Economic Growth: A Meditation
I will argue, briefly, that national economic growth which contains, internal to it, severe inequality, is a bad thing. I hope to persuade the reader why this so, with an analogy. For this exercise, we shall imaginatively anthropomorphize the economy: Let's call him "Bob."
The second thing I will argue is that hyperactivity of finance is always a bad thing. Its manifestation always signals that something very wrong and very bad has happened in the economy; and its manifestation and persistence can only augur bad things in the future. To make this point, we will kill off "Bob" and reincarnate him as "Alan."
Without further ado... I give you....
Bob is thirty-years old. He is eight feet tall. He weighs 484 pounds. But Bob is an oddly put together person.
You see, Bob is sort of a genetic and chronological patchwork man. The vast majority of his height comes from genetically and chronologically thirty-year old legs: which are make up six-foot-five inches of his height.
It is only a slight exaggeration to say that his thighs are like tree trunks, and make up the vast majority of his weight. His thirty-year-old feet are size 30.
His arms and torso are those of an average-sized, non-"giant," genetic and chronologically ten-year-old.
Let's call the size of his head and the development of his brain as that of an average, non-"giant" fifteen-year-old
Is that simple enough? Thirty. Ten. Fifteen.
- Three genetic and chronological ages are represented in "Bob."
- The lower part of Bob's body has the condition of "gigantism."
Now then, looking at "Bob," you might want to ask yourself if this is "growth" that is to be admired.
"Bob" is my analogy for the economy of the United States. His grotesque proportions are meant to symbolize the wildly and, more importantly, unjust distribution and concentration of income and wealth, respectively, in both race and class terms (1).
The lower half of Bob's body, then, is meant to symbolize the corporate rich and top one-tenth-of-one-percent in the United States.
So, such a state of affairs tends to lead to a politics of demonization of the working class (2), as well as the criminalization of the poor (3).
"Bob" is at war with himself, which is never a good thing. But speaking of politics of the demonization of the working class and criminalization of the poor, you should notice that: Bob's enormous lower body gets that way by vampirically draining nourishment away from the rest of his body.
Bob is a freak, of course. But he cannot see this for various reasons. For one thing, his arms and torso hope to get as big as the lower half of his body someday. Then Bob will really be something!
Once again, though, Bob's arms and torso do not realize the absurdity of their wish. The size of his legs and feet come directly at their expense (4). His lower half's immensity is directly made possible by his arms and torso's scrawniness. A more even distribution of muscle and fat, and so forth, would produce a more balanced, normal-looking Bob; that is to say, no part of his body would be "giant"-sized; and thus, envy would not be generated.
Let me just mention something in passing: I am talking about the United States of America. But I suppose, at this point, my remarks might apply equally well to China.
By the way, another reason that Bob cannot see that he is a freak, is because he takes lots and lots and lots of drugs. These drugs make him feel really, really, really good about himself. Bob thinks he is a stud, a god; he cannot see that he is a monster, instead.
Maybe Bob's legs deserve to be as big as they are. They've worked hard; got the right education; made the right choices in life...
Funny thing, though. Did you know that CEO compensation is not at all correlated with performance? Did you know that?
CEO pay is not at all correlated with performance (5). And did you know that despite all their neoliberal blather about free enterprise and desiring only to be left alone by government (no government "interference"), something I call the government-to-business subsidy pipeline is, for corporations, the very wind in their sails, the wind beneath their wings, the jelly in their jelly donuts?
By the way, despite all their neoliberal blather about free enterprise and desiring only to be left alone by government (no government "interference"), something I call the government-to-business subsidy pipeline is, for corporations, the very wind in their sails, the wind beneath their wings, and the jelly in their jelly donuts (6).
Now, Bob's legs have a mind of their own; and they frequently try to detach themselves from the rest of Bob's body, so that they can roam the Great Expanse of the world, with the goal of either finding or trying to build a body more worthy of them (7).
Perhaps, in this way, Franken-Bob can become eleven or twelve feet tall rather than the eight, which does not satisfy him. But, of course, the other half of original Bob is left spluttering on the ground, bleeding to death from where his legs had formerly joined his upper body (8).
Bob's giant legs from America, might link up with Steve's giant forearms from Holland; and Fred's giant upper arms from France; and Joe's King Kong hands from Taiwan; and Randal's giant chest from Brazil; and Lawrence's gigantic shoulders from Australia; and Peter's mega-sized head from New Zealand --- "And I'll form the head!" (from Voltron -- the five Voltron "lions") (9).
The Birth of "Alan"
Bob has died; and five years later, he has been reincarnated as "Alan." Thirty years later, we find Alan a similarly drug-addicted, incongruously proportioned, genetically and chronologically mismatched mammoth human being, who thinks he is a too fly god, not realizing that he, too, is a monster.
Now then: What is the relationship of finance to what economists call the "real" economy?
First of all, let's remember that what economists call the "real" economy is simply the production arm of the economy.
Let us say that the financial system is to the real economy, what the metabolism is to the body. What does that mean?
Well, what is the relationship of the metabolism to the body?
The metabolism is the system that digests, breaks down, and distributes throughout the body, the food we eat. It distributes fats here, sugars there, amino acids somewhere else, Vitamin A someplace, and so on --- sort of according to need, as I understand it.
They say that something like best health is achieved through a combination of proper diet, exercise, and rest.
If you eat good, balanced, healthful food, the engine of the metabolism can, with relative ease and efficiency, extract good fuel for the body to function at its best.
The financial system plays the role of the metabolism; and the real economy plays the role of the most positive, healthful results of the intake of a good, healthful, balanced diet.
Let's stop and get this straight.
- The financial system plays the role of the metabolism, so that we can speak of the financial metabolism of the real economy.
- The real economy is NOT the good, healthful, balanced diet --- the real economy is the positive results of the intake of good food, of a good, healthful, balanced diet.
- We can call good, high-paying jobs with proper benefits, facilities, and amenities, and the like, as the equivalent of good food.
- A healthy real economy is the positive, societal, community-building and community-maintaining results of an economy full of good, dignified jobs at all levels.
So, eat good food, get proper rest and exercise, and health should be optimal.
- But what happens when the body does not get enough to eat? As you know, the metabolism does not stop burning. It is an engine for processing food and will continue to do so --- even if it means cannibalizing its own body. You see this with people who literally starve to death.
- What happens when the diet gets really crappy, and you get only 4 to 5 hours of sleep at night and best, and you take up smoking and drinking? How do you keep going? How do you keep functioning? You probably have to take lots and lots and lots of drugs to keep you going and feeling happy (or at least think you're feeling happy). What this also means is that your metabolism will have to work so much harder to extract anything at all of value from the crap you're eating; to derive recuperative value from the reduced sleep you are getting; and to try to remove some of the toxins you are pumping into your body with your smoking, drinking, and industrial doses of amphetamines.
Stay with me here. Now, those of you familiar with American economic history, know that starting in the late-1960s, something called "deindustrialization" of the economy began to ensue. It picked up in the 1970s; and was really going full steam ahead in the 1980s and 1990s, to the present day (10).
The high-paying, good benefit manufacturing jobs, which did not require a college degree, shifted from the northeast and upper Midwest --- to the south and southwest --- then to Mexico --- then to China and elsewhere. The pattern was something like that (11).
As you also know, those manufacturing jobs were largely replaced by low-wage, low-skilled, unsecure, hamburger-flipper-type jobs. This represents a deterioration of the quality of job-nutrients circulating throughout the economic body.
This has caused the financial-metabolism to have to work harder to extract anything at all of value from the situation. Remember, the financial-metabolism keeps on churning; it doesn't stop. The financial-metabolism always have to be burning... something, even if it must cannibalize its own real economic-body (12).
This tendency is known as the "financial-ization" of the economy.
What I am saying is that excessively class-stratified economic growth will lead to or hasten the manifestation of the financialization of the economy.
Because the American economy is dominated by "Paul Bunyan"-like figures known as corporations. Because they are so big, they have big "appetites." They eat and eat and eat a whole lot.
The more they "eat," the bigger they get. The bigger they get, the hungrier they get, the more their appetite grows.
We should think of this "eating" as the capture of "market share." What we're talking about here, then, is the tendency to monopolization (13).
Once Paul Bunyan, Borg-like corporations have "eaten" everything up, they are still hungry, of course. They are still "hungry" because they are bigger.
Once they have "eaten" everything up in the home country, big business tends to demand that their government find them more "food" (meaning "market share") elsewhere, wherever it may be in the world. This has historically been the connection between monopoly capitalism and imperialism (14).
Now, if you want a book on American imperialism, I'll recommend: Chomsky, Noam & Herman, Edward S. The Washington Connection And Third World Fascism: The Political Economy of Human Rights. Volume I. Southend Press, 1979.
Here's the point: Economic "growth" is one of those seemingly, beyond question, commonsense terms. But the thing about economic "growth" is this: The elite tend to grab the vast bulk of it for themselves. This results in an enlargement of the economy as a whole, but it is always a grotesque, misshapen growth, which give us freakish, warped, and not to mention, chronologically and genetically mismatched giants like "Bob" and "Alan."
This is something that can be difficult to see, from the inside (of powerful capitalist states) looking out. But people can see the monster more clearly, from the outside looking in.
Joseph E. Stiglitz is a Nobel-prize-winning economist, a liberal Keynsian, I would say. He is a former chief economist of the World Bank; and former chairman of President Bill Clinton's Council of Economic Advisors.
Dr. Stiglitz's book is called The Roaring Nineties: A New History of the World's Most Prosperous Decade. He frames the matter this way:
Coming to a screeching halt! Stopping on a dime! Hold up! Wait a minute!
Before we get into how Dr. Stiglitz frames the matter, let me remind you to keep our theoretical formulation in mind: The finance-metabolism in relation to the real economic-body.
The finance-metabolism is the engine that "metabolizes" inputs, you might call them, (defining "inputs" as jobs, investment, social consequences of such) and distributes them throughout the real economic-body, doing what they must to the limits of their ability to bolster that real economic-body. "Food"/"nutrients" are analogic synonyms for "inputs," which the "finance-metabolism" "metabolizes" or breaks down and distributes throughout the real economic-body.
The better or worse (and more or less) the "food/nutrients/inputs," the better or worse will be the effect upon the "real economic-body."
Now, if the "food/nutrients/inputs" are meager in quantity and/or of poor quality, then the "finance-metabolism" will have to work so much harder to extract anything at all of value from such inputs, in order to keep the real economic-body going in any form or fashion whatsoever.
You must understand that the finance-metabolism is going to keep on churning, no matter what --- even if it cannibalizes the body: breaks down and re-consumes the body in order to keep the body going.
No, you read that right. Its an absurd situation. But its no more absurd than the notion we heard during the Vietnam War: "We had to destroy the village to save it."
The destruction of the real economic-body, by a starved finance-metabolism (one not receiving adequate inputs), is the finance-metabolism desperately trying to save the real economic-body; and the very salvation of the real economic-body, by the finance-metabolism, is effected by the destruction of the real economic-body ---- by a "starved" finance-metabolism.
Now, while all of this is going on, "Alan," our current anthropomorphized economy, is swallowing amphetamines by the bucket. He not only feels no pain, he is rather euphoric.
It is during this constant push-pull, pull-push of destruction-salvation, salvation-destruction, that produces financial bubbles. These financial bubbles, themselves, are symbolized by the buckets full of amphetamines that "Alan" is swallowing.
The financial bubbles-buckets full of amphetamines are what causes "Alan" (The Economy) not to feel the pain of the push-pull, pull-push, destruction-salvation, salvation-destruction situation that is going on.
However, nothing can go on forever. When something cannot go on any longer, it doesn't. (I think Yogi Berra said that).
At this point, the amphetamines stop working for "Alan," and his psyche comes crashing down to Earth; he realizes that he is a misshapen, gigantic, chronologically and genetically mismatched freak. And on top of it all, he sees himself --- all seven foot-eight inches and 407 pounds of himself.
What makes "Alan" so sad at this point, is the realization that he never even grew to be as big as the eight-foot, 484 pound "Bob." The bubble pops, in other words.
Does that makes sense?
I hope so.
Now let us return to the words of Nobel-prize-winning economist, Dr. Joseph E. Stiglitz.
Now, once again, we return to the way Dr. Stiglitz framed the situation, from his book, The Roaring Nineties.
"What happened in the Roaring Nineties was that a set of longstanding checks and balances --- a balance between Wall Street, Main Street (or High Street, as it is called in the United Kingdom), and labor, between Old Industry and New Technology, government and the market --- was upset, in some essential ways, by the new ascendancy of Finance. Everyone deferred to its judgment. Countries, including the United States, were told to accept the discipline of the market. Longstanding wisdom that there were alternative policies, that different policies affected different groups differently, that there were trade-offs, that politics provided the arena through which the trade-offs were evaluated and choices were made was shunted aside" (15).
"[I]n the Nineties, America set itself up as the role model for the rest of the world. America was looked to for its views about the right balance of government and the market and about what kind of institutions and policies are needed to make a market economy work well" (16).
One more time:
"Those countries which did not voluntarily mimic America, in the hope that their economy too would experience a boom, including those that thought America had not gotten the balance right, were cajoled, badgered, and in the case of developing countries dependent on assistance from the International Monetary Fund, effectively forced to go along with what was described as the sweep of history" (17).
What we have here is weakness being mistaken --- willfully or not --- as strength (again, an inversion of reality greatly facilitated by swallowing buckets and buckets and buckets of amphetamines the way "Bob" and "Alan" do).
Because the reason Finance goes wild, as Dr. Stiglitz describes it, is because of a weakness in production. Remember, the finance-metabolism is an engine with no 'off' button.
A few pages later, Dr. Stiglitz acknowledges the weakness in production. He informs us that by the mid-1990s, manufacturing in the United States shrank to close to 14 percent of total U.S. output, and an even smaller proportion of total world output (18).
Joseph Stiglitz does not conceive of this weakness in production as the cause the "ascendancy of Finance," as he would have it, because he does not use the theoretical model that I use: finance-metabolism related to the real economic-body.
We're not quite done yet!
But you see, it is precisely this weakness in production that necessitated, by many corporations, the non-acknowledgement of the stock options they were paying to their executives to --- wait for it --- to boost their profits on paper, and, therefore, their stock price.
Stay with me here.
Dr. Joseph E. Stiglitz explains to us that by 2001, stock options accounted for about 80 percent of the compensation of American corporate manager. If Microsoft, for example, had been required to acknowledge the value of the options it gave that year, the effect would have been to reduce the company's 2001 profits (officially $7.3 billion) by one-third (18).
The same thing allowed Starbucks and Cisco, among other companies, to boost their profits by 20 percent or more. Intel's profits would have been cut to a fifth, from $1.3 billion to $254 million; and Yahoo's losses would have been increased tenfold, from $93 million to $983 million (19).
Furthermore, "Enron, WorldCom, and Adelphia," writes Stiglitz, "were only the most flagrant and well publicized of many companies where the vaunted energy and creativity of the Nineties would eventually be directed less and less into new products and services, and more and more into new ways of maximizing executives' gains at unwary investors' expense" (20).
Note this: The weakness in production directly led to a situation whereby many companies felt the need to fake things, to a certain degree, to make themselves look more profitable than they really were.
It was precisely this state of affairs that led to the following reality:
In March of 2000, the stock market was at an all-time high. Something called the NASDAQ Composite Index peaked at 5,132 (21). This was the height of the euphoria.
"The next few years," according to Dr. Stiglitz, "confirmed suspicions that the numbers were unreal, as the stock market set new records for declines" (22). Suspicious people doubted the euphoria. The doubt became skepticism. The skepticism became outright disbelief.
With the result that....
In the next two years, $8.5 trillion -- with a 'T' --- dollars were wiped off the American stock exchange alone. This was an amount that almost exceeded the annual income of every country in the world other than the United State (23).
AOL Time Warner took write-downs of $100 billion. The amazing thing about that is, that at the start of the 1990s, there was no company that worth $100 billion dollars, let alone one able to lose that much and continue to exist (24).
Finance is always outrunning the real economy in capitalism. That is because, in a sense, finance is the seat of the imagination. To the extent that the "real" (as in "reality") economy can meet the former's visionary expectations, there is success and economic "growth."
But it is the very nature of the imagination and reality, that the latter can never keep pace with the former, step-for-step in perpetuity. Reality gets tired and has to stop sometimes, and catch its breath. The imagination does not tire, does not let up, does not slow down.
Finance keeps going, alone, as its own running companion...
Thank you for reading.
Notes: A Series of Analogic Equivalencies
1. For information about unequal distribution of income and wealth on class terms in the United States, see: 1) Johnston, David Cay. Free Lunch: Ho The Wealthiest Americans Enrich Themselves At Government Expense (And Stick You With The Bill). Portfolio, 2007; 2) Johnston, David Cay. Perfectly Legal: The Covert Campaign To Rig Our Tax System To Benefit The Super Rich --- And Cheat Everybody Else. Portfolio, 2003; 3) Baker, Dean. The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer. (Creative Commons, 2006) -- online book.
For information about how American wealth was concentrated in racial terms, see: Katnelson, Ira. When Affirmative Action Was White: An Untold Story of
2. Harvey, David. The New Imperialism. Oxford University Press, 2003. P.63 -- Dr. Harvey reminds us how Ronald Reagan smashed the air traffic controllers union (PATCO); in another book, The Enigma of Capital And The Crises of Capitalism. Oxford University Press, 2010, he talks about how Alan Budd, Margaret Thatcher's chief economic adviser, later admitted that 'in the 1980s policies of attacking inflation by squeezing the economy and public spending were a cover to bash the workers' and so to create an 'industrial reserve army,' which would undermine the power of labor -- p.15
Dr. Harvey goes on, in "The Enigma of Capital And The Crises of Capitalism," saying that in the name of controlling inflation, the US unemployment rate soared to over 10 percent by 1982 and wages stagnated -- p.15
And furthermore: "This was accompanied in the US by a politics of criminalisation and incarceration of the poor that had put more than 2 million behind bars by 2000" -- p.15
3. For information about the resulting criminalization of the poor (which intersects very substantially with "race" in the United States), see: Alexander, Michelle. The New Jim Crow: Mass Incarceration in the Age of Colorblindness. The New Press, 2010: about the "War on Drugs."
4. Marxist analysis would call this '"accumulation by dispossession," as a way to really get at how wealth can be and is, at least sometimes, a direct function of impoverishment of another party. The best thing I can recommend, at the moment, if you want more information about this, is to read David Cay Johnston's discussion of the Reagan tax cuts in the 1980s and the Bush tax cuts in the 2000s, in one of his books I already mentioned: Perfectly Legal --- which is about the highly regressive, unequal, and unjust tax system in the United States.
5. Adams, S. (2014, June 16). The Highest-Paid CEOs Are The Worst Performers, New Study Says. Retrieved October 22, 2016, from forbes.com ; When CEOs Are Paid for Bad Performance. (2005, February 1). Retrieved October 22, 2016, from stanford.edu; Morgenson, G. (2016, June 17). How to Gauge a C.E.O.'s Value? Hint: It's Not the Share Price. Retrieved October 22, 2016, from nytimes.com
6. Again, see: Johnston, David Cay: Free Lunch: How The Wealthiest Americans Enrich Themselves At Government Expense (And Stick You With The Bill) and Baker, Dean. The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer.
7. From Rothkopf, David. Super Class: The Global Power Elite and The World They Are Making. Farrar, Straus, and Giroux, 2008.
"A global elite has emerged over the past several decades that has vastly more power than any other group on the planet. Each of the members of this superclass has the ability to regularly influence the lives of millions of people in multiple countries worldwide. Each actively exercises this power, and they often amplify it through the development of relationships with others in this class..." -- p.xiii
"... to truly be a member of this superclass one has to hold on to power for at least long enough to make an impact --- to enter or affect the world of other members of this superclass --- a period of a couple of years or more." --- pp. xiii-xiv
"The reality is that the combined net worth of the world's richest thousand or so people --- the planet's billionaires --- is almost twice that of the poorest 2.5 billion." --- p.xv
"I do believe," wrote David Rothkopf, "that some of the network's that exist among the most powerful people in the world have enabled a remarkable few to shape the global system and often to set the terms of our discussions about that system." --- p.xv
8. Basically I'm referring to the community-shattering effects of what's called "deindustrialization." What happens to a community that had been organized around the local steel plant (the unions, the good wages, the homes and residential working class communities, the clubs and fraternal organizations: the totality of lifestyle), when that steel plant is moved out of the country, in search of lower wage, more malleable labor markets.
9. see note #7.
10. Harvey, David. The Enigma of Capital... ; "continerization," for example, enabled business to offshore production. This in addition to the deregulation of finance, which started in the late 1970s, accelerated after 1986, and became seemingly unstoppable in the 1990s, is the major component which enabled industry offshoring --- p.16
11. Think NAFTA and "globalization" in general.
12. Speaking of "cannibalizing its own real economic body," see: Korten, David C. When Corporations Rule the World. Berret-Koehler & Kumarian Press, 1995. Read his discussion of the havoc and destruction wrought by the so-called "leveraged buyout" boom of the 1980s.
A very crucial insight into how the failure of periods of lagging innovation leads to "financialization" is contained in the following paragraph.
"Finding ways to create new value in a sophisticated modern economy is seldom easy," wrote Mr. Korten, "Finding ways to create new value that will produce returns in the amount and with the speed demanded by a predatory financial system many times larger than the productive economy is virtually impossible. The quickest way to make the kind of profit the system demands is to capture and cannibalize existing values from a weaker market player," --- p.207
Summarizing, he wrote:
"Nearly 2,000 cases have been identified in which the new owners have virtually stolen a total of $21 billion of what they declare to be 'excess' funding from company pension accounts to apply to debt repayments." --- p. 209
Two-thousand cases. Imagine that happenning 40 times in each of the 50 states of the Union!
For full discussion of the process: pp.207-209
Notes: A Series of Analogic Equivalencies
13. Reich, Robert B. Supercapitalism: The Transformation of Business, Democracy, and Everyday Life. Alfred A. Knopf, 2007. Robert B. Reich is the former United States Secretary of Labor for President William Jefferson Clinton.
Dr. Reich explains that by the beginning of World War I, much of the American industry had been concentrated into giant firms like Ford Motors, U.S. Steel, American Telephone & Telegraph, United States Rubber, National Biscuit, American Can, The Aluminum Company of America, General Electric, General Motors, and Standard Oil --- p.19
Quoting Dr. Reich:
"The size of such enterprises became an almost impregnable barrier for smaller firms, that might wish to enter the market" --- p.19. He also believes it noteworthy that, of the Fortune 500 largest corporations in 1994, more than half were founded between 1880 and 1930; and a far smaller number were founded between 1945 and 1975 -- p.19.
Anti-trust legislation was passed in 1890; and the Supreme Court did order a handful of mammoth firms broken up. However, antitrust was not always effective, according to Dr. Reich, for two primary reasons: 1) Monopolization was hard to prove; and 2) Judges were reluctant to break up "well established businesses" --- p.23.
"More to the point, industrial giants could not be dismembered without sacrificing the efficiencies of large-scale production. Antitrust began as a political movement and ended as a technical legal specialty" --- p.23
Korten, David C. When Corporations Rule the World. Kumarian Press & Berrett Koehler Publishers, Inc., 1995.
Although the law may have forgotten what monopoly is, economists have not
First of all: "The largest 1,000 companies in America account for over 60 percent of the gross national product (GNP), leaving the balance to 11 million small businesses" --- pp.217-218.
Economists generally consider a domestic market to be monopolistic when the top four firms account for 40 percent or more of sales. Through a series of mergers and consolidations, the top four major appliance corporations in America (Whirlpool, General Electric, Electrolux/WCI, and Maytag) controlled 92 percent of the U.S. appliance market as of 1990 --- p.223
Four airliners (United, American, Delta, and Northwest) accounted for 66 percent of U.S. revenue passenger miles. Four computer software firms (Microsoft, Lotus, Novell/Digital, and WordPerfect) controlled 55 percent of the U.S. software market in 1990. Two of them (WordPerfect and Novell) merged on June 27, 1994 --- p.223
When five firms control more than half of a global market, that market is considered to be highly monopolistic. The British Economist magazine found five-firm concentration ratios for 12 global industries. The greatest concentrations were found in "consumer durables," with the top five firms accounting for nearly 70 percent of the whole world --- p.223
As for automotive, airline, aerospace, electronic components, electrical and electronic equipment, and steel industries, the top five firms control more than 50 percent of the global market. In oil, personal computers, and media industries, the top five firms control more than 40 percent of sales, which marks them as showing strong monopolistic tendencies --- p.223
14. see Kinzer, Stephen. Overthrow: America's Century of Regime Change From Hawaii To Iraq. Times Books (Henry Holt & Company), 2006.
On the direct connection between monopoly and imperialism, Mr. Kinzer writes:
"By the end of the nineteenth century, farms and factories in the United States were producing considerably more goods than Americans could consume. For the nation to continue its rise to wealth, it needed foreign markets. They could not be found in Europe, whose governments, like that of the United States, protected domestic industries behind high tariff walls. Americans had to look to faraway countries, weak countries, countries that had large markets and rich resources, but had not yet fallen under the sway of any great power" --- p.34
Harvey, David. The New Imperialism. Oxford University Press, 2003.
The theorist David Harvey, using more technical terminology of Marxist economic geography, expressed the exact same analysis:
"In some instances monopoly power becomes strong enough to inhibit the dynamism in capitalism's geography, introducing strong tendencies toward geographical inertia and stagnation" --- pp.96-97.
Here comes the good part:
"The tendency towards spatial dynamism given by the competitive search for profits is countered by the bundling together of monopoly powers in space. It is from exactly such centres that imperialist practices and calls for an imperial presence in the world typically emanate" --- p.97
Parenti, Michael. Against Empire. City Lights Books, 1995.
Furthermore, Woodrow Wilson, once again expressing the exact same sentiment, framed the matter this way, in 1907:
'Since trade ignores national boundaries and the manufacturer insists on having the world as a market, the flag of his nation must follow him, and the doors of the nations which are closed against him must be battered down. Concessions obtained by financiers must be safeguarded by ministers of state, even if the sovereignty of unwilling nations be outraged in the process. Colonies must be obtained or planted, in order that no useful corner of the world may be overlooked or left unused' --- pp.39-40
15. Stigliz, Joseph E. The Roaring Nineties: A New History of The World's Most Prosperous Decade. W.W. Norton & Company, 2003. p.xiv
16. ibid, p.xv
17. ibid, pp. xv-xvi
18. ibid, 116
21. ibid, 5
22. ibid, 5-6
23. ibid, 6
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