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Saturday, September 22, 2007

Most Americans would like to forget that the original economic system of our nation was based on slavery

In the long run Globalization is not good for the U.S. economy Saturday, September 22, 2007 News World National State News Politics Business Technology Industry Science Medicine Sports Education Entertainment Weather Opinion Latest Articles View Topics View Authors Features Latest Articles View Topics View Authors Community Town Hall CityBlogs Join Our List Other Sections Affiliates Advertise Video

Globalization and the Evolution of American Capitalism Darrell Williams
Globalization is inevitable but is it good or bad for our nation? Capitalism and free enterprise in the United States has never been static, it has always been dynamic. The fundamental characteristics of capitalism continually inspire individuals to be creative. The effects of this individual creativity can be good and they can also be bad. They can be good in so far as they develop the nation’s economic system and increase the standard of living of the majority of the population. They can be bad if they overly exploit labor and cause environmental damage for the benefit of a few corporate owners.
Most Americans would like to forget that the original economic system of our nation was based on slavery. Throughout history, few nations have had any laws prohibiting this inhuman practice of exploiting their fellow beings. Prior to the U.S. Civil War, a large percentage of Americans continued to justify this system for many reasons. However the only real reason it existed was that slavery was the cheapest form of labor. It is pure capitalism because the labor cost is zero. Slavery is capitalism because the owners own the means of production. They own the slaves. Owners achieved maximum profit off of unpaid forced labor. When a slave was worn out, they were simply replaced. A few cruel owners lived in southern mansions while their helpless labor families lived in shacks. It took a violent revolution to end this disgraceful system.
However, American capitalism continued to evolve. After the end of the agricultural slave system in the south, a new type of exploitation developed in the north. This system could be called industrial slavery. Few people today are fully aware of the terrible conditions that existed in the early factories that developed during the industrial revolution. The conditions of the factory workers could only be described as slavery. Men, women and children worked in unsafe conditions for long hours. With absolutely no laws or restrictions on labor practices, children worked 16 hours a day for pennies. The labor costs were so small that this system could be classified as almost pure capitalism. Pure capitalism is the system in which labor costs are at a minimum and profits are at a maximum. Slavery is the cheapest possible form of labor. Cheap labor is always the goal of corporation owners.
Pure capitalism continued to grow and spread in the United States and other industrial nations until 1929. In that year, the ill effects of pure capitalism pushed the economic system to the point of collapse. The flaw in pure capitalism is that it continually takes more and more money out of the economic system. If the profits are too high and the labor wages are too small, the rich continue to get richer and the poor continue to get poorer. When more and more capital is going into the bank accounts of the rich, there is less and less money being circulated. Eventually the working people are not receiving enough wages to buy the products that the factories are producing. When the breaking point is reached, the system collapses. The factories and businesses are closed. The wealthy owners retire to their yachts and country clubs. The unemployed workers are forced to stand in bread lines to get food for their families. This was the Great Depression that lasted from 1929 until 1939.
Historians often describe the history of the world as a struggle between the haves and the have-nots. A struggle between the rich few and the many poor. A struggle between the Kings and the peasants. Most of the revolutions in history, such as the French Revolution, resulted when these unbalanced systems reached a breaking point. They are very often violent revolutions such as the Russian Revolution in 1917.
President Roosevelt recognized that the United States was facing exactly such a crisis. He saw that the crisis could easily get out of control and produce a violent revolution. He had to act quickly to preserve the national peace and preserve capitalism. He recognized the flaws in pure capitalism and began enacting legislation to correct some of those characteristics that had resulted in the unbalanced system. This program was called ’The New Deal’. By enacting legislation that improved the conditions of the workers, such as minimum wage, eight hour work day, unemployment insurance, social security, prohibited child labor, safe working conditions, public work programs and increased taxes on the wealthy, he helped the workers restore the economy. The working people were able to put capital back into circulation and the nation’s economy recovered.
What President Roosevelt did was obviously opposed by the wealthy owners. They are always opposed to any government regulations that reduce their profits. Because of this opposition, the corporations have always opposed all of the measures enacted by Roosevelt. However these same owners should acknowledge that it was Roosevelt that saved capitalism by putting some limits on it’s characteristics. What Roosevelt created could be called limited capitalism. Limited capitalism is better than pure capitalism because it keeps enough capital in circulation to allow the system to grow without collapsing.
It is the limited capitalism that has been the system within the United States since the 1930’s that is responsible for the successful economic growth of our nation. By giving higher wages to workers it has allowed them to buy all of the products the companies are producing. This is the best economic system and it has created the worlds highest standard of living for the American people.
But the greed of corporate owners has never, since Roosevelt, stopped trying to eliminate or evade all of the restrictions government regulations and local laws have placed on their operations. Corporations continue to have the selfish goal of maximizing profits and minimizing labor costs. These owners and managers continually fail to recognize that the most successful economic system requires that the gap between the rich and the poor be reduced not increased. The more money that consumers have to spend, the more healthy the economy is. Reducing the wages of workers has only a detrimental effect.
Now the world is facing the reality of Globalization. The ease with which corporations can establish factories in other countries is becoming very appealing to greedy owners. The primary reason for doing this is obvious. It is the same as always, to maximize profits by reducing labor costs. By moving operations to other countries, corporations can evade all of the labor laws and environmental restrictions that exist within the United States. This is the best move a company can make for the owners of the company.
Globalization may be one step forward for the company, but it is one step backward for our nation’s economy. It will temporarily increase the profits for the individual company, but by reducing workers wages, it’s long term effects will be detrimental.
  • First, it reduces the wages of working Americans because the labor is being done by foreign workers. This is a step backward toward the pre-1930’s when there were no labors laws. This increases U.S. unemployment and increases the gap between the rich and the poor. If this gap continues to grow, it can result in another breaking point in the economic system and another Great Depression and collapse.
  • Secondly, this condition cannot continue indefinitely in a foreign country. Sooner or later the workers in that nation will demand an increase in their wages and local ownership of the company. This system of having an American company in a foreign country is essentially colonial exploitation. The foreign labor is being exploited for pennies a day, while all of the profits are being taken out of the country by the American owners. This kind of colonial exploitation is little more than modern slavery.

Globalization is here to stay for better or for worse. The world’s economic systems will continue to evolve. In the near future, Globalization will probably temporarily increase the profits of American corporations, while stagnating or lowering the standard of living for the average working Americans.

The U.S. government should assume some responsibility for limiting the worst effects of this loss of American jobs. Unfortunately, Congressional lobbyists for corporations oppose all restrictions or control of foreign operations. When there is conflict between the best interests of the corporations and the best interests of the nation, Congress should support the nation and not the special interests. American owned foreign corporations should be subjected to import taxes for all products brought into the U.S. This would help redistribute some of the profits which are being made at the expense of the American workers. The U.S. government should also require that all foreign products meet the same quality standards and safety regulations as they do when manufactured within the U.S. The U.S. should also have international agreements with every nation regarding labor laws, labor working conditions and environmental protection laws. Those nations that fail to accept these agreements should be banned from importing their products to the U.S. If corporate profits are reduced, corporations may choose to remain within the U.S. In the long run Globalization is not good for the U.S. economy.

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