Roller-Coaster Capitalism: Creative Destruction at Work

Everything is for the best in this best of all possible worlds, Voltaire's Dr. Pangloss used to tell Candide, and many of today's social, political, and, especially, economic pundits owe the good doctor a greater debt than they have acknowledged. Panglossian optimism flourishes in all times and social conditions; there is always a willing audience for defenders of the status quo. Contemporary Panglossians tend to work with a debased form of the Whig narrative of progress: capitalism is the best of all possible economic systems; democracy is the best of all possible political systems; capitalism leads to democracy, and democracy leads to peace.

That in a nutshell has been the credo of both the Bush and Clinton administrations. The triumph of liberal capitalism and liberal economics signifies, in Francis Fukuyama's formulation, the end of history, and unsatisfactory as it might be, the world that has emerged is the best of all possible worlds.

William Greider's new book is a contemporary Candide, an attack on the platitudes that guide policymakers. But it is to Rousseau, perhaps, rather than Voltaire that one should look for his true literary antecedent: it has been said that the second edition of the works of Jean Jacques Rousseau was bound in the skins of those who had scoffed at the first. If half the shocking things William Greider says in One World, Ready or Not turn out to be true, a similar fate lies in store for what will undoubtedly be a legion who scoff at Greider.

SOLD OUT IN SEATTLE

One World, Ready or Not is a wildly ambitious and wildly uneven book of revisionist economics, and Greider hammers his heterodox propositions home as enthusiastically as Martin Luther nailed his revolutionary theses to the doors of the Wittenburg Cathedral. "The whole of Aristotle is to theology," wrote Luther, "as darkness is to light." Greider is no less insistent that the conventional wisdom now guiding the world's governments and international institutions is little more than darkness made visible.

Economic reform has been a failure. Trade liberalization has reduced living standards. The North American Free Trade Agreement has been a disaster. The world is drowning in a glut of savings. Financial assets are grossly overvalued, and the only question is whether there will be an economic catastrophe when the bubble bursts. Only greater government intervention can save the world from economic and, potentially, political trouble on an unprecedented scale.

This is a book that graduate students and coffeehouse dissidents everywhere will enjoy. It is a book for anybody who thinks that the emperor has no clothes and that, as the slogan of opponents of the World Bank and International Monetary Fund goes, "Fifty years is enough." It will comfort the remnants of the democratic left and fan the flames of populist rage. Most fundamentally, it is the book of a prophet, thundering against the sins of financial elites and calling its audience to return to the values of a simpler era.

It is a safe bet that not many professional economists will desert the Brookings Institution and the World Bank, don hair shirts, and follow Greider into the wilderness. Yet to ignore this book would be a mistake; if Greider's answers are not always consistent or clear, the questions he raises are important, and they shed light on some of the issues and problems that will shape national and international politics over the coming decades.

Prophets, of course, are not rare in the world of economic forecasting and financial advice. Greider, however, an iconoclastic journalist who has written well- researched populist critiques of the Federal Reserve (Secrets of the Temple) and American economic policy (Who Will Tell the People?) is not just one of those wild-eyed prophets of doom who burst periodically onto the scene with implausible but dramatic stories about Kondratieff long waves, imminent economic collapse, and the importance of keeping one's savings in gold. He is a gadfly, to be sure, but beyond being a brilliant gadfly who punctures the pretensions of conventional wisdom, he has policy ideas of his own.

THE DARKER SIDE OF CHANGE

The arguments and perspectives that inform One World, Ready or Not are a distillation of an emerging international populist platform in opposition to what Europeans and Latin Americans call "neo liberalism," the economic and political paradigm that has guided Western policy, especially U.S. policy, since Margaret Thatcher installed it in Britain in the 1980s. "There is no alternative," Thatcher used to say in defense of her program of economic reform. Capital markets had to become less regulated and more global; labor markets had to become more flexible; trade had to be more free; government subsidies, spending, and safety nets had to be cut; tax policy had to provide incentives for enterprise. The Keynesian turn of Western economies after the Great Depression and World War II was a ghastly mistake; true capitalism was the less regulated, more chaotic, but freer and ultimately more effective capitalism that held sway in Britain and the United States before 1914 and the long slide to state domination.

There is an alternative, says Greider, and this book is the best shot so far at describing one.