In One World Ready or Not, William Greider explores the dynamics of global capitalism. In chapter three of this text (The Ghost of Marx), Greider states, “the fundamental struggle is between capital and labor” within capitalism (pg 39). This view it the bases for his argument that global capitalist system is headed toward likely crisis due to overproduction. Greider criticizes the notion of self regulating markets as a dangerous illusion, therefore this theory is not a viable mean to remedy the looming problem he identifies within global capitalism. Consequently, Greider offers possible solutions other than self-regulation to avoid a global market collapse.
Greider gives compelling evidence to demonstrate that the Marxist theory of self-regulating markets in inherently flawed. The 1929 stock market crash and The Great Depression are examples where the market did not arrive at an eventual balance (Greider, 48) Furthermore, Greider continues to explain that the underlying reason for this collapse in the market was the supply problem. False expectations drove stock prices up; consequently, overproduction was the demise of industrialization. This example by Greider exemplifies the intertwined relationship between production and market stability.
Managing supply to meet market demand while maintaining high profit levels is the goal of every business. Moreover, Greider explains that overproduction of goods results in unsold inventories that must be disposed at discount prices, narrowing profit margins. “To minimize damage, a company has to shrink it’s supply and productive capacity” (Greider 45). Businesses may outsource jobs to other underdeveloped countries to reduce production costs, and in turn maintain productivity levels at cheaper rates. The problem with this tactic to minimize losses is that the consumers who could have purchased products produced by business, due wage equilibrium, do not have the same purchasing power prior to outsourcing.
Greider suggests some solutions to the supply problem to avoid a market collapse. One such solution is producer cartels (agreements among rival companies to limit overall production and divide available sales in global market). Another tactic that Greider identifies that many multinational corporations employ is the hedging strategy. A hedging strategy protects them against surpluses by “learning to operate profitably while employing a smaller portion of their productive capacity” (Greider, 50). This allows for a company to lower it’s break even point and operate far below it’s real potential. Yet another solution to the supply problem is addressing inadequate demand through government intervention to increase purchasing power of consumers worldwide (Greider, 51). This tactic was first introduced my John M. Keynes as a means to recover from the great depression.
Using Keynesian ideology to attack global inequalities would be the fist step to countering production surpluses. Greider advocates “global Keynesianism,” by bringing up the bottom of the global wage ladder would directly impact the production surplus by introducing new consumers with viable purchasing power to consume the world’s goods (Greider, 52). This solution offers a positive outcome for both labor and capital. The new purchasing power attained by the narrowing of the wage gap would result in new spending and increases market demands. Companies cannot successfully continue to grow and profit without narrowing the wage gap because eventually, their will be no consumers left to purchase their products and there would be a market collapse.
-William Greider. 1998. One World, Ready or Not: The Manic Logic of Global Capitalism