WEBVTT 00:00:12.480 --> 00:00:15.021 I’ve been asked to say a few words 00:00:15.021 --> 00:00:20.411 about the global shift in power in politics. 00:00:20.411 --> 00:00:23.850 That's a hotly debated topic these days. 00:00:23.850 --> 00:00:27.858 There’s a great deal of speculation about 00:00:27.858 --> 00:00:32.230 whether or when China will displace the United States 00:00:32.230 --> 00:00:34.480 as the dominant global power, 00:00:34.480 --> 00:00:36.630 perhaps along with India, 00:00:36.630 --> 00:00:41.340 which if true would mean that the global system would be returning 00:00:41.340 --> 00:00:46.242 to something like what it was before the European conquests, 00:00:46.242 --> 00:00:48.673 primarily from the 17th century. 00:00:48.673 --> 00:00:53.040 Just to illustrate the mood with unscientific 00:00:53.040 --> 00:00:56.180 but probably representative sample, 00:00:56.180 --> 00:01:01.047 I was talking recently to a professor of history 00:01:01.047 --> 00:01:04.291 at one of the Massachusetts' state colleges, 00:01:04.291 --> 00:01:09.099 who told me that at the beginning of every semester she asks 00:01:09.099 --> 00:01:13.640 her students what they think are the richest countries in the world. 00:01:13.640 --> 00:01:18.740 And for the last few years, they've been regularly saying China and India. 00:01:18.740 --> 00:01:22.898 Well, you could believe that if you read the headlines. 00:01:22.898 --> 00:01:26.410 A few qualifications may be in order. 00:01:26.410 --> 00:01:30.673 First, what about wealth or the health of the society. 00:01:30.673 --> 00:01:33.022 There's a standard measure, 00:01:33.022 --> 00:01:37.410 it's the Human Development Index comes out every year. 00:01:37.410 --> 00:01:41.278 With the latest release, 00:01:41.278 --> 00:01:45.139 India was ranked at 134th, 00:01:45.139 --> 00:01:47.570 slightly above Cambodia, 00:01:47.570 --> 00:01:51.109 below Laos and Tajikistan. 00:01:51.109 --> 00:01:54.230 That's about where it was several decades ago. 00:01:54.230 --> 00:01:57.822 China was ranked 92nd. 00:01:57.822 --> 00:02:00.310 But that's a little uncertain 00:02:00.310 --> 00:02:02.539 since the poor areas of China 00:02:02.539 --> 00:02:05.645 are not very accessible in this more closed society. 00:02:05.645 --> 00:02:07.706 So it could be lower. 00:02:07.706 --> 00:02:10.260 Where it's ranked it's tied with Belize 00:02:10.260 --> 00:02:12.480 as slightly above Jordan 00:02:12.480 --> 00:02:15.806 and below the Dominican Republic and Iran. 00:02:15.806 --> 00:02:17.680 By comparison, 00:02:17.680 --> 00:02:20.860 Cuba, which has been under harsh US attack 00:02:20.860 --> 00:02:24.875 for 50 years is ranked 52nd. 00:02:24.875 --> 00:02:27.217 It's above both of those, 00:02:27.217 --> 00:02:30.460 also the highest in the Central America and the Caribbean, 00:02:30.460 --> 00:02:33.536 barely below Argentina and Uruguay. 00:02:33.536 --> 00:02:38.370 India and China also have extraordinarily high inequalities, 00:02:38.370 --> 00:02:39.970 some of the worst in the world. 00:02:39.970 --> 00:02:42.220 So that means a well over a billion people 00:02:42.220 --> 00:02:45.300 are much further down in the scale. 00:02:45.300 --> 00:02:47.622 Well, what about debt? 00:02:47.622 --> 00:02:56.247 Common discussion ideas, it places the United States enthralled to China's whims. 00:02:56.247 --> 00:03:00.595 Well, apart from a very brief interlude, which is now over, 00:03:00.600 --> 00:03:03.206 Japan has been the biggest holder 00:03:03.206 --> 00:03:06.426 of the US government debt. 00:03:06.426 --> 00:03:09.589 At best, it’s not much of a weapon 00:03:09.589 --> 00:03:13.968 for many reasons that are well understood. 00:03:13.968 --> 00:03:15.880 What about prospects? 00:03:15.880 --> 00:03:18.650 The United States has enormous advantages 00:03:18.650 --> 00:03:21.051 over both Europe and Asia. 00:03:21.051 --> 00:03:22.888 For one thing, it's unified, 00:03:22.888 --> 00:03:27.185 has a relatively homogeneous population, one language, 00:03:27.185 --> 00:03:30.427 a huge internal market and rich resources, 00:03:30.427 --> 00:03:33.913 a favorable climate and much more. 00:03:33.913 --> 00:03:36.551 What about military power? 00:03:36.551 --> 00:03:39.222 Well, here there's just no discussion. 00:03:39.222 --> 00:03:43.500 The US is about the same as the rest of the world combined 00:03:43.500 --> 00:03:47.130 in military expenditures, much more if we can add intelligence. 00:03:47.130 --> 00:03:49.740 Technologically far more advanced. 00:03:49.740 --> 00:03:54.167 It's the only country with hundreds of military bases, 00:03:54.167 --> 00:03:56.710 maybe 800 military bases abroad, 00:03:56.710 --> 00:04:01.402 which in fact are regularly used for the exercise of violence. 00:04:01.402 --> 00:04:03.961 So here, there's no comparison. 00:04:03.961 --> 00:04:07.880 Actually there’s more fundamental observation. 00:04:07.880 --> 00:04:11.636 The entire framework of discussion, though conventional, 00:04:11.636 --> 00:04:13.983 is pretty misleading. 00:04:13.983 --> 00:04:18.030 The global system is not just an interaction among states, 00:04:18.030 --> 00:04:22.180 which pursue some so-called national interest, 00:04:22.180 --> 00:04:27.320 which is abstracted from the distribution of domestic power within the society. 00:04:27.320 --> 00:04:31.721 That’s the way the matter is usually viewed in commentary 00:04:31.721 --> 00:04:37.730 and also in the profession and professional international relations theory. 00:04:37.730 --> 00:04:40.275 Largely dominant views called realism -- 00:04:40.275 --> 00:04:44.566 views the international system roughly in this fashion. 00:04:44.566 --> 00:04:47.789 Now, there have always been critics of this view. 00:04:47.789 --> 00:04:51.054 To take one, Adam Smith. 00:04:51.054 --> 00:04:54.676 Adam Smith was concerned primarily with England. 00:04:54.676 --> 00:04:56.278 And he described -- 00:04:56.278 --> 00:04:57.770 He said that in England, 00:04:57.770 --> 00:05:02.069 the principal architects of government policy 00:05:02.070 --> 00:05:04.773 are merchants and manufacturers 00:05:04.773 --> 00:05:07.390 and they make sure that their own interests 00:05:07.390 --> 00:05:10.220 are most peculiarly attended to, 00:05:10.220 --> 00:05:13.530 however, grievous the impact on others, 00:05:13.530 --> 00:05:15.200 including the people of the England, 00:05:15.200 --> 00:05:19.175 but of course far worse of those who are subject to 00:05:19.175 --> 00:05:22.180 what he called the savage injustice of the Europeans. 00:05:22.180 --> 00:05:26.212 He was referring particularly to England and India. 00:05:26.212 --> 00:05:30.430 Well, today, pretty much the same maxim holds. 00:05:30.430 --> 00:05:32.899 It's not merchants and manufacturers 00:05:32.899 --> 00:05:34.981 in the United States and Europe. 00:05:34.981 --> 00:05:40.300 It's primarily multinational corporations and financial institutions. 00:05:40.300 --> 00:05:44.230 The financialization of the economy has been in a dramatic change 00:05:44.230 --> 00:05:47.220 in the last roughly 30 years. 00:05:47.220 --> 00:05:50.580 If you go back to about 1970 in the United States, 00:05:50.580 --> 00:05:55.250 financial institutions amounted to maybe 3 percent of gross domestic product. 00:05:55.250 --> 00:05:57.532 And now it's approaching a third. 00:05:57.532 --> 00:06:01.902 Corresponding fact is the hollowing out of productive industry 00:06:01.902 --> 00:06:04.673 and that has huge effects on the society, 00:06:04.673 --> 00:06:07.310 on political decisions and on the political system 00:06:07.310 --> 00:06:10.390 generally keeping to Adam Smith's maxim. 00:06:10.390 --> 00:06:13.978 In fact we've just seen a very dramatic illustration of that. 00:06:13.978 --> 00:06:18.600 President Obama, who has gained office, 00:06:18.600 --> 00:06:22.690 in large measure through the support of the financial industry, 00:06:22.690 --> 00:06:24.828 huge component of the economy. 00:06:24.828 --> 00:06:29.876 And they preferred him to McCain and that was the core of his funding. 00:06:29.876 --> 00:06:32.329 And there was a payoff. 00:06:32.329 --> 00:06:35.595 Huge bailouts to the financial institutions 00:06:35.595 --> 00:06:38.240 when the system collapsed. 00:06:38.240 --> 00:06:40.360 And they were actually much more important gifts 00:06:40.360 --> 00:06:42.910 that are not so much discussed. 00:06:42.910 --> 00:06:44.700 So takes a Goldman Sachs, 00:06:44.700 --> 00:06:47.020 which is considered the top dog 00:06:47.020 --> 00:06:50.061 in the economy and the political system. 00:06:50.061 --> 00:06:54.290 It made a mint by selling mortgage-based securities 00:06:54.290 --> 00:06:57.350 and more complex financial instruments 00:06:57.350 --> 00:06:59.290 to unwitting buyers. 00:06:59.290 --> 00:07:01.940 But Goldman Sachs itself knew what it was doing. 00:07:01.940 --> 00:07:05.171 They knew that they were likely to go bust. 00:07:05.171 --> 00:07:09.735 So the company insured itself against loss 00:07:09.735 --> 00:07:13.633 by betting that what they're selling would fail 00:07:13.633 --> 00:07:16.450 using, what's called, credit default swaps 00:07:16.450 --> 00:07:20.340 through giant insurance agency AIG, 00:07:20.340 --> 00:07:22.750 the world's biggest insurance agency. 00:07:22.750 --> 00:07:24.990 Well, when the financial system collapsed, 00:07:24.990 --> 00:07:27.570 it took AIG down with it. 00:07:27.570 --> 00:07:32.380 But Goldman's boys are well-placed among the architects of power 00:07:32.380 --> 00:07:35.520 and they not only arranged for a huge bailout. 00:07:35.520 --> 00:07:38.052 but more importantly, they got the taxpayer 00:07:38.052 --> 00:07:45.343 to pay to save AIG from bankruptcy by up their collapsed loans 00:07:47.190 --> 00:07:51.364 and that incidentally saved Goldman Sachs from the same fate. 00:07:51.364 --> 00:07:55.890 Now, the CEO of Goldman Sachs Lloyd Blankfein 00:07:55.890 --> 00:07:59.960 is hailed as maybe the greatest genius since Einstein. 00:07:59.960 --> 00:08:02.720 Goldman's making record profits, 00:08:02.720 --> 00:08:05.020 paying out huge bonuses. 00:08:05.020 --> 00:08:08.620 And the other agents of the financial crisis 00:08:08.620 --> 00:08:11.367 are bigger and more powerful than ever. 00:08:11.367 --> 00:08:16.246 Well, the public may not understand the details, but they are furious. 00:08:16.246 --> 00:08:19.990 The banks that created the crisis are visibly booming, 00:08:19.990 --> 00:08:22.403 the population is suffering, 00:08:22.403 --> 00:08:26.690 the unemployment is officially at about 10 percent, actually much higher. 00:08:26.690 --> 00:08:31.160 In manufacturing industry, it's about the level of the Great Depression. 00:08:31.160 --> 00:08:33.160 And those jobs are not coming back 00:08:33.160 --> 00:08:37.330 because of the shipping of productive capacity abroad. 00:08:37.330 --> 00:08:39.560 In fact, for the last 30 years, 00:08:39.560 --> 00:08:42.130 for the majority of the population, 00:08:42.150 --> 00:08:46.220 there has been roughly stagnation, sometimes decline, 00:08:46.220 --> 00:08:51.770 in the real wages as wealth poured into very few pockets 00:08:51.770 --> 00:08:55.180 at highest inequality in US history. 00:08:55.200 --> 00:08:56.746 So there's plenty of anger. 00:08:56.746 --> 00:09:00.110 And finally President Obama had to react to it. 00:09:00.110 --> 00:09:01.690 And he did a couple months ago. 00:09:01.690 --> 00:09:04.176 He reacted first with the rhetorical shift, 00:09:04.176 --> 00:09:06.660 started talking about bad bankers and so on. 00:09:06.660 --> 00:09:11.565 And also a few policy suggestions that the financial industry didn't like. 00:09:11.565 --> 00:09:14.020 But he was supposed to be their man in Washington. 00:09:14.020 --> 00:09:15.920 They'd bought him and put him in. 00:09:15.920 --> 00:09:19.900 And the principal architects very quickly sent their instructions. 00:09:19.900 --> 00:09:25.140 They announced very publicly that they're shifting funds to the political opposition. 00:09:25.140 --> 00:09:29.607 And they poured money into crucial election in Massachusetts, 00:09:29.607 --> 00:09:34.535 which gave the Republicans the power to block any congressional legislations. 00:09:34.535 --> 00:09:36.591 An Interesting story in itself. 00:09:36.591 --> 00:09:39.416 And Obama got the message within days. 00:09:39.416 --> 00:09:42.000 Within days, he informed the business press 00:09:42.000 --> 00:09:45.550 that bankers are, I'm quoting now, "are fine guys." 00:09:45.550 --> 00:09:48.445 He singled out for praise the chairmen of chairs 00:09:48.445 --> 00:09:53.670 of the JP Morgan Chase and Goldman Sachs, the two biggest players. 00:09:53.670 --> 00:09:56.520 And he assured the business world as he put it that, 00:09:56.520 --> 00:10:02.058 "I, like most of the American people, don't begrudge people's success or wealth." 00:10:02.058 --> 00:10:07.069 He's referring to the huge bonuses and profits that are infuriating the public. 00:10:07.069 --> 00:10:11.450 "That's part of the free market system," Obama continued. 00:10:11.450 --> 00:10:14.763 Not inaccurately as free markets are interpreted 00:10:14.763 --> 00:10:17.410 in state capitalist doctrine. 00:10:17.410 --> 00:10:23.257 It's a very revealing snapshot of the Smith's maxim in action. 00:10:24.534 --> 00:10:28.000 Well, with Adam Smith's crucial corrective in mind, 00:10:28.000 --> 00:10:30.000 let's take another look at the global system. 00:10:30.000 --> 00:10:31.840 See what's happening to it. 00:10:31.840 --> 00:10:34.630 There is a real shift of power across the world, 00:10:34.630 --> 00:10:38.650 namely, from the workforce to transnational capital. 00:10:38.650 --> 00:10:41.510 And China does play a big role in it. 00:10:41.510 --> 00:10:46.961 It's basically the assembly plant for a regional production system. 00:10:46.961 --> 00:10:51.000 Japan, Taiwan, other Asian economies 00:10:51.000 --> 00:10:55.310 export high-tech parts and components to China, 00:10:55.310 --> 00:10:58.740 and China assembles and exports them 00:10:58.740 --> 00:11:03.264 using its advantages of extremely cheap and highly repressed labor and land. 00:11:04.972 --> 00:11:08.970 There's much concern about the trade deficit with China, 00:11:08.970 --> 00:11:10.750 -- US trade deficit. 00:11:10.750 --> 00:11:12.820 Which is in fact huge and growing. 00:11:12.820 --> 00:11:17.769 But there’s less attention to the fact that there's a compensating factor 00:11:17.769 --> 00:11:22.725 that trade deficit with Japan and the rest of Asia have sharply declined, 00:11:22.725 --> 00:11:26.690 as the new regional production system takes place. 00:11:26.690 --> 00:11:29.974 And US manufacturers are following the same course. 00:11:29.974 --> 00:11:32.900 They're providing parts and components for China 00:11:32.900 --> 00:11:36.900 to assemble and export back to the United States often 00:11:36.910 --> 00:11:40.480 for the financial institutions and the retail giants 00:11:40.480 --> 00:11:46.450 and the ownership and management of manufacturing industry. 00:11:46.450 --> 00:11:49.762 And the sectors closely related to this nexus of power. 00:11:49.762 --> 00:11:52.940 It's heavenly. That's also well understood. 00:11:52.940 --> 00:11:57.561 So the head of the very influential Sloan Foundation, 00:11:57.561 --> 00:12:03.050 Ralph Gomory, testified before Congress a couple years ago 00:12:03.050 --> 00:12:05.050 and he explained that, as he put it, 00:12:05.050 --> 00:12:11.140 "In this new era of globalization, the interests of companies and countries have diverged 00:12:11.140 --> 00:12:13.480 in contrast to the past. 00:12:13.480 --> 00:12:17.130 What is good for America's global corporations 00:12:17.130 --> 00:12:21.612 is no longer necessarily good for the American people." 00:12:21.620 --> 00:12:24.250 Take one striking illustration. 00:12:24.250 --> 00:12:27.440 Take IBM, peak of the computer industry. 00:12:27.440 --> 00:12:31.997 Today it employs about 400,000 people 00:12:31.997 --> 00:12:37.579 in its facilities in the United States and its subsidiaries abroad. 00:12:37.579 --> 00:12:41.110 By now, employees within the United States 00:12:41.110 --> 00:12:44.654 have declined to about 30 percent. 00:12:44.654 --> 00:12:48.589 Many of the employees here are informed 00:12:48.589 --> 00:12:52.340 that they have to go abroad if they want to keep their jobs. 00:12:52.340 --> 00:12:56.370 Well, that's fine for IBM owners and directors, 00:12:56.370 --> 00:13:00.010 but it's grievous for the country as Adam Smith put it. 00:13:00.010 --> 00:13:05.578 And it's worth adding that IBM became the global giant in computing 00:13:05.578 --> 00:13:10.140 in large measure thanks to the magnificence of the US taxpayer 00:13:10.140 --> 00:13:14.672 who substantially funded the core of the IT revolution 00:13:15.657 --> 00:13:18.330 and most of the rest of the high-tech economy. 00:13:18.330 --> 00:13:20.650 But business is not philanthropy. 00:13:20.650 --> 00:13:25.250 Corporations are dedicated to maximizing profit and market share. 00:13:25.250 --> 00:13:28.120 In fact, that's a legal obligation for management. 00:13:28.120 --> 00:13:32.204 So it's not good for the country. It’s too bad. 00:13:32.204 --> 00:13:36.700 Well, China became the world's assembly plant. 00:13:36.700 --> 00:13:41.521 The Chinese workers are suffering along with the rest of the global workforce. 00:13:41.521 --> 00:13:44.149 And it's just as we would anticipate in a system 00:13:44.149 --> 00:13:47.841 that's designed to concentrate wealth and power, 00:13:47.841 --> 00:13:52.550 and to set working people in competition with one another worldwide. 00:13:52.550 --> 00:13:57.510 Worldwide the share of workers and national income has been declining 00:13:57.510 --> 00:13:59.770 but dramatically so in China, 00:13:59.770 --> 00:14:02.930 maybe more than anywhere else close to it, 00:14:02.930 --> 00:14:09.640 which is also leading to growing unrest in this highly inegalitarian society 00:14:09.640 --> 00:14:12.220 one of the most inegalitarian in the world, 00:14:12.220 --> 00:14:17.298 and capable of considerable violence to suppress dissent. 00:14:17.298 --> 00:14:20.890 Well, there's a good deal more to say about all of this 00:14:20.890 --> 00:14:29.106 but just to summarize with few salient points from a much more complex reality. 00:14:29.106 --> 00:14:33.651 There are indeed very important shifts in global power. 00:14:33.651 --> 00:14:37.500 And if we escape from the doctrinal framework, 00:14:37.500 --> 00:14:39.650 we can see what they are. 00:14:39.650 --> 00:14:44.510 There's a shift from the general population worldwide 00:14:44.510 --> 00:14:48.230 to the principal architects of the global power system 00:14:48.230 --> 00:14:53.430 that's pretty much as what any rational person would expect, 00:14:53.430 --> 00:14:58.421 particularly when in an era -- reffering now to the West 00:14:58.421 --> 00:15:01.206 particularly the United States and Europe -- 00:15:01.206 --> 00:15:07.384 large-scale depoliticization, undermining of functioning democracy. 00:15:09.077 --> 00:15:11.803 Where it goes from here depends on 00:15:11.803 --> 00:15:15.056 how much the great majority is willing to endure.