Howard Richards
Professor, Peace and Global Justice Studies, Earlham College


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Understanding the Global Economy
the book online
  • Foreword by Betty Reardon
  • Table of Contents
  • Detailed Table of Contents
  • Author's Preface

    This book began as a way to help my friends with their homework. I have been helping friends with homework since fourth grade. Now, as a member of the middle-aged professional middle class in California (when I am not teaching at Earlham College in Indiana), I have friends who see themselves, with reason, as victims of the global economy. They are engineers who have lost high-paying jobs as corporations have downsized or moved operations offshore. Other friends suffer in other ways, while still others are not suffering at all --not yet. All of them --it is my fate and privilege to have socially conscious friends-- are active in organizations that protest the global economy and seek to reform it. We all sense that the global economy has power over us and does not love us.

    I started writing this book because I believed that my friends had not done their homework. They did not have time. They had no training in philosophy, and I was convinced that economics could not be understood, much less transformed, without philosophy.

    I think I always knew in the back of my mind that I had a thesis to prove. But at first my plan was to review all of the scientific efforts that have been made to understand the global economy, without declaring any conclusions in advance. I wanted the outlines of a new and more adequate understanding of the global economy --one that would include and go beyond the knowledge and insight provided by all hitherto existing theories- - to emerge gradually. I wanted my conclusions to state themselves, and to be proven by the sheer weight of the evidence. I wanted the reader to see for herself or for himself --guided of course by my lucid and impartial survey-- that there is a better way to understand the economic predicament in which humanity now finds itself, and, consequently, a better way to get out of it.

    Now I think my initial plan was coy. I am writing this preface because I think I should say at the beginning what I am trying to prove, and how I propose to prove it.

    At the end, even if the conclusions do not state themselves, I will nonetheless be able to state my conclusions somewhat as I had originally planned. I will have had seven chapters in which to introduce and to develop a series of concepts (such as "cultural structures") that will both lead up to my conclusions and supply a vocabulary for formulating them. I will be able to write my thesis in my own terms and in terms borrowed from authors (such as Ludwig Wittgenstein) I will rely on. Now, at the beginning of this text, I must make some guesses about what concepts my readers are likely to be already familiar with. I must state my thesis using common terms.

    I think the common terms I should use are: "culture," "cause and effect," and "needs."

    My thesis is that the solutions to global economic problems are, in the end, cultural rather than economic per se. Otherwise put: the premises by which economists explain international trade are, in the end, descriptions of how certain basic cultural norms work out in practice on a global scale. Hence, social changes intended to alter the present disastrous course of events must, if they are going to solve humanity's fundamental problems, change culture. (Conversely, traditional societies that are not yet fully incorporated into the basic normative structures that govern the global economy will in many cases solve their problems better if, in certain respects, their cultures do not change.)

    We should be asking ourselves the question: "How can we construct cultures of peace, justice, and ecological balance ?" This is a question that should precede and set the framework for more specific questions about what sets of economic policies to pursue. Paulo Freire's phrase "cultural action," (1) and Antonio Gramsci's phrase, "moral and intellectual reform" (2) are appropriate names for the process of making the cultural changes without which economics per se is powerless to solve the problems it addresses.

    The thesis that culture is the primary reality, and the economic institutions and theories are forms of culture, is connected with an account of the logic of cause and effect. If we ask why the global economy is as it is, we are asking what mechanisms produced it, and we are asking what mechanisms it uses to produce its effects. The short answer is: the market. Or, perhaps, markets. I will be arguing that the market is best understood as a form of culture. And that the cause, of which the global economy is an effect, is market culture.

    As I review each of the main theories that purport to explain the global economy, I will in each case discuss their normative premises (how they answer the question "What should we do?") as well as their epistemological premises (how they answer the question "How do we know?). The resulting amalgam, the theoretical matrix which combines knowledge about the global economy with explicit or implicit norms to guide action, I will call "a metaphysic."

    The norm to guide action which I find support for in many precedents, and which I endorse is: employ or invent cultural forms which meet the needs of human beings, regarding the human family as a part of the living systems of the planet earth. (This can be called, for short, a "love ethic" combined with an "earth ethic.") Thus the common term "needs," joins the common terms "culture" and "cause and effect" in articulating my thesis.

    In bringing to the fore the cultural basis of economic phenomena, I do not deny the validity of the explanations given by economists. What economists predict often happens; it happens (in part) because their cultural assumptions accurately mirror a culture that exists.

    Similarly, I generally approve of the critiques that progressive economists have made of the neo-liberal juggernaut that is currently wreaking havoc worldwide. In Chapter Eight I comment on twenty-six "tips" for political action given by Professor Jane Kelsey. She is a progressive economist from New Zealand. Although I agree with her, I also propose to modify and extend her action program. In Chapter Eight I want to show that a philosophy of culture, which views economics as a part of culture, adds important new contributions to transformational practice, while at the same time supporting the conclusions already reached by intelligent economists committed to the cause of social justice.

    The reader may be surprised to find that I proceed without reference to the majority of the popular books that have been recently published on the globalization of the economy. The reason for this omission is that I have limited my topic to scientific explanations of it. I discuss only books which claim to explain in some systematic way why economic events happen.

    Scientific books have, or at least claim to have, a practical advantage which popular books lack. The scientific book invokes a general principle of causal explanation, which is subjected to the rigors of empirical testing by confrontation with historical facts systematically gathered and analyzed. Having arrayed the facts of the past under one or more explanatory principles, the scientist is able to recommend future policy on the ground that the same causes will produce the same effects in the future.

    A classic example is Adam Smith's Inquiry into the Nature and Causes of the Wealth of Nations. Taking ".. a certain propensity in human nature ...to truck or barter and exchange one thing for another..." (3) as an explanatory principle, Smith deploys an extensive array of historical facts to argue that the relative prosperity of Great Britain and Holland in the 18thcentury is due to giving that propensity free reign in free markets. Smith's normative recommendation, a prudent and moderate policy of laisser faire, drew strength from the premise that the same causal factors that had operated in the past would continue to operate in the future.

    A popular book, such as Jerry Mander's excellent work The Case Against the Global Economy, and for a turn to the local (4) appears to have a logical disadvantage. Lacking a systematic explanation of why the world is the way it is, it also lacks a principle to justify the inference that the measures advocated will produce the results desired.

    This is not to say that popular books are not important. It may turn out to be the case that books full of facts, which make no claim to testing scientific theories that offer general explanations, will mobilize public opinion and change history. It may also be the case that in some instances popular books may actually provide better explanations than scientific books. Scientific theories propose generally applicable models to explain human conduct and institutions. The events of history, on the other hand, are often due to particular human actions that cannot (or cannot easily) be explained by general theories. Violence, lies, accidental coincidences, surprise, passion, pride, illusions, and stupidity are notoriously powerful in the real world, but notoriously hard to explain by general theories.

    My omission of references to popular books on the global economy does not mean that I do not approve of such books. Attempts to achieve a scientific understanding are most relevant to the steady persistent factors that in the long run shape the structures within which human action takes place. Popular books, long on facts and short on theory, are likely to provide better explanations of current events and better insights into the particular human motives that produce particular actions.

    Having limited my scope to theories that propose scientific explanations, I do not attempt to review all of them. Instead I attempt to review all of the types of explanation they employ. After I have discussed what I find to be the logic relating causes to effects in a type of explanation of international trade, (such as comparative advantage theory or Marxist theory) , I excuse myself from discussing all of the theories of that type, on the ground that if my thesis is true of a general type of explanation, then it is necessarily also true of any instance of that general type. However, I may have inadvertently failed to consider some type of scientific explanation of the global economy, either because I was not aware of it, or because I mistakenly regarded it as a species of a genus already considered. If any reader knows of a type of scientific explanation of the global economy essentially different from those described and analyzed in this book, I would be grateful if she or he would bring it to my attention, so that I can discuss it in a later edition.

    An earlier version of this work was discussed by the Commission on Global Political Economy at the meetings of the International Peace Research Association in Durban, South Africa, in June of 1998.

    For helpful comments on earlier drafts, or parts of them, I wish to thank Professors Jonathan Diskin and Gilbert Klose of the Department of Economics of Earlham College, Professor Osvaldo Croci of the Department of Political Science of Laurentian University in Canada, Dr. Catherine Hoppers of the Social Sciences Research Council of the Republic of South Africa, and Professor John Newman of the Departments of Philosophy and Religion of Earlham College. Richard Spahn did proofreading, and Roger Hand did research for the footnotes. The remaining errors are, of course, my own.