The wealth of nations: our precarious prosperity.

Wall Street's wild rides fascinate the media. But just what these mean for most of us is a question too seldom asked. July's plunge in the value of the Thai baht was compounded when investors, expecting the devaluation of the Hong Kong dollar, staged a massive sell off of Asian stocks. U.S. investors, anticipating declining exports to Asia, followed suit, causing a 554-point fall in the Dow (October 27). Stocks rebounded, but Wall Street's volatility remains a serious concern.

Amidst this turmoil, we should keep some simple facts in mind. After years of relatively fixed exchange rates, most currencies are now bought and sold just like any other commodity in world markets. And throughout most of Latin America, Europe, and much of Asia, barriers to trade in goods and services have also been lowered. A corporation's freedom to invest wherever it wants is written into the structure of trade treaties. Banks and other lending institutions now also enjoy an unprecedented degree of freedom from oversight and regulation.

These corporate freedoms were supposed to produce prosperity for the whole world. What they have done is to trigger a relentless urge by corporate leadership to relocate business to nations with the lowest wages and most deregulated financial markets. Many mainstream economists assure us that only poorly paid, low-skilled jobs are affected. But the new information technologies now encourage export of high-tech processes and even whole management systems. Economist Harley Shaiken points out that state-of-the-art auto plants have been relocated to Mexico. Workers there are now paid about 12 percent of the U.S. wage.

Not everyone has been a loser in this process. Downward pressure on wages has translated into growing short-term profits for multinational corporations. As stockholders and managers make more money, they in turn pour more funds into the stock market. As prices rise, investors bet more on further growth, fueling a self-sustaining stock-market boom. Unprecedented numbers of working- and middle-class investors, seeing great gains to be made, have jumped into the market as well. Nonetheless, despite all the talk about market booms and widespread economic prosperity, most stocks are still held by the wealthy, with 1 percent of U.S. families owning about 40 percent of corporate stocks. Wealthy investors, the aspiring middle class, and the pension funds now so heavily committed to the market need to consider whether a global economy built on such concentrations of wealth will long sustain economic growth.

Most Americans are better off than a few years ago, but such gains must be placed in historical perspective. World economic growth has slowed from 5 percent per annum in the two decades after World War II to about half that figure in the '90s. The current U. S. expansion is the weakest of the postwar era, with Gross Domestic Product growing at the slowest rate and employment at the second slowest. Real wages remain more than 5 percent below their 1989 level, near the peak of the last business cycle.

In newly deregulated foreign markets, such as Asia, there has been rampant economic expansion. But these states must now sell their goods in a world market in which wages are stagnant everywhere. Working-class consumers are already heavily in debt, and cannot go much further down this path. Bankers or government leaders everywhere have been reluctant to ask how, with wages so sluggish, consumers will be able to afford to buy the goods now being produced. High profits always spur some level of investment, but if worker wages don't increase as capacity, profits, and productivity grow, production must inevitably exceed consumer buying power. Consumption by the wealthy, who often spend a lower percentage of their income, won't fill the void. Without broad-based demand, product inventory and excess capacity accumulate. Incentives for further investment or even current production levels will then erode. Jobs and eventually even corporate profits are then threatened.

What is at stake in all this turmoil for U.S. citizens? Predictably, major downturns in markets result in international lending authorities, governments, and businesses pushing more of the medicine that brought about the crisis in the first place. Asian states are now being urged to reduce supports for the most vulnerable, limit labor's rights, and reduce investments in education, the environment, and other public needs. The New York Times recently (Saturday, October 25) assured its readers that if the Asian states follow the corporate cure, "they can recover and continue to grow in two or three years or less."

But it is hard to imagine how scaling back public expenditures in a time of economic crisis and embracing further competitive pressures on workers' wages will help restore consumer purchasing power.

None of this proves that a 1929 Depression is around the corner, either for U.S. stocks or the global economy. The Federal Reserve and international monetary authorities have already put together bailout packages to stabilize Asian currencies. On the domestic front, IBM's decision to buy back billions of dollars of its own stock also seems to have buoyed "investor confidence." Stock markets, like currency markets, move largely in response to the guesses individual investors make regarding the actions of other investors. A herd mentality easily takes hold, and herds are inherently unpredictable.

Bailouts, however, whether corporate or government sponsored, merely paper over the growing instability and casino-like operations of the global economy. A world where businesses can relocate their production facilities at will obviously undermines the ability of labor unions to press for just compensation. The deregulation and lack of oversight in financial and currency markets lead to speculative excesses - the source of the Asian collapse and that makes productive investment more costly. When corporations like IBM buy back stock or lay off workers and cut costs just to keep brokers and speculators happy, most of us lose in the long run. Money spent to boost the value of a stock is money no longer available for wages or productive investment.

There are alternatives to a world where even the very foundations of commerce - land, human labor, and money - are continually for sale at any price. Admittedly, these alternative ways of regulating economic life would be difficult to achieve in the current political climate. Still, the increased volatility in stock and currency markets has even begun to worry some well-positioned investors. Labor, liberal, tax-justice, and environmental organizations have for some time now raised regulatory issues, and the stock market's current difficulties may give these advocates more confidence and more visibility. Keeping alive alternative possibilities is important, especially if the current crisis were to deepen.

For starters, taxes on currency transactions and restoration of adequate capital gains taxation would ease speculative excesses. Central banks could encourage investment in new technologies and discourage loans for real estate and unproductive mergers. U.S. and Asian states could collectively negotiate broader access to Japanese and other protectionist markets as a condition for continued access to their own. Trade treaties with developing nations should provide labor with as many rights as corporations now enjoy under those accords. All governments should observe minimal wage and labor standards as a condition for membership in new trade zones. Labor not only here but throughout the world is pressing for such basic rights, and wage standards could be pegged to each nation's general level of productivity so as not to become protectionist instruments. Such measures are vital for more than just the average worker. The whole history of capitalism demonstrates that without growing wages and steady consumer demand, even corporate growth is ephemeral.

John Buell is the author of Politics by Other Means (Illinois University Press).