Posts Tagged ‘windfall profit’

The success of globalization

Tuesday, August 12th, 2008

Massive globalization — a major move towards free market capitalism — has brought over a billion people out of poverty, while sixty years of socialist chaos and violence has failed to convince most of the world that central planning is a very bad way to run any economy.“Ruble” symbolizes pretend money, unconvertible into goods, much as “Finland” symbolizes submission to a hostile power, and “Peso” symbolizes inflation.

Globalism has done what socialism promised to do and failed to do: It has lifted those parts of the third world that adopted it out of poverty. If you have been shopping for a subnotebook, this should be obvious. Globalization means that if you are using a subnotebook, you are using a subnotebook designed and built in a country that recently used to be third world and used to be socialist, but which has moved substantially towards free market capitalism.

Socialism aimed to create an alternative to normal economic transactions, an alternative that would avoid such banes of capitalism as business cycles, windfall profits, and unemployment. Socialists expected to that their benevolence, wisdom — and absolute power backed by the most brutal extremes of savage violence — would bring the poor out of poverty, but instead chained the poor into serfdom and slavery.

Socialist transactions usually involved crises, shortages, unfullfillable quotas, and the continual threat and frequent reality of violence.

To do what they were commanded to do, administrators under socialism had to do what they were forbidden to do — the plan functioned, in so far as it did function, through an illegal underground black market economy. To enable the military plan to be fulfilled, troops lurked on the road to intercept and seize goods planned for other purposes. Civilians substituted the black market for the plan, and the military substituted pillage for the plan.

The Soviets created a Potemkin village of normality, thinly concealing a chaotic and violent reality that people were forbidden to notice.

Socialists interpret trade and business as fraud and violence, which gives them continual cause for war, especially war on their disarmed and frightened subjects. The failure of socialism was and is blamed on internal and external enemies. Somehow, capitalism was continuing, so more violence was required. If poverty is caused by wicked capitalists, and poverty continued, then obviously capitalism must be continuing, and must be hunted down and crushed.

“Globalization” is that Walmart and China are entwined, that American business phones are manned by Indians in India, and as a result of globalization, a major part of the third world, most importantly India and China, are now becoming first world.

Globalization is a success, a success as obvious and spectacular, as socialism was a spectacular and dreadful failure.

Lots of planning and state intervention remains — and lots of violence and chaos remains. But to the extent that do we have globalization, it has succeeded spectacularly. Its crises are the crises of success. If Chinese were still trudging around barefoot in the mud and snow, we would not have the present energy crisis.

There is still a lot of state intervention and state owned enterprises, in China and elsewhere, but there is now a lot less of it, and what there is accepts capitalism, rather than trying to fix capitalism. No more “iron ricebowl” in China.

China still has extensive state owned enterprises, but they no longer have monopoly privileges – they are subject to competition, and required to make a profit. If they lose money, the management is fired. If they continue to lose money, everyone is fired – which is one hell of a lot less socialist than America’s Amtrack, and features business cycles, windfall profits and unemployment, all the things that socialism and state intervention was justified as remedying. The resource crisis has led to huge windfall profits by Chinese resource businesses, and of course lots of Chinese state owned enterprises have shut down for inability to turn a profit, leading to unemployment, plus the whole economy is coordinated through just in time contracts organized by firms run from outside China, through private contracts with global businesses, not through a government plan. The Chinese economy is run through virtual private networks managed by overseas servers, the servers largely located in places such as Bermuda, which virtual private networks and servers are the nerves and sinews of globalization.

And to the extent that such intervention has been dramatically reduced, and transformed in ways that make it less disruptive of capitalism, transformed in ways that accept the unpredictable outcomes of free market competition, and the winners and losers that such competition produces, the poor have become vastly better off.