Oliver Kamm on "fair trade"
By Andrew Medworth @ 13:55 | Filed under: PoliticsVery interesting article by Oliver Kamm, a left-wing blogger, about Oxfam’s notion of "fair trade". I disagree with the morality behind the entire piece, especially the following two sentences:
Of course laissez-faire is no reputable answer. Oxfam is right to posit an obligation to assist poor coffee farmers.
I think laissez-faire is in fact the only moral answer, and I do not agree with the altruist notion that we have a moral obligation to help the poor (I would argue that the fundamental harmony of human interests under capitalism means that what is good for us is also good for them, provided one accepts a rational standard of the good). However, the piece is interesting in that it demonstrates that the opposition to the notion of "fair trade" does not come only from the free-market right: it also comes from those leftists who are sensible enough to recognise that it won’t help the people they want to help.
The philosophical reason why "fair trade" is not in fact fair, comes from the definition of justice. For me, justice is acting in harmony with reality, making decisions on the basis of what reality and the standard of human life require. Oxfam’s notion of "fair trade" is the opposite of this: they advocate paying prices for coffee which are in direct conflict with supply and demand, and with the competence and efficiency of the coffee producers, i.e. in conflict with reality. Any departure from reality, for any reason whatsoever, has disastrous consequences.
"Fair trade" is generally espoused by those who have some deep-seated need to blame rich countries for the poverty of the Third World. There are indeed policies of our governments that hurt both us and them, the Common Agricultural Policy being a particularly egregious example, and these should be repealed at once, as much for our sake as for theirs. But the real root cause of Third World poverty is the corruption, repression and injustice perpetrated by Third World governments. Ultimately, the only thing that can bring the poor out of poverty is the rational social system — capitalism — both in the poor countries and in the rich ones on whose markets they depend.
May 21st, 2004 at 10:32
You are absolutely right to say that this is about justice, and making decisions on the basis of what reality and the standard of human life require. I thought I would try to find out how fair trade genuinely stacks up against this idea…
On pricing… according to international descriptions on websites, fair trade prices are calculated by taking a range of market and demographic data to calculate roughly what farmers need to be paid to meet the costs of their own production, plus have some kind of sustainable livelihood. For some commodities there are regional variations (not coffee though). But isn’t that close to your definition of justice? Are you making a massive assumption in saying that laissez faire will meet adequate standards of living? Try telling it to dairy farmers in the UK… You also say that fair trade ignores basic supply and demand – but the reality is Fairtrade is a voluntary system not a subsidy – basically farmers only get a Fairtrade price if there is a buyer willing to pay it. The more buyers, the more they can sell. So in fact there does appear to be some kind of correlation between demand and supply built into the system. Thirdly, when I have asked about the risk of too many growers coming into the market to get Fair trade prices, I have learnt that there is a register of farmers for each commodity, and that they close the list for new registrations if it looks like supply is outstripping demand overall – and only reopen it with new demand.
May 22nd, 2004 at 07:01
?Fair trade? (a form of protectionism) is practiced by almost every high-income country in the world presently and long through history, including the United States, Japan and Western Europe, despite your empty assertion that it ?is generally espoused by those who have some deep-seated need to blame rich countries for the poverty of the Third World?, which is laughable [http://www.cato.org/pubs/pas/pa-164.html. The US Congress, for instance, imposes more than 8,000 different taxes on imports, with tariffs as high as 458 percent, while demanding low-income countries to open up their markets to US exports through vehicles like the IMF and World Bank, both of which are under strong US influence (so much for the much touted capitalism it supposedly assumes). Obviously, such protectionist policies employed in high-income countries, although damaging to both parties, hurt the consumers and economies in those countries much less than they hurt the producers and economies in low-income countries since the economies of low-income countries are largely dependent on the primary sectors like agriculture and textiles while economies of high-income countries have a small primary sector and significant concentration in the secondary and tertiary sectors.
I quote from the book Economic Democracy by J.W. Smith, which I would highly recommend for a thorough understanding of the world?s income inequality with an integration of economics, political science, and history (which should inseparable):
?The world looked up to America as a champion of freedom and rights. To admit to a suppression of freedom and rights under the rhetoric of free trade would be to lose the Cold War before it started. America solved its dilemma through demonizing as enemies any who had broken out from under, or were attempting to break out from under, the control of imperial-centers-of-capital. Unequal trades imposed by military power under colonialism were transformed to unequal trades imposed by financial and economic power supported by covert warfare. A few (Korea, Vietnam, Iraq, Yugoslavia) were brought to heel through open warfare.
Given opportunities and rights, people within all societies are equally capable. All wealth is processed from natural resources. With most of the world?s natural resources within their borders, currently destitute regions of the world should be wealthy and strong. But those nations were impoverished by colonialism and they are further impoverished by current structural adjustment policies that lower their education and health levels, limit their access to technology, and force them into unequal trades. Thus resource-wealthy nations remain as impoverished providers of cheap resources and cheap labor to the resource-poor imperial-centers-of-capital.?
?Thirteen years after the American/British war of 1812, Friedrich List arrived in America, became an American citizen, and studied America’s protectionist break for economic freedom. America?s Grand Strategy, designed by America’s founders and promoted through List’s German language newspaper Outlines of Political Economy, provided the foundation for his 1841 protectionist classic, The National System of Political Economy. America took the philosophical lead in protection of industry and markets, from 1816 to 1945 was one of the most protected nations, and virtually every nation which has ever successfully industrialized did so under the protection principals laid down by Friedrich List.
List analyzed how the British had industrialized; their strategy of technological monopolization and control of trade; noticed the collapse of European industry when sales of English products penetrated Europe after Napoleon?s defeat; how America had ignored British free trade propaganda, protected its industry and markets, and became wealthy; and how Britain?s promotion of free trade was a subterfuge to maintain control of markets. He then designed a philosophy under which his beloved native Germany, or any other nation, could industrialize, protect their tender industries and markets, and become powerful.
America?s founding fathers, especially Alexander Hamilton, had made the same analysis. The prosperity Americans enjoyed once they had gained both their political and economic freedom exposes the Grand Strategy of the original promoters of Adam Smith to keep America’s, and the world?s, wealth going to British vaults. America?s treasured independence is little more than breaking the chains of financial dependence. Financial independence depends on gaining control of industrial technology, access to raw material and fuel to process into more industrial tools and useful products, as well as access to markets to sell enough products to pay for necessary imports. Gaining their economic freedom to manufacture and trade is what most colonial nations were unable to do.
Adam Smith?s philosophy, although quite just between equally developed nations and quite valuable as an analysis of trade between nations of equal power, is the industrial world’s self-protective philosophy being forced upon the rest of the world under the guise of it being for their own good. ?
As the above quotes illustrate, every high-income country today did not become ?developed? under laissez faire capitalism. Never did a nation develop under Adam Smith. The high-income countries accorded a central role to the state in economic activity, practiced strong protectionism with subsidies for domestic industries (still provided today as seen in the farm and textile subsidies in the US). The industrialised nations have understood that some forms of protection allows capital to remain within the economy, and hence via a multiplier effect, help enhance the economy. Yet the structural adjustment policies imposed by the IMF and World Bank and other Western-imposed policies (one of the major causes of ?Third World? poverty) do exactly the opposite to the low-income countries.
Your unsubstantiated assertion that the ?real root cause of Third World poverty is the corruption, repression and injustice perpetrated by Third World governments? is not wholly true. It is true that ?corruption, repression and injustice? cause poverty. Yet, consider this question: how did this ?corruption, repression and injustice? come about? The growth of corruption is largely the result of rapid privatisation of public enterprises, along with reforms to downsize and undervalue civil services, pushed on ?developing? countries by the World Bank, IMF and Western governments supporting their transnational corporations [http://www.twnside.org.sg/title/corruption.htm. In addition, it is no secret that the US has, for decades, propped up corrupt, unpopular and repressive Arab regimes, bankrolled brutal military dictatorships and supported dictators like Ferdinand Marcos and Chun Doo-hwan, all the while championing democracy loudly.
The causes of ?Third World? poverty go beyond the ?corruption, repression and injustice perpetrated by Third World governments? you claim, which sounds as though it is a completely self-inflicted disease which serves them right in retrospect. To fully understand the reasons behind poverty in low-income countries, one has to delve deep into the history, politics and philosophy of the past.
I shall an introductory quote from J.W. Smith?s book again:
?To understand how the world?s wealth is controlled and distributed we must study centuries of suppressed history. Eight-hundred years ago the powerful of the city-states of Europe learned to control the resources and markets of the countryside by raiding and destroying others? primitive industrial capital, thus openly monopolizing that capital and establishing and maintaining extreme inequality of pay. This low pay siphoned the wealth of the countryside to the imperial-centers-of-capital (Chapter 1). The powerful had learned to plunder-by-trade and have been refining those skills ever since (Chapters 2 through 9).
Two-hundred years ago, Britain’s William Pitt (1759-1806) realized that Adam Smith?s Wealth of Nations (if interpreted carefully and selectively), would be a great philosophy under which England could consolidate those unequal trades into customary practice and maintain dominance in world trade. As a cover under which England could maintain that dominance, British government, British intelligence, and British industry supported lecturers throughout the world promoting their interpretation of Adam Smith?s philosophy. That imposed ?framework of orientation? successfully protected powerful nations’ access to resources and markets and, for the same purpose, continues as the world?s dominant philosophy today.
Every nation that successfully developed did so following the protectionist philosophy of German economist and naturalized American citizen Friedrich List (1789-1846) even as those same nations were mouthing the free-trade philosophy of Adam Smith. This includes Britain, America, Germany, Japan, the Asian tigers that were so essential for economically and philosophically containing the post WWII rapid expansion of socialism, and now China.
Friedrich List observed the collapse of European industry when Napoleon?s continental system was dismantled after his defeat at Waterloo in 1815. From those observations, and after watching firsthand America?s rapid development through ignoring Britain?s imposition of Adam Smith?s philosophy, List published his protectionist classic, The National System of Political Economy, in 1841.
When British power was shattered by World Wars I and II, America was the only remaining wealthy imperial nation. To protect herself and her historic allies, and against the interests of the economic liberation of the colonial world from the weakened imperial powers, America took over the job of maintaining the imposition of the neo-mercantilist/neo-liberal interpretation of Adam Smith upon the world (Chapters 6 through 11).?
May 24th, 2004 at 09:23
Barbara: you make some interesting points which I hope to address when I have time.
Cindy: did you even read the article I linked to? We aren’t talking about fair trade in the sense of protectionism, which is generally how the term is understood in America. Your accusation that I believe that Third World poverty "serves them right" is totally baseless and unfair: it’s the governments of poor countries who are to blame, not their people.
Of course I disagree with the way the US and other countries have propped up corrupt regimes over the years. I also disagree with your assertion that corruption comes from privatisation. Corruption is only possible when governments have power which they should not have, and are not as open as they should be, and thus can be persuaded to use their power unjustly. The only solution to corruption is to place a firm leash on the power of the state.
The assertion that poor countries were impoverished by colonialism is also very suspect. Naturally, I do not condone military force for any reason except self-defence, but most colonised countries actually benefitted a great deal from their contact with the West. The former colonies have generally gone one of two ways: either they have taken on board the lessons they learned while colonised and therefore succeeded (e.g. Hong Kong) or they have deliberately gone the other way (e.g. Zimbabwe).
With regard to your comments about protectionism, I would contend that the rich countries of the world have grown that way despite, not because of, protectionism. The source of wealth is the mind, and wealth is therefore produced best when the mind is left unshackled.
You are right, however, to imply that the capitalism I advocate is more a possible future system than one that exists now, although it is my understanding that America in the 18th and 19th centuries got quite close.
May 25th, 2004 at 09:06
I have indeed read the article, Andrew. We are, in fact, talking about fair trade in the same sense as that article I linked earlier, which has a direct reference to the United States, because essentially, both cases are practices of protectionism. This means that instead of selling goods and services at the equilibrium price as according to the price mechanism, they are sold at adjusted prices which in both cases are higher than the equilibrium price which derives from the forces of overall demand and supply. Notice that it is stated in the article (which you linked to) that ?coffee growers will win three times? and that ?they?ll be selling their coffee at a fair trade price?. The only difference is that the adjusted prices are established by different authorities, which does not make any difference to my reference made to the US because prices are still being adjusted above the equilibrium price. Therefore, contrary to your belief, there is no difference in the way the term is understood in the US and the fair trade of coffee you were referring to and therefore, it is not wrong at all to draw a parallel with the fair trade in the US when they are the same thing anyway. Indeed, we can examine how ?fair? this price setting is (and this requires a firm grasp of the economics underlying it before even evaluating there is justice) and we can go on to discuss and compare both cases of ?fair trade?, but first, we have to understand the nature of the current ?free? trade movement we have today, which is undoubtedly unfair.
The current ?free? trade instituted by the IMF/World Bank/GATT/NAFTA/WTO/MAI/GATS/ FTAA /military colossus is unequal because workers are not paid according to their productivity. The secret to siphoning away others? wealth is the low-paid labour in the poor nations and high profits and high wages in the rich societies that have dominated global trade for centuries. It is calculated that through an imbalance of currency values, equally-productive labour in the world’s defeated, dependent nations were paid 20% that of the developed world, a 5-to-1 differential. Later currency collapses in the developing world may have doubled that differential to 10-to-1. The result of this unequally-paid but equally-productive labour is a wealth accumulation advantage over the underpaid nations which grows exponential. Moreover, the low level of wages is intimately linked not to low productivity of labour-time, as classical economic theory would suggest, but to the undervalued exchange rates and the workings of the international monetary system. I am unable to explain the whole economics behind this here, but J.W. Smith?s book explains this well at the start of his book, Economic Democracy. I strongly urge all to read this book, which is available free here: http://www.ied.info/books/ed/
I completely agree with you that the accusation that you believe that ?Third World poverty serves them right? is totally baseless and unfair in the sense that it is ?governments of poor countries who are to blame, not their people?. However, I did not make such an accusation in the first place! I was referring to your identification that the ?real root cause of Third World poverty is the corruption, repression and injustice perpetrated by Third World governments? as having the implication that the cause of poverty lies wholly with the low-income countries themselves, as in being completely self-created and self-perpetuated, which in itself, shows to be fallacious since many of these low-income countries were in the past colonised, controlled and governed politically and economically by their colonisers, which were foreign (not ?Third World? governments). To talk about poverty being perpetrated by governments only after these countries were freed of colonialism is to completely obliterate from consideration the role in which colonialism plays in every aspect of life in these low-income countries for more than 150 years, less than 40 years ago.
If you (?of course?) disagree with the way the US and other countries have propped up corrupt regimes in the past and assert that corruption creates poverty, then you must acknowledge that such practices of these countries lead to poverty in the low-income countries. In that case, how can the ?real root cause? of poverty be due to ?corruption, repression and injustice perpetrated by Third World governments?? Surely this is one of the many causes of poverty, but the ?real root cause?? So the foreign governments had nothing to do with it?
Did you even read the article on corruption I linked to too? Lack of transparency of government dealings makes possible corruption, but it is not ?only possible?. One cannot clap with a single hand. Similarly, one cannot engage in bribery without funds (from a supplier) to bribe in the first place, which is what multinational companies do as a result of privatisation and reforms as stated in the article: ?Western businesses pay bribes to the tune of $80 billion a year – roughly the amount that the United Nations believes is needed to eradicate global poverty?.
I almost had yet another severe heart attack after reading your third paragraph. I seriously suggest that you find out more about colonialism, in particular British colonialism, before you make such wholly unfounded remarks. If anything, it was the colonisers who benefited enormously from the over 150 years of ?contact? (which is an extremely mild word) with the colonies. I also suggest that you refrain from using the phrase ?the West? as a collective in this case without defining it properly since certain countries in Europe were not colonisers in the past or had ?contact? with colonised countries. Such an implication might be highly offending, as I would be in my view if I belonged to one of those countries. Logically speaking, if colonialism was such a beneficial thing for the colonised countries, after more than 150 years of so very fortunately and gratefully experiencing such a beneficial thing, surely all those colonised countries would have prospered like mad. Strangely though, I don?t seem to have witnessed anything like that. I challenge you to state specifically all the so-called ?lessons? that all the colonised countries learnt while colonised which could have allowed them to succeed. Forcing tax collection from the poorest Iraqis to achieve greater wealth I suppose. Using air attacks to teach obedience I suppose. Importing indentured labourers after slavery was abolished I suppose. Looting wealth from people and letting the Indians die from famine and plague I suppose. Use of violence like striking Hong Kong coolies with canes and umbrellas I suppose. I am sure the former colonies would now be interested to learn from you that colonialism was all only supposed to be a ?free? learning experience bestowed by their most wonderful masters descended from heaven. Suffice to say, most Singaporeans would be deeply insulted to be told that the prosperity they enjoy today after 30 years of nation-building was all due to the effort of the British under colonialism. Worse, the older generations involved in the government, upon learning this revelation, would probably die in fits after struggling so hard to gain independence from dreadful British colonial rule in the past. When all fails, simple common sense tells you that if British colonialism were such a beneficial thing, they and the people like the famous Indian, Gandhi would never dream of toppling it and the countless other colonies like Uganda, Nigeria and Sierra Leone would be times richer than now. In any case, I can bet on my life that British colonialism alone would never produce a Singapore like today, unless the British deliberately made it so, like Hong Kong, which if so, would still be an incomparable feat considering the nature of our circumstances then (no natural resources, racial riots, poor infrastructure, undeveloped economy).
(Hong Kong grew prosperous, in capitalist terms, as a banking center — not because of any fictitious democratic institutions but because, as a direct colony, it was a secure base of British capitalism. All the wealth of British imperialism in Asia moved through this city because British administrators totally controlled the whole political and economic structure. After the 1949 Chinese Revolution broke the imperialist powers’ hold on mainland China, Hong Kong’s importance grew. Thousands of corporations that extract profits from the low wages and super-exploitation of workers throughout Asia were registered in Hong Kong. This was a way to take control away from the newly emerging anti-colonial nationalist governments from India to Malaysia, Thailand and Burma where capitalist relations were not yet stabilized. Hong Kong was a safe vault to stash the imperialists’ stolen wealth.)
To say that countries like Zimbabwe have ?deliberately gone the other way? is the most ridiculous and offending statement anyone can make. I am sure Hong Kong was the only deliberate case, if you want to talk about hidden agendas. I challenge you to name me another ex-British-colony today in the continents of Asia and Africa besides Singapore and Hong Kong which is as similarly successful in terms of national income, quality of life and income inequality gap. The British Empire was the largest of all others, yet it produced only one miserable successful colony by itself in all of Asia and Africa. What kind of valuable ?lessons? could the British colonials have consciously intended and sought to provide? How could it be that after 150 years of wonderful colonialism and ?lessons? (well enough time to develop), these African and Asian ex-colonies were still mired in poverty? Obviously, the British colonials never intended to provide or provided those dubious ?lessons? you claimed. If they had, the world would indeed have changed like never before.
If the ?assertion that poor countries were impoverished by colonialism? is suspect, then the poor countries should have been grown richer during the 150 years of nothing but colonial rule. I must admit that however hard I try, I am unable to find a single shred evidence of this, except for that one miserable case of Hong Kong which was meant for the purpose of stashing the British Empire?s stolen wealth after the other former colonies struggled and achieved independence from British colonial rule around the 1960s.
Some self-evident quotes to demonstrate that the assertion that poor countries were impoverished by colonialism has no reason to be suspect and your statement that ?most colonised countries actually benefitted a great deal from their contact with the West? is utterly false beyond redemption:
“Napoleon knew well that any nation would be impoverished if their industry and trade were dominated by another: ?Under the existing circumstances … any state which adopted the principles of free trade must come to the ground … [and] a nation which combines in itself the power of manufacturers with that of agriculture is an immeasurably more perfect and more wealthy nation than a purely agriculture one.”
“Adam Smith pointed out that, ?England had founded a great empire for the sole purpose of raising up a people of customers…. The maintenance of this monopoly has hitherto been the principal, or more properly perhaps the sole end and purpose of the dominion which Great Britain assumes over her colonies.? Historian Barbara Tuchman concurs:
Trade was felt to be the bloodstream of British prosperity. To an island nation it represented the wealth of the world, the factor that made the difference between rich and poor nations. The economic philosophy of the time (later to be termed mercantilism) held that the colonial role in trade was to serve as the source of raw materials and the market for British manufacture, and never to usurp the manufacturing function.”
“With Europe?s discovery of the sea route to the East and America, the maximum control of natural resources as well as markets for manufactured products could be attained through gaining title to lands of easily conquerable people. The race was on to colonize the world. ?By 1900 Great Britain had grabbed 4,500,000 square miles…. France had gobbled up 3,500,000; Germany, 1,000,000; Belgium 900,000; Russia, 500,000; Italy, 185,000; and the United States, 125,000.?
“Forcing the natives to work for nothing while providing their own subsistence created enormous profits. Thus Indians were enslaved in Spanish mines and Africans were enslaved to replace the Indians when over 95% of their population died off under such oppression. Wealth on the periphery?American, African, and Asian colonies?was claimed by Europe in trade for trinkets, knives and guns.”
“In 1897, British statesman Neville Chamberlain wrote a Colonial Office report: ?During the present century … you will find that every war, great or small, in which we have engaged, has had at bottom a colonial interest, that is to say, either of a colony or else of a great dependency like India.? The impoverishment of India is a classic example of plunder-by-trade backed by military might. Before being subdued, colonized, and enforced to become dependent upon British industry:
India was relatively advanced economically. Its methods of production and its industrial and commercial organization could definitely be compared with those prevailing in Western Europe. In fact, India had been manufacturing and exporting the finest muslins and luxurious fabrics since the time when most western Europeans were backward primitive peoples.
Hand weaving was tedious and paid little, so at first the British purchased much of their cloth from India. India had no need or desire for British products, so imports had to be paid for with gold. However, Britain did not make the same mistake as Spain; Indian textiles were embargoed and British cloth was produced with the evolving technology of weaving machinery. After India was conquered, its import and export policies were controlled by Britain, which not only banned Indian textiles from British markets but also taxed them to a disadvantage within India so that British cloth dominated the Indian market. India?s internal production of cloth was not only excluded from their own internal market so as to be undersold by Britain?s inferior cloth, Britain excluded those beautiful and much higher quality fabrics from England while marketing them all over Europe. Controlling India and the seas ?entitled? British merchants to buy for a pittance and sell at a high price.”
“Through the forced sales of British products and the simultaneous embargoing of, or high tariffs on, the cheaper yet higher quality Indian cloths, India?s wealth started flowing toward Britain. ?It was [only] by destroying [the] Indian textile industry that [the British textile industry of] Lancaster ever came up at all.? Other Indian industries were similarly devastated.”
“One exceptionally rich sector of India was East Bengal (Bangladesh). When the British first arrived,
[they] found a thriving industry and a prosperous agriculture. It was, in the optimistic words of one Englishman, ?a wonderful land, whose richness and abundance neither war, pestilence, nor oppression could destroy.? But by 1947, when the sun finally set on the British Empire in India, Eastern Bengal had been reduced to an agricultural hinterland. In the words of an English merchant, ?Various and innumerable are the methods of oppressing the poor weavers … such as by fines, imprisonment, floggings, forcing bonds from them, etc.? By means of every conceivable form of roguery, the company?s merchants acquired the weaver?s cloth for a fraction of its value.
Later, still under British control and ignoring the fact that the East Bengalis were being impoverished through dispossession of the land which produced their food and cotton, Bengal produced raw materials (indigo and jute) for world commerce, and poppies for the large, externally-imposed, Chinese opium market. As Adam Smith commented, money was lent to farmers ?at forty, fifty, and sixty percent? and this, and other profits of trade, would confiscate all wealth except that paid in wages. Of course, Bengali labor was paid almost nothing so Bengal?s wealth was rapidly transferred to Britain. Foreign control enforcing dependency upon British industry and siphoning wealth away through unequal trades in everyday commerce devastated the balanced and prosperous Bengali economy and created the extreme poverty of Bangladesh today. ?[O]nce it was the center of the finest textile manufactures in the world … [with] a third of its people … employed in non-agricultural occupations…. Today 90 percent of its workers are in agriculture or unemployed.? The destruction of the once thriving economy of East Bengal (Bangladesh) was so thorough that even the long-staple, finely textured local cotton became extinct.”
“Anyone who saw the movie Gandhi will remember that Indian citizens were even denied the right to collect salt from the ocean and were required by law to buy their salt and other everyday staples from British monopolies. Such enforced dependencies were little more than a tax upon defeated societies under the guise of production and distribution. Much work was being done, but it could have been done just as well or better by those being dispossessed of their land, denied the right to produce for themselves, and overcharged for monopolized products.”
“In 1800, the per-capita standard of living in China exceeded that of Europe. Like India, China did not need or want Britain?s products. However, Britain consumed large quantities of Chinese tea and, to avoid the loss of Britain?s gold, it was imperative that something else be traded. Though it was done covertly and not acknowledged by the British government, it became official policy for British merchants to peddle opium to China. ?Opium [sold to China] was no hole-in-the-corner petty smuggling trade but probably the largest commerce of the time in any single commodity.? This injustice was challenged by Chinese authorities (the Boxer Rebellion) but their attempt to maintain sovereignty was put down by a combined force of 20,000 British, French, Japanese, German, and United States troops (5,000 were Americans) led by a German general. It was a blatant attempt to carve up China between those imperial-centers-of-capital.
With the sales of opium exceeding the purchases of tea, Britain lost neither gold nor currency. Their capital and labor costs involved only an internal circulation of money. No wealth was lost to another society, which is the essence of a successful mercantilist policy. This appears productive only because the wealth gained or protected by Britain was considered; the much greater losses suffered by China, India, and much of the world were conveniently left uncalculated.”
May 25th, 2004 at 22:06
Zheng Xinyi Cindy says she would ‘highly recommend’ J.W. Smith?s ‘Economic Democracy’ for a ‘thorough understanding’ of the world?s income inequality with an integration of economics, political science, and history.
But this gem from the first paragraph sums up Smith?s fundamental economic, political, and philosophical ignorance: ?America solved its dilemma through demonizing as enemies any who had broken out from under, or were attempting to break out from under, the control of imperial-centers-of-capital.?
He must be referring to Canada, Australia and New Zealand.
You would have thought that it might have dawned on Smith that the massive capital outflows from the UK throughout the early, middle and late period of the British Empire may have given grounds to hedge to such lofty rhetoric, especially since the essence of the period, thanks to the discoveries of the British Classical economists was NOT the political management of capital but, ON THE CONTRARY, the UNPRECEDENTED removal of restrictions on capital flows, but I suppose it?s par for the course if you consider a proto-Nazi like Friedrich List to be a worthy socio-economic analyst.
Pitiful.
May 27th, 2004 at 10:32
John Webb:
Regarding this sentence (?America solved its dilemma through demonizing as enemies any who had broken out from under, or were attempting to break out from under, the control of imperial-centers-of-capital.?) which you pointed out, the ?enemies? he is referring to are not Canada, Australia and New Zealand, although I think you may have thought so because besides the US, Canada, Australia and New Zealand were the only former colonies to eventually gain both their political and economic freedoms from the British. The term ?imperial-centers-of-capital? Smith uses does not refer to Britain only during that period of time in which the US was able to break free from Britain?s monopolisation of finance capital and after World War II, was the only intact center-of-capital. In this case, the ?enemies? the author is referring to are countries like Vietnam, Cuba, Iran, Iraq, Libya and Yugoslavia.
I am not sure what your purpose of referring to Britain?s capital outflows is, but I found some related information on this. For instance, it is said that:
?Increasingly during the last decades of the 19th century, English capital flowed into select capital-deficit countries such as Argentina, in order to finance, build, then run their national rail and transport infrastructure, a role usually encouraged by generous concessions from the host government. English capital also went to develop the local country’s steamship lines and their ports. So were the economies of Argentina and other English “client states” effectively made into economic captives, with terms of trade and finance dictated from the City of London, by British merchant houses and trade finance banks. These client states of England thereby found that they had surrendered control over their essential economic sovereignty far more efficiently than if British troops had occupied Buenos Aires to enforce tax collection in support of the British Empire.?
From: http://users.cyberone.com.au/myers/engdahl.html
If you wish to refute any of Smith?s statements after reading his book, I most certainly welcome and wish to hear it.
Friedrich List may be a proto-Nazi but I do not see why this should be a justified basis for judging the soundness of a person?s philosophy and analysis. Do you know that Nazi scientists proved smoking causes cancer over 20 years before anyone else thought about it? Nazism is indeed vile, but what has this to do with a person?s ability to think and analyse? Does this mean that a person who smokes despite being aware of the health consequences must hold wrong notions on every intellectual issue? It would be terrible if we were to base our judgements in such a manner. Since almost everyone has flaws of a certain kind, going by your method of judgement, this means that almost nobody can be right on anything. How are we going to continue living like that?! We might as well all go off and commit suicide.
May 27th, 2004 at 19:17
Zheng Xinyi Cindy says: ?Friedrich List may be a proto-Nazi but I do not see why this should be a justified basis for judging the soundness of a person?s philosophy and analysis.?
The reason that the nationalism of Friedrich List IS the basis for judging the soundness of his philosophy and analysis, is because List?s nationalism is not some accident of custom, or a merely incidental cultural preference, but a fundamental departure from the truth proceeding from the assumption of a false philosophical principle: ?the social subjective.? The social subjective theory of value may be very popular and it may seem to ?explain? a loose hotch-potch of events taken out of context and viewed in isolation, but its inability to explain obvious exceptions and account for broader and more pertinent effects, reveals the analysis to be what it is ? fundamentally mistaken.
It is no surprise that J.W.Smith should have recourse to such risible ?arguments.? What IS a surprise is to hear such ?arguments? repeated today even though they have been refuted, in principle, by Ayn Rand in ?Capitalism: the Unknown Ideal? [1966] ?The Virtue of Selfishness? [1964] and in ?Atlas Shrugged? which was published nearly 50 years ago.
May 28th, 2004 at 04:29
John Webb:
I have a few queries. How did you come to the conclusion that List?s nationalism is ?not some accident of custom?? How did you come to the conclusion that List?s nationalism is not ?merely incidental cultural preference?? How did you come to the conclusion that List?s nationalism is ?a fundamental departure from the truth proceeding from the assumption of a false philosophical principle: ?the social subjective.??? What has List?s nationalism and all your above conclusions to do with whether the following statements taken from Smith?s book are true?
?America took the philosophical lead in protection of industry and markets, from 1816 to 1945 was one of the most protected nations, and virtually every nation which has ever successfully industrialized did so under the protection principals laid down by Friedrich List. List analyzed how the British had industrialized; their strategy of technological monopolization and control of trade; noticed the collapse of European industry when sales of English products penetrated Europe after Napoleon?s defeat; how America had ignored British free trade propaganda, protected its industry and markets, and became wealthy; and how Britain?s promotion of free trade was a subterfuge to maintain control of markets. He then designed a philosophy under which his beloved native Germany, or any other nation, could industrialize, protect their tender industries and markets, and become powerful.?
Exactly and specifically which ?risible arguments? are you referring to? An argument is a support and substantiation for an assertion. Which assertion(s) are you referring to? Exactly which arguments by Ayn Rand refutes ?in principle? the assertion(s) and arguments you are referring to (which I have no idea which)? How do you know that Smith does not advocate capitalism or what Smith advocates without reading his book?
May 28th, 2004 at 21:15
How did I come to my conclusions about List?s nationalism and Smith?s book?
If you were familiar with Houston Stewart Chamberlain, Alfred Rosenberg, Count de Gobineau, Vacher de Lepouge, Schopenhauer, Schleiermacher, Hegel, Kant and other Franco-German intellectuals dating all the way back to Luther [or even Meister Eckhart] you would appreciate that Smith and List fall into the same distinct school of socio-economic collectivism whose intellectual calibre is akin to the archaeological theories of Erik von Daniken.
Free trade is not ‘propaganda’ it is part of the science of economics as you would appreciate if you understood the Gold Standard, the law of comparative advantage, the tendency to uniformity of profit per unit of capital invested, marginal utility, the wages-fund doctrine, the laws of supply and demand, the error of price controls, the futility of protectionism, the myth of market ‘monopoly,’ etc. etc. etc..
May 28th, 2004 at 23:43
John Webb:
I only know that you have not answered any of my questions. Enough said.
If the “risible arguments” you were talking about refer only to the ‘argument’ that free trade is propaganda, there is nothing more I can say. What you have done is to simply pluck out words out of context from a paragraph which I quoted earlier and brilliantly form a thesis statement which Smith does not even assert.