Essay
Unit 8: Modern Political Economies II
Chapter 1 Summary Chapter One: Capitalism and the Making of the Consumer The consumer revolution is a strange chapter in the ethnographic history of the species. For what may have been the first time in its history, a human community willingly harbored a nonreligious agent of social change, and permitted it to transform on a continual and systematic basis virtually every feature of social life. -Grant McCracken,Culture and Consumption The . . . metamessage of our time is that the commodity form is natural and inescapable. Our lives can only be well lived (or lived at all) through the purchase of particular commodities. Thus our major existential interest consists of maneuvering for eligibility to buy such commodities in the market. Further, we have been taught that it is right and just-ordained by history, human nature, and God-that the means of life in all its forms be available only as commodities. . . . Americans live in an overcommodified world, with needs that are generated in the interests of the market and that can be met only through the market. -Stephen Fjellman, Vinyl Leaves:Walt Disney World and America On or about December 1910, wrote novelist Virginia Woolf, human character changed. On his repeated visits to the United States, Frenchman Andre Giegfried noted much the same thing: "A new society has come to life in America," he said. "It was not clear in 1901 or 1904; it was noticeable in 1914, and patent in 1919 and 1925" (cited Leach 1993:266). Samuel Strauss, a journalist and philosopher writing in the 1920s, suggested the term consumptionism to characterize this new way of life that, he said, created a person with a philosophy of life that committed human beings to the production of more and more things-"more this year than last year, more next year than this"-and that emphasized the "standard of living" above all other values. "From a moral point of view," Strauss continued, it is obvious that Americans have come to consider their standard of living as a somewhat sacred acquisition, which they will defend at any price. This means that they would be ready to make many an intellectual or even moral concession in order to maintain that standard. (cited Leach 1993:266) There is no question that in America at least the half-century from 1880 to 1930 marked a major transition in the rate and level of commodity consumption-the purchase, use, and waste of what comedian George Carlin called "stuff." Food production grew by almost 40 percent from 1899 to 1905; the production of men's and women's ready-made clothing, along with the production of costume jewelry, doubled between 1890 and 1900; glassware and lamp production went from 84,000 tons in 1890 to 250,563 tons in 1914. In 1890, 32,000 pianos were sold in the United States; by 1904, the number sold increased to 374,000 (Leach 1993:16). During this period the perfume industry became the country's tenth largest; at one department store, sale of toiletries rose from $84,000 to $522,000 between 1914 and 1926. The manufacture of clocks and watches went from 34 million to 82 million in ten years. By the late 1920s, one of every six Americans owned an automobile. All of this consumption occurred in a society in which 2 percent of the people owned 60 percent of the wealth, while the bottom 50 percent owned only 5 percent. Of course these figures are dwarfed by what Americans and others around the world consume today. There are as many cars in the United States as there are persons with drivers' licenses, for example. However, although consumption rates were not nearly as high as they are today, the early twentieth century is notable because it marked the early phase of what Ernest Gellner (1983:24) called the society of perpetual growth, and the creation of a new type of culture, consumer capitalism (see Bodley 1985:67), along with the construction of a new type of person, the consumer. The emergence of the society of perpetual growth and the culture of capitalism marked a new stage in an ongoing global historical process that began (to the extent that it can be said to have a beginning) anytime from the fifteenth to the early nineteenth centuries. The creation of the human type that characterizes this stage, the consumer, followed soon after the emergence of two other historically unique categories of human beings: the capitalist and the laborer. Merchants had existed, of course, for thousands of years, and people had always labored to produce goods and, in a fashion, consumed what they'd produced. But never before in history has there existed a society founded on categories of people: the capitalist, whose sole purpose is to invest money and accumulate profit; the laborer, whose sole means of support comes from the sale of his or her labor; and the consumer, whose sole purpose is to purchase and consume increasing quantities of goods and services. By the end of the nineteenth-century, the capitalist and laborer-operating within a set of rules mediated by a new type of political entity, the nation–state-had created a revolutionary system for the production of goods that potentially contained the seeds of its own destruction. By the late 1890s, so many goods were being produced that businesspeople and government officials feared overproduction, panic, and the severe economic depression that marked that decade. Out of these fears came what William Leach called "a steady stream of enticements" designed to encourage people to consume and to awaken Americans, as Emily Fogg Mead, the mother of anthropologist Margaret Mead, said, to "the ability to want and choose" (see Leach 1993:16). The consumer was necessary to save industrial capitalism from its own efficiency. Virtually all Americans, at some point in their lives, play the roles of consumer, laborer, or capitalist; as consumers they buy things; as laborers, they work for wages; and as capitalists they invest money in banks, insurance policies, pension plans, stocks, education, or other enterprises from which they expect to profit. What ties together these roles, and indeed the entire culture, is money. Every culture has its distinct style or elements, rituals or ritual objects, that define for its members what is most important in life. The Dogon of West Africa define their existence through art; the Balinese of Indonesia, through drama and music. The Trobriand Islanders engaged in the accumulation of yams and the ritual exchange of shell necklaces and bracelets; the ancient Aztecs of Mexico in human sacrifice. For the indigenous peoples of the American Plains, the key element of cultural life was the buffalo. For members of the culture of capitalism the key element is money. As Jack Weatherford (1997:11) noted: Money constitutes the focal point of modern world culture. Money defines relationships among people, not just between customer and merchant in the marketplace or employer and laborer in the workplace. Increasingly in modern society, money defines relationships between parent and child, among friends, between politicians and constituents, among neighbors, and between clergy and parishioners. Money forms the central institutions of the modern market and economy, and around it are grouped the ancillary institutions of kinship, religion, and politics. Money is the very language of commerce for the modern world. Consumers want to spend as much money as they can, laborers want to earn as much as possible, and capitalists want to invest it so that it can return more. There is the potential for much conflict in these arrangements. Each person, as consumer, wants to pay as little as possible for commodities; while the same person, as laborer, wants to earn as much as possible, thus driving up prices. The capitalist wants to pay each person, as laborer, as little as possible, but wants the person, as consumer, to earn enough to purchase the commodities from which profits accrue. Yet each role also reinforces the other: The capitalist is dependent on the laborer to perform services and produce products and on the consumer to buy them; the laborer is dependent on the capitalist for employment and wages. Furthermore, each role disciplines and drives the other: the consumer in each person, desiring to acquire commodities and the status they may convey, accumulates debt; to pay off the debts accumulated to purchase status-bearing commodities, the consumer must labor to acquire money or must, in the role of capitalist, make investments hoping for greater returns. We can perhaps best conceptualize the working of the culture of capitalism as sets of relations between capitalists, laborers, and consumers, each depending on the other, yet each placing demands on, and often conflicting with, the others. In this cultural scheme, the nation–state serves as, among its other functions, a mediator, controlling the creation and flow of money and setting and enforcing the rules of interaction. (Figure 1.1 is a highly simplified model, but it serves to underline the key features and unique style of the culture of capitalism.) (Figure 1.1 is attached as a seperate file to the bottom of this post) Where did the culture of capitalism come from? One of the assumptions of this book is that the emergence of capitalism has been misrepresented by many historians, sociologists, and anthropologists; rather than recognizing it as the emergence of a historically unique culture, they have generally portrayed it as an inevitable historical or evolutionary development. Capitalist culture was equated with "civilization," implying that anything different was "uncivilized." Later it was considered part of a process of "modernization," implying that anything else was "primitive" or "traditional." The emergence of the culture of capitalism, particularly in the so-called third world, was called "economic development," once again implying that anything less was "undeveloped" or "underdeveloped." However, if we look at capitalism as one cultural adaptation out of many, we will better able to understand and judge the effects it has had on the world's peoples and see its spread not as inevitable development, growth, or modernization, but as the displacement, for better or worse, of one way of life by another. Put another way, there is not much to choosing (as we must if capitalism is equated with progress, modernity, and development) between being modern or primitive, developed or undeveloped, civilized or uncivilized; it is, however, a very different matter in choosing whether to be a member of the culture of capitalism or a Zuni, Guaran', Mohawk, Chuckchee, Nuer, or Murngin. The emergence of the culture of capitalism has left little in our lives untouched-it has affected our material, spiritual, and intellectual life; it has reshaped our values; and, as we shall see, it has largely dictated the direction that every institution in our society would take. It has produced wave after wave of consumer goods, revolutionized food production, and prompted previously unimagined developments in technology, communications, and medicine. Most dramatically, at least from the anthropological point of view, "feeding" the consumer has required a level of global integration unmatched in human history. The clothes we wear more often than not are produced in whole or in part by people in Malaysia, Hong Kong, or El Salvador; workers in Brazil probably cut the sugarcane that became the sugar that sweetens our soft drinks; our morning coffee began as coffee beans in the highlands of Colombia; the oranges we eat may have been grown in Spain, packed in cardboard boxes made of Canadian pulpwood, wrapped in plastic produced in New Jersey, and transported on trucks made in France with Italian, Japanese, and American parts. Our radios, televisions, and VCRs are most likely assembled by workers in Mexico, Haiti, or Indonesia; and our automobiles, of course, may have been produced at least in part in Japan, Taiwan, or Korea. Furthermore, the culture of capitalism is being exported to all parts of the globe. Yet few people are aware of how the culture works and how it affects our lives and those of people all over the world-how American consumption, labor, and investment patterns relate to wages paid to women in Indonesia, the destruction of the rainforests in Paraguay, or the use of water on the American Plains. This is not necessarily the fault of the individual, for as we shall see, the culture of capitalism purposefully masks from its members the problems that result from its maintenance and spread. Chapter Two: The Laborer in the Culture of Capitalism By many poor men that work early and late; If it were not for them that do our labor full hard We might go and hang ourselves without regard. . . . By these people's labor we fill our purse. If trading grows dead, we will presently show it, But if it grows good, they shall never know it (seventeenth-century labor song). -Fernand Braudel, The Wheels of Commerce The capitalist system makes it very much easier for people not to realize what they are doing, not to know about the danger and hardship, the despair and humiliation, that their way of life implies for others. -Edmund Wilson, The Shores of Light The consumer may drive the culture of capitalism, but without the laborer there would be no commodities to consume. Yet the emergence of the laborer-the person who survives by selling labor-is a recent historical phenomenon. In past centuries most people had access to land on which to grow their own food, selling whatever surplus they produced. Or they owned tools-implements for weaving, metalworking, or producing other objects for sale or trade. Thus to understand capitalism it is necessary to examine why people choose or are forced to sell their labor. Before beginning this examination it is necessary to have a fundamental understanding of the workings of the capitalist economy. Capitalism is not an easy term to define. Pierre Proudhon, who first used it in 1861, called it "an economic and social regime in which capital, the source of income, does not generally belong to those who make it work through their labor" (cited Braudel 1982:237). The term capitalism does not appear in the writings of Karl Marx and did not gain currency until 1902, when the German economist Werner Sombart used it to denote the opposite of socialism. But definitions alone won't help us to understand fully the dynamics of something as complex as a capitalist economy. We need to understand the major characteristics of capitalism to appreciate how as an economic and a cultural system it has permeated our lives Few people will deny that the genius of capitalism lies in its ability to produce goods-commodities for people to buy and consume. Let's start our excursion into capitalism with a product, beginning with something nearly all of us buy at one point or another-sneakers-and examine, briefly, the largest manufacturer of sneakers, Nike, Inc. Today most of the sneakers-and clothes-we wear are assembled overseas because large corporations, such as Nike, have increasingly relocated assembly factories from their home countries to countries on the periphery. Consequently the clothes we wear; the TVs, stereos, and compact disks (CDs) we listen to; and the computers we use are at least partly produced by a person in another part of the world. This situation creates a clash of cultures that can be illuminating for what they tell us about other cultures and what they may tell us about ourselves. The effects that these factories have on other countries highlight the distinctive features of the capitalist economy and perhaps approximate the impact of early capitalism on our own society. But first let us digress briefly to an understanding of the economic logic of capitalism and particularly the role of labor within this economic system. Chapter Three: The Rise of the Merchant, Industrialist, and Capital Controller From the fifteenth century on, European soldiers and sailors carried the flags of their rulers to the four corners of the globe, and European merchants established their storehouses from Vera Cruz to Nagasaki. Dominatingthe sea-lanes of the world, these merchants invaded existing networks of exchange and linked one to the other. In the service of "God and profit" they located sources of products desired in Europe and developed coercive systems for their delivery. In response, European craft shops, either singly or aggregated into manufactories, began to produce goods to provision the wide-ranging military and naval efforts and to furnish commodities to overseas suppliers in exchange for goods to be sold as commodities at home. The outcome was the creation of a commercial network of global scale. -Eric Wolf, People Without History When I think of Indonesia-a country on the Equator with 180 million people, a median age of 18, and a Moslem ban on alcohol-I feel I know what heaven looks like. -Donald R. Keough, President of Coca Cola At no other time in human history has the world been a better place for capitalists. We live in a world full of investment opportunities-companies, banks, funds, bonds, securities, and even countries-into which we can put money and from which we can get more back. These money-making machines, such as the Nike Corporation, have a ready supply of cheap labor, capital, raw materials, and advanced technology to assist in making products that people all over the world clamor to buy. Moreover, governments compete for their presence, passing laws and making treaties to open markets, while maintaining infrastructures (roads, airports, power utilities, monetary systems, communication networks, etc.) that enable them to manufacture products or provide services cheaply and charge prices that remain competitive with other investments. Nation–states maintain armies to protect investments and see that markets remain open. Educational institutions devote themselves to producing knowledgeable, skilled, and disciplined workers, while researchers at colleges and universities develop new technologies to make even better and cheaper products. Our governments, educational institutions and mass media encourage people to consume more and more commodities. Citizens order their economic and social lives to accommodate work in the investment machines and to gain access to the commodities they produce. In return the investment machines churn out profits that are reinvested to manufacture more of their particular products or that can be invested in other enterprises, producing yet more goods and services. But there are economic, environmental, and social consequences of doing business and making money. We live in a world in which the gap between the rich and poor is growing, a world that contains many wealthy and comfortable people but also contains almost one billion hungry people, one-fifth of its population. Then there are the environmental consequences of doing business: Production uses up the earth's energy resources and produces damaged environments in return. There are health consequences as well, not only from damaged environments but also because those too poor to afford health care often do without it. Finally there are the political consequences of governments' using their armed force to maintain conditions that they believe are favorable for business and investors. In the long view of human history these conditions are very recent ones. For most of human history human beings have lived in small, relatively isolated settlements that rarely exceeded three or four hundred individuals. And until some ten thousand years ago virtually all of these people lived by gathering and hunting. Then in some areas of the world, instead of depending on the natural growth of plant foods and the natural growth and movements of animals, people began to plant and harvest crops and raise animals themselves. This was not necessarily an advance in human societies-in fact, in terms of labor, it required human beings to do the work that had been done largely by nature. The sole advantage of working harder was that the additional labor supported denser populations. Settlements grew in size until thousands rather than hundreds lived together in towns and cities. Occupational specialization developed, necessitating trade and communication between villages, towns, cities, and regions. Political complexity increased; chiefs became kings, and kings became emperors ruling over vast regions. Then, approximately four or five hundred years ago, patterns of travel and communication contributed to the globalization of trade dominated by "a small peninsula off the landmass of Asia," as Eric Wolf called Europe. The domination by one region over others was not new in the world. There had existed prior to this time civilizations whose influence had spread to influence those around them-the Mayan civilization in Central America, Greek civilization of the fourth millennium b.c., Rome of the first and second centuries a.d., and Islamic civilization of the eighth and ninth centuries. But there was an important difference. The building of these empires was largely a political process of conquest and military domination, whereas the expansion of Europe, while certainly involving its share of militarism, was largely accomplished by economic means, by the expansion and control of trade. Now let's shift our focus to the development of the capitalist-the merchant, industrialist, and financier-the person who controls the capital, employs the laborers, and profits from the consumption of commodities. This will be a long-term, historical look at this development, particularly because if we are to understand the global distribution of power and money that exists today and the origins of the culture of capitalism, knowledge of its history is crucial. Assume for a time the role of a businessperson, a global merchant, or merchant adventurer, as they used to be called, passing through the world of the last six hundred years. We'll begin searching the globe for ways to make money in the year 1400 and end our search in the year 2000, taking stock of the changes in the organization and distribution of capital that have occurred in that time. Because we are looking at the world through the eyes of a merchant, there is much that we will miss-many political developments, religious wars, revolutions, natural catastrophes, and the like. Because we overlook these events does not mean they did not affect how business was conducted-in many cases they had profound effects. But our prime concern is with the events that most directly influenced the way in which business was conducted on a day to day basis and how the pursuit of profit by merchant adventurers influenced the lives of people all over the world. Our historical tour will concentrate on three areas: 1. An understanding of how capital came to be concentrated in so few hands and how the world came to be divided into rich and poor. There were certainly rich people and poor people in 1400, but today's vast global disparity between core and periphery did not exist then. How did the distribution of wealth change, and how did one area of the world come to dominate the others economically? 2. An understanding of the changes in business organizations and the organization of capital, that is, who controlled the money? In 1400, most business enterprises were small, generally family-organized institutions. Capital was controlled by these groups and state organizations. Today we live in an era of multinational corporations, many whose wealth exceeds that of most countries. We need to trace the evolution of the power of capital over our lives and the transformation of the merchant of 1400 into the industrialist of the eighteenth and nineteenth centuries then into the investor and capital controller of the late twentieth century. How and why did these transformations in the organization of capital come about? 3. The increase in the level of global economic integration. From your perspective as a merchant adventurer, you obviously want the fewest restraints possible on your ability to trade from one area of the world to another; the fewer restrictions, the greater the opportunity for profit. Such things as a global currency, agreement among nations on import and export regulations, ease of passage of money and goods from area to area, freedom to employ who you want and to pay the lowest possible wage are all to your advantage; furthermore, you want few or no government restrictions regarding the consequences of your business activities. How did the level of global economic integration increase, and what were the consequences for the merchant adventurer, as well as others? With these questions in mind, let's go back to the world of 1400 and start trading. Chapter Four: The Nation–State in the Culture of Capitalism The mutual relationship of modern culture and state is something quite new, and springs, inevitably, from the requirements of a modern economy. -Ernest Gellner, Nations and Nationalism Among the primary goals of the modern, post-Enlightenment stateare assimilation, homogenization, and conformity within a fairly narrow ethnic and political range, as well as the creation of societal agreement about the kinds of people there are and the kinds there ought to be. The ideal state is one in which the illusion of a single nation–state is created and maintained and in which resistance is managed so that profound social upheaval, separatist activity, revolution, and coups d'état are unthinkable for most people most of the time. -Carol Nagengast, Violence, Terror,and The Crisis of the State Imagine an alien from another planet who lands on Earth after a nuclear holocaust has destroyed all life but has left undamaged terrestrial libraries and archives. After consulting the archives, suggested Eric Hobsbawm, our observer would undoubtedly conclude that the last two centuries of human history are incomprehensible without an understanding of the term nation and the phenomenon of nationalism. The nation–state, along with the consumer, laborer, and capitalist, comprise, we suggest, the essential elements of the culture of capitalism. It is the nation–state, as Eric Wolf (1982:100) suggested, that guarantees the ownership of private property and the means of production and provides support for disciplining the work force. The state also has to provide and maintain the economic infrastructure-transportation, communication, judicial systems, education, and so on-required by capitalist production. The nation–state must regulate conflicts between competing capitalists at home and abroad, by diplomacy if possible, by war if necessary. The state plays an essential role in creating conditions that inhibit or promote consumption, controls legislation that may force people off the land to seek wage labor, legislates to regulate or deregulate corporations, controls the money supply, initiates economic, political, and social policies to attract capital, and controls the legitimate use of force. Without the nation–state to regulate commerce and trade within its own borders, there could be no effective global economic integration. But how did the nation–state come to exist, and how does it succeed in binding together often disparate and conflicting groups? Virtually all people in the world consider themselves members of a nation–state. The notion of a person without a nation, said Ernest Gellner (1983:6), strains the imagination; a person must have a nationality as he or she must have a nose and two ears. We are Americans, Mexicans, Bolivians, Italians, Indonesians, Kenyans, or members of any of close to two hundred states that currently exist. We generally consider our country, whichever it is, as imbued with tradition, a history that glorifies its founding and makes heroes of those thought to have been instrumental in its creation. Symbols of the nation-flags, buildings, monuments-take on the aura of sacred relics. The attainment of "nationhood" had become by the middle of the twentieth century a sign of progress and modernity. To be less than a nation-a tribe, an ethnic group, a regional bloc-was a sign of backwardness. Yet fewer than one-third of the states in the world are more than thirty years old; only a few go back to the nineteenth century; and virtually none go back in their present form beyond that. Before that time people identified themselves as members of kinship groups, villages, cities, or, perhaps, regions, but almost never as members of nations. For the most part, the agents of the state were resented, feared, or hated because of their demands for tribute, taxes, or army conscripts. States existed, of course, and have existed for five to seven thousand years. But the idea of the nation–state, of a people sharing some bounded territory, united by a common culture or tradition, common language, or common race, is a product of nineteenth century Europe. Most historians see the French Revolution of 1789 as marking the beginning of the era of the nation–state. Yet in spite of the historical newness of the idea, for many people nationality forms a critical part of their personal identity. Some of the questions we need to explore are: How did the nation–state come to have such importance in the world? Why did it develop as it did, and how do people come to identify themselves as members of such vague abstractions? Finally, why does the nation–state kill as often as it does? The question of killing is important, because today most killing and violence is either sanctioned by or carried out by the state. This should not surprise us: most definitions of the state, following Max Weber's (1947:124–135), revolve around its claim to a monopoly on the instruments of death and violence. "Stateness," as Elman Service (1975) put it, can be identified simply by locating "the power of force in addition to the power of authority." Killing by other than the state, as Morton Fried (1967) noted, will draw the punitive action of organized state force. The use of force, however, is not the only characteristic anthropologists emphasize in identifying the state; social stratification-the division of societies into groups with differing access to wealth and other resources-is also paramount. Yet even here the state is seen as serving as an instrument of control to maintain the privileges of the ruling group, and this, too, generally requires a monopoly on the use of force (see Cohen and Service 1978; Lewellen 1983). Thus to complete our description of the key features of the culture of capitalism we need to examine the origin and history of the state and its successor, the nation–state.
USA and Western Europe
I. USA
a. History of economic development
i. During time of colonies:
1. Discovery of new land = fertile and very productive farmland, very productive raw material resources such as land, river, oceans, etc.
2. European immigrants were mainly farmers. These European proletariats came to the new land to escape rule of feudal lords. They had nothing to lose and everything to gain
3. Natural resources were very abundant
4. European model of development promoted industrialization, urbanization, etc.
5. U.S. became a nation of copying the making of European goods but at a cheaper price. European goods were expensive, so U.S. exports soared
6. U.S. eventually became a nation of investors
ii. WWII:
1. It was a big plus for the U.S. There were no battles taking place in the U.S., so its infrastructure and economy was left intact. The U.S. supplied its allies with the guns, food and everything needed for the war effort
2. Political stability aided economic growth
3. U.S. possessed superior technical skills with both its labor force and machinery
4. There was a massive brain drain (i.e. the U.S. had a liberal policy for immigrants with science skills and extraordinary intellectual qualities to come and work in the U.S.)
b. Strengths:
i. Economic indicators include:
1. Per capita GNI PP of $31,910
2. Per capita GDP of $31,872
ii. Social indicators include:
1. A low fertility rate of 0.6%. You need to grow your population to grow your economy (i.e. it creates new consumers, demand increases, so the economy increases), but too much population growth is negative because it will become a struggle to fulfill basic needs within society
2. Life expectancy = 77 years
3. Infant mortality rate = 7.1. This is a high rate among industrialized nations. This is mainly due to the lack of universal health care
iii. Other strengths include:
1. Huge domestic market
2. We have been overusing/overexploiting our resources but we still have a lot of them left because we are a relatively large and young nation
3. We have a high level of technical skills. The “brain drain” immigration policies have helped in this area
4. Excellent management skills
5. Strong computer industry
6. Immigrants play a central role, both in the brain drain and area of low wage workers (e.g. in the agricultural industry)
7. College education system is strong even though the model has been criticized. We have a large number of universities focused on research and development. They also graduate a large number of graduates trained in leading fields
c. Problems:
i. The emergence of new players competing for the top spot (e.g. Germany, Japan,
France, India, China, etc.)
ii. The European Union was established to compete with US and Japan
iii. Problems with capitalism have created tremendous inequality, high illiteracy rates
compared with Europe, high rates of poverty
iv. There is a decline in and changing role of natural resources
v. Skills of American workers are not easily transferable. E.g. In general American
assembly line workers do not have the skills to survive outside of assembly line if
they are laid off from their job
vi. There are major trade imbalances (i.e. the U.S. imports more than it exports). This
does has the effect of sending wealth overseas
vii. There is a major budget deficit. The U.S. is 8 trillion dollars in debt. It was zero
when Bill Clinton left the white house in 2000.
viii. U.S. consumers have major debt (e.g. mortgages, student loans, credit card
balances, etc.). The only other time that U.S. consumers were in so much debt was
during the great depression
ix. Foreign companies are buying up American assets. There needs to be restrictions
on what can be bought and sold. Foreign nations can manipulate the economy with
their influence
x. The U.S. is a nation of consumers. People spend money whether or not they actually
have it
xi. Infrastructure is deteriorating. The U.S. motorway system was originally built for
the military. The problem is that it needs billions of dollars to maintain it
xii. There is a decline in the quality of products. The U.S. began manufacturing
products that only last 4-5 years to keep consumers coming back to buy more. The
reputation of products built in the U.S. has gone down
d. Future trends:
i. If a nation has good economic indicators for 100 years, the next 100 years tends to
be promising. Based on these past indicators, the U.S. should be strong for some
time to come
ii. The U.S. may lose its #1 status, but it will still be near the top
iii. The U.K. was #1 for a very long time (up until the end of the 19th century). It is still
strong economically even though it is not #1
iv. There will be increased global competition
II. Western Europe
a. Strengths:
i. Economic indicators include:
1. Per capita GNI PP of $29,410 (lower than the U.S.)
2. Per capita GDP of approximately $24,000 (lower than the U.S.)
ii. Social indicators include:
1. A low natural increase rate of 0.1% (lower than the U.S.). This is good. While you need to grow your population to grow your economy (i.e. it creates new consumers, demand increases, so the economy increases), too much population growth is negative because it will become a struggle to fulfill basic needs within society
2. Life expectancy = 79 years (higher than the U.S.)
3. Infant mortality rate = 4.0 (lower than the U.S.). This low rate reflects the fact that countries in Western Europe have universal health care
iii. Other strengths include the fact that Europe is still rich; its workers have a high rate of technical skills; its infrastructure in roads, building, utilities are good; and it enjoys both economic and political stability
b. Problems:
i. There is a lot of dependency on foreign trade
ii. The countries have large welfare budgets
iii. Unions are also strong, which can affect productivity and growth
iv. Rising unemployment rates make it so that people have less money to spend, thus consume (a major backbone of capitalism)
v. Europe has been plagued with internal conflicts for a long time
vi. Its population is declining so that means there is a loss of consumers
vii. There is increasing global competition
c. Future trends:
i. The European Union will increasingly dominate the political economies of Europe.
There will be increased free trade, large circulation of the Euro, passports enabling
European citizens to move about freely throughout Europe. The EU is a powerhouse
ii. The European Union is a free trade zone where there are no tariffs posed
iii. The fact that there is so much conflict within Europe, and there has been no time
that it has flown under one flag, perhaps makes the future of this zone a bit
unrealistic