Resolved: On balance, economic globalization benefits worldwide poverty reduction 3
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- Asian gains at the expense of the US middle class
- A2: Benefits Workers
- A2: Capitalism Self Correcting
- Markets are not self correcting – their evidence is based off of flawed models
- Capitalism doesn’t have the structures to fix itself
A2: Inequality Reduction in AsiaPolicy, not globalization, responsible for reductions in inequality in AsiaRavi Kanbur, Cornell University, 2015, Handbook of Income Distribution, Volume 2, pp. 1845-1881 However, the East Asian experience has also been used to support the thesis that the equity dimensions of outcomes owe a significant amount to other structural and policy features. Among these are the land reforms instituted by the occupying American forces in South Korea in the 1940s and 1950s, which meant that they entered the next phase of development, in the 1960s and 1970s, with supportive initial conditions for equitable development. Further, in these countries and in other East Asian countries, proactive policy had ensured a very wide spread of basic education. Here is how Adelman (n.d.), the leading scholar of South Korean development strategy at that time, sets out these structural factors in the country from the end of World War II until the beginning of the 1960s: There were two waves of land reform, in 1947 and 1949. In 1947, the U.S. military government decreed that the land confiscated from Japanese farmers and Japanese corporations should be redistributed to tenants… . The second wave of land reform redistributed the holdings of Korean landlords owning more than 3 chongbo (7.5 acres or about 3 hectares) to tenant farmers and landless farm laborers… . The distribution of land holdings became very even… . The bulk of government investment during this period was on social development…Over this period, the literacy rate increased from 30 to over 80 percent.
Washington Times, October 6, 2014, “Economic Globalization Boosts Asia, bogs down US Middle Class,” http://www.washingtontimes.com/news/2014/oct/6/economic-globalization-boosts-asia-bogs-down-us-mi/?page=all DOA: 1-2-14 But Mr. Lakner said it’s hard to know whether to celebrate the success of Asia — formerly one of the poorest parts of the globe — or rue the slow hollowing out of the industrialized West, where middle-income citizens stand to keep losing more and more income in the competition with the emerging world for jobs in coming decades. He worries that the slow but steady decline of living standards for the middle class — even as the wealthiest 10 percent grows richer — poses a threat to democracy in the West. A2: Benefits WorkersLiberalization doesn’t benefit the poorest workersAnish Bharadwaj, 2014, International Max Planck Research School for Competition and Innovation, Munich Centre for Innovation and Entrepreneurship Research, Advances in Economics and Business 2(1): 42, p. 42-57 In world terms developing countries are clearly labour-abundant, so that freer trade gravitates towards higher wages in general. However, within those countries it is not clear that the least-skilled workers, and thus the most likely to be poor, are the most intensively used factor in the production of tradable goods
Capitalism squeezes out wage earners – prevents self correctionSabnavis ’14 [5/18/14, Madan Sabnavis has been the Chief Economist and General Manager of Credit Analysis & Research Limited and has a masters in Economics, ~ “Marx for the millennials”, http://www.thehindubusinessline.com/opinion/marx-for-the-millennials/article6022729.ece] The other law defines the share of income going to capital as the product of return on capital and capital to income ratio. With the return increasing over time with access to various assets, capital will get a larger share of income. In fact, when wealth is inherited and can be diversified the returns are higher than in case of an individual who has limited wealth and prefers safer avenues which earn lower returns. This, according to French economist Thomas Piketty, is the crux of the problem of capitalism, which creates a crisis in the long run because when we over-invest in capital, there is little left for labour which is also what Karl Marx spoke of. Marx spoke of a revolution, but the basic issue is that if wage earners are squeezed out, who will buy the goods that the capitalist produces? Markets are not self-correcting as is made out in textbooks and hence bourgeois economics does not quite work. Markets are not self correcting – their evidence is based off of flawed modelsStiglitz ’13 [5/9/13, Joseph Eugene Stiglitz is an economist and a professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979). He is a former senior vice president and chief economist of the World Bank, and is a former member, and Chairman of the Council of Economic Advisers, ~ “The lessons of the North Atlantic crisis for economic theory and policy”, http://www.voxeu.org/article/lessons-north-atlantic-crisis-economic-theory-and-policy] In analysing the most recent financial crisis, we can benefit somewhat from the misfortune of recent decades. The approximately 100 crises that have occurred during the last thirty years –as liberalisation policies became dominant – have given us a wealth of experience and mountains of data. If we look over a 150-year period, we have an even richer data set. With a century and half of clear, detailed information on crisis after crisis, the burning question is not ‘How did this happen?’ but ‘How did we ignore that long history, and think that we had solved the problems with the business cycle’? Believing that we had made big economic fluctuations a thing of the past took a remarkable amount of hubris. Markets are not stable, efficient, or self-correcting The big lesson that this crisis forcibly brought home – one we should have long known – is that economies are not necessarily efficient, stable or self-correcting. There are two parts to this belated revelation: One is that standard models had focused on exogenous shocks, and yet it’s very clear that a very large fraction of the perturbations to our economy are endogenous. There are not only short run endogenous shocks; there are long run structural transformations and persistent shocks. The models that focussed on exogenous shocks simply misled us – the majority of the really big shocks come from within the economy. Secondly, economies are not self-correcting. It’s clear that we have yet to fully take on aboard this crucial lesson that we should have learned from this crisis: even in its aftermath, the tepid attempts to fix the economies of the United States and Europe have been a failure. They certainly have not gone far enough. The result is that we continue to face significant risks of another crisis in the future. So too, the responses to the crisis have not brought our economies anywhere near back to full employment. The loss in GDP between our potential and our actual output is in the trillions of dollars. Capitalism doesn’t have the structures to fix itselfLi, ’10 [Summer 2010, Dr. Minqi Li is an Assistant Professor Department of Economics, University of Utah, “The 21st Century Crisis: Climate Catastrophe or Socialism”] The impending climate catastrophe is but one of several aspects of the structural crisis of capitalism in the 21st century. We are currently in the beginning of a prolonged period of global instability and chaos. Similar periods of systemic chaos had happened before (for example, during the first half of the 20th century). Capitalism had managed to survive earlier crises, through institutional adjustments without changing the system’s essential features (production for profit and endless accumulation of capital). Because of this historical observation, some have developed the belief that capitalism is such a remarkably “flexible” and “creative” system that it can always reform itself, adapt to change, survive crises, and meet challenges. But this belief is short-sighted and fundamentally ahistorical. Like every other social system, for capitalism to exist and function, it requires certain necessary historical conditions. Capitalism would remain viable (and therefore “reformable”) only to the extent the necessary historical conditions required for its normal operations are present. But the development of capitalism inevitably leads to fundamental changes in the underlying historical conditions. Sooner or later, a point will be reached where the necessary historical conditions are no longer present, and capitalism as a historical system will cease to exist. If one compares the current systemic crisis with earlier instances of systemic crisis, what are some of the major differences? First, in previous periods of crisis, the world’s natural resources remained relatively abundant and the global environment remained largely intact. Today, the global ecological system is literally on the verge of complete collapse. The impending climate catastrophe is only one among many aspects of global environmental crisis. Global capitalism has already exhausted the environmental space for further capital accumulation. Secondly, the successful operations of the capitalist world system require it be regulated by an effective hegemonic power at the systemic level. However, with the decline of the US hegemony, no other big power was in a position to replace the US to become the new hegemonic power. Without an effective hegemonic power, the system would be unable to pursue its own long-term interest and solve system-wide problems. Thirdly, in the past the capitalist system had managed to survive crisis through social reforms. In essence, social reform is for the system to buy off certain opposition groups by making limited concessions. The concessions have to be limited so that they do not undermine the essential interest of the ruling class. Today, the system has run out of its historical space for social compromise. In virtually all the advanced capitalist countries, now a restoration of favorable conditions for capitalist accumulation would require nothing short of large and sustained declines of working class living standards. Will the western working classes simply surrender and give up their entire historical gains since the 19th century? If not, Western Europe and North America will again become major battlegrounds of class struggle in the coming decades. Fourthly, the world has reached the advanced stage of proletarianization. Marx famously predicted that the proletariat would become the grave diggers of capitalism. For the entire 19th and much of 20th century, the process of proletarianization was largely limited to the “West” (the advanced capitalist countries). In the neoliberal era, as capital is relocated from advanced capitalist countries to the rest of the world to exploit the reserve army of cheap labor force, there have been large formations of industrial working classes in the non-western world. Over time, the non-western working classes will have developed the organizational capacity and demand a growing range of economic, social, and political rights. For the capitalist world system, if its economic and ecological resources are already so limited that it is no longer possible to accommodate the historical demands of the western working classes, what is the chance for the system to accommodate the demands of the much larger non-western working classes? If the system can no longer survive by buying off its potential oppositions, can it simply survive by repression, and for how long? How will the combination of these trends play out in the coming decades? Will the current structural crisis turn out to be the terminal crisis of capitalism? One thing is clear. If capitalism does survive the current crisis, there is probably not much hope for the humanity to survive the coming global climate catastrophe. For the humanity’s sake, end capitalism before we are ended by capitalism. 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