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EdwardWilliams
12June2014
USPoliticalEconomy(PS495)
GerryBerk
FinalEssay

GlobalizingHumanismReconsideringtheScopeofWealthRedistribution

Since the advent of industrialization, and the development of its corporate structure, concerns of
contradictions between capitalist structures of economics and democratic structures of governance have
been paramount in political economic thought. Unfortunately, these concerns consistently stress the
importance of a symbiotic relationship between a certain nations economic activity and that nations
political activity. Due to the nature of the modern economy as increasingly globalized, the contradictions
between corporate capitalism and representative democracy should instead be examined as
contradictions in human organization on a global level, rather than on a statebystate basis.
Nonetheless, recent proposals for rectifying these contradictions fail to address their global nature,
seeking merely to redistribute the product of economic injustice, rather than critically alter the
internationalsystemthatpropagatesit.
Predominantly four observations of political economic development in the United States are
critical in identifying the process by which economic injustice has been expanded across the world.
Most significantly, corporate capitalism must be understood to be an impediment to the healthy
functioning of a democratic system. Furthermore, this impeding quality of corporate capitalism has been
exacerbated by financialization and the nexus form of corporate organization. Necessarily, this
financialization and corporate restructuring increasingly have brought these contradictions to the global
level. Finally, the alternative structures offered as potential solutions fail to address this globalized

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economic injustice, serving only to redistribute its spoils within the domestic economy. Economic and
political injustice exist as global phenomena, which cannot be remedied through domestic redistribution
ornationalintegrationpolicies,butratherrequirecomprehensivereorganizationglobally.
Though the legal structures of marketbased economics and representative democracy have
been cornerstones of the American system since the founding, the implications of these structures were
originally quite different than they have become. Robert A. Dahl explains this transformation. An
agrarian order that historically speaking was extraordinarily congenial to democracy was now displaced
by a new socioeconomic order of corporate capitalism that was much less compatible (Dahl, 1986,
237). Dahl is explaining how the early American system of familybased farms and small enterprises
maintained a level of economic equality that allowed a democratic system to flourish. However, as
industry overtook agriculture as the dominant mode of production, enterprises did not remain small, and
wealthdidnotremainequal.
This restructuring was directly responsible for establishing a trend of corrosion within the
American democratic system. Dahl explains that Inequalities in political resources added further to the
handicaps of any majority coalition that sought changes in the allocation of privileges and disadvantages
(Dahl, 238). The significance of these inequalities cannot be understated. Increased access to the media,
massive political contributions, and other corrupt business dealings have given these new holders of
corporate wealth a strong advantage in determining national policy. Dahl further describes that ...the
rapid expansion of this revolutionary form of economic enterprise meant that an increasing proportion of
the demos would live out their working lives, and most of their daily existence, not within a democratic
system but instead within a hierarchical structure of subordination (Dahl, 238239). Thus, not only did
members of the new industrial working class lack access to political participation and policy

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determination, but also lived their lives in a condition of subservience, detracting from their capacity to
selfactualize in a way that is supposed to foster a healthy democracy. Essentially, by developing an
industrial form of corporate capitalism, the American political economy has traded away a legacy of
equality, liberty, and selfdetermination in exchange for automobiles, airconditioning, and highfructose
cornsyrup.
However, economic development does not inherently lead to corporate capitalism. The
restructuring of economic activity under corporations is often attributed to the state, creating and
enforcing paradigms by which these dominating systems were legally protected in their quest for wealth
and power. Rachel ParkerGwin and William G. Roy describe this, arguing Corporations are...
perhaps more than any other economic entity... creatures of the state. They derive their legal existence
from charters granted by the state, and corporate law specifies what corporations can and cannot do
legally (ParkerGwin & Roy, 1996, 113). This aspect of corporate development seems significant, not
only in how it applies to corporate development within democratic states, but also how it applies outside
of the realm of democratic systems. If the accumulation of private property offers disproportionate
political influence within liberal democracy, and the assistance and enforcement of the state is essential
for corporate capitalism, the optimal conditions for the development of corporate capitalism seem to be
liberalism and democracy. This will prove significant in understanding the growth of corporate capitalism
whenanalyzedonthegloballevel.
The era of financialization from the 1970s to the 1990s witnessed an immense rise in the role
of capital and corporate ownership on the international level. In describing the transformation of the
American political economy during the Reagan administration, Greta Krippner explains a prominent
development for the American state, and for American corporations ...in mid1983, a major new

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source of capital emerged, quite unexpectedly, to finance the federal budget deficit: International
especially Japanese investors had developed a voracious appetite for Treasury securities. (Krippner,
2010, 156). In a political economic environment that was still recovering from the crisis of stagflation in
the1970s,foreigninvestmenthadbecomecriticalforAmericansuccess.
Importantly, this development of international economic integration brought with it the same
form of political dominance that corporations had already enjoyed domestically. Krippner describes this
metamorphosis, explaining ...over the course of two years, the Reagan administration economists had
learned that they lived not in a closed national economy, but in a world of global capital. (Krippner,
160). The state, of which analysis has already shown is influenced overwhelmingly by corporate
economic interests, sought to fortify this internationalization of capital markets. ...in the fall of 1984,
Treasury initiated its foreigntargeted securities program, in which several special issues were prepared
for European and Japanese markets. (Krippner, 161). Conflating previous observations of the
American political economy, a clear picture of this globalization can be seen. Corporations demanding
access to capital, and enjoying their influence over politics, have driven the state to enacting policies that
heavily favor economic globalization. Financialization offered incredibly easy transfers of ownership of
capital. When combined with vastly improving technology in computing, communication, and
transportation,thisfinancializationhascausedinternationaltradetobecomeexponentiallymoreviable.
This process of globalization coincided with a process in which the internal structure of
corporate ownership changed dramatically. Gerald Davis provides insight into this restructuring,
describing a shift in the understanding of a corporation from being a managerial entity seeking the
maximization of profit, to being a nexus of contracts seeking the maximization of shareholder value.
...the social institution owned by widows and orphans was reduced to a mere contractual nexus, driven

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by signals on financial markets (Davis, 2009, 63). Financialization and correspondingly,
globalization have caused the corporate form to change structurally, now behaving less as a body of
economic activity within a nation, and more as an accumulation of capital from a collection of
decentralized investors. Just as Treasury securities shifted to the international economy, corporate
ownership began to decentralize and restructure into an international system. This means that from the
1970s to the 1990s, the role of finance, corporations, and economic activity in general, shifted massively
fromdomesticproductionanddistributiontoproductionanddistributiononaglobalscale.
If ownership of capital is traded globally, (so fully that even corporate ownership is dispersed
between stockholders scattered across the planet) this would imply that the influence of wealth upon
politics similarly exists worldwide (at least within democratic nations that share similar legal and
economic structures as the United States.) If the industrialization of the agrarian United States allowed
for the massive consolidation of capital and real property, and if capital ownership has been globalized,
it logically follows that the owners of capital would seek to exert their influence on the media, on
policymaking, and on directing public opinion to industrialize and corporatize the vulnerable
underdeveloped nations of the world. The result of this corporate influence has been nothing less than a
completereconceptionofAmericanpoliticalthought.
Traditional American political discourse has been grounded fundamentally in classical liberalism
and American conservatism. However, corresponding with the rise of financialization, the restructuring
of the corporate form, and the globalization of private property ownership this rhetoric has drastically
changed. From the 1970s through the 1990s, traditional American political philosophy transformed into
a sort of neoAmerican political philosophy. Conservatism the advocacy of a classical liberal republic
has been largely replaced with Neoconservatism, the advocacy of implementing this form of

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government around the world. Similarly, Liberalism the advocacy of negative liberty, private property,
and marketbased trade has been replaced with Neoliberalism, the advocacy of implementing these
economic paradigms around the world. These new conceptions in political discourse seem explicitly
directed towards fostering (and even implementing through military force) the same conditions in states
around the world as existed in America which facilitated the gargantuan and rapid consolidation and
corporatizationofwealthduringthesecondindustrialrevolution.
The cooperation of the state, which was necessary for the rise of corporate capitalism in
America, is similarly necessary for the rise of corporate capitalism around the world today. Therefore,
nations that do not practice economic liberalism theoretically should have the potential to prevent
corporate consolidation, or may possess nationalized resources that investors could not acquire on the
global market. An example of a nondemocratic state owning a nationalized industry that investors
across the world might want access to would be the nationalized oil industry in Iraq. An example of
neoconservatism implementing the interests of global capital would be the American militarily toppling
that regime in 2003. Consistent with neoconservative rhetoric, this was justified with claims of spreading
democracy.
Military and police force has similarly been used to spread the ideals and paradigms of
economic liberalism around the world. From the position of an affluent society consumed by
materialism, blessing the less developed parts of the world with capital investment and modern
technologies seems to be a truly noble act. The recipients of this investment, however, often express
different opinions. Subcomandante Marcos, the enigmatic leader of the revolutionary Zapatista
movement an organization combating neoliberalism in Mexico describes this political and economic
situationasTheFourthWorldWar(theThirdbeingtheColdWar,anditsrelatedconflicts).

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The concept on which globalization is based is what we call "neoliberalism," a new
religion which is going to permit this process to be carried out. With this Fourth World War,
once again, territories are being conquered, enemies are being destroyed and the conquest of
theseterritoriesisbeingadministered.
The problem is, what territories are being conquered and reorganized, and who is the
enemy? Given that the previous enemy has disappeared, we are saying that humanity is now the
enemy. The Fourth World War is destroying humanity as globalization is universalizing the
market, and everything human which opposes the logic of the market is an enemy and must be
destroyed.(Marcos,1997).

Marcos description of neoliberalism as a religion is a reference to the totalizing positivism of the

worldview that accompanies liberal society. The enemy that neoliberalism is combating against is not a
nation, an ideology, or a social class, but rather the very concepts of subjectivity and culture. The
positivist drive for profit, Marcos claims, is causing every human custom and tradition to be replaced by
whatever subliminal psychology causes people to spend the most money, and whatever productive
activities generate the most revenue. To cultures that are less entrenched in materialism, the implications
of this injustice of this neoliberal globalization go far beyond economics and politics, but rather redefine
humanexistencecompletely.
The most problematic aspect of this political economic development is that while capital
increasingly exists as an international force, the contradictions between corporate capitalism and
representative democracy continue to be understood as contradictions in the political economic
paradigms of specific nations themselves. In describing several plans to potentially solve some of the
inequalities associated with corporate capitalism, Gar Alperovitz attempts to define "...a
politicaleconomic system 'model' that is different... from both traditional capitalism and
socialism[whichAlperovitzhas]termeda'PluralistCommonwealth'"(Alperovitz,2011,7071).

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The intention of the "Pluralist Commonwealth" model is to attempt to reduce the inequality of
real capital assets through gradual means that avoid traditional methods of redistribution and regulation.
Alperovitz describes the goal of this project to be "...a fundamental shift in the ownership of wealth [to]
move the nation as a whole toward greater equality directly..."(Alperovitz, 71). Alperovitz offers several
hypotheticalprogramsthatcouldplayaroleinconstructingthisPluralistCommonwealth.
One of the potential components of a Pluralist Commonwealth is the Community Development
Corporation (CDC). Alperovitz describes the CDC as "a hybrid selfhelp entity that operates at both
the community building level and the economic level, and that exhibits microlevel applications of
Pluralist Commonwealth principles" (Alperovitz, 99100). Essentially, the CDC operates by investing a
communitys assets in businesses, jobs, and property development within the community. While this
appears to be a wonderful solution to a difficult problem in terms of benefiting a certain community
specifically, it should be noted that this may not serve to rectify the distribution of capital in the
international system. In fact, the increased level of investment created by this proposal may even serve
toexacerbateeconomicinjusticewithinexploitednations.
Another program described by Alperovitz is the Individual Development Account (IDA). One
idea for an IDA program involved providing individuals with "...a $5,000 capital grant at birth and up to
$1,000 a year thereafter until age eighteen. ...if conservatively invested, such an amount will produce a
capital fund of roughly $50,000 per individual at maturity" (Alperovitz, 22). While this could potentially
help balance the wealth distribution domestically, there are several concerns with this system. This could
likely foster an economic environment where the success of an economic system would become
exponentially more dependent upon initial capital investment, yet access to this initial investment would
be restricted to naturalborn citizens, posing serious problems for future immigrants to the United States.

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Furthermore, "conservative investment" seems to imply investment that is safe and reliable. Considering
Americas evergrowing trade deficit, this most likely implies the IDA investments would go to major
economic actors producing in other nations. Similarly to the CDC proposal, this plan unfortunately
appearstofurtherfacilitateneoliberaldevelopmentandexploitationinforeigncountries.
However, an unquestioningly promising component of Alperovitz Pluralist Commonwealth
model is the Employee Stock Ownership Plan (ESOP). A gradual transfer of real wealth from
corporate owners to domestic employees could ease the tensions of wealth inequality. Retaining these
assets capital assets in the ownership of domestic workers, rather than investing them globally, also
importantly would avoid further exacerbating neoliberal expansion. Workerowned firms even appear to
be more efficient, according to Alperovitz, who explains that ...several studies demonstrate that greater
participation leads to greater productivity and thus greater competitiveness in the marketplace
(Alperovitz, 87). The efficiency and enhanced productivity of workerownership seem to offer a useful,
realistic, and effective solution to both the decline of American manufacturing, and to the rapidly
increasing inequality of real assets. However, the incentivization of workerownership alone is not
sufficientindefeatingeconomicinjustice.
The most serious question for determining Americas political economic direction has to be
defining what, exactly, the moral purposes of economics are. If economic responsibility implies
providing ones own nation with as much wealth as possible, perhaps an assetbuilding strategy for
gradual real property equalization in the domestic economy would be appropriate and proper.
However, that position seems justifiable only if economic activity were, at least mostly, confined within
the nation. The modern economic environment is one in which corporate capitalism utilizes financial and
military dominance to exploit resources and labor from less developed nations around the world. The

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vast majority of that wealth flows from these exploited nations to their wealthier counterparts such as the
United States. In light of this reality, there exists a moral imperative for the direction of economic
development to acknowledge and address this globalization directly. Facilitating, or even accepting the
globalization of corporate capitalism and expansion of neoliberal and neoconservative policies, while
attempting to redistribute real capital assets domestically does nothing to solve the structural problems of
the modern political economic reality. This also would further distance the American electorate from the
unsavory realities of these recent economic developments, limiting activism and public understanding
even further. An ethical response to current economic and political injustices must answer them globally
anddirectly.
In addition to supporting the growth and success of domestic workerowned businesses, the
morally sensible direction forward for the American political economy should be towards protectionism
and conventional redistribution. This should include substantially increasing progressive tax rates,
offering tax incentives for ESOPs, and implementing significant tariffs. While this would likely reduce the
overall levels of material wealth, it would greatly significantly curtail neoliberal expansion and
exploitation. Furthermore, this would provide an avenue for a resurgence in domestic manufacturing,
while accumulating considerable public funds to reinvigorate the economic infrastructure of the United
States. Solutions to the contradictions between corporate capitalism and representative democracy
need to take into account the harsh realities of the modern neoliberal world. While wholly domestic
proposals appear to be attractive solutions for the United States, economic inequality and corporate
dominancemustbeaddressedasaglobalcrisisthatcannotbesolvedthroughdomesticpolicyalone.

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WorksCited

Alperovitz,Gar.AmericaBeyondCapitalism:ReclaimingourWealth,ourLiberty,andour
Democracy,(Hoboken:JohnWiley&Sons,2005)

Dahl,RobertA.OnRemovingCertainImpedimentstoDemocracyintheUnitedStates,InMoral
FoundationsoftheAmericanRepublic,ed.RobertH.Horwitz(UniversityPressof
Virginia,1986)

Davis,GeraldF.ManagedbytheMarkets:HowFinanceReshapedAmerica,(Oxford:Oxford
UniversityPress,2009)

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Krippner,Greta.ThePoliticalEconomyofFinancialExuberanceinMarketsonTrial,ed.
MichaelLounsbury(Evanston:Emerald,2010)

Marcos,Subcommandante.1997.TheFourthWorldWar,Trans.EdEmery.LeMonde
Diplomatique.Web.Accessed6June2014.http://mondediplo.com/1997/09/marcos

ParkerGwin,Rachel,andWilliamRoy."CorporateLawandtheOrganizationofPropertyinthe

UnitedStates:TheOriginAnd..."Politics&Society,24.2(1996):111135.