Saturday, December 29, 2007

KRUGMAN ON TRADE

Thomas Riggins

Paul Krugman's article in the NYT on 12/28/07 raises some interesting points. Briefly:

It seems that globalization's international trade policies benefit billions of people around the world and helps third world workers improve their incomes. At the same time it "reduces the real wages of many and perhaps most workers in this country [the US]."

Free trade can make a country as a whole richer but not necessarily all the different groups within a country. In other words, it benefits one class at the expense of another, or even parts of one class as opposed to another. The capitalists and highly skilled educated workers in the US benefit but low skilled and less educated workers do not.

How can American wage workers compete with workers in Mexico who are paid 11% of the average American wage, or China at 3.5%? Capitalism is obviously going to favor relocation to low wage areas whatever pro labor American politicians have to say.

Is protectionism the answer? Marxists are internationalists and US Marxists would not want to be put in the position of denying opportunity to foreign workers on a nationalist basis. Krugman says "keeping world markets relatively open is crucial to the hopes of billions of people."

Yet American workers are clearly suffering. "The highly educated workers who clearly benefit from growing trade with third-world economies are a minority, greatly outnumbered by those who probably lose."

Krugmen thinks the best solution is "strengthening the social safety net."
It is clear that as long as the American working class does not have its own political party it will be subject to the dictates of the two major parties of capitalism which alternate in political power in the US.

The first step is to convince the American people of the absolute class hostility of the Republican party towards their interests. The 2008 election can be a milestone if the Republican anti-labor and pro-war policies are completely repudiated. This would give the progressive forces the breathing room necessary to push the Democrats leftward and to plan more advanced strategies for the future.

4 comments:

normandmarkowitz said...

Paul Krugman is essentially a Keynesian left liberal, which makes him a little bit like Lenin's characterization of the Anti-Imperialist League in the U.S(the "last of the Mohicans" of the old bourgeois democracy).
A welfare state will increase education, skill, and real purchasing power for the working class by providing the working class with housing, health care, education and transportation benefits and subsidies, which, along with a strong labor movement which will give them higher wages and better working conditions, will make them more productive workers and give them more disposable income to purchase goods. Keynesian liberals like to say or at least used to that this is good for capitalism as a system, since it will eliminate social conflict and alienation among workers and also reduce the possibility of major depressions that will undermine capitalist profits by sustaining mass purchasing power.
The problem is not that this is necessarily wrong, but that capitalists don't see it that way. They agree in practice with Karl Marx that their profit comes from labor costs, which is why they make keeping labor costs down to the barest minimum they can get away with their first priority, both in many wages and in social benefits. They will accept a welfare state rather than face socialism, which is why welfare states have been created largely through the influence of socialist and communist parties which were leading forces in strong labor movements, but they don't want a welfare state, since it strengthens workers against them, and they use their power politically to undermine it, weaken it, "privatize it." it where it exists.

Tom is very very right that as long as the working class does not have a political party of its own to represent its interests, it will be very hard to develop the "social safety net" or welfare state that Krugman is talking about and trade will be six of one, half a dozen of the other for the working class in the U.S., although one should mention that the absence of effective mass purchasing power in the U.S. means that the working class lives on and through a mountain of installment plan debt, which means that it pays back in interest to the capitalists its wage increases which further undermines its purchasing power, and that it also is a "beneficiary" of an imperialist economy, where it purchases enormous quantities of relatively cheap consumer goods made in developing countries with cheap labor(often from U.S. based corporations) which further undermines its job and wage base. This is "free trade" for by and of capitalists, against the interests of working class, even if some benefits to "trickle down" to a section of the working class

Doug said...

Kucinich - Strength Through Peace

normanmarkowitz said...

Doug,
It's great to turn that old cold war slogan around. Peace is the only way to strength

Anonymous said...

Kucinich is an example of the problem we have in this country with "class consciousness." Looking at his program reveals that on almost every issue he is head and shoulders above the leaders of the pack in the Democratic Party (the Republicans are completely irrelevant to the real interests of the American people), yet he has no chance to get the nomination.
The leadership of the Party and the media have ganged up on him to keep him out of the debates and the news so Americans don't get to learn about his campaign except in a fragmented way. The 2 major parties and the press suppress class awareness and class consciousness preferring a rabble to an informed people. Unless this can be overcome the corporate dictatorship will continue in power under the guise of a "constitutional democracy"-- using the constitution of the slaveocracy slightly amended to favor monopoly capitalism.