They made long-range plans and were lucky enough, despite some turmoil, to enjoy the order and peace that ripened their plans into mature performance. Their governments invested enough in utilities and communications systems to prevent the bottlenecks that have plagued other developing countries where poor transportation has delayed the flow of goods between production and shipping sites. The courts have worked well and fairly, though the draconian laws of Singapore still appall. In a unique mix of government direction and free market dynamics, these countries have confounded many an economic prediction, none more hallowed than the idea that inequality accompanies economic development.44 They have benefited enormously from fitting themselves into the niches created by each new technological breakthrough. Korea, with a current population of forty-eight million, has a GDP ranking of eleventh in the world. Even their neighbors Malaysia, Thailand, and Indonesia are developing in promising ways.
Economic development transformed women’s lives in these traditionally patriarchal societies. A measure of the preference of Asian families for boys can be demonstrated by their skewed sex ratio. Once ultrasound permitted a pregnant woman to learn the sex of her fetus, abortions of females began to climb. The normal ratio of the births of boys to girls is 105:100. In recent years it has reached the high of 120:100 in China, with other Asian countries close behind. Officials in most countries have soundly condemned the practice. In India a doctor or nurse telling a woman the sex of the child she is carrying violates the law that was passed to stem this practice. Yet it is widely violated. Estimates put the number of female fetuses aborted annually in India at ten million.45 This hardly sounds like a benefit to women, but something is happening today in South Korea that suggests a turnaround as its sex ratio has dropped from 116 to 107.
A new appreciation for girls has emerged in this once deeply traditional society.46 Good schooling has brought more and more women into jobs in business and the professions. At a practical level, parents no longer depend upon their sons to support them in retirement, for they are retiring with benefits. Their daughters, working outside the home, are no longer near servants to their husbands’ families. They earn their own support and maintain the family’s emotional ties better than their brothers do.
During the 1970s experts considered everything Japan did as optimal. But even the best of times must come to an end, as the saying goes, or maybe “what goes up must come down” is more apropos. After astounding the world by becoming its second-largest economy, Japan slid into a prolonged recession in the 1990s. The quality of its cars and stereo equipment continued to impress; its lean production put to shame American and European factory management, but these strengths couldn’t prevent a downward spiral of prices. Stock market and real estate values dropped, leading to an accumulation of bad debts. To boost the economy, the government finally poured trillions of yen into public spending that pushed up the value of the yen and an unintended but consequent fall in exports. Nature kicked in with a major earthquake.
These problems proved intractable, and they exposed some of the structural weaknesses in the Japanese economy, the most prominent being the cozy relationship between its leadings banks and corporations and the government. This revelation garnered some important support around the world for America’s strong antitrust policies. The Japanese had had antimonopoly legislation since 1945, but these laws were weakly enforced. When the economy took a dive in the 1990s, the government put some teeth into their enforcement. Japan broke up its telecommunications monopoly, as the United States had done in 1982.47
Although there was a modest recovery in Japan in 1997, prices declined again, and nothing seemed to relieve this deflationary pressure. When Thailand, Indonesia, Korea, and Singapore experienced a financial crisis that year, Japanese firms and households became more anxious, further deflating the economy.
The Asian crisis highlighted the need for more transparency in government programs, less rigid exchange ratios, and stronger, better-regulated financial systems. The International Monetary Fund shored up Japanese markets with large infusions of cash, much of which went to buy food, fuel, and medicine for those most distressed by the unexpected downturn. Other problems, like the absence of bankruptcy in Korea, came to light. As one expert noted, “capitalism without bankruptcy is like Christianity without hell. There is no systematic means of controlling sinful excesses.”48
Walmart Retailing Wizardry
Microprocessing was by no means the only engine of capitalism in the last decades of the twentieth century, though it was integral to one of the most astounding successes of the century, Walmart. Sam Walton started a chain of discount stores in Arkansas, Missouri, and Oklahoma in 1962. He began an astounding ascent to the position of the world’s number one retailer by figuring out how he could buy directly from manufacturers and bypass the wholesalers, who added 4 to 5 percent to prices. Walton turned his Bentonville headquarters in Arkansas into a distribution center that could receive bulk orders from suppliers and send them to particular stores through a fleet of Walmart trucks. Being able to buy big-city items at low prices made a big hit with customers in the small towns where Walton placed the stores in his expanding empire. Reminiscent of Tom Watson, Sr., at IBM, Walton became a bigger than life figure for his employees. His style was simple, direct, and a bit intrusive. Everyone was on a first-name basis; he drove around his vast empire in a pickup truck. He hired young men, often the sons of farmers, and instilled them with a spirit of company loyalty that merged into a shared evangelical piety.
Like Ford and Carnegie, Walton didn’t know how to think small. When he wanted to start a new store, he’d fly over the chosen area, mark the spot most easily reached by a cluster of towns, land his plane, and buy up a piece of farm property.49 And then another and another until some seven thousand Walmart stores sprang up, many outside the United States. Even though Walton was born in 1918, he became the retailing maven of the information technology revolution. First he networked his stores with computer connections. He installed the most advanced inventory control. Whenever a cash register rings up a Walmart sale, a message goes to company purchasing agents, the manager of the store, and the vendor saying that another Hewlett-Packard printer or Disney DVD should be sent to Bentonville.
This just-in-time restocking systems helped both Walmart and its suppliers. It also enabled Walmart executives to analyze what its customers wanted in winter or summer, flush times or lean ones, when celebrating an anniversary or anticipating bad weather. Walmart truck drivers keep in constant radio or satellite contact with headquarters to learn where to pick up items so that they can return from making deliveries with full loads. Expanding size and scope made this system more and more efficient. Computers track the pallets moving endlessly through the vast Walmart loading area. When its managers discovered that bar codes on items could be mutilated or unreadable, they switched to radio frequency identification tags that convey all the necessary inventory information through antennas and radio waves into computers.50
Everyone who works for Walmart is kept on a tight electronic leash. Critics say Walmart became the behemoth of world retailing by driving down wages and scaling back benefits for its own employees and those of their suppliers. Its vendors claim that its ruthless bargaining has reduced everyone’s profit margin, sometimes to the point of vanishing. Admirers point to the boon of low prices for low-income families. Less entranced observers focus on Walmart’s arrogance in insisting that all business with it be done in Bentonville, Arkansas. Sam Walton liked flying around rural America, but he didn’t want to do business in Chicago, Los Angeles, or New York. Vendors have to travel to Walmart headquarters, and many keep offices there. A Disney executive wryly noted that when his company, not known as a pushover, had disputes with Walmart, it always lost and had to go to Bentonville to do so.
The Walt Disney Company has been selling its DVDs, toys, interactive games, and apparel in Walmart’s seven thousand–plus stores. With Disney parks in Japan, France,
and Hong Kong, in addition to the United States, the company has developed a large customer base for the consumer products that Walmart distributes. Of course maintaining a record of high-quality entertainment, especially for children, since 1929, Disney was already doing well. It had long been the largest publisher of children’s books and magazines that go into the homes of one hundred million customers in seventy-five countries. Mickey Mouse, who turned eighty in 2008, is the most recognizable icon in the world. More Americans (95 percent) recognize him than they do Santa Claus. Movies made in the 1930s and reissued regularly have introduced Disney characters around the world. When rivals to Spain’s president José Luis Rodríguez Zapatero wanted to blast his gentleness, they called him Bambi.
Competitors took notice of Walmart’s success and emulated its system. Otherwise three other American discount retailers—Home Depot, Costco, and Target—would not be among the top thirty-five of the Fortune 500 companies. A retailer as extensive as Walmart has greatly enhanced the commercial reach of many American companies like Disney, not to mention introducing a host of foreign goods into American homes. Walmart imports one-third of all consumer durables produced in China.51 Like a great oak that suppresses all growth around it, Walmart stores have made ghost towns of countless small cities by drawing customers to their exurban locations. Walmart has also steadfastly fought off unionization of its 1.4 million employees, an effort that has provoked a vigorous anti-Walmart campaign. Some of those employees took the company to court for violation of wage and hour laws, winning a fifty-two-million-dollar settlement. A substantial number of other Walmart employees share Sam Walton’s linkage of evangelical fundamentalism with free market competition.
The conspicuous difference between America’s number one employer at the end of the twentieth century and the automakers forty years earlier is that Walmart has not pushed its employees into the middle class. Instead it has been a cause and an emblem of a seismic shift in the fortunes of American workers. After World War II, powerful labor unions, buoyed by decades of prosperity, successfully bargained for high wages, worker safety, and generous benefits. Jobs in American industry that had been unsafe and unremunerative became the basis for a generous standard of life. People now regret the loss of all those great jobs in the steel mills, but they have put the horse before the cart. They were lousy jobs before their work force was unionized.52 Over the succeeding decades, a variety of factors battered organized labor: vigorous political opposition from management, a shift of jobs away from industry to the more difficult to organize service sector, failures in union leadership, the intense competition of the world market, and the new technologies that made it easier for producers to move abroad, where there were pools of cheap labor. Most devastating, the American public lost its sympathetic connection to organized labor, no longer viewing a strong labor movement as good for the economy and essential for a vigorous democracy.53 Once this was gone, an endeavor like Walmart could switch public attention away from securing good paying jobs to having access to cheap goods.
Had wages not been driven down in recent decades, low prices would not figure so prominently in people’s calculation of their interest. Globalization, that combination of marketing and messaging, has played its part in the shift of American labor from a coordinated, stable, securely earning group to an aggregation of individuals perpetually uncertain about the next paycheck. Moving in tandem, information technology and globalization have opened up markets and made them more out of the reach of any government’s control. Even profits have been rendered less secure. Dependency upon unseen forces and unexpected shifts in supply and demand have introduced a stratum of worry that undermines the efforts of labor to win back its public voice and bargaining power. In the last decade, union leaders have raised the call for international standards for labor, revisiting the old issues of gaining living wages, safe working environments, and the eight-hour day for a global economy. The rapidity with which cheap labor centers have moved from countries like Mexico to China and then on to Vietnam suggests that this campaign may gather force in the next decade.
Globalization has thrust Western culture into all the communities of the world, evoking a powerful reaction to the intrusive images coming out of American movies and television shows. Criticism often comes from members of the educated elite who seem unable to appreciate that the commercialization of entertainment has delivered a powerful antidote to boredom. With more disposable income, millions around the world are patronizing the products of Hollywood and Bollywood and hundreds of other sites that produce drama and documentaries. Although an important economic force in itself, the American entertainment industry has influenced people’s material aspirations in a way that’s probably been more significant for economic development than its revenues. An alternative way of life comes in with its CDs, DVDs, videos, TV shows, and movies.
More Personal Choices with Capitalism
Capitalism has encouraged countless new drugs and medical procedures. Perhaps the most revolutionary of all for women has been effective birth control. This means that while busy generating wealth, the market has also increased the number of options in people’s lives, setting off what might be called a rebellion of the womb. Birthrates are dropping precipitously, as women in the West and Japan are having fewer children, and many having none at all. This has shocked those who thought that they understood women’s natures. In many countries, there are not enough births to replace the existing population. At the same time, in much of the West the sexual freedom of the 1970s has altered attitudes and practices about pregnancy and marriage. Now half the babies born in France and the United States, for instance, are born “out of wedlock.” While the plight of the single mother is real, it is also the case that in the past illegitimacy carried the onus of a disgrace and one that fell on women more than upon men.
What capitalism has uncovered is what many people really want. The value systems of the past grew out of scarcity and restraint. Traditions prioritized ways to behave and ennobled values compatible with the scarcity of food and other goods. The international press, which capitalism has promoted, has also carried to the most remote places on the globe the spirit of the Helskini Accord on human rights, if not the actual text. In the first decade of the twenty-first century, an eighteen-year-old woman living among the Stone Age inhabitants of New Guinea fled to Papua to assert her right to choose her husband, and a ten-year-old girl in Yemen found a court where she could seek a divorce in 2008.
Pharmaceutical companies in the United States and Europe came into their own with a cornucopia of new drugs in the 1980s and 1990s. Many of them targeted the aging populations around the globe; new antidepressants also became hugely successful among men and women no longer willing to accept melancholy as a fact of life. In addition to the research done in corporation laboratories, European and American universities have devoted billions to finding new cures for old maladies, in some cases eliminating old diseases altogether. The U.S. National Institutes of Health and the Department of Energy launched in 1990 the Human Genome Project, which became an international effort to identify the genes in human DNA. An astoundingly ambitious effort, the project determined the sequencing of the three billion chemical base pairs that make up human DNA. Slated to take fifteen years, it finished early in 2003, when a private geneticist, Craig Venter, turned the project into a race between competitive sequencing efforts. Still undeveloped, genenomics is pushing genetics in new directions, many with commercial possibilities. This has aroused fears about interfering with natural processes. There is also concern that disinterested science will become a thing of the past with pharmaceutical companies lavishing gifts upon researchers. Of the top twenty pharmaceutical companies, twelve are American, two Swiss, and two German. Britain, Sweden, Japan, and France have one each.
Capitalism had proven its adaptability and its capacity to nurture technology and commercialize its findings. Firms, universities, and whole countries have built impressive learning centers, most
of them open to outsiders. Curiosity about how the world works has been sustained; talent has often trumped wealth, as the computer revolution demonstrated. Since World War II, institutions to promote development and cooperation among Western nations have gained in influence, but not without generating discontent. The industrialized nations have often played their strong cards with indifference to the other players in the world market, ignoring calls for eliminating domestic subsidies, for instance. Not exactly a tradeoff but relevant has been the decline of violence—both public and private—since 1975. Even with the war stories that clog our newspapers and nightly news shows, casualties on various battlefields are minuscule compared with the first three-quarters of the twentieth century. Forget the carnage on a single day in a World War I battle, and just compare the forty-seven thousand American battle deaths in five years of fighting in Vietnam with the four thousand plus in six years in Iraq.
And then there is the ambiguous link between capitalism and democracy. The United States has been a vocal booster of both. The connection was actually forged much earlier when the market economy in late-seventeenth-century England revealed that quite ordinary people could take care of themselves and make reasonable decisions about their welfare. Over time these observations replaced earlier assumptions that men and women were woefully fickle creatures, derailed by their emotions and cursed with a tendency toward wickedness. With an improved view of human nature, sober thinkers could entertain the idea that rule of the people—democracy—might be a good form of government. The United States put these ideas into practice after its Revolution. A few years later it ratified a constitutional order that sharply curtailed the will of the majority and guaranteed a panoply of civil rights. The joining of capitalism and democracy in popular thinking caused a Russian woman, looking at her empty cupboard, shortly after the collapse of the USSR in 1991, to announce that there would be no democracy in her country until that cupboard was full. To her, evidently, majority rule meant abundance, presumably because both were found in the United States.
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