Nabokov once famously described the creative process as multiple nerve endings forming into bigger ideas. For many individuals left partially or wholly out of the system, however, the nerve endings of the big idea known as globalization have grown increasingly raw and frayed.
Barry Lynn’s End of the Line considers the complex costs and benefits of globalization and illustrates the many trade-offs between the effectiveness and efficiency of modern corporations and the health and welfare of the planet. Thankfully, his is not a sad, deterministic tale of the inevitable tragedy of globalization, a popular line of thinking these days that he ascribes to intellectual laziness on the part of pundits and politicians. Instead, his focus is on the modern corporation and, in particular, the greed and selfishness of some of the individuals who run what Chandler & Mazlish (2005) call the Leviathans of global commerce.
Having said this, however, Lynn heavily discounts his own arguments with anecdotes about business today that are both superficial and, in some cases, dead wrong. Furthermore, his prescriptions for reform at the end of the book are directionally useful, but quite shallow and hardly developed. What a shame. Lynn is accused of being an alarmist about coprorate capitalism, but some of his concerns are legitimate. It is worth sounding an alarm at the smell of smoke.
Lynn embodies Sowell’s (2002) notion of the “constrained vision.” He accepts mankind’s limitations and potential for wrongdoing. He understands that the sustainability of globalized capitalism and any reasonable long-term distribution of its benefits require us to engage in complex, sometimes messy tradeoffs the likes of which were readily apparent to Adam Smith and Friedrich von Hayek.
However, Lynn says that we can no longer simply rely on the passive logic of Smith’s “invisible hand” to balance the costs and benefits of capitalism and corporatism through markets alone. He rightly rebukes the so-called Chicago school of economics and the markets-above-all-else thinking of Milton Friedman and George Stigler that helped rewrite antitrust policy and, with it, “an industrial landscape that remained remarkably stable for four decades and that was notable for its many groups of three,” workable competitive clusters such as Bethlehem, Republic and U.S. Steel or Chrysler, Ford and General Motors (p. 166). He believes that the status quo of laissez-faire economics is grossly insufficient and hardly well equipped to remedy the disease that afflicts modern capitalism.
In Lynn’s thinking, the sheer scale of globalization has been brought about, in part, by unbridled free-traders, anti-regulation ideologues and, yes, a certain inevitability born of unprecedented technological sophistication. Accordingly, these developments require new thinking and structural interventions in a “global industrial machine” (p. 257) whose reliance on vertically integrated supply-chain management and lean manufacturing wreaks havoc with the American manufacturing base and the quality of life for workers here and throughout the world.
Lynn is obviously less enamored of capitalism and far more suspicious of globalization than Zakaria (2004). The latter made a useful case for the development of capitalism and, with it, the growth and sustainability of a business class based on the rule of law as a necessary precursor to sustainable democracy. Still, by comparison, Zakaria’s image of capitalism seems romantic, even simplistic and not sufficiently rooted in the realities of corporate capitalism. Zakaria believes that capitalism answers many questions, but he also skims right past the exceedingly more difficult questions about globalized capitalism that seem to grow exponentially. This is why Lynn’s work is an essential counterpoint to Zakaria’s The Future of Freedom, especially for those of us whose visions are more constrained.
Lynn’s Echo of Schumpeter
Zakaria would seem to support Schumpeter’s (1942) views as to the limits of democracy, but perhaps for different reasons. Schumpeter’s vision was constrained, so he did not trust political or commercial elites to work in a manner that truly reflected the will of the people. By comparison, Zakaria seems unconstrained in this context since he clearly laments the disappearance of traditional elites. Yet Zakaria challenges the new breed of moneyed elites today and suggests that the pursuit of their myopic, self-serving interests has disconnected them from the moorings of social responsibility that earlier generations of elites held dear.
So, Zakaria seems unconstrained when elites embraced community goodwill in a manner described by Adam Smith as “fellow feeling.” He seems quite constrained in his vision, however, when those elites turned selfish, which is just the point Barry Lynn is making and which Schumpeter would likely agree. Capitalism in this sense is a bit like Mae West; it’s very good when in good hands, and very bad when in bad hands.
Lynn’s treatise actually brings to life Schumpeter’s concerns over capitalism falling into the wrong hands. Schumpeter firmly believed in capitalism, but he contended in Capitalism, Socialism and Democracy that it would be all too easily corrupted by greed. How prescient! And, again, how emblematic of Lynn’s concerns. The author underscores the point in showing how Cisco’s “monopoly profits,” in classic Schumpeterian terms, were generally not “channeled into a robust in-house R&D operation” in the 1990s but, instead, used to buy potential challengers, attempt to control the pace of new technology introductions and enhance the wealth of a limited number of individuals (p. 176).
When Lynn writes that “unmitigated economic power increasingly undermines the security and well-being of our societies, a growing number of states will inevitably react against the status quo” (p. 254), he is boldly echoing Schumpeter. Schumpeter understood that, once stirred to action, the behemoth the state can choose to overwhelm corporations no longer serving the public interest. Lynn readily agrees when states that, “the power of these corporations, as vast as they seem now in the virtual absence of any government effort to regulate them, is no match for that of a state with a coordinated program and the will to act (p. 258).
The Schumpeter logic as echoed by Lynn seems so very distant from the romantic thinking of Rousseau, Voltaire, Godwin and others whom Sowell’s identifies as unconstrained. Their realism underscores precisely why Dewey (1916) argued that a society is well served when large numbers of its citizens can actually engage in a debate about essential issues such as globalization and possess the critical thinking skills needed to consider the many complex trade-offs Lynn raises, ranging from stricter antitrust measures to greater corporate transparency to a complete refashioning of executive compensation systems.
Otherwise, as Lynn points out, the public dialogue on these issues will continue to be held hostage to superficial bumper-sticker messages – what he calls “intellectual inertia” (p. 257) – designed to support the narrow interests of today’s elites that give Zakaria so much concern. Indeed, Lynn sounds much like Dewey when he counters Friedman’s incessant declarations that protectionism hurts both importer and exporter when he says, “But is it not up to the people of each individual nation, acting through democratic institutions, to decide for themselves what policies pain them? Is not one of the strengths of democracy that it enables a people to identify, debate and eliminate economic policies that benefit only a small minority? (p. 259)” This is Lynn using Dewey’s premise to evoke Schumpeter’s promise. Indeed, the ongoing cycles of “creative destruction” that otherwise mark a healthy form of capitalism may be lethal without corrective action and might just, someday, represent the end of the line for the global corporation.
References
Chandler, A.D. & Mazlish, B. (2005). Leviathans: Multinational Corporations and the New Global History, Cambridge University Press.
Dewey, J. (1916). Democracy and Education: An Introduction to the Philosophy of Education, New York: Cosimo Publications.
Schumpeter, J. A. (1962). Capitalism, Socialism and Democracy, New York: Harper Publications.
Sowell, T. (2002). A Conflict of Visions: Ideological Origins of Political Struggles, New York: Basic Books.
Zakaria, F. (2004). The Future of Freedom: New York, New York: W.W. Norton.
Barry Lynn’s End of the Line considers the complex costs and benefits of globalization and illustrates the many trade-offs between the effectiveness and efficiency of modern corporations and the health and welfare of the planet. Thankfully, his is not a sad, deterministic tale of the inevitable tragedy of globalization, a popular line of thinking these days that he ascribes to intellectual laziness on the part of pundits and politicians. Instead, his focus is on the modern corporation and, in particular, the greed and selfishness of some of the individuals who run what Chandler & Mazlish (2005) call the Leviathans of global commerce.
Having said this, however, Lynn heavily discounts his own arguments with anecdotes about business today that are both superficial and, in some cases, dead wrong. Furthermore, his prescriptions for reform at the end of the book are directionally useful, but quite shallow and hardly developed. What a shame. Lynn is accused of being an alarmist about coprorate capitalism, but some of his concerns are legitimate. It is worth sounding an alarm at the smell of smoke.
Lynn embodies Sowell’s (2002) notion of the “constrained vision.” He accepts mankind’s limitations and potential for wrongdoing. He understands that the sustainability of globalized capitalism and any reasonable long-term distribution of its benefits require us to engage in complex, sometimes messy tradeoffs the likes of which were readily apparent to Adam Smith and Friedrich von Hayek.
However, Lynn says that we can no longer simply rely on the passive logic of Smith’s “invisible hand” to balance the costs and benefits of capitalism and corporatism through markets alone. He rightly rebukes the so-called Chicago school of economics and the markets-above-all-else thinking of Milton Friedman and George Stigler that helped rewrite antitrust policy and, with it, “an industrial landscape that remained remarkably stable for four decades and that was notable for its many groups of three,” workable competitive clusters such as Bethlehem, Republic and U.S. Steel or Chrysler, Ford and General Motors (p. 166). He believes that the status quo of laissez-faire economics is grossly insufficient and hardly well equipped to remedy the disease that afflicts modern capitalism.
In Lynn’s thinking, the sheer scale of globalization has been brought about, in part, by unbridled free-traders, anti-regulation ideologues and, yes, a certain inevitability born of unprecedented technological sophistication. Accordingly, these developments require new thinking and structural interventions in a “global industrial machine” (p. 257) whose reliance on vertically integrated supply-chain management and lean manufacturing wreaks havoc with the American manufacturing base and the quality of life for workers here and throughout the world.
Lynn is obviously less enamored of capitalism and far more suspicious of globalization than Zakaria (2004). The latter made a useful case for the development of capitalism and, with it, the growth and sustainability of a business class based on the rule of law as a necessary precursor to sustainable democracy. Still, by comparison, Zakaria’s image of capitalism seems romantic, even simplistic and not sufficiently rooted in the realities of corporate capitalism. Zakaria believes that capitalism answers many questions, but he also skims right past the exceedingly more difficult questions about globalized capitalism that seem to grow exponentially. This is why Lynn’s work is an essential counterpoint to Zakaria’s The Future of Freedom, especially for those of us whose visions are more constrained.
Lynn’s Echo of Schumpeter
Zakaria would seem to support Schumpeter’s (1942) views as to the limits of democracy, but perhaps for different reasons. Schumpeter’s vision was constrained, so he did not trust political or commercial elites to work in a manner that truly reflected the will of the people. By comparison, Zakaria seems unconstrained in this context since he clearly laments the disappearance of traditional elites. Yet Zakaria challenges the new breed of moneyed elites today and suggests that the pursuit of their myopic, self-serving interests has disconnected them from the moorings of social responsibility that earlier generations of elites held dear.
So, Zakaria seems unconstrained when elites embraced community goodwill in a manner described by Adam Smith as “fellow feeling.” He seems quite constrained in his vision, however, when those elites turned selfish, which is just the point Barry Lynn is making and which Schumpeter would likely agree. Capitalism in this sense is a bit like Mae West; it’s very good when in good hands, and very bad when in bad hands.
Lynn’s treatise actually brings to life Schumpeter’s concerns over capitalism falling into the wrong hands. Schumpeter firmly believed in capitalism, but he contended in Capitalism, Socialism and Democracy that it would be all too easily corrupted by greed. How prescient! And, again, how emblematic of Lynn’s concerns. The author underscores the point in showing how Cisco’s “monopoly profits,” in classic Schumpeterian terms, were generally not “channeled into a robust in-house R&D operation” in the 1990s but, instead, used to buy potential challengers, attempt to control the pace of new technology introductions and enhance the wealth of a limited number of individuals (p. 176).
When Lynn writes that “unmitigated economic power increasingly undermines the security and well-being of our societies, a growing number of states will inevitably react against the status quo” (p. 254), he is boldly echoing Schumpeter. Schumpeter understood that, once stirred to action, the behemoth the state can choose to overwhelm corporations no longer serving the public interest. Lynn readily agrees when states that, “the power of these corporations, as vast as they seem now in the virtual absence of any government effort to regulate them, is no match for that of a state with a coordinated program and the will to act (p. 258).
The Schumpeter logic as echoed by Lynn seems so very distant from the romantic thinking of Rousseau, Voltaire, Godwin and others whom Sowell’s identifies as unconstrained. Their realism underscores precisely why Dewey (1916) argued that a society is well served when large numbers of its citizens can actually engage in a debate about essential issues such as globalization and possess the critical thinking skills needed to consider the many complex trade-offs Lynn raises, ranging from stricter antitrust measures to greater corporate transparency to a complete refashioning of executive compensation systems.
Otherwise, as Lynn points out, the public dialogue on these issues will continue to be held hostage to superficial bumper-sticker messages – what he calls “intellectual inertia” (p. 257) – designed to support the narrow interests of today’s elites that give Zakaria so much concern. Indeed, Lynn sounds much like Dewey when he counters Friedman’s incessant declarations that protectionism hurts both importer and exporter when he says, “But is it not up to the people of each individual nation, acting through democratic institutions, to decide for themselves what policies pain them? Is not one of the strengths of democracy that it enables a people to identify, debate and eliminate economic policies that benefit only a small minority? (p. 259)” This is Lynn using Dewey’s premise to evoke Schumpeter’s promise. Indeed, the ongoing cycles of “creative destruction” that otherwise mark a healthy form of capitalism may be lethal without corrective action and might just, someday, represent the end of the line for the global corporation.
References
Chandler, A.D. & Mazlish, B. (2005). Leviathans: Multinational Corporations and the New Global History, Cambridge University Press.
Dewey, J. (1916). Democracy and Education: An Introduction to the Philosophy of Education, New York: Cosimo Publications.
Schumpeter, J. A. (1962). Capitalism, Socialism and Democracy, New York: Harper Publications.
Sowell, T. (2002). A Conflict of Visions: Ideological Origins of Political Struggles, New York: Basic Books.
Zakaria, F. (2004). The Future of Freedom: New York, New York: W.W. Norton.