The Toronto Star Saturday March 21, 1998
Hostages to the money men
A new book asks:
Why do we let ourselves be powerless against global financial
markets?
By Linda McQuaig Special to The Star
This is the first of two excerpts from
The Cult of Impotence: Selling the Myth of Powerlessness in the Global
Economy, written by Linda McQuaig and published by Penguin Canada.
McQuaig, a former reporter for The Star and The Globe and Mail, has now
written five books on politics, economics and Canada's financial
establishment. Her publisher notes that newspaper magnate Conrad Black
has publicly suggested she should be horsewhipped.
DR. IAN ANGELL, professor of information systems at the London
School of Economics, is holding forth on CBC Radio, explaining how most
of the working population will soon be redundant.
"Isn't there an economic cost to writing off the world's workers?" asks
interviewer Ian Brown.
The question suggests that Brown has bought the basic parameters of the
debate: that we only discuss economic cost. Brown is asking: How does
the unemployment of most of the world's population fit society's basic
business plan?
No one mentions human cost. But still, the question doesn't suit Angell.
Impatience is detectable in his voice. "This requires a total rethinking of the
institutions of the industrial age. You must throw them away," says Angell,
trying to make things nice and simple for Brown to grasp. "All your
thinking has to be different."
As the interview progresses, Brown becomes increasingly skeptical of what
he's hearing. His questions reveal that he's struggling to see how all this
unemployment helps ordinary people. Answer: it doesn't. But that's not the
issue. The issue is that it's the future. Globalization, technology,
governments can no longer coddle their people, etc., etc.
An emboldened Brown asks something about how people are to survive.
Angell is getting a touch irritated with these repetitive questions about
human needs. Brown just doesn't seem to get it. The point is that we're in a
brand new age, the information age. Technology and globalization have
made all these questions about human needs irrelevant. That's part of
yesterday's menu. Today we simply watch as the technological juggernaut
rolls on, squashing our needs.
"Is this a world you look forward to?" asks Brown, struggling to make
some sense of it all.
"That's neither here nor there," responds Angell.
"Is there some way we can stop this?" Brown asks anxiously. "Is there
nothing we can do to avoid this dark future?"
That's when Angell snaps. "That question reflects the thinking of the
machine age," he says curtly.
Hold it. Let's play that again slowly.
This line is more subversive than it first appears. It is perhaps as subversive
a thought as it is possible to have. Angell is saying, it's not just that we
can't change things, but we also can't even think about the possibility of
changing things; to do so is to engage in old-style thinking.
So, it's not just that we're powerless to stop being pushed over the edge of
the cliff in the new global world order. But to even try to prevent ourselves
from being pushed over the cliff is a sign of regressive thinking.
The new way of thinking, as outlined by Angell, requires an acceptance of
powerlessness, resignation to a world without solutions - a world of
inaction and helplessness. That democratic impulse to assert one's rights
must be contained, thwarted, rendered mute and inoperative.
Never mind the democratic impulse. It's actually the human impulse that's
at stake here. The human impulse to act, to build, to create, to improve, to
shape our lives, to use our brains to do better. It's called being alive. It's
just got to go.
"Imagine." The word is half-whispered. On the screen, we see a native girl
of indeterminate age on a swing. Wistful. Dreamy. Free as the wind that
blows in her face. She is presumably imagining the possibilities, imagining a
better world. Could she be thinking of change, improvement? Could she be
thinking the old way? Perhaps a few weeks in a Dr. Angell re-education
camp is needed.
But wait. This is a TV commercial for a bank. It's the Bank of Montreal,
saying it is possible. Of course, it's never clear from the ad exactly what is
possible. It seems to be suggesting that anything is possible. Surely, that's
the reason for choosing a young native girl for the part.
We'd normally see the face of such a girl in the media only as part of a
story about glue-sniffing or teen suicide or "young runaway turns teen
stripper and ends up murdered in a stairwell." But here, in the airbrushed
world of the Bank of Montreal - or its hipper version, mbanx - this girl
seems to be an inspired person, someone with limitless possibilities in front
of her.
Surely, if even someone like this - not an upwardly mobile white male in a
suit, but a native female in a long skirt and cowboy boots - can have a
dream, the possibilities out there for regular people must be truly endless.
And they are - when it comes to banking.
"At mbanx, we don't believe in limits," says the breathless prose in a print
ad for mbanx, picking up the theme from the TV ad. "Your $13 monthly
fee covers all your everyday banking needs and more."
No wonder the native girl seems so blissed out. Imagine the possibilities.
Why would anyone bother to sniff glue or commit suicide or get killed in a
stairwell when there's a whole new, wide world out there of . . . debit
cards, online shared networks, activation charges.
"At mbanx, we see technology as something that links, not isolates. So,
even though you may never see us, we're always here for you. In some
ways, we're closer than any branch could be. And we guarantee you'll be
satisfied with our service. Every time you call, you can speak with a
portfolio manager whose job it is to know you, respect you and make what
you want happen."
Is this banking or telephone sex? Is there a difference?
As we delve deeper into the mbanx philosophy, we see there is nothing
here that Angell would have trouble with. As long as the native girl
confines herself to imagining the banking possibilities that lie ahead, she is
simply marvelling at the high-tech corporate world engulfing her. She is not
trying to assert herself or work toward changing the world.
But what if her mind were to stray from contemplating the wonders of
modern banking on to, say, contemplating Canada's unemployment
problem? This world is worth exploring for a minute because, with its
sense of hopelessness, it is the flip side of the ever-expanding dreamy world
of the mbanx commercial.
Mostly, it's a world full of people feeling depressed because they can't find
work. Huge numbers of people. Virtually an army of people.
Lars Osberg, an economist at Dalhousie University in Halifax, has come up
with a graphic way to illustrate the size of this army of unemployed
Canadians and the enormous waste of its idleness. Let's suppose that the
army was put to work building something highly labour-intensive -
something like, say, the great pyramids of ancient Egypt - using the exact
same primitive technology that was available back in the 26th century B.C.
Osberg calculates unemployed Canadians could have built no fewer than
seven pyramids since 1990 and be well on their way to completing their
eighth.
Of course, the more significant question to consider is, what could have
been accomplished had these unemployed Canadians instead used modern
technology and built something more useful than a tomb for a dead king?
What if they'd built housing or highways, cleaned up the Great Lakes or
operated day-care centres, or worked in the Canadian aerospace industry?
Imagine.
We've come to believe certain things are no longer within our reach, in this
age of the global economy. Is full employment possible? How about well-
funded public health and education systems, or a clean environment? Or is
only all-night banking possible?
The dominant school of thought has become those who argue, essentially,
that the market now determines what is possible.
It's an odd sort of situation we find ourselves in. The market offers us a
giddy world of choice when it comes to consumer items: banking, cars,
appliances, bathroom fixtures, beer. Enter into any one of these consumer
worlds, and one is confronted with a breathless array of possibilities.
We can choose from literally hundreds of different car models, with
thousands of options. Do we want a sedan or a hatchback, leather or plush
seats, cruise control, anti-lock brakes, air-conditioning, wrap-around
stereo, coffee holders that flip out or pull down?
What about telephone sets? Do we want them to be cordless or plug-in, to
beep with incoming calls or simply record them on an answering machine,
to look like a fire engine or like the Star Trek spaceship?
Or dental floss: Do we want it waxed or unwaxed, mint or plain, thick or
fine, floss or tape?
But when it comes to things that many people might consider more
important - like whether we will have jobs, or live in communities where air
and water are unpolluted and no one will be left hungry or homeless - these
things are apparently beyond our control. If we put in place policies that
create the kind of society we apparently want, the market will move money
out of the country, we are told.
Thus, there are limits to what we can do. We have to stay within the
dictates of the market. We have become captives of the marketplace.
It's interesting to note just how far we've moved outside the normal range
of historical human experience. In his overview of world economic history,
The Great Transformation, economic historian Karl Polanyi noted that the
Industrial Revolution marked the first time in history that the notion of the
private market was elevated to the central organizing principle of society.
In earlier times, the market was only one of the forces around which
society organized itself. Religion, family, custom, law, tradition had all
been considered more important.
Now, if Ian Angell and his ilk are to be believed, we've come to the point
where not only has the market become the dominant force in our society,
but also its dominance is above reproach, above question. To suggest that
we have a choice about what role the market will play in our lives is to fail
to see that we've evolved to a supposedly higher plane - a plane where we
now no longer have any choice about the market's power over our lives in
areas that really matter, a plane where we are essentially impotent.
Thank God we've at least got all-night banking.
Are we really powerless in the global marketplace? Have governments truly
lost their sovereignty in the face of globally wandering capital and wickedly
clever currency traders? Are we in a brand-new, globalized world, where
financial markets have the power to dominate in a way never seen before?
In fact, the globalization of international finance is not a new phenomenon.
It is, rather, a throwback to an earlier time. While capital is more mobile
now than it was two or three decades ago, it was just as mobile before
World War I.
Even the conservative British magazine The Economist acknowledges: "In
relation to the size of economies, net capital flows across borders then
were much bigger than they are now. The international bond market, too,
was just as active at the start of this century as it is now. . . . Today's
free-
flowing capital fits with the long-term pattern."
Let's follow a little further what The Economist has to say on this, because
it is very revealing: "The anomaly is not, as many believe, the current
power of global finance, but the period from 1930 to 1970 when, to
various degrees, capital controls and tight regulation insulated domestic
financial markets and gave governments more control over their domestic
economies."
Indeed, it was in response to the devastating Depression that governments
around the world began to assert their power to bring footloose capital
under some degree of democratic control. Immediately after World War II,
they established a new international financial system that gave
governments, for the first time, considerable power over financial markets.
With governments, rather than markets, flexing their muscles, the result
was an agenda more geared to popular wishes, such as full employment
and social programs.
That early postwar period was, in many ways, the Golden Age. But now it
is gone; full employment seems out of the question, no matter how much
the public may like it, and social programs just keep shrinking, no matter
how much the public seems to want them. The question is why. What has
happened? Can this change really be attributed to the "globalization of
financial markets" when, as it turns out, financial markets were just as
global at the turn of the century?
Of course, the technology is dramatically different now - although perhaps
not as different as we sometimes assume. At the turn of the century, there
were no computers, but international transactions could be made almost
instantaneously after the completion of the first transatlantic cable in the
1860s.
Computer technology has now made it possible to move money even more
quickly. But does it follow that this faster movement makes it impossible to
control money?
On the contrary, there's a flip side to this computer wizardry that is almost
always omitted from discussions about the new techno-world of global
finance. The very technology that makes it possible to move money more
quickly than ever before also makes it possible to trace that movement
more easily than ever before. If the movement of money can be traced, it
can be regulated and brought under control.
In other words, there is no reason - from a technological point of view -
that international capital markets can't be regulated, as they were in the
first
few decades after World War II. If anything, it would probably be easier to
regulate them now, because computers have made comprehensive tracking
possible.
The real problem is not the technology, but rather the unwillingness of
governments to apply the technology to the task.
One striking thing about impotence is how unfashionable it is, except when
applied to democracy. One of the most prominent themes running through
the popular business literature of the last decade - in books, magazines and
seminars - is the theme of empowerment, the notion that anything is
possible, with the right attitudes and efforts.
In the business world, impotence is nowhere to be found. Imagine a
business leader standing up in front of the company's shareholders and
telling them it just isn't possible to increase market share.
Or imagine Bank of Canada governor Gordon Thiessen explaining in a
speech to the National Club that, although he would like to control
inflation, he really can't, owing to globalization and technology. Such a
governor would not likely still be governor by the end of the day.
Yet, somehow, this enormous sense of empowerment, this belief in the
endless possibilities of human initiative and creativity, disappears when we
enter the domain of democracy. Somehow, the notion that we can
collectively achieve great things - indeed, that we can achieve even basic
things that were regularly achieved centuries ago, like providing work,
shelter and food for everyone in the community - these things are now
considered beyond our reach.
So, while a culture of machismo guarantees the delivery of the market
agenda - in which Thiessen must prove his unshakeable resolve to control
inflation and Finance Minister Paul Martin vows to meet his deficit targets
"come hell or high water" - all that testosterone disappears when it comes
to fighting unemployment or delivering social programs.
Governments, in other words, are practising a form of selective impotence.
-------------------
Tomorrow, in the Context section, excerpt 2: Making sure the rich stay
rich.
Regards,
Tom Walker
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Vancouver, B.C.
[EMAIL PROTECTED]
(604) 669-3286
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The TimeWork Web: http://www.vcn.bc.ca/timework/
