[NSD 5/20/03]

WORTH THINKING ABOUT: THE GLOBALIZED ECONOMY

Financial management guru George Soros is a well-known advocate of "the open society":

"We live in a global economy that is characterized by free trade in goods and services and even more by the free movement of capital. As a result, interest rates, exchange rates, and stock prices in various countries are intimately interrelated, and global financial markets exert tremendous influence on economic conditions everywhere. Financial capital enjoys a privileges position. Capital is more mobile than the other factors of production, and financial capital is even more mobile than other forms of capital. The globalization of financial markets has reduced the ability of individual states to tax and regulate capital because it can move elsewhere. Given the decisive role that international financial capital plays in the fortunes of individual countries, it is not inappropriate to speak of a global capitalist system.

"We can speak about the triumph of capitalism in the world, but we cannot yet speak about the triumph of democracy. There is a serious mismatch between the political and the economic conditions that prevail in the world today. We have a global economy, but the political arrangements are still firmly grounded in the sovereignty of the state. How can the needs of a global society be reconciled with the sovereignty of states? That is the crucial problem facing us today.

"Capitalism and democracy do not necessarily go hand in hand. There is some correlation: Rising standards of living and the formation of a middle class tend to generate pressure for freedom and democracy; they also tend to support greater political stability. But the connection is far from automatic. Repressive regimes do not relax their grip on power willingly, and they are often aided and abetted by business interests, both foreign and domestic. We can see this in many countries, particularly where natural resources such as oil or diamonds are at stake. Perhaps the greatest threat to freedom and democracy in the world today comes from the formation of unholy alliances between government and business."

*** See http://www.amazon.com/exec/obidos/tg/detail/-/1891620274/newsscancom/ref=nosim for George Soros's "The Open Society: Reforming Global Capitalism, Public Affairs"—or look for it in your favorite library. [We donate all revenues from our book recommendations to adult literacy programs.]