A Book Review of Johan Norberg’s In Defense of Global Capitalism
On the surface there are some inherent hypocrisies when activists organize protests against globalization using the very tools of globalization. This is something Johan Norberg could have argued in his bold little book In Defense of Global Capitalism (Cato Institute, 2003). Instead he forms a much deeper case for those that want to plant themselves in a solid defensive position of liberalized capital and free trade. That first point about hypocrisies comes from economist Joseph Stiglitz’s book Globalization and Its Discontents(Norton, 2002), but it may be more irony than hypocrisy. Said discontents use technological and cultural innovations like the Internet, Cell Phones and Digital Cameras, made possible through globalization, to fight the forces of capital that move them around the world. The irony is a bit like fighting fire with fire and what activists are calling for is a fairer style of free trade from the G-8 hegemony.
Aside from the fact that trillions of dollars in global capital infuse new markets and feed people, Norberg is up against an obstinate choir of anti-corporate globalization critics. His argument is straightforward and convincing forming a statistically armed shield that proclaims, if not capitalism, then what? Larger, philosophical questions about capitalism’s potentially selfish nature being detrimental for humanity in the long haul can only be answered by history. For now Norberg makes apparent that global capital does more to end poverty than altruistic development assistance. As he notes, ” in 10 years the poor countries of the world have obtained a trillion dollars in foreign direct investments-slightly more then all the development assistance they have received, worldwide, in the past 50 years.” This establishes the basic notion free market advocates like Norberg hold; open markets are good, government interference is bad.
At no fault of his own, Norberg’s book cannot tackle the culminating forces of Global Trade, investment, the World Bank, International Monetary Fund (IMF) and socio-political poverty with magic bullet capitalism. He argues more through growing statistical evidence that capitalism is the great equalizer over time and critics of globalization are just impatient. For someone who has toured the globe in search of the invisible hand’s reach to poor countries, Norberg should realize impatience has a different ring of urgency in starvation. What critics of the current state of corporate led globalization are so fired up about is portions of these people do not have to live in such conditions. The war over resources is fought at the trade tables and one swipe of a pen can crush the very people who inhabit the lands of those resources. This is just one aspect that keeps Norberg’s book, among others, on fragmented ground from which to argue truth of statistics, graphs and charts.
Still the book is well rooted in endnotes and clears the fog about what Norberg calls “grotesque statistical tricks.” One being the claim that debt kills 20,000 people a day, as critics of the World Bank and IMF call for debt cancellation. Norberg points out that “the 41 most highly indebted countries receive about twice as much (grants, credits and development assistance) from the Western World as they pay every year. From a sensible economic perspective, this is like complaining to VISA that you can’t buy groceries because you owe them $100 every month, when they give you $200 in food stamps and discounts. In that case its time to start re-evaluating spending habits, but there are again factors at work that Norberg can’t possibly equate in statistical terms. Just the psychological damage of poverty alone can be a viral force when entire villages are wiped out in senseless wars or famine. Nonetheless, Norberg sees the best solution, as countries opening up markets and eliminating tariffs to allow investments to plant entrepreneurial seeds as free trade lifts the masses.
In one of several creative moments, Norberg uses the analogy of a waiter’s freedom to offer a menu to a customer like that of freedom of business in free market economies. He writes, “it entitles other waiters-foreign ones, even!-to come running up with rival menus.” In theory this situation would keep the waiters healthily competitive, give the customer options and maybe even promote cooperation among waiters to serve separate portions of the meal. In the end, theory may crumble in the real world where unregulated capitalism encourages ruthless competition or trade talks are conspiratorial. In theory and in a few substantially evidenced occasions, such as the Asian economic miracles, everything Norberg argues in favor of global capitalism reveals a just system for all. This position is needed greatly in the debate, because in many ways he finds the middle ground between total anarcho-capitalism and sensibly regulated trade. Norberg’s anarchist roots mentioned in the preface might tip the scale of his argument, but ultimately he shows the good of capitalism to its increasingly jaded critics.
Its’ fair to say that the system is only as good as the people who operate it and this is largely lost in hyperbolic opinions of corporate hegemony. This goes for both those who fear evil corporate conspiracies of world domination and those who feel corporations should own everything because governments are prone to tyranny. Something needs to silence both these fears so real solutions can be explored. Norberg’s book is effective defense, but not quite the roll of duct tape needed, or perhaps desired, to quiet the debate. He touches on something that could drastically alter the debate into conversation about consumer pressure. He mentions a Chinese Labor attorney’s plea that without companies like Nike and Reebok, both continually accused of sweatshops, labor conditions could not improve due to consumer pressure. Also noting that “the presence of multinational corporations in oppressive governments can very often be an aid to the pursuit of democracyâÂ?¦” due to consumer pressure. If people truly acted upon their humanity with their dollars, consumer pressure would be the driving force of tremendous change. Yet it seems Norberg can only touch upon this and not rely on it completely, because capital that flows freely knows no enemies.
Like Jeffrey Sachs in his book The End of Poverty, Norberg raises the example of the Bangladeshi Garment Industry as successful free trade infusion. Though creating millions of jobs where once there were none, both Sachs and Norberg look beyond the harsh realities of those factories. They rightfully exemplify the theoretical good that free flowing capital can have on poverty. The reality overlooked is on the ground where the rubble of collapsed factories crushed lives and in the human trafficking of Bangladeshi workers to Jordanian sweatshops. It is easy to agree with the idea that free trade is something the people of Bangladesh, Indonesia or Jordan need, as long as change is stable and not static. This is the problem in some of Norberg’s claims that capitalism is the end all cure of poverty and we just need to create freer markets. We have to decide if the risk is too great when there are sharks riding atop the waves of free trade. As much as Norberg warns of those who say “I’m all for free trade, butâÂ?¦” as following false paternalism, it can be a protectionism evolved beneficially. He is right in that much protectionism arose historically from countries trying to corner markets for domestic labor; only to damage the advantage trade has for progressing labor. Yet the type of protectionism that stems from humanitarian efforts or consumer movements is meant to ensure equal distribution of free trade. Something hardly apparent in the far-reaching decisions of the World Trade Organization (WTO). Norberg, like many economists, is bubbling with optimism for the bi-lateral progress of democracy and capitalism. With China’s recent entry into the WTO, this realization is overshadowed by capitalism in the hands of totalitarianism. Just try searching for that on Google in China.
Capitalism may empower an individual into a material gain that feels closer to freedom, but without basic human rights it is a form of control. Control over the very thing Norberg advocates capitalism for being; a ticket to autonomous individuality free from being means to another’s ends. Norberg’s ideal of free trade is one we would all like and one that is rooted in the classical market liberals. Hopefully it is still just advocating for something ahead of its time, because the age of social responsibility has not yet caught up to the global economy. The book is a step in this direction and as much a defense of global capitalism as a subtle critique of its failings. It spans the globe and maps the possible paths for free markets to carry the burden of the prisoners of poverty. Norberg is enthusiastic, but not quixotic about capitalism and critical, but not deaf to the rioting activists. If more free market advocates take his position of capital as development assistance, perhaps the markets will be molded of the people and not just the numbers.
