of purchasing power by the middle-class. Greider notes that "incomes were on average losing real value faster than any price benefits delivered by the marketplace" (1997, p. 119). In other words, capital may have been able to manufacture products at a cheaper price due to having to pay lower wages in lesser developed countries, but the ability of the middle-class to consume was diminishing due to the decline of real wages. This brought about a new dilemma, the supply problem; corporations are finding it difficult to sell their products because the upper class invests their money and purchases luxury goods, not mass-produced goods as might be sold by these, now, multinational corporations.

The second by-product of the development of the silicon chip was political mobilization of capital to support their objectives. When capital organizes politically, it can easily exert pressure on the political system with its ability to make large contributions to both actors and interest groups. In addition, they can use calculated threats to sway a government towards their position. For instance, in the agreement between Alabama and Daimler-Chrysler, the state of Alabama gave enormous concessions to Daimler so that they would build an assembly plant in the state (Greider 1997). Unfortunately, this one-sided compromise was not enough to guarantee Daimler's staying in the area, nor was it worth it in the money spent on creating jobs. The money used to lure Daimler into the area could have been better spent on worker retraining programs or other infrastructural or welfare-system development, rather than spending it on a foreign firm. This example of Alabama is the American equivalent of what is happening in lesser-developed countries. LDCs are able to promote their low cost labor as a way to attract potential foreign investors. However, if after a company has infiltrated the market, they can then make powerful threats to leave the area if labor costs start to rise. The human resources in the third world offer a large labor market from which foreign investors can threaten their host countries. Once again, these circumstances often lead to a situation where workers are only making enough money for subsistence living and are not able to amass an income over and above. That excess income would allow for purchasing power and the lowest income bracket could eventually rise to a better living situation and could sustain the capitalist system.

These actions by capital are further "aggravated by the development of unstable global finance" (Dannehl 2005). The income gap is becoming wider due to the aforementioned reasons and capital is amassing the most from corporate profit. Greed is certainly the driving influence, because as Greider noted, "
LDCs and developing countries have been known to default on sizeable loans in the past. Massive debt accumulation is also a continuing problem in those countries, as well as the US in its current state of affairs. In these situations, the United States is looked to for assistance because of its position as a hegemon. However, the US is beginning to experience its own financial trouble; a combined trade deficit and national debt are mounting a significant threat to its current position of power. The combination of these circumstances will certainly lead to a global economic collapse if something is not done to avert the impending crisis.

Action must be taken to prevent the monumental crisis the global economy is facing, but for now many economic and political actors are choosing to avoid the reality as best they can. In his book, Greider suggests several measures that could alleviate the problems of the system. He cites Louis Kelso, the Marxist scholar, and notes important micro- and macroeconomic guidelines that would positively affect the system. The most important aspect of these actions is that they must be taken in a proactive fashion, a reaction to any major disturbance may be too late already.

Kelso's adaptation of Marx's original theory requires that workers take on the running of a firm in the capitalist system. This idea is microeconomic in nature and presumes that ownership that is widely shared among members of society. Kelso explained that the central problem with capitalism today is that "the technological displacement of wage incomes undermines the base of consumption needed to sustain the capitalist system (in Greider 1997, p. 421). Those that have a labor and financial stake in the company, would then work to reap the benefits of their toil twofold. Kelso proposes an employee ownership group with a significant holding of stock within the firm. This suggestion provides a solution to the growing income gap as described by Kelso. While the working class is constantly finding themselves further disadvantaged in the area of wages, a stimulation of demand from the bottom up would occur if these workers were to receive an income over and above the income needed for subsistence living, or maintaining a certain standard of living in the advanced industrial countries. In turn, the disposable income of the working class would increase and the ability to purchase could improve, or even rectify, the supply problem.

Greider points out that "the employees in a company or citizens who live in the same community who, as shareholders, will have a stronger incentive to impose social accountability on the enterprises" (1997, p. 441). Taking this into account, Kelso's plan could also produce a spillover effect in the areas of environmental matters and labor exploitation. Because labor has a commitment to the residential areas surrounding a company, alarm over the treatment of the environment will be heeded more readily by a locally run company than by a one that does not have ties to the area. In addition, labor would be represented within the executive board in some form and thus their concerns would be voiced in a formal manner and must be regarded as they would own a substantial amount of stock within the employee stock arrangement. Another important aspect of employee ownership is the prevention of capital flight. A business would not have an easy time convincing a considerable number of worker-owners that they would be better off if it moved to a market where labor is less expensive, since a sizeable portion of their income comes from being employed by the business.

The next set of recommendations is macroeconomic in nature, meaning that each must be implemented by the governments of the leading industrial nations to be effective. In Greider's words, "the poor cannot save the earth, only the affluent minority can do that. If the wealthier nations choose not to face the portents of industrial disaster, then the global system will proceed forward to meet whatever wall of calamities may lie ahead" (1997, p. 459). The first step needs to be the restoration of national controls over global capital. The rich industrial countries must initiate this step, they have the technology and influence to ensure that policies regarding the resolution to avert this disaster are properly implemented. Their ability to restrict market access to their large national economies plays a major function in their capacity to exert power over other states and the self-interested multinational corporations. It is assumed that this soft power could force trading nations to accept more balanced trade relations, thus absorbing more of the supply surplus and alleviating the growing debt among advanced industrial nations. Lenders in the international system, such as developed countries, the World Bank and International Monetary Fund, need to also look at the growing debt of LDCs. These countries that are essentially the poorest of the poor will most likely never be able pay off their debts. States must now face the reality that the loans made to LDCs should be considered grants in improving the standard of living within those states. Forcing them to repay those loans will probably put them further into debt, while attempting to pay them back. It is a small concession to bring the poorest states in the world up a rung, once again emphasizing bringing the lowest incomes of society up to stimulate demand. With global capital now operating without borders it is also time to consider a monetary policy that operates on the same principle. Although the IMF already does something of this nature, a more accurate global monetary policy regime is needed. A global monetary system would increase currency stability and states would find themselves more visibly interdependent upon one another. This visibility would increase the public awareness of how important economic relations are between states. On the national level, governments must change their income tax structure; rather than taxing the working class and taking away more of their disposable income, the wealthy should be taxed. The upper class does not contribute to remedy the supply problem, instead they invest their money and purchase luxury goods.

Generally, Greider's suggestions for preventing the impending crisis are both feasible and practical. The most important emphasis is placed on the advanced industrial states, and their accepting the reality that the capitalist system is not in perfect balance and that something may be done. Realization is the key to resolving this problem. The only way many of these policies would be implemented worldwide is if there were a specific event to trigger public outcry; be it the growing labor problem or an economic disaster on Wall Street. In both cases one echelon of society would find themselves disadvantaged and demanding a reason and remedy for their situation. More than likely the labor issue will rear its ugly head first, because it is already a widespread problem throughout the world. The critical question is whether the working class can create the unity needed to state their case before it is too late. If it is not possible, then the latter will occur. It is also important that the leaders of each nation take note of this impending disaster and educate the masses on the issue. A well-informed public will produce a call for accountability of the governments. Unfortunately for now, no one is willing to take that crucial first step.

Greider, William. One World, Ready or Not: The Manic Logic of Global Capitalism. 1st Ed. Simon & Schuster. 1998.
Dannehl, Charles. William Greider: One World, Ready or Not ... Lecture. Bradley University. Peoria, IL. Mar-Apr 2005.