God, Mammon and the guardian angels

The global market may wreck local cultures but, says Diane Coyle, it can also boost democracy

One World, Ready or Not: the manic logic of global capitalism by William Greider, Allen Lane, pounds 25

Communism is dead but Marx was right. Capitalism is about to enter its final and fatal crisis. There will be misery and unemployment in the West, while the East will find its traditional culture torn to shreds by the financial vultures.

So says William Greider, the latest recruit to the school of prophets of economic doom. His book slots into the new genre of "endism", predicting, with a nicely judged degree of reluctance, that unfettered finance capitalism will destroy all it touches. "Our wondrous machine, with all its great power and creativity, appears to be running out of control toward some sort of abyss," he writes.

Greider, the national editor of Rolling Stone magazine, is in good company. Malaysia's prime minister, Mahathir Mohamad, this month threatened to throw currency traders behind bars, saying that speculators were trying to sabotage his Asian Tiger economy. In fact, they ought to be shot, the intemperate Mahathir said. He blamed George Soros, doyen of financial speculators, for the region's currency and stockmarket crisis.

Ironically, earlier this year Soros himself expressed some concerns about the flaws in late 20th-century capitalism. In its triumph, it had left behind the poor, the ill-educated, workers made redundant from industries that transplanted to countries like Malaysia. A backlash would become inevitable without a kinder capitalism, he warned.

Greider likewise sees Malaysia as a beneficiary of the global jobs auction. Visiting an American-owned silicon chip plant, he quotes one of the managers saying: "We had to change the culture." He adds: "The government would like to maintain Islamic principles and protect people from western values, but whether the government likes it or not, the people are becoming westernised."

This chunky tome, badly in need of editing, is pitched somewhere between Marx's Das Capital and the Adventures of Tom Sawyer. In so far as there is any analysis, it amounts to a garbled theory of excess investment and underconsumption. Greider predicts a collapse in the rate of profit and a catastrophic financial crisis when companies realise that nobody can buy the products they are over-supplying.

But the tone is pure Huck Finn, with our wide-eyed correspondent reporting from the economic hotspots. Take his visit to Rob Johnson, a New York financier working for Soros who happens to have just bought $4 billion of bonds, or financial IOUs, issued by European governments. "What a day!" he says to Greider, who reports: "None of this made much sense to me until Johnson explained the play." You'll be pleased to hear that he gets to grips with it eventually.

He goes on to explain the Soros phenomenon and the "fundamental insight" of the speculators: that "national governments expected to guarantee stability were trapped between two worlds - their obligations to domestic economies and the new force of the global market".

This is as good an explanation as any of a currency crisis, but it misses the point. The financial markets are the guardian angels of global capitalism, but they spring into vigilante action only where there is something to be vigilant about. Most often, this is either a government issuing IOUs it is unlikely to be able to repay easily, or a nation sucking in far more imports than it can pay for with export earnings. The markets force unsustainable situations to a messy conclusion.

Is this a profoundly undemocratic evil? I think it is exactly the reverse, especially in the case of countries whose politicians have more of an eye on their own than the national fortunes. This is not to say there is nothing to worry about in the way the global economy now operates. But it is a worry about politics rather than economics. It is shared by Benjamin Barber in his polemic Jihad vs McWorld, and, in a far more intelligent way, by Anthony Giddens in Beyond Left and Right.

The trouble is that while fundamentalism is anti-democratic, capitalist democracy has become anti-political. It presents all issues as technical problems, matters of good or bad administration. As Greider puts it, the trouble with those optimistic about globalisation is that their optimism "lobotomizes history, mainly by separating the epic economic changes from their political consequences". When I read this sentence, I found something to agree with. The other 500-plus pages pile up more travel notes and more rhetoric. Sadly, it is all whipped cream and no pudding. Look elsewhere for plums of analysis.