01/20/97 THE GLOBAL ECONOMY: A 'DREADFUL RECKONING'?

THE GLOBAL ECONOMY: A 'DREADFUL RECKONING'?

ONE WORLD, READY OR NOT
The Manic Logic of Global Capitalism
By William Greider
Simon & Schuster 528pp $27.50

When William Greider discusses the global economy, it's with a chip on his shoulder and a wistful eye for the days when trade stopped at the border and capital rarely left home. Rather than accept free trade and borderless finance as inevitable and beneficial, Greider sees little but trouble. In One World, Ready or Not, the Rolling Stone national editor paints a scary picture of a world ruled by self-interested multinational corporations and soulless investors, all vying to earn high returns by opening yet another factory in yet another emerging economy.
This line of analysis is hardly new, and at first glance it would be easy to dismiss One World as just one more populist tome out of the Pat Buchanan-Ross Perot school. Indeed, Greider's proposed remedies, including imposing tariffs and other restrictions on international trade and investment flows, forcing exporting nations to consume more, and raising wages and working conditions for the emerging-economy labor force, strike me as impractical at best. Despite Greider's misgivings, a lot of jobs do depend on international trade. And when contemplating the kind of tit-for-tat trade curbs that the author envisions, don't forget the damaging protectionism of the Great Depression.
But Greider, who skillfully chronicled the clandestine inner workings of the Federal Reserve Board in a previous book, Secrets of the Temple, should not be dismissed out of hand. Drawing on numerous interviews with workers, managers, and traders around the industrial and emerging economies, he has assembled a coherent and surprisingly easy-to-read series of arguments. Such recent events as the Mexican financial collapse and recession, he says, are troubling examples of a spreading global stress. Moreover, he warns, the world has embarked on ''a reckless foot race with history, plunging toward some sort of dreadful reckoning.''
What that reckoning may be, Greider never really says. But he hints at a lurch back to fascism in the industrialized world, particularly if economic strains continue to undo the welfare state and the very foundations of one society after another. Looking at Europe's spiraling unemployment, slow growth, and social tensions as it prepares to launch a single currency--one of the European Union's solutions to its global-competitiveness dilemmas--I can only hope he's not on to something.
High on Greider's list of problems is the pursuit of labor-saving technology despite uncertain payoffs. Visiting an eerily robotized Lexus plant in Japan, where Toyota Motor Corp. can assemble a luxury car with one-fifth of the worker hours that Daimler Benz needs to turn out such a vehicle in Germany, he is amazed. But what happens when Toyota's competitors make the same leap? Does everyone benefit? Hardly, argues Greider, who maintains that technology competition will lead companies ''to invest in more output of goods than the global marketplace of consumers can possibly absorb.'' The unfortunate result: ''a seemingly permanent and expanding surplus in the productive capacity of the world.''
Exacerbating this problem, Greider asserts, are the deals struck between multinationals and overseas governments. He contends that countries such as China or India care not a whit about the global impact of attracting new production. Rather, he says, they care about jobs for their citizenry and status as world-class export manufacturing states. These are needs that many corporations seem only too happy to meet.
That willingness disturbs Greider and leads him to offer some prescriptions that merit examination. He would have Washington, at least, ask whom American multinationals should serve--their shareholders or their country. Since, to Greider, the answer is never in doubt, he would have the government use the tax code to discourage some foreign investment and generally ''shift its primary focus to defending the U.S. industrial structure and employment, not the U.S. multinationals themselves.''
Given America's general reluctance to embrace broad industrial policies, this proposal strikes me as pie in the sky. And I was left cold by Greider's superficial analysis of international financial markets--a surprise, given his previous immersion in the Fed and his close friendship, which he acknowledges, with top strategists for hedge-fund supermanagers George Soros and Paul Tudor Jones. To Greider, financial markets are anything but efficient conduits of capital. He sees them as breeding grounds of instability, where ''firms and workers, sales and profit, jobs and incomes [are] held hostage by the gross price swings of this unpredictable commodity called money.'' Not surprisingly, his cure would be to slow the system through new taxes and regulations.
This universal prescription--to tax, regulate, and jawbone global trade back into submission--is the most disappointing facet of the book. And even Greider concedes that backing away from free trade would involve penalties, such as the high prices Japanese consumers pay for locally produced goods and services in order to keep domestic industries afloat. Trouble is, even long-complaisant Japanese consumers are seeking better deals now as the government tries to open the economy to more global competition. It seems that the attraction of free trade is irresistible for many, even if it leaves Greider uneasy and unimpressed.
By WILLIAM GLASGALL