Singapore’s Message for Today’s America

Let me start with a quote and ask you to contemplate the source:

The modern economy cannot exist without constantly revolutionizing the instruments of production…. Constant revolutionizing of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish our epoch from all earlier ones. All fixed, fast-frozen relations…are swept away; all new-formed ones become antiquated before they can ossify. All that is solid melts into air; all that is holy is profaned; and man is at last compelled to face with sober senses his real conditions of life…

Who said that? Paul Krugman? No. Joe Stiglitz. Wrong, again. Perhaps Justin Wede, Pete Dutro, or one of the other leading lights in the Occupy Wall Street movement? Not them, either.

Rather, the authors of this passage are none other than Karl Marx and Friedrich Engels. I amended the passage just slightly, removing the word “bourgeoisie” whenever it appeared in the text so as to disguise its origin.

The remarkable thing is how contemporary the passage sounds otherwise, though it was written more than 160 years ago.

The instruments of production are indeed being revolutionized today. That revolution is undoubtedly causing an uninterrupted disturbance of all our social conditions. And all that we once took to be solid seems to be melting.

In that sense, 2012 doesn’t appear very different from 1848. History doesn’t repeat itself exactly, of course, but it does have a nasty habit of rhyming. Much has been said of the “new normal.” I believe it would historically be more accurate to say that the industrialized world is now experiencing a condition better described as post-normal.

As it was when Marx and Engels penned their Communist Manifesto (the quoted passage is from the first chapter), the radical disturbance of our social fabric today is due to something positive — globalization, in our case, which is but a continuation, on a vastly more complex scale, of the constant revolutionizing of the instruments of production of which Marx and Engels wrote.

The current debate about globalization has brought to the fore a rather virulent anti-foreign mood, which is particularly discomforting when it surfaces in such global-minded places as the Netherlands and Singapore.

On the one hand, globalization’s true believers are struck by the stars — the wide horizon, an infinitude of possibilities, a glorious multitude of opportunities. On the other, uncertain citizens notice there is no tent — leaving them exposed to the elements, forever at the mercy of events in distant places.

They feel threatened by foreigners crossing our shores and crowding us out, with no possibility of safe harbor in a globalized economy that can turn yesterday’s winner into today’s losers in the blink of an eye.

The great doubling

Who or what stole our tent? There are many thieves. I will mention just one, perhaps the most important — what economist Richard Freeman of Harvard University has called the “Great Doubling.” (An article by Freeman on his research was published by The Globalist in June 2005.)

“The advent of China, India and the ex-Soviet Union [has] shifted the global capital-labor ratio massively against workers” in the developed world, Freeman explains. If China, India and the ex-Soviet bloc had remained outside the global economy, there would only have been 1.46 billion workers competing for assignments back in 2000.

But because they joined the global economy, ending a prolonged cycle of economic and political “un-normality,” there are now more than three billion workers. That “great doubling” had thinned the amount of capital available to the global workforce by 61% in 2000, compared to what it would have been had China, India and the former Soviet bloc remained autarkies.

And it was not just “low-wage labor.” Countries such as China and India have invested heavily in higher education. China alone produces more Ph.D. graduates in the sciences and engineering than the United States.

Hundreds of millions in China, India and elsewhere are going to be lifted out of the most mind-numbing, soul-destroying, back-breaking poverty. Never before in history have so many been lifted out of poverty so quickly, and never before has human welfare improved so much for so many. That is the good news.

The bad news is that this is going to happen — has happened — at the expense of low- and medium-wage workers in the developed world. The rich in the rich world will get richer — and the poor will get poorer. And that is a situation that is not morally, politically or economically sustainable, especially in democracies.

Why not? I think Lee Kuan Yew, Singapore’s first prime minister, provided the answer to this question when, in 1969, he addressed the National Trades Union Congress’ historic Modernization Seminar. Why have trade unions, he asked? Why not industrialize, as Chiang Kai-shek’s Taiwan and Park Chung-hee’s South Korea did, by first suppressing the unions?

Because “it is the consciousness of our being co-owners of the new society we are creating that provides the drive for fulfillment,” Mr. Lee said. “Developing the economy, increasing productivity, increasing returns, these make sense only when fair play and fair shares make it worth everyone’s while to put in his share of effort for group survival and group prosperity.”

Those words remain as true today as they did 42 years ago. The insight that human reality — and progress — is the creation not of any one individual, but of a totality of all people, is the essence of community, democracy and nation.

Can that sense of a totality be maintained in the face of rising income inequalities? We know that this is unlikely. The urgent question is: What are we going to do about it?

Editor’s note: This article is adapted from the author’s opening remarks at the Singapore Perspectives 2012 conference, on January 16, 2012..