Yves here. I’m a believer in synchronicity, and this post will allow readers to continue the discussion we’ve been having over the last few days about the forces for war versus peace in industrial and post industrial economies.
The author John Weeks does himself a disservice by letting his considerable frustration with how economics treats topics like trade and war descend into spurts of hyperventilation. However, I believe you’ll find his argument though-provoking. Some of his points include that analysis of trade assumes that countries, as opposed to companies, are the locus of activity, and that trade creates incentives for peace, when in fact trade just as often (if not more often) creates incentives for war, for instance, via competition for resources.
By John Weeks. Originally published at Triple Crisis
Troglodyte – pronounced trog-luh-dahyt, 1) prehistoric cave dweller, 2) a person of degraded, primitive, or brutal character, 3) person living in seclusion, and 4) a person unacquainted with affairs of the world.
Troglonomics – pronounced trog-lo-nomics, the social institutions of production & exchange as viewed from a cave by a person degraded & corrupted intellect unacquainted with the affairs of the world; also known as “neoclassical” economics.
The troglodyte economics of the mainstream (a.k.a. neoclassical economics) functions as a virus of the mind. Like a computer virus, it corrupts the brain’s operating system, creating shot-circuits that by-pass both common sense and the brain’s analytical software. Once contracted through formal training in the classroom, troglonomics proves almost impossible to remove from the thought process. We find evidence of the difficulty of freeing the mind of the neoclassical virus in the writings of the few self-exiles from the mainstream who consider themselves progressive—and are so considered by the public.
Joseph Stiglitz represents an obvious example of a prominent mainstream-trained economist whose progressive views are not up to the task of purging his mind of the basic principle of troglodyte ideology, that resources are scarce and human wants unlimited (see the first chapter of his macroeconomics text with Carl Walsh, and the teeth-grinding “Thinking like an economist” boxes scattered through the book).
It is a mystery how an intelligent person (not withstanding his so-called Nobel Prize in economics, actually awarded by the Central Bank of Sweden, not the Nobel Committee) could live in a world of persistent unemployment and believe that resource scarcity is the central problem of a capitalist economy (my critique of resource scarcity is in Chapter 4 of my new book).
Krugman on War (yet again)
But few progressives are more virus-inflected than Paul Krugman. Despite his commendably progressive views on a range of social and political issues, Mr/Professor/Laureate Krugman remains a true believer in the virtues of international trade, his critique of which is limited to concerns about “market failure” (see his 1997 book Pop Internationalism, which to my knowledge he has not disavowed).
This loyalty to the mainstream ideology on trade goes far to explain his singularly bizarre view of the causes of war. In the August 17 edition of the New York Times he argued that since ancient times wars have been fought “for fun and profit” (his exact words in “Why We Fight Wars,” and see a critique in my Huffington Post blog).
He went on to argue that the increasing integration (“interdependence”) among countries during the second half of the 19th century made war among countries irrational because it disrupted the benefits accruing from trade. The argument continues with the stunning insight that wars continue to occur because 1) “leaders may not understand the arithmetic” of the cost-benefit calculations for a war (again, a quotation), or 2) politicians seek an external distraction from domestic maladies.
Other than a passing reference to some rather obscure and methodologically dubious research by a neoclassical economist, Mr Krugman relies on the 1909 book by Norman Angell, Europe’s Optical Illusion (Krugman cites the expanded 1910 version, re-named The Great Illusion). In the book, Angell argued that war among countries in an economically integrated world bring no gain even to the victor (Angell was awarded a real Nobel Prize, for Peace, in 1933, but not for his 1909 book, I hope).
It appears that Mr Krugman overlooked the irony of the world’s most brutal and murderous war in 1914 so soon after the publication of Angell’s book. If wars result from mistakes of calculation, the First World War (aka The Great War) stands out as the biggest arithmetical error in the history of humanity to that date. The Second World War would also qualify as a notable error of calculation.
Is it credible that in 1914 political leaders would make a calculation error that resulted in the deaths of 17 million people, then a mere 25 years later their successors would top that with faulty cost-benefit arithmetic leading to a second conflagration that would consume 60 million lives?
The “war for fun and profit” argument is not only absurd; it is in extremely bad taste, betraying an extraordinary insensitivity. I would have thought that the latter if not the former would have occurred to Mr Krugman by reflecting for a moment on the explicitly genocidal objectives of the Nazi regime. He should have realized the argument was offensive, even if he didn’t realize it was absurd. On the contrary, he repeated the argument, much of it word-for-word, in a column on December 21 (“Conquest is for Losers”). The purpose of the re-run was to demonstrate the foolish and anachronistic militarism of President Putin of Russia, who according to Mr Krugman foolishly seeks to enrich Russia by conquest.
War and Trade
Mr Krugman asks, “Why did Mr Putin do something so stupid” as to provoke conflict with Ukraine? The more relevant question is, why is Mr Krugman so stupid that he has such an absurd explanation of why wars are fought? The question has an obvious answer—the troglodyte (neoclassical) theory of international trade which Mr Krugman accepts with only minor revisions.
David Ricardo is perhaps the most misrepresented figure in the 250 year history of economics. To him are attributed two of the cornerstones of troglodyte economics, “diminishing returns” and “comparative advantage.” Ricardo is innocent of having formulated either. His versions of both bear no resemblance to the nonsense found in mainstream economics and taught to neophytes as universal laws.
Mainstream theory of international trade comes down to us not from Ricardo but from two Swedes, Eli Heckscher and Bertil Ohlin (worth noting that the latter was for over 20 years leader of the People’s Party, the right wing opposition to the Social Democrats, and was the political mirror image of the great Swedish progressive Gunnar Myrdal). The Heckscher-Ohlin (or “H-O”) theory concludes that trade among countries is unambiguously beneficial, raising the standard of living (“welfare”) for both countries.
If we believe mainstream trade theory it follows that war among countries must be irrational just as Mr Krugman, Mr Bhagwati, et al. claim. Why fight a war with blood and gore to get what could be obtained through neighborly bargaining—“make trade not war, Mr Putin.”
No one should believe the gains-from-trade story. It is based on fanciful nonsense. The reactionary nature of the story results from two blatant misrepresentation of international exchange. First, the Heckscher-Ohlin theory treats international trade as if it were among countries. In a capitalist system trade is always among companies, with households far down the distribution line. Second, it views competition in general and specifically among companies as a benign and harmonious process.
These two misrepresentations allow the pernicious fiction that international trade benefits all of humanity by bringing to each country more efficient allocation of resources and through greater allocative efficiency cheaper commodities for everyone everywhere. In reality, international trade is contest and collusion among great corporations to generate profits. A major part of this profit seeking comes through achieving economic and political power at the national level, by buying elections or buying politicians directly.
A very large portion of cross-border trade occurs not between companies, but within them (“intra-firm trade”). The motivations for this internal corporate trade include avoiding 1) unionization, 2) taxation, and 3) national regulations that prevent destructive environmental practices. Any benefits to the “consumer” are more than wiped out by job losses, elimination of small producers, the race to the bottom in wages and working conditions, and global pollution.
Trade and the Decline of Democracy
Even more important than these negative economic effects of corporate dominated trade is the detrimental impact on democratic institutions. Far from stimulating accord and cooperation, as Krugman suggests, unregulated international trade undermines democratic institutions, limiting the policy options of governments. Obvious examples are the two-decade-old North American Free Trade Agreement and the proposed Trans-Atlantic Trade and Investment Partnership.
A key element in both of these corporate trade pacts is to remove companies from the jurisdiction of national governments. The Trans-Pacific Partnership pact would go even further, allowing companies to sue national governments for regulations that restrict pursue of profits.
In the 21st century, the domination of trade among countries by corporations includes restricting the democratic rights of citizens to petition their governments for redress of the damage created by those same corporations. This assault upon democratic governance represents this century’s version of what President Franklin D. Roosevelt described in his address to the US Congress in April 1938:
Unhappy events … have re-taught us two simple truths about the liberty of a democratic people. his first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it comes stronger than their democratic state itself. That in its essence is fascism—ownership of government by an individual, by a group.
Countries integrated into a system of trade may go to war with each other because trade itself contains the source of conflict, aggressive competition among institutions of private power stronger than governments. This may not be rational for “the people” of any of the countries in a conflict. Countries do not have homogenous populations; they are divided into classes and groups. For some groups and classes, armed conflict may bring gains, making the choice for war quite rational even on a cost-benefit calculation.
International trade aggravates the three great crises—of finance, development and the environment — and to those three it adds another, of democracy. Far from a benign process fostering harmony and welfare among nations, commodity and service trade, most of it carried out by powerful private institutions, creates tensions, corruption and conflict. As a general rule, wars kill people and enrich corporations. That, Mr Krugman, explains why not all but most of them continue to occur
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I don’t detect too much hyperventilation,just an appropriate level of anger and a clear explanation of the attractions of intertnational trade to supranational players.
Mentioning gunnar myrdal remided me of his idea of the ‘soft state’:
A general lack of social discipline in underdeveloped countries, signified by deficiencies in their legislation and, in particular, in law observance and enforcement, lack of obedience to rules and directives handed down to public officials on various levels, often collusion of these officials with powerful persons or groups of persons whose conduct they should regulate, and, at bottom, a general disinclination of people in all strata to resist public controls and their implementation. Within the concept of the soft state also belongs corruption, a phenomenon which seems to be generally on the increase in underdeveloped countries
A state that indemnifies established power at all levels and engenders hopelessness throughout the majority.
Globalisation is all about bringing these benefits from the third world to the first.
Perhaps Krugman should go off and have some “fun” – maybe in Afghanistan, Syria or the like. The children there should be able to point to the especially entertaining areas. Minefields are good.
He sits with his cronies on top of the hill cheering their particular side in the battle on the killing field below, where there is real blood, heartache, lost sons, slaughtered teachers and poets, whilst betting or theorising on the outcome.
I would like to see him and his kind pick up a rifle, march up a hill on point and look this “fun”, this “miscalculation” in the eye.
Of course ….. sadly he will not.
No real honour other than those from the ‘kings’ for whom he shills.
I don’t see hyperventilation in the piece, in fact I would say even the anger is rather well contained.
Si
The author leaves out, or just hints at, another major fallacy of the benefit of international trade – it causes countries to specialize and to organize themselves to the point that they become dependent on the international system to survive. This occurs probably in many more ways than I know, but for example a) countries cease to become food self-sufficient, in food volume and food diversity, so that they become dependent on international trade to feed themselves b) international debts, particularly in currencies they don’t control, give external governments or entities significant leverage for causing severe harm in the country, c) the social conditioning that accompanies ‘development’ causes societies to actively or passively destroy their natural wealth and thus their resiliency. Consider the society that allows international corporations to mine/manufacture, massively degrading the forests, wildlife, water, and air through spills, dumping wastes in water ways, etc. When the International Corp. is gone, the country has far less physical (ecological) wealth than before, and only has monetary wealth to show for it. And of course, this monetary wealth isn’t nearly as well distributed as the ecological wealth, leading to inequality, anti-democratic gov’t behavior, etc. Or consider the company that cares only about one cash crop (United Fruit Company in Guatemala comes to mind, after the CIA’s coup there) – turning an entire national economy into a cash-crop monoculture, destroying both economic diversity and ecological diversity, massively increasing inequality while disenfranchising millions.
Here in Quito, activists I’ve spoken to are deeply saddened by how incredibly polluted their rivers are, for example. The vast majority couldn’t care less (and from what I’ve heard, human waste/sewage accounts for a major part of the river pollution), buying into the consumer mindset or being too poor or too separated from natural ecosystems to care.
The beauty of all those problems is that even if a gov’t is eventually elected that honestly wants to benefit the masses, it will have a devil of a time undoing the power asymmetries (internal to the country and externally) and ecological damage wrought through however many years of international trade, not to mention the need to undo the consumer-mindset conditioning so many people evince. And of course, the internal wealth inequality brought through international trade probably makes it much harder to get such a gov’t in place.
International trade, particularly between unequal partners, really does seem like a much better branded mode of colonial control, and maybe even more efficient too for the rich leaders of the countries and corporations that benefit. After all, it’s a much harder narrative to fight against than blatant, white-people-leading-brown-countries colonialism.
Superb comment, thank you.
+1
Ah, the elegance of neocolonialism.
“a) countries cease to become food self-sufficient, in food volume and food diversity, so that they become dependent on international trade to feed themselves”
I have found myself wondering if the old cold war big wigs forced this situation into place by way of massive subsidies on their own food production. Thus it was “cheaper” for other nations to import from those big wigs than maintain their own internal supply and risk a race to the bottom.
Seriously, the “Arab Spring” seems to have had more to do with the Russian grain harvest than Facebook. A bad harvest made the price of bread in Egypt and elsewhere spike. This then resulting in a hungry and rowdy populace. If Facebook did anything it was to passify the populace as they could follow the ruckus from the safety of their homes. But when the net was cut they ventured onto the streets and got dragged along.
End result is that much like with gas to Europe, the price of grain can be used to put pressure on a nations leadership to “get with the program”.
Also, I think early on some of these mineral/resource rich areas were ‘sacrifice zones’. The importers of these goods made out well as well as the people running the export businesses. They got in trouble by borrowing in a foreign currency to buy the infrastructure for the extraction. And the exporter elite shipped their money out to foreign bank accounts rather than investing in the local population for self sufficiency in food and other industry.
I think the more recent Arab Spring was also influenced by commodity speculation.
Now that we are into the period of extreme extraction (tar sands, fracking, deep water drilling, arctic drilling) these sacrifice zones have moved into more ‘prosperous’ areas and are experiencing more backlash.
Food security is the first thing the IMF seek to undermine in their structural adjustment programs, just as they are now doing so in Ukraine and have done in Mexico, Argentina and others in the past. That’s why their first demand is always to end state food subsidies.
The Dnepr River is in the process of being diverted away from the agricultural region of the south toward sites where fracking operations are to begin, pending the removal of angry, Donbas peasant farmers who formed most of the resistance. Also, Monsanto is poised to move in and plant GMF crops which are to be used as export for paying IMF debts, along with the fracked oil program which was secured via a £3 billion contract as Yansenyuk came to power last year.
https://www.youtube.com/watch?v=Mubtm5KQXKs
Hudson originally mentioned this strategy as trojan horse for Western corporate dominance back in 1973 in his brilliant ‘Supercapitalism’ – it is indeed nothing new.
Marvelous post, Will!
John Weeks, you are now my favorite author.
I always recall Eric Hobsbawm’s argument when I see pieces like this: that nation-states like Bismarck’s Germany have real, but always limited ambitions (so long as the ruler is not completely nuts), whereas multinational corporations have unlimited appetites for growth and profit. GE wants to sell to everyone and Citibank wants to loan to everyone, everywhere, and any impediment to this is seen as an illegitimate provocation by their political client/sponsors (at times hard to tell which). They also want to run all their competitors out of business, especially those in any polity they do not directly control.
My addendum to Hobsbawm’s argument would be that the sheer magnitude of American dominance has kept this competition manageable (so long as Uncle Sam always winds up with the lion’s share of the profits) for decades. America’s relative advantages, however, may be waning, and this threatens to unleash the full fury of capitalist competition a la pre-1914 or 1931-39. America now needs to unleash war because it can’t use its size and the promise of lucrative trade arrangements to get what it wants. America is getting relatively weaker and greedier, and, to quote Cheney in a different context, therefore gloves are coming off. This would explain the complete dominance of the insane interventionism so popular now in Washington.
Troglodyte is also the latin name for wrens
“Market Failure” is the term used by economists who believe that the market never makes a mistake, for when the market makes a mistake. These economists use this term a great deal…
Weeks’ dissing of trade is of course the exact opposite of observed behavior.
The U.S. regards Iran, North Korea and (till recently) Cuba as enemies, so it doesn’t trade with them. Canada and Mexico are friendly, so we have NAFTA.
During Soviet years, Comecon had little external trade, but Russia and eastern Europe traded extensively with each other.
And so forth. Nations trade with allies, but impose embargoes on enemies to withhold the obvious benefits of trade. Fortunately Weeks’ anti-historical, anti-trade troglonomics is a far-fringe outlier. Stop trading with other humans entirely, and you turn into Ted Kaczynski.
Embargoes always struck me as a trade weapon – a political means of crushing competition. The sudden cozying up to Cuba is clearly a means of getting at its oil fields. If Communism were really an issue for not trading with a country, we wouldn’t have such enormous trade with China.
They have been used directly to foment wars, as the U.S. did by imposing an oil embargo on Japan six months before Pearl Harbor.
Despite our best efforts, though, Iran just refuses to take the bait and lash back. :-(
I guess we must be really, really friendly with China then.
We’re besties. LOL That’s why they’re all fired anxious to replace the dollar as global reserve currency(guess they must not have liked the hypocrisy of us calling them currency manipulators.)
However, I do believe at one time our deciding to trade with China was a “reward.”
IMHO Weeks does not go deep enough in exploring the underlying motivation of imperial hegemons like the United States and, before it, Great Britain. True enough, both countries acquired their wealth through trade (though in the case of the U.S. it might be more accurate to say its wealth was acquired from the attempt of Great Britain, France and the other countries of ‘Old Europe’ to eliminate their competitors by force). But the underlying impulse propelling imperial hegemons to war appears to be competition for the privilege of being the world’s banker – not for markets and natural resources. Being the world’s banker is synonymous with creating the world’s money. Once you can do that, there is no reason to fight for what you can get by just entering a few numbers in an accounting ledger.
This is the game being played by ‘wealth creators’ in the U.S. and other Western financial centers. Dr. Michael Hudson is fond of explaining that “The product of Wall Street is debt.” As long as the world continues to accept that debt, the Masters of the Universe in the US and elsewhere throughout the West have no need for “useless eaters” or a “reserve army of labor”, except perhaps to serve as debt collectors, “muscle m(a)en for Big Business, for Wall Street and the banker”. But woe unto those who question the divine order of things! The very credibility of Western finance and its ‘wealth creators’ is at stake.
“…both countries acquired their wealth through trade…”, referring to the US and the UK.
But I thought the US had high tariff barriers for virtually the whole post-Civil-War period right down to WWII, and that they only started to come down via the Uruguay Round of trade agreements. Wasn’t foreign trade a surprisingly small proportion of the US GDP up until very recently?
Trade was certainly very important for the free-trading (more or less) UK. However a lot of the “trade” benefits were financial (eg. through financing trade and insuring it), shipowning and entrepot trade. Thus UK financiers, shipowners and merchants made money out of goods which either never entered the UK or were rapidly re-exported and consumed somewhere else.
The French archbishop Bishop François Fénelon (1651-1715), who wrote his wildly successful “Adventures of Telemachus” (1699) as a textbook for his pupil, the Dauphin of France, extolled the peaceful benefit of free trade, as opposed to war and conquest. Fénelon was writing in the aftermath of the devastatingly violent Thirty Years War and the Wars of Religion to which peaceful trade did appear decidedly preferable. His book was extremely influential and has been called the political template for the eighteenth century enlightenment. Jefferson, for example, owned multiple copies and read and re-read him. Though amazingly dull, Telemachus was still being recommended as a boys’ book at the end of the nineteenth century. I have always wondered, since finding out about Fénelon and his influence, whether Telemachus played a part in the almost religious reverence with which trade and markets have come to be regarded. Fénelon, of course, envisaged trade between individuals and would have condemned predatory capitalism “The true way,” he wrote “is never to aim to gain to much.”
A good article on the rank hypocrisy in manifestly-RIGGED trade deals. But I wonder why he so scornfully lambastes Krugman for saying that ‘wars have been fought “for fun and profit” (his exact. words)’. I understand the anger about wars for ‘fun’, but in the end, he agrees with him, that wars are waged for [power] and PROFIT.
I would add that “fun” might be a term that roughly fits the motivation of much of the warrior class, if one includes the narcotic addiction to industrial-scale murder and torture. Consider Dr. Dick Strangelove, Rummy and his minions, who clearly relish working with the dark side, wielding shock and awe power, and inflicting gloves-off agony. Consider also Obama’s dramatic escalation of the drone assassination program from Bush’s restrained start and his flippant remark, “I’m good at killing people” (sounds like great fun to me). However distasteful, to PK’s “fun and profit”, I would also add religion — anxious for Armageddon.
I agree with you. There are people, and I’ve met them who genuinely enjoy killing and destruction for its own sake. Also, a big motivation for the warrior class (officers that is) is that wars bring promotions and, above all, a reason for being.
I don’t think that WWI and II were fought mainly for profit, btw, but certainly Afghanistan to a degree and Iraq to an even larger degree were fought for profit–there was no sensible strategy in either war, not rational attempt at “winning” just ample opportunity for a large variety of inside the beltway hustlers and intel mercenaries (most of intel and black ops) to steal money from the government (literally).
Looking at the modern definitions of warrior I suppose Bush & the like could be described as belonging to a warrior class. My youthful idea of what that word defines would have been very different & would have included the likes of Crazy Horse, Sugar Ray Leonard, Alexander the great, Nelson & many others who actually were there at the scene of the fight or the battle. The word came from old North French between 1250 – 1300 & I am not sure they would have been happy to see it applied to armchairs.
Although he came slightly later I imagine they would have been happy enough to confer that description on Henry V, who at age 16 at the battle of Shrewsbury received a 5″ deep arrow wound under his eye & next to his nose, which required much digging out – He then spent the 18 years of the rest of his life leading armies from the front.
I remember Bush sneering about Saddam being found in a hole as if he had with his own hands put him there. If Bush were to threaten a modern day version of Henry V – would it not be correct for Henry to enquire ” You & whose army ” ? Hawk is also too good a word for them – scavengers more like.
I think resources is an important element in all of this & the whole thing reminds me of the behaviour of our closest cousins – Chimps, Bonobos & to a lesser extent Baboons. Chimps are a pretty warlike, male dominated aggressive bunch as opposed to Bonobos who in comparison are big into free love, peaceniks living in a matriarchal society. They are virtually physically identical but one big difference is that foraging female chimps have a much tougher time due to competition from Gorillas for food sources on the ground which leads to a very stressed out & desperate female population who tend to fight among themselves. The Bonobos have no such competition which means that they have been able to develop a sisterhood which is powerful enough to control male aggression.
Baboons tend to have a society where the alpha males & their hanger ons ( I remember similar behaviour in the playground ) basically bully all those they consider to be socially inferior. In one case a troop of baboons lived off the refuse from a dump, with the elite getting to be first in line for the finest pickings. This privilege for once backfired resulting in all the major assholes being poisoned. After this event the behaviour of the whole troop soon changed into something more like the Bonobo way of doing things – even to the extent that young aggressive newcomers calmed down & fit in with the new philosophy, within what became a much happier & more successful group.
The nutjobs are not necessary – perhaps in some corners of the cosmos there are thriving civilisations who have evolved from Bonobo type creatures who will survive long term because they perhaps unknowingly discovered this.
Um, as a general principle, allowing trade is good, resources are finite, and that attack on Stiglitz is just bizarre.
To describe NAFTA and the various transocean pacts as trade is to dump milk on a cold rock and call it ice cream. Sure, you can call it that, but what’s the point? When people ask for ice cream, they’re asking for the delicious stuff, not crap that will break your teeth.
I am also in principle a proponent of free trade. But yah, I also see the drawbacks, some of which Will above so eloquently described.
I tend to interpret the arguments in favour of free trade as meaning that trade can be good for all parties, but not as meaning that it inevitably will be good. Put another way, there are lots of prerequisite conditions that have to be met for free trade to be good for everybody, and as Will (comment near the beginning of this thread) points out, there are lots of circumstances where they aren’t.
And, of course, the post itself is all about that.
http://www.zengardner.com/a-call-for-removal-of-the-depopulationists/
This article and Will’s comment pretty much explains for me why Our Great Leader Harper has embarked on a spree of trade pacts with South Korea, the EU (Ireland, Liechtenstein, Norway, Switzerland), Panama, Jordan Columbia, Peru, Honduras, etc.
In preparation for all these trade deals he has gutted environmental protections against pollution of water, air and soil and has allowed the hiring of foreign workers where Canadian workers are supposedly not available. He should be training Canada’s unemployed to work in the jobs available. Part of the reason that Canadians won’t work in these lower paying jobs is that they cannot earn a decent living on the lower wages that foreigners will work for.
I, for one, am sick and tired of picking up items that are made in China, Taiwan, Indonesia, Bangladesh, Pakistan, India, Columbia, and so on. Very few items are made in Canada anymore. I refuse to buy snow peas that come from China. We can grow snow peas here!
End of rant.
I found the article somewhat incoherent. I found the criticism of Stieglitz to be stunningly over-simplified and the criticism of Krugman a bit more sensible. Just a note, the Noble Prize has become completely politicized and means little other than certain people get recognition based on being in favor with some important segments of the power-elites–that’s not to say most of the honorees don’t deserve to be awarded a prizes they get.
I agreed with this post. That “free trade” is malignant. It destroys democracy and benefits only large companies at the expense of people and the planet. The way it is now. So when Xi proferred a new trade agreement with the ASEAN nations – that it would always be OK for them to trade the goods of state owned enterprises whenever it was beneficial to the exporting country – an agreement diametrically opposed to the unilaterally imposed shackles of the TPP, it was a serious shot across the bow to our attempts to turn the world into vassals of private corporations. If trade is good, why isn’t it also good to trade the products of state owned enterprises?
“it is not enough to say we must not wage war, it is necessary to love peace and sacrifice for it”
-Dr. Martin Luther King Jr
Economic oligarchy model turns USA into a “hong kang” mega-mall, where no civic franchise exists apart from each respective “hong” and loyalty and subservience to it. The immigrant working poor have loyalties to their families of origin in (mostly) developing countires but by and large are land owners there, so don’t feel the cultural depravation compared to disenfranchised white male working classes & lower middles.
It is interesting to compare the dynamics to the Shogun commercial houses. There is definitely a gradient of cultural sophistication at play even among the oligarchs. For guan xi, commerce is symptomatic and instrumental of more substantial interpersonal relations, if only a longer time frame for relationship endurance. Wall St and City looks crass and brutish by comparison. Chinese racial memory is more durable too.
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Historical note – The chap who shaped British thinking about economics in early 19th century when we Poms were making our bid for hegemony based on the Royal Navy and control of the gold/silver supply was McCulloch.
A copy of his “Principles of Political Economy” could be found on every international trader’s desk whether he dealt in guns, slaves, opium or even cotton and grain. Whatever the experts say today, I believe McCulloch is the reliable authority for the thought processes of commercial minds at the beginning of the debt-based system.
Good article.
“A very large portion of cross-border trade occurs not between companies, but within them (“intra-firm trade”).” That’s my business observation, and I’ve been struggling to understand it, with little genuine success – except to conclude the importance is really the cross-border cash transaction. Within the corporation, no one cares a hoot what consumers want. It is manipulation of buyers with trumped up evidence that consumers want the product, when in fact they are indifferent or even not at all interested. The product is pushed into a country and then all kinds of structural/environmental/media inventions used to get rid of it. Usually the product is low quality stuff, dressed up and hyped as “premium” (only it isn’t). They sell it by promising buyers higher margins when they re-sell to consumers. It is about picking pockets, giving in return a token product.
Interesting post, but I feel it is seriously flawed in its analysis.
First, as a pet peeve, Ricardo was not mis-understood or mis-applied. He knew exactly what he was doing, posing a business position as an universal principle and stating what is a weak theory as a strong fact. I don’t let him off the hook for putting economics onto the track of talking its book to power.
More importantly, the author downplays the role of governments in an economy. The business sphere and the government sphere are equal but separate. The role of business is to sell things at a profit. The role of governments is to set the standards that businesses must operate to. If one sphere appears to dominate the other, well…, appearances are deceiving. Look behind the curtain and you will find the missing parts.