The Future of Global Capitalism
By Richard Longworth
The unquestioning euphoria that surrounded global markets just a year or two ago has vanished. But utter condemnation of these markets is little accepted. Organized labor in the United States is likely to continue to oppose trade agreements such as NAFTA, and opinion polls show that nearly half of all Americans support some tariffs. But Buchanan’s call for a “new economic nationalism,” imposing tight limits on trade and immigration, does not appear to have much of a future. Even analysts who think Buchanan is asking the right questions about trade and investment feel that the imposition of new national barriers would not solve the problem, but only insulate the United States from the real benefits that the global economy can bestow.
More global economic shocks like the Asian financial crisis are likely to come, if only because the markets that produced them still exist and the global and national regulations necessary to prevent the shocks are not yet in place. The work ahead is as much political as it is economic. The new rule makers will have to balance the need for social stability and broad prosperity with the efficiency and profit demanded by free markets. In all successful market democracies in the past, struggles over these issues have resulted in compromise, involving something less than totally free markets and something short of complete regulation.
Market reforms, no matter how necessary, may limit the ability of the global economy to spread wealth to developing nations. Some analysts believe that the creation of global safety nets—to protect stricken countries and prevent crushing depressions—may only provide a cushion that encourages the speculation and risk-taking that caused the problem in the first place. Others point to the need to reach solutions to global economic problems within a democratic framework. Global rule making, like global markets, takes place now in an arena that democracy and the vote cannot reach. Making the global economy responsive to the people who live within it may be the great challenge of the coming century.