RESOURCE FILES

Chapter 9

The Structure of Society: Organizations and Social Institutions

Barbara Garson

Money Makes the World Go ‘Round

Like many people these days, author Barbara Garson was concerned about the effects of an increasingly globalized economy. ¹ She wanted to find out from ordinary people how global economics is affecting them personally.

Rather than interview or survey a representative sample of people around the world, Garson came up with a unique research strategy: She decided to deposit some of her own money in the bank and follow it around the world, talking to the people who were touched by it.

As you probably already know, when you deposit money in a bank, it doesn't actually "stay" in the bank. Banks use the money from depositors' accounts to invest and lend elsewhere.

In addition, money is not a tangible thing that can be marked and easily followed, so Garson couldn't literally follow every dollar she deposited. Instead she researched where and how her money was being invested and followed a few "representative uses."

The journey led Garson from corporate boardrooms and government offices in the United States to the impoverished streets of Singapore and Thailand. Along the way, she spoke to wealthy lenders and investors as well as to poor fishermen, pipe fitters, and maids half way around the world.

Garson began by getting an advance from her publisher and depositing half of it ($29,500) in a small, family-owned bank in Millbrook, New York, about 90 minutes north of New York City. She found that some of "her" money was used for small local business loans. A Millbrook pizza parlor entrepreneur got a piece; a seafood importer in Brooklyn got some too.

But another part of Garson's money quickly made its way out of the country. First it was sold to the large investment bank Chase Manhattan. Chase, in turn, sent the money—and hundreds of millions of dollars just like it—around the world, as it does each day.

Garson soon discovered that when Chase loaned her money out globally, it wasn't going to budding Asian and Latin American entrepreneurs who had dreams of starting their own small businesses. Instead, most of it went to foreign governments, multinational corporations, or international banks.

So Garson's small deposit quickly became a tiny part of a large chunk of U.S. capital that is a key component of the global economy.

Garson discovered that, through a series of complicated international corporate and finance connections, some of her money went to Caltex, a multinational oil company that primarily serves South Asia, southern Africa, New Zealand, and Australia. Caltex, in turn, had business relationships with oil companies in England and Japan, not to mention close ties to Texaco and Chevron in the United States. At the time, Caltex was building oil refineries in Singapore and Thailand, and Garson's money was being used to finance these massive construction projects.

In Singapore alone, thousands of migrant laborers from Bangladesh, Thailand, China, Burma, India and a variety of other countries around the world had been brought in to work. The wages they earned may have been much higher than what they could have made in their own countries, but the conditions under which they were required to work resembled indentured servitude. For instance, a Thai laborer at the oil refinery earned twice as much as he could have at home, but strict migration laws did not allow him to leave Singapore to visit his family.

As she observed these workers on the job or in their harrowing living conditions, Garson came to a startling realization:

They were all my workers. . . . After all, these men and women were eating now, before the refinery they were working on produced any income, and the tools and material they were working with were paid for even though there was no oil money coming in yet. All this labor and material was mobilized through the power of capital. That's what control of capital means. You can pay people to do things for you with money that will buy them other people's goods and services. In this case the power to pay was based on borrowed capital, and I was supplying it. ²

From one branch of a small-town bank, her money had touched lives across the globe. It helped subsidize rapid growth in places such as Southeast Asia. Lots of people benefited.

But there was also a downside to her global money trail. The rapid influx of foreign capital (and equally rapid withdrawal during the Asian economic crisis of the late 1990s) left many local people displaced and financially destroyed. Garson writes,

I was excited when I saw 9,000 people, mobilized by a Chase loan, building a refinery. . . . But a Caltex company wife who'd been there earlier remembers when there were still small farms and houses on the site. She didn't feel guilty when they were torn down, she says, because the company brought jobs, hospitals, and other opportunities. . . . "But after the crash the jobs and hospitals were gone but there were no little farms to go back to. How will these people live?." . . . Something like a hundred million people were reduced to extreme poverty in the short time that I happened to be following my money around the world. But the money isn't going to turn back and try to undo the damage. ³

In this whirlwind journey, Garson documents the international trajectory of money. In so doing, she charts the global interconnectedness of social institutions and everyday life.

¹ Garson, B. 2001. Money makes the world go around. New York: Penguin.

² Garson, B. 2001. Money makes the world go around, p. 84. New York: Penguin.

³ Garson, B. 2001. Money makes the world go around, p. 319. New York: Penguin.