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I’ve been asked 
to say a few words

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about the global shift 
in power in politics.

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That's a hotly debated topic these days.

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There’s a great deal 
of speculation about

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whether or when China will
displace the United States

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as the dominant global power,

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perhaps along with India,

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which if true would mean that
the global system would be returning

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to something like what it was
before the European conquests,

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primarily from the 17th century.

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Just to illustrate
the mood with unscientific

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but probably representative sample,

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I was talking recently to 
a professor of history

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at one of the Massachusetts' 
state colleges,

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who told me that at the beginning 
of every semester she asks

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her students what they think 
are the richest countries in the world.

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And for the last few years,
they've been regularly saying China and India.

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Well, you could believe that
if you read the headlines.

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A few qualifications may be in order.

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First, what about wealth 
or the health of the society.

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There's a standard measure,

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it's the Human Development Index
comes out every year.

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With the latest release,

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India was ranked at 134th,

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slightly above Cambodia,

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below Laos and Tajikistan.

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That's about where it was
several decades ago.

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China was ranked 92nd.

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But that's a little uncertain

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since the poor areas of China

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are not very accessible
in this more closed society.

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So it could be lower.

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Where it's ranked 
it's tied with Belize

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as slightly above Jordan

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and below the Dominican Republic
and Iran.

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By comparison,

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Cuba, which has been
under harsh US attack

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for 50 years is ranked 52nd.

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It's above both of those,

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also the highest in the Central America
and the Caribbean,

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barely below Argentina and Uruguay.

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India and China also have 
extraordinarily high inequalities,

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some of the worst in the world.

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So that means 
a well over a billion people

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are much further down 
in the scale.

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Well, what about debt?

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Common discussion ideas, it places
the United States enthralled to China's whims.

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Well, apart from a very brief interlude,
which is now over,

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Japan has been the biggest holder

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of the US government debt.

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At best, it’s not much of a weapon

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for many reasons
that are well understood.

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What about prospects?

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The United States has
enormous advantages

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over both Europe and Asia.

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For one thing, it's unified,

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has a relatively homogeneous population,
one language,

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a huge internal market 
and rich resources,

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a favorable climate 
and much more.

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What about military power?

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Well, here there's just 
no discussion.

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The US is about the same
as the rest of the world combined

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in military expenditures, much more
if we can add intelligence.

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Technologically far more advanced.

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It's the only country with 
hundreds of military bases,

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maybe 800 military bases abroad,

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which in fact are regularly used
for the exercise of violence.

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So here, there's no comparison.

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Actually there’s more
fundamental observation.

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The entire framework of discussion,
though conventional,

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is pretty misleading.

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The global system is not
just an interaction among states,

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which pursue some
so-called national interest,

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which is abstracted from the distribution
of domestic power within the society.

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That’s the way the matter
is usually viewed in commentary

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and also in the profession and
professional international relations theory.

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Largely dominant views
called realism --

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views the international system
roughly in this fashion.

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Now, there have always been
critics of this view.

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To take one, Adam Smith.

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Adam Smith was concerned
primarily with England.

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And he described --

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He said that in England,

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the principal architects 
of government policy

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are merchants and manufacturers

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and they make sure
that their own interests

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are most peculiarly attended to,

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however, grievous the impact
on others,

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including the people of the England,

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but of course far worse 
of those who are subject to

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what he called the savage injustice
of the Europeans.

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He was referring particularly
to England and India.

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Well, today, pretty much
the same maxim holds.

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It's not merchants and manufacturers

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in the United States and Europe.

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It's primarily multinational corporations
and financial institutions.

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The financialization of the economy 
has been in a dramatic change

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in the last roughly 30 years.

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If you go back to about 1970 in the United States,

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financial institutions amounted to
maybe 3 percent of gross domestic product.

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And now it's approaching a third.

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Corresponding fact is
the hollowing out of productive industry

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and that has huge effects 
on the society,

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on political decisions 
and on the political system

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generally keeping to 
Adam Smith's maxim.

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In fact we've just seen
a very dramatic illustration of that.

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President Obama,
who has gained office,

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in large measure through the support
of the financial industry,

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huge component of the economy.

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And they preferred him to McCain
and that was the core of his funding.

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And there was a payoff.

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Huge bailouts 
to the financial institutions

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when the system collapsed.

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And they were actually
much more important gifts

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that are not so much discussed.

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So takes a Goldman Sachs,

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which is considered the top dog

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in the economy and
the political system.

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It made a mint by selling 
mortgage-based securities

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and more complex
financial instruments

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to unwitting buyers.

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But Goldman Sachs itself knew
what it was doing.

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They knew that they were
likely to go bust.

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So the company insured itself
against loss

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by betting that
what they're selling would fail

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using, what's called, 
credit default swaps

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through giant insurance agency AIG,

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the world's biggest insurance agency.

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Well, when the financial system collapsed,

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it took AIG down with it.

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But Goldman's boys are well-placed
among the architects of power

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and they not only arranged
for a huge bailout.

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but more importantly, 
they got the taxpayer


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to pay to save AIG from bankruptcy
by up their collapsed loans

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and that incidentally saved Goldman Sachs
from the same fate.

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Now, the CEO of Goldman Sachs
Lloyd Blankfein

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is hailed as maybe
the greatest genius since Einstein.

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Goldman's making record profits,

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paying out huge bonuses.

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And the other agents
of the financial crisis

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are bigger and more powerful
than ever.

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Well, the public may not understand 
the details, but they are furious.

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The banks that created the crisis 
are visibly booming,

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the population is suffering,

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the unemployment is officially 
at about 10 percent, actually much higher.

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In manufacturing industry,
it's about the level of the Great Depression.

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And those jobs 
are not coming back

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because of the shipping
of productive capacity abroad.

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In fact, for the last 30 years,

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for the majority of the population,

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there has been roughly stagnation,
sometimes decline,

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in the real wages as wealth
poured into very few pockets

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at highest inequality in US history.

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So there's plenty of anger.

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And finally President Obama
had to react to it.

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And he did a couple months ago.

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He reacted first with 
the rhetorical shift,

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started talking about 
bad bankers and so on.

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And also a few policy suggestions 
that the financial industry didn't like.

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But he was supposed to be
their man in Washington.

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They'd bought him 
and put him in.

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And the principal architects
very quickly sent their instructions.

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They announced very publicly that
they're shifting funds to the political opposition.

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And they poured money
into crucial election in Massachusetts,

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which gave the Republicans the power
to block any congressional legislations.

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An Interesting story in itself.

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And Obama got the message
within days.

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Within days, he informed
the business press

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that bankers are, I'm quoting now, 
"are fine guys."

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He singled out for praise 
the chairmen of chairs


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of the JP Morgan Chase and Goldman Sachs,
the two biggest players.

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And he assured the business world
as he put it that,

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"I, like most of the American people,
don't begrudge people's success or wealth."

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He's referring to the huge bonuses and profits
that are infuriating the public.

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"That's part of the free market system,"
Obama continued.

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Not inaccurately
as free markets are interpreted

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in state capitalist doctrine.

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It's a very revealing snapshot
of the Smith's maxim in action.

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Well, with Adam Smith's
crucial corrective in mind,

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let's take another look
at the global system.

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See what's happening to it.

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There is a real shift of power
across the world,

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namely, from the workforce
to transnational capital.

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And China does play a big role in it.

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It's basically the assembly plant
for a regional production system.

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Japan, Taiwan, 
other Asian economies

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export high-tech parts
and components to China,

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and China assembles 
and exports them

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using its advantages of extremely cheap
and highly repressed labor and land.

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There's much concern
about the trade deficit with China,

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-- US trade deficit.

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Which is in fact huge and growing.

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But there’s less attention to the fact
that there's a compensating factor

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that trade deficit with Japan
and the rest of Asia have sharply declined,

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as the new regional production system
takes place.

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And US manufacturers are
following the same course.

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They're providing parts
and components for China

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to assemble and export
back to the United States often

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for the financial institutions
and the retail giants

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and the ownership and management
of manufacturing industry.

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And the sectors closely related
to this nexus of power.

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It's heavenly.
That's also well understood.

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So the head of the very influential
Sloan Foundation,

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Ralph Gomory, testified before Congress
a couple years ago

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and he explained that, as he put it,

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"In this new era of globalization, the interests
of companies and countries have diverged

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in contrast to the past.

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What is good for America's
global corporations

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is no longer necessarily good
for the American people."

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Take one striking illustration.

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Take IBM, 
peak of the computer industry.

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Today it employs
about 400,000 people

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in its facilities in the United States
and its subsidiaries abroad.

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By now, employees 
within the United States

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have declined to about 30 percent.

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Many of the employees here are informed

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that they have to go abroad
if they want to keep their jobs.

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Well, that's fine for IBM owners
and directors,

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but it's grievous for the country
as Adam Smith put it.

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And it's worth adding that IBM became
the global giant in computing

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in large measure thanks to
the magnificence of the US taxpayer

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who substantially funded
the core of the IT revolution

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and most of the rest 
of the high-tech economy.

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But business is not philanthropy.

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Corporations are dedicated
to maximizing profit and market share.

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In fact, that's a legal obligation
for management.

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So it's not good for the country.
It’s too bad.

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Well, China became 
the world's assembly plant.

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The Chinese workers are suffering
along with the rest of the global workforce.

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And it's just as we would anticipate in a system


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that's designed to concentrate
wealth and power,

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and to set working people in competition
with one another worldwide.

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Worldwide the share of workers
and national income has been declining

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but dramatically so in China,

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maybe more than anywhere 
else close to it,

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which is also leading to growing unrest
in this highly inegalitarian society

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one of the most inegalitarian
in the world,

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and capable of considerable violence
to suppress dissent.

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Well, there's a good deal more
to say about all of this

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00:14:20,890 --> 00:14:29,106
but just to summarize with few salient points
from a much more complex reality.

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There are indeed very important shifts
in global power.

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And if we escape from 
the doctrinal framework,

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we can see what they are.

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00:14:39,650 --> 00:14:44,510
There's a shift from the general
population worldwide

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00:14:44,510 --> 00:14:48,230
to the principal architects
of the global power system

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00:14:48,230 --> 00:14:53,430
that's pretty much as
what any rational person would expect,

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particularly when in an era
-- reffering now to the West

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00:14:58,421 --> 00:15:01,206
particularly the United States and Europe --

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large-scale depoliticization,
undermining of functioning democracy.

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00:15:09,077 --> 00:15:11,803
Where it goes from here depends on


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00:15:11,803 --> 00:15:15,056
how much the great majority
is willing to endure.