Units of Capitalism at the Dawn of Globalization


In 1954 America, the average middle class family had one black, metal telephone wired to a wall near the kitchen, one car with no seatbelts or GPS system, and one television receiving a handful of free, snowy channels from an antenna on the roof. By most measures, fifty years is not a long time, but in America, fifty years can be precisely measured in price tags, pie charts, top-ten hits, hairstyles, hemlines, movies, TV commercials, and a decade-by-decade calendar of trends and products we created, manufactured and sold to each other. In the developed world, America represents the best working model of capitalism and free enterprise. Muddled by our democratic process, and flawed by its inherent inequalities, our interpretation of capitalism is the most influential economic force in the global community.

Fifty years has so many markers in our country because in our economy change must rule the day. Change means new ideas, new products, new jobs, and new money to fuel new ideas. One of the downsides of the system, however, is that people become so consumed by the process of managing their own complex lives, that they lose perspective of their true context as elements of the economy, and by extension, as a nation in the global community.

In America, the emphasis on today is trend economics by design, but it is important to step back and include the valuable lessons of history in today’s thinking. This is a nation built on the pursuit of ideals, and strengthened by the ingenuity and diverse fabric of its society. A nation of immigrants that became a nation of Americans with many faces, in a world of nations that became a global community. The realities that flow from these truths are the foundation of the future for an America that is no less capable, but as a society, perhaps less able to see the bigger picture, and less willing to evolve. This is no more evident than in the debate over who gets the jobs of American companies. It is less a question of entitlement than a matter of understanding history and of how our economy works. A system that demands more of everything to survive cultivates a society of individuals that functions on the same premise. The very nature of capitalism imposes powerful influences and pressures on society to achieve and consume, but in that process the broader context of issues is over-shadowed by an ever-narrowing focus on achieving personal goals. Objectives become expectations; opportunities become entitlements.

Our economic and labor history is one of creating change and then adapting to it. The transitions were never smooth, but the process is inevitable unless our workforce is prepared for change. The independence and resourcefulness of individuals is historically what defined the character of our collective workforce. Today, more than ever, we are units of capitalism and our lives are microcosms of the entities we create.

There is a lesson here for the developing world and the global community, and that is to recognize the gaps that democracy and capitalism create. The system has flaws that break down from the inside, at the individual level. Governments need to invest in education so that the workers of today have the chance to adapt to the real world economy, and workers of tomorrow are prepared to. It is not just a matter of teaching specific skills, but also the concept of adaptability; of learning the broader skills of learning, and understanding the effects of the global economy on individual lives. The empowerment of people to create their own opportunities is key to the long-term success of capitalism. Governments have the responsibility to build a foundation on which businesses can create opportunities, and to provide its citizens with the structure and knowledge to pursue them.

Globalization is less of a concept or economic policy than it is a collective realization of an inevitability. Like modernization, the word globalization can be defined as an adjustment after-the-fact. Our world is coming into focus as its population grows, as technology networks us together, and ultimately, as our demands on each other and the resources of our world force us to come up with a plan. This is a global realization – a wake-up call to the obvious state of the new global economy, and how it effects our lives.

In New Dehli, India, beyond the chaotic street life that defines the county’s social and economic turmoil, are islands of order – new businesses with cutting-edge technology run by young entrepreneurs. They serve U.S. companies as customer service and technical support for American products and services. Using their own satellite telephone equipment, because India’s public telephone service is too unreliable, employees learn to speak colloquial English to Americans who believe they may be chatting with someone from Columbus, Ohio or Brooklyn, New York. Only five percent of those who apply are offered these prime jobs that pay only $5000US per year – a bargain for U.S. companies. So important are these jobs to India, though, that many members of the Indian government believe they represent a cornerstone to the rebuilding of the economy, and the pride of their nation.

In the U.S., the debate over the outsourcing of jobs to other countries is a debate over the present toward the future, that often overlooks the past. Much of our history has been shaped by the process of free enterprise. At the end of the 19th Century, during America’s Industrial Revolution, emerging industries and new inventions displaced workers and forced entire generations of craftsmen to retrain – to apply their experience and retool their skills in order to adapt to the changing world. Employers moved to build factories closer to resources to expand and increase profits. America was reinventing itself from an agricultural to an industrial economy.

The industrialization of America undermined the status of skilled workers. Increased mechanization meant that owners had less and less need for highly trained artisans and craftspeople. As a result, beginning in the 1870s, skilled workers became an ever smaller part of the overall labor force. Companies hired unskilled laborers who performed simple tasks and worked for lower wages. The result was that American factory work became “deskilled”. More and more rural Americans migrated from farms to urban factories, while women and children became an ever more significant part of the industrial workforce. Most women who worked in factories were between the ages 18 and 24, and children as young as five became increasingly important cogs in the industrial wheel. By 1890, the bulk of the urban American population was living below the poverty level of $530 per year. By 1910, 25 percent of all American children were employed full-time in the nation’s factories. Americans were taking American jobs, and industries were moving over state lines. The realization then was nationalization. Just as today, the American worker was caught in a gap between expendable skills and expanding progress.

During the 1830s and the 1840s, the average workday at American textile mills was 16 to 18 hours. By 1865, that dropped to between 11 and 12 hours, and by the early 1880s, employees demanded that they work only 10 hours a day. In a few cities, lead by Chicago, organized labor emerged and fought for the now-standard 8-hour workday. Some factory owners agreed with the reforms, but most still believed that workers benefited morally from working longer hours. The balance had shifted from a skilled workforce to a captured unskilled pool of interchangeable parts. In a long and bitter struggle, organized labor fought to right the scale.

Unions championed the rights of American workers to secure jobs that pay fair wages in safe environments, and their role has been a vital weight toward achieving a balance between corporate profits and fair labor standards. But unions have also over-protected jobs at the expense of the progress that created them – holding back technological advances, and seeking high wages for dull-edge – obsolescent or less-skilled jobs. This helped drive up the cost of American goods and services, which in turn helped inflate the cost of living, which was then used as a justification to demand higher wages, while competition from foreign imports riddled American industries.

The end-result to the American consumer was a greater choice of products and lower prices based on free-market competition with foreign companies. The end result to the American worker was short-term gains that lead to long-term unemployment for many, when companies that could not compete became industries that could not compete. American workers became consumers who had raised their standard of living on higher wages, and raised the price of the American goods and services in the process. Faced with that reality, they found themselves buying foreign-made goods to maintain their American standard of living.

The Technological Revolution of today thrives in a global community instead of national one. Just as over a hundred years ago, businesses are moving toward cheaper labor to increase profits. A successful business is an organism designed to compete. Social considerations aside, a company seeking greater profits overseas is no different than an employee seeking a higher salary across the street. Outsourcing is not “anti-American” as many in the workforce are suggesting – it is very American, and a positive step toward the development of a healthy global economy. In the building of our country, fairness has never been a cornerstone of progress – it’s almost always been a lengthy retrofit, but it doesn’t always have to be that way, and the model we create can provide more balance to the process of progress.

Individual initiative supported by government and industry prioritizing education and training will help streamline the growth of business and industry, while empowering individuals to become part of an economy designed for revolutionary change. Other counties are living a part of America’s past, dealing with issues of child labor, poor working conditions and unfair wages. In some ways, we are doing business with 19th Century Americas. The similarities, however, can be limited to an immediate set of circumstances. The broader context in Mexico, for example, is quite different from anything in American history.

The Mexican economy is struggling under the weight of forty million people living below the poverty line – by Mexican standards. And American manufacturing jobs have moved there because the labor is cheap, and Mexican products have flowed into the U.S. marketplace because they are less expensive. This is how the global economy will grow. The problem with Mexico is the great disparity in the cost of labor and the standard of living. The border has become a waterfall from a high level of unemployment and poverty to a pool of opportunities and free handouts. Illegal immigrants are an unplanned-for flow in the globalization process, but they are also people trying to survive it. Clearly, illegal immigrants are not entitled to American jobs, but more importantly to American workers, they are not entitled to the opportunity. This is demoralizing because their opportunity was earned – through history, hard work, and citizenship. In a capitalist democracy, opportunity is a cornerstone, and opportunities can be lost because progress can be unfair, but not because illegal immigrants are handed American jobs. This is unjust on its face, and further compounded by the use of taxpayer funds to provide welfare, health care, and education benefits that some American citizens cannot obtain.

The key to dealing successfully with America’s latest revolution, is to see the global community for what it is – a powerful group of developed countries with resources and money, and a much larger number of struggling countries trying to use the system to compete and survive. It sounds simple enough, but America, as the world leader, must not just set the pace, it must set an example. An established set of checks and balances should allow a controlled flow of legal immigrants into the country, provide for massive education of its own workers, and allow the natural process of economic progress to flow. Creating a model that other economies can emulate and follow is more economically sound than allowing workers to lose their competitiveness, illegal immigrants to flow into the workforce, and other countries to define the shape of our economy. Clear policies and proactive planning will define the shape of America’s future in the center of the global community, and allow other counties to share the opportunities we provide, and exploit the opportunities they create.

Synopsis:

America is built on a rich history of revolutionary changes – on dynamic growth driven by ingenuity and independence. Held against the realities of capitalism and democracy, we can see that progress in America has never been a smooth process. Constant change and competition leads to innovation and economic revolutions, but leaves unprepared workers behind, and causes lengthy adjustments that damage the economy. During America’s Industrial Revolution, the flow of businesses and jobs amounted to nationalization in the same way that the networking of global resources has lead to globalization. In the 19th Century, American workers lost their jobs to new inventions and the industrialization of the economy. Factories moved to urban areas, and women and children took the jobs of craftsmen, whose skills became obsolete. Today, the outsourcing of jobs to developing countries is part of a technological revolution, and just as over a hundred years ago, the workforce is unprepared. The right of businesses to seek greater profits remains the basic premise of free enterprise, just as an employee’s right to seek a better-paying job.

Capitalism, by design, creates pressures on society to achieve and consume. The byproduct of the system’s success, however, is a society that begins to view objectives as expectations, and opportunities as entitlements. In this age of globalization, when America needs to lead, it is mired in another cycle of maladjustment. At the beginning of the 20th century, American workers were at the mercy of industrialization until organized labor fought to right the imbalances. Unions then tipped the scale too far, and began to control the ability of companies to compete by slowing technological innovations and increasing salaries in order to provide job security, This contributed to higher prices, which sparked foreign competition, companies and industries that could not compete, and ultimately the loss of many jobs.

Government and industry need to prioritize education and training to help streamline the revolutionary process of economic progress. America needs to recognize that developing counties are living a part of America’s past, dealing with many of the same labor issues. It is part of our role as a world leader to set the standard for growth in the world economy by example – preparing our workforce, allowing businesses to expand, and defining our immigration policies by our laws and our growth by the lessons of our history.


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