Nasdaq Japan

It’s far more likely, however, that neither Japanese nor U.S. workers will benefit from the creation of Nasdaq Japan, that rather than floating on a seamless, flowing stream of capital, workers will butt their heads against the same stony walls separating them from better jobs and higher wages that have been erected as part of the broader globalization process. If anything the rivalries which pit U.S. and Japanese workers against each other will be worse at the end of the day, as capital adds this new conduit allowing capital to flow most smoothly to wherever labor can be most easily exploited.

This has been the clear result of the globalization of manufacturing. The investment across countries in auto, steel, garment, and toy factories, supposedly designed to create more jobs, has instead meant lost jobs, lower wages, and harsher working conditions—and more antagonism between workers of different countries (don’t forget that the "seamless" flow of capital into Eastern Europe played no small part in reviving competition for resources between nationalities, and thus ethnic hatred, in Yugoslavia).

Zarb’s claim that the market will more efficiently find investment opportunities for capital, across broader geographic reaches, ignores the plain fact that capital under the current setup has too many places for productive investment already. Under current levels of world demand there are already too many factories. That’s why the stock market mania of the last two decades represents money chasing money in an irrational speculative orgy. Nasdaq Tokyo will only lend this orgy a new high-tech gloss and a quicker pace.

A good explanation of this absurd situation was carried in an article by New York Times economics correspondent, Louis Uchitelle, in "Global Good Times, Meet the Global Glut" (11/16/97). Writing at a time when everyone feared global catastrophe growing out of that fall’s Asian financial crash, Uchitelle said: "The Asian financial turmoil may be the first stage of a developing worldwide crisis driven mainly by a phenomenon called overcapacity: the tendency of the unfettered global economy to produce more cars, toys, shoes, airplanes, steel, paper, appliances, film, clothing and electronic devices than people will buy at high enough prices. ‘There is excess global capacity in almost every industry,’ Jack Welch, chair of General Electric, said in a recent interview in the London Financial Times. Whether it’s Airbus jets in Germany or sneakers in the United States, goods have a tendency to pile up in today’s global economy."

"The problem arises," says Uchitelle, "because the global economy sucks businesses into building too many factories…. The danger is that at some point this house of cards must tumble down. In an open-border global economy nearly every car manufacturer, for example, is trying to have a presence in every market. But when factories crank out more cars than people can buy, down come car prices. Down go the profits of car companies. Out go the workers. And down go the number of people who can afford to buy cars. Economies can spiral downward toward recession, or worse. That is what is beginning to happen in Asia now."

Uchitelle then points to the role of globalization in worsening rather than alleviating this situation: the global market produces "more and more goods even as it suppresses wages at both ends of the world, in industrial as well as developing countries…. You cannot do that forever—producing more and cutting the wages of those who buy—without some collapse."

So Nasdaq Japan is designed to solve a problem that doesn’t exist. Given the way our system functions, the problem isn’t that capital can’t find places to invest; the problem is that capital can’t invest in new goods- or service-producing facilities whose output can find a market. Yet if anything this leads capital to search more desperately for investment opportunities, both real and intangible, to make up for declining profits. And the more it does so the less chance it has of making a go of the newest investments. So new stock markets only increase the fury with which capital chases its own tail.

This description of capital’s dilemma may not seem to match today’s headlines, and Uchitelle’s worries could all too easily be written off as the momentary panic brought on by the fall 1997 crash. But recently new evidence of the thin ice on which the world’s economy skates could be heard. Many economists and businesspeople still worry that the rest of the world’s economy will drag down the U.S.—and the economy of Japan, stagnant now for decades, will be one of the biggest drags. Gretchen Morgen- son, in "U.S. Shoppers Shoulder the Weight of the World" (New York Times, 6/20/99) quotes a banker who told her "a slowdown in consumption here could stop the improving economies elsewhere dead in their tracks: ‘If he [the American consumer] slows down at all, we’re going to feel the world weak again." Like Uchitelle, this banker also points to the role of low wages in weakening demand and thus preventing the use of existing factory capacity: "Perhaps most important, annual growth in real wages has fallen from about 3 percent early last year to around 1.5 percent." So, he concludes, if the U.S. consumer doesn’t continue to fuel world consumption, "there is nobody out there to take his [sic] place… If it [the global economy] really slows down and gets into a more scary scenario, then the whole stock market gets into trouble." And, I would add, more efficient, more global stock exchanges such as the newly global Nasdaq, will spread that trouble all the more quickly and "efficiently."