One World, Ready or Not: The Manic Logic of Global Capitalism

1. One World, Ready or Not: The Manic Logic of Global Capitalism Chapter 8 – Facai Shifu Shi Guangrong De William Greider

2. Key Issues • Current Economic Issues 1. Stagnation and slow growth 2. Surplus of goods 3. Difficult price competition • MNE expansion into emerging markets “Multinational enterprises from every advanced nation and sector are elbowing one another to gain a footing in these emerging markets, imaginingthey will find relief from their persistent vulnerabilities…” (p.146)

3. Why Expand into Emerging Markets? • Surging demand equals larger customer base • Increased market share • New pools of cheap labor • Low production costs, high profit margins “Suddenly, it seems, the rich need the poor – and the poor know it….[The poor countries] do not intend to tolerate another chapter of colonialist domination, but hope instead to exploit the insecurities of the global enterprises for their own advancement.” (p.146)

4. The Costs of Expansion “The logical and more likely outcome is that the system’s underlying disorders, social and economic, will be seriously aggravated by this new wave of investment.” (p.146) • Emerging countries will no longer tolerate colonialist domination • They want to become first-class, advanced producers on par with the United States

5. The Impending Storm • New producers increase the surplus of goods • Increased competition in exports • Price wars • Shakeouts on corporations and countries in order to reach “marketplace equilibrium” “…the system will try to adjust to the consequences…by imposing more rolling shakeouts on both corporations and countries – the painful episodes when firms, factories and workers are, somewhere in the world, declared redundant and discarded from the global production base.”(p.147)

6. The Race to China “Facai zhifu shi guangrong de.”

7. “Because it is so large and vibrant with change, China offers the most dramatic illustration of this dilemma.” The Race to China “Facai zhifu shi guangrong de.” To get rich is glorious.

8. Economic Miracle Or Nightmare China - • If China succeeds in its plans to be high-ranking global producer… 1. Overcapacity of low-cost goods that wrecks other economies and destabilizes the multinational regime

9. Economic Miracle Or Nightmare China - • If China’s market fails to solve the problem of surplus goods… 1. Huge capital disappointment • If China becomes a hybrid of both – “Command Capitalism” 1. A market of some affluent consumers i.e. 200 million out of a total population of 1.2 billion 2. Huge supply of cheap, government controlled labor “Such a hybrid form of command capitalism, once it has learned to make high quality goods, could underbid almost everyone in the world on wages and prices.” (p.148)

10. Capitalism and Communism - Why China? “The capitalists brought capital and technology, the higher arts of systems management, quality control and marketing. The Communists delivered order and discipline and, above all, consumer demand.”(p.149) • Cheap wages • Eager to learn • New market hungry for modern goods • Complete government control over the labor force

12. The Xian Aircraft Company “Huge rural factory complex…that manufactured everything from aluminum windows and diving boards to medium-range jet bombers.” (p.148) • Principal purpose has been military aircrafts • Belonged to the People’s Liberation Army • Quality Is First, Quality Is Life “21,000 workers, including 1,200 engineers, many of whom shifted from one product line to another, depending on current demand.”(p.149)

13. What’s the Big Deal About XAC? • It was one of the places where the competing multinationals met face-to-face. (p.148) • Boeing, McDonnell Douglas, Airbus, Aerospatiale, Canadair, Mitsubishi, Volvo “The fact that XAC is a state enterprise means that, as the small baby in that family, we get some extra help because no government wants its ventures to fail.” (p.149) ~Thomas Appelbom, Volvo On-Site President

14. Employee Life “Provided its workers with everything important to their lives – the neat rows of apartment housing, two high schools, three primary schools and a technical college, a 500-bed hospital, a modern sports complex and fitness center, a huge entertainment hall that flashed at night with red-and-white neon stripes.” (p.150) • Positive outlook on work and company goals • Heavy load of surplus labor • Low wages globally, but superior living conditions locally • “You’re paying a guy here $40 a month and you pay somebody $4,000 a month in Seattle.”(p.154)

15. Chinese Government • Labor Unions • “Everything is done guanxi – favors, gifts, help someone out and they take care of you” (p.156) • “…the model workers selected at XAC each year were nearly always Communist Party members.” (p.156) • May Day • Traditional anniversary of international labor. • “The local authorities in Yan Liang round up prisoners and drive them in an open truck through the country villages surrounding XAC. At a river bridge on the outskirts of town, the prisoners are unloaded and executed, their bodies cast into the gorge below, a cautionary message to the peasantry.” (p.156) • Way for People’s Republic to instruct its citizens on importance of discipline and quality.

16. Future of XAC “Our strategic target is to become the high-tech and foreign-oriented enterprise, high profit and high civilization, material civilization and spiritual civilization We want to be the first-class, successful enterprise. All the employees of XAC are marching to this goal.” (p.152) ~Guo Chenglin, XAC’s Director of Propaganda and Culture • Possibly selling nonvoting “B” shares to private investors • “There is a policy in China that we insist on – public ownership, not private. This policy will not change, this will remain forever” ~Guo Chenglin (p.152)

17. Possible Effects if Successful • If XAC is successful, may present some problems: • Erosion of the world’s potential purchasing power • Worsen the supply-demand imbalances

18. “Is it possible to wish for the success of the Chinese people without also assuming disaster for others? Or is the system bound to crash on its own internal contradictions?” p.166

19. Global Impacts and Reactions “ TheU.S. trade representatives supposed, for instance, that they could persuade China to abandon its state industrial plans for autos, aircraft and other sectors.” - Legal trading - Government interference

20. Economic Views & Suggestions “ I don’t think this is a zero-sum game.” - Oscar B. Marx III, p.167 Ford Architect “Our objective must be to make them rich as soon as possible – give then the capital to become consumers as rapidly as they can so they will be as rich and rotten as the rest of us.” - Harou Shimada, p.167 Keio Univ. Economist

21. Global Revolution “To get rich is glorious” - Deng Xiaoping, p.168 “Challenging the repression is not simply a moral act but a way to help rescue the global system from its own economic contradictions” - William Greider, p.168 “The challenge is whether a moderate course can be developed between the extremes – governing interventions that temper the revolutionary action but without cutting adrift those aspiring nations that seek to escape their poverty.” - William Greider, p.168

22. Global Revolution “Social tariffs” - William Greider, p.169 “Should it abandon the industrial dreams and withdraw from the global system or moderate its plans and relax the political repression?” - William Greider, p.169

23. Current Events • Although voting is in place, will China ever become a Democratic society? • What steps must China take to continue to be the fastest growing economy?

24. Democracy in China! • The one party rule of the China Communist Party has not changed but important and gradual steps towards democratization are in place. • Village communities in China have started using secret ballots and having multiple candidates in the election process. This new form of the election process has also caught on in the election of congresses at the local and country level.

25. Democracy in China! • According to a CNN article, Han Weijun of Hebei became his village's first democratically elected village chief in May 1999. Statistics has shown that one-third of China's villages have held at least one round of democratic elections since the change in government.   • The importance of these changes and elections are found in the people seeing how much power their voice can have which makes them concentrate on election qualified people into power. According to the article, most of the electives into power are not members of the Communist Party but young entrepreneurs.

26. Democracy in China! • With all the changes being made at the local and country level it is not impossible that the Communist Party will gradually open elections above the county level. • Although most people want change, it seems that the CCP will not lose power over time but the slowly forming democratic will ultimately take effect which will leave china with a Communist rule of a democratic society.

27. Democracy in China! • According to China scholar Andrew J. Nathan, "When Chinese democracy begins to take shape, it may turn out to be a mixture of democratic and authoritarian elements, openness and secrecy, idealism and selfishness, turbulence and stability." • “The emerging Chinese democracy, in this case, might not be recognizable to Western observers because, as China scholar Andrew J. Nathan points out, It is hard to predict whether China will eventually adopt a Western model of liberal democracy. But it is certain that Chinese democracy will be shaped both by Chinese historical tradition and the political power configuration at the time of transition.

28. Helping Your Own • “Microfinance refers to a range of financial services offered to those too poor to be eligible for commercial services.” • According to the Chinese Academy of Social Sciences, the Chinese government invested US$775m in micro enterprises in 2000, compared to US$30m from international donors

29. Who Wants to Invest in China? • The market for Ford in China is expanding incredibly fast so Ford's Chongqing factory in southwestern China which was designed to make as many as 50,000 Mondeo and Fiesta cars a year, will boost production to maximize sales that are expected to triple to 5.8 million units by 2010. • Ford is the second largest car making industry and according to Dale Jones, Ford Motor (China) Ltd.'s marketing vice president, Ford needs to bring in as many products as soon as they can to take advantage of the growth.

30. Looking at Home • China signed agreements with Russia and four Central Asian neighbors in an effort to strengthen a 7-year-old security alliance and encourage economic links across a largely undeveloped region. • Why form these alliances? China will naturally be giving out financial aid to further its regional influence but the country stands to benefit as both supplier and investor as soon as energy reserves and other economies are up and running in these neighboring undeveloped nations.

31. Covering All Areas • The United States and the Soviet union have launched manned spacecrafts and China is in the process of being the third country to do the same. • China's first four spaceship launches, Shenzhou I through Shenzhou IV, have been unmanned research vessels. Shenzhou V -- the name means "sacred vessel" -- would include a human being.

32. NOTES • Wall Street Journal • Wall Street Journal on Asia • CNN Online World Issue • CNN Online China • The Detroit News Auto Insider • The San Francisco Gate • The Federation of American Scientists • Jane's Information Group Article 1 • XAC Company • Jane’s Information Group Article 2 • Jane's information Group Article 3