Dear Rog,
At last a reply to your 29/9 19:00 -0400 posting, at least a
partial one... I want to write sooo much more than I have time
available...
You seem to have taken some offence at my suggestion that
American wealth is due to flocking together AND valuing wealth
over other things. I'm glad you noticed that I'm not suggesting
most of the things that enrage you.
You wrote 30/9 20:23 -0400:
"This 'greed' thing, for example. I suspect it is as much a
matter of resentment and a way to dismiss American success than
it is anything real."
I can assure you that my suggestion (to the extent that it was
serious) was not fuelled by resentment, but rather by shame. The
Netherlands is only a little bit less wealthy than the U.S.A. and
if American wealth is due to the flocking together of people
overvaluing wealth this is also true of Dutch wealth. In the 16th
century Holland was at the frontline of European economic
modernization due to the flocking together of refugees from all
over Europe. The infrastructure that was created then (dykes,
polders, canals etc.) still underpins my wealth; my wealth owes
relatively little to my virtue and I am ashamed that the same
amount of effort yields me so much more wealth than it does for
instance an Afghan peasant.
Dutch wealth in the 16th century (and part of present-day
infrastructure underpinning my wealth) was created at a cost that
was not evenly shared by all who participated in producing it and
was distributed unevenly among them in reward for their efforts.
The city-dwellers, who had the best opportunities to amass
wealth, were industrious and resourceful enough. They invented
more seaworthy trading vessels, ways of using windmills in all
kinds of manufacture and scores of other things. They also highly
valued freedom and creativity. Religious freedom motivated the
flocking in of a lot of refugees and formed the excuse for the 80
years' war in which the "Republic of the Seven United
Netherlands" liberated itself from Spanish rule (and from its tax
burden...). Science flourished.
The wealth of the cities was also underpinned however by
industrious, resourceful, freedom-loving and creative Dutch
peasants. If they were less so, that was mainly due to the fact
that they could (at the point of a musket) only enter the cities
(with their educational opportunities) when they paid an entry
tax. Most of them could only afford to pay that tax if they
produced and delivered goods and services the city-dwellers
needed (for instance dairy products and vegetables). They were
not entirely free to exchange their goods and services for those
of the cities at an exchange rate that would have yielded them
the same wealth for their efforts, for they had to pay the tax.
And there were more "mechanisms" putting peasants at a
disadvantage. Another one worth mentioning was the relative
safety of property within the walls and canals of the cities. The
cities "bought" this safety from the ruling nobility who were
dependent on rich city dwellers for credit, as they were always
short of money to finance their wars, that were increasingly
fought for them by mercenaries. So the pattern that concentrated
wealth in the cities was a pattern that exploited Dutch peasants.
They were more dependent on the markets in the cities to sell
their produce than the cities were on buying from them. For sure
they were better of than peasants without a city nearby, but they
were nevertheless exploited in the sense that their efforts
yielded less wealth than those of city-dwellers.
The concentration of wealth in Dutch cities was also underpinned
by exploitation of people outside Holland. This "international"
exploitation involved the slaves that Dutch trading vessels
transported from Africa to the Americas and the producers of
spices in Dutch East India (now Indonesia). The trade volume
involved in this was relatively small however, so that even with
high profit margins these kinds of trade accounted for only a
small part of the total trading profits. The bulk of Dutch trade
was within Europe: from Southern Europe to the Baltic. Dutch
merchants acted as intermediaries for all kinds of trade, but in
the end they also traded Dutch herring and manufactures against
goods Dutch city dwellers needed: salt, wine, timber, grain etc..
The trade with the Baltic (mainly in grain) was most important.
It was called the "mother trade". International trade in staples
not only made Dutch cities less dependent on their own
countryside (underpinning the exploitation of Dutch peasants). It
also enabled for instance the nobility of Eastern Europe to make
money from renewal of serfdom, coerced cash-crop labor using the
legal system of previous feudalism.
Yes, Eastern European nobles "freely co-operated" with Dutch
traders when they chose to specialise on producing bulk goods for
Western and Southern European markets in return for manufactures
like textiles and wines. Once they had specialised, they had less
alternatives than the Dutch, however (for traders could choose
between different ports to sail to and get the grains and timber
from that were needed in their home cities). They were still
better off, of course, than the nobles further from coast and
rivers, that had no ports nearby to ship the produce of their
estates from. The inland nobles were consequently economically
and politically overshadowed by the nobles with better trading
opportunities. The bulk of the population of Eastern Europe, who
were gradually made into serfs again, were worse off because of
this division of labour between Eastern and Western Europe and
... didn't "freely co-operate" at all.
This is a story of how Dutch wealth was initially created, a
story in which both local and international exploitation have a
essential roles. A similar story can be told for American wealth.
But first some conclusions from my story:
- It is not a story in which some baddies can be blamed for
harming
others, because of their "greed" or otherwise. It is a story of
social interaction in which (as an almost general principle)
small initial differences are stabilized and reinforced.
- From the 16th century on social interaction became more and
more global. Globalization started back then!
- Because of the growing division of labour, mainly
intranational, but international as well, no nation, defining
itself as a "society", can tell less privileged "societies": "we
are wealthy because of our 'free and competitive environment' and
you are not because you are 'centrally commanded, non fragmented,
non competitive'". Globalization has made them both part of the
same society and the different "environments" in different parts
of that society have come into being simultaneously and because
of mutual influence.
- It is a story of ... a social pattern of values unfolding of
which both wealth and poverty are elements. The best way I know
of showing you this pattern is by referring you to the film
"Powaqqatsi", see us.imdb.com/Title?0095895 . Please see it.
I wrote 23/9 23:51 (and you agreed 23/9 23:10 -0400):
"Whenever a society ... develops internal inequality of any kind
... some will feel privileged and others will feel
underprivileged. Regardless of luck, virtue or whatever being at
the root of the inequality, the privileged will develop systems
of ideas to legitimize their privileges and the underprivileged
will develop systems of ideas to legitimize redistribution."
You wrote 24/9 22:38 -0400 (to Davor):
"When it comes to socio-economics I decided to prioritize my
reading based upon current influence in the world and quality of
life in actual practice. Starting with the best (free enterprise
global economics), I have made it as far as 'serfism', and soon
hope to get to the real losers 'hunter gathering', 'nomadic
barbarism', 'Nazism', eventually ... at the bottom of the heap, I
will get to 'Marxism'."
I guess you will have understood that 'Marxism' is such a system
of ideas developed on behalf of the underprivileged to legitimize
redistribution. Did you know that 'serfism' after say 1500 AD is
a system of ideas developed on behalf of the privileged of the
"globalizing" European society, serving not only the interests of
Eastern European nobility, but also those of Dutch merchants and
Western European city dwellers more generally? (Without it, they
would have had their grain less cheaply.) Do you recognize that
'free enterprise global economics' is a system of ideas developed
on behalf of the privileged to legitimize their (my and your)
privileges?
I can recommend to add "mercantilism" to your reading list.
Mainstream history of economic thinking vilifies it as a
primitive fore-runner of economic science. It was practiced and
preached at and around the courts of the main Western European
countries in the Dutch "Golden Age" (the 16th century). As far as
I know there were no Dutch "mercantilists" ...
Some mercantilists were very appropriately called "bullionists".
All held that the wealth of a nation was best served by
preventing outflow and stimulating inflow of precious metals.
Protectionism avant la lettre. "Ship English wool with English
trading vessels even if they are still less modern than Dutch
ones. Tax the imports of cheap Baltic grain, to protect English
grain production. etc." This system of ideas served for instance
France and (especially) England well in their competition with
the Northern Netherlands as the hegemonic power in the new "world
economy" that was created. While the Northern Netherlands fought
their freedom from Spain and created a state that primarily
served merchants' interest (effectively employing a foreign noble
as stadholder, prince William of Orange-Nassau, Orange being a
principality in present-day France and Nassau in present-day
Germany), England was rapidly creating a modern nation-state.
This meant among other things an unified internal market and
(after the Civil War of the 17th century) a compromise between
merchant-class and nobility that effectively created mercantile
capitalism backed by the
military power of the State.
France and other Western European states followed England's lead
and by the end of the 17th century the Netherlands were eclipsed.
In its subsequent competition for hegemony with France England
chose and got a maritime hegemony while France (for the time
being) became the strongest continental European power. England
was able to profit most from the division of labor that now also
encompassed the Americas, became the dominant core power and
started the following phase of globalization.
The rise of industrial capitalism was impossible without the
expansion of the "world economy" to Africa and Asia and the
division of labor between peripheral (colonized) and core
(colonizer) areas: production of raw materials with unfree labor
versus production of industrial products with more skilled and
therefore necessarily more free labor. Only then, in the 19th
century, did "free trade global economics" overcome
"mercantilism", at
first only in England. Being hegemonic, it served them well.
American economists of that time still favored more protectionist
varieties of "classical economics".
Let's draw some more conclusions from my story, also in reply to
some other things you wrote:
You wrote 23/9 12:36 -0400:
"I agree that gross imbalances can foster very unhealthy power
imbalances that can lead to exploitation. ... I don't think the
problem is success, it is failure. My goal ... is to export
recipes for others to create similar wealth, freedom, health etc.
... wealth, health, technology and knowledge are not (primarily)
re-apportioned, they are CREATED. The solution to imbalance is to
show others how to create it. If they choose to not follow the
recipe, ... they better be prepared to live with the results"
And you wrote 23/9 23:10 -0400:
"W: Every center of gravity of fortune in history suppressed
economic advancement in a wide circle around itself by
attracting greedy people and/or their investments and by
creating political structures defending their interests.
R: Again I agree. Exploitation is a universal characteristic ploy
of those in power. It needs to be carefully controlled."
- Indeed wealth and its accessories are at first created in an
innovative way. The new wealth is however immediately used to
defend the advantages and to prevent others from following the
recipe.
- Wealth implies power (in every conceivable form) and more often
than not induces exploitation of differences in power to
unbalance wealth distribution even more.
- Wealth implies status in a globalized social pattern of values
and status is defended.
- A powerful tool for wealth creation is division of labor (both
national and international). Division of labor implies patterns
of dependence, patterns of specialisation that can only be undone
at a cost. Economic specialisation "values" (in a MoQ-sense)
specific cultural and political forms that impede following
"recipes" from elsewhere.
- International exploitation can't be controlled with traditional
(national, political and cultural) means in a "world economy". (A
world economy consists of competing core states that have a
division of labor with peripheral areas.) Even if international
exploitation (compared with national exploitation) can only
siphon off limited amounts of wealth (because of distances and
cultural defenses against strangers based on distrust), the lack
of a global political and cultural system prevents periodic
redistribution. Both the amount of wealth and the inequality of
its distribution in a "world economy" can therefore be much
larger than in a "world empire" (like the Roman or the Chinese
empire) that is not based on division of labor and on
exploitative economic relations but on political and cultural
unification and on tributary relations.
- The roles of core and peripheral areas in a "world economy" do
shift over time however, due to the phases of growth and relative
decline of the "world system" as a whole and the different
demands these phases make on core areas....
The North-eastern American colonies acquired in the 17th and 18th
centuries a semi-peripheral (in-between) status in the English
colonial empire. This was partly because of English dependence on
them for naval supplies (while periodic wars with France and its
allies made dependence on continental European sources less
attractive). Mercantilist policy required that these colonies
maintain an unfavorable balance of direct trade with England:
they had to pay with coin procured elsewhere for part of the
manufactures they needed from England. So England tolerated
that the North-eastern colonies developed (within limits) their
own (exploitative) trade relations with the rest of North-America
and with the Caribean.
They also developed a shipbuilding industry. Mercantilist laws
also required the other American and Caribean colonies to ship
the staples they produced to England with English ships and drove
the Dutch out of North America. North-eastern shipbuilders and
merchants managed to take over a part of the role of the Dutch
before English shipping could meet the full needs of the other
colonies. So "English ships" came to include "colonial American
ships".
With the shipbuilding industry, and its relatively skilled and
high-paid labor force, a profitable market for English
manufactures came into existence, that also helped to resign the
English to the semi-peripheral role of the North-eastern
colonies, for a while ...
Independence was needed to defend this semi-peripheral role when
the English were changing their mind. The Civil War marked the
settlement of the conflicting interests of the semiperipheral
North-east and the peripheral South, which could not co-exist
within one nation.
Naval power (defending and extending trade relations) was the key
to success as a core area (as military power is still). State
power was both essential to build naval power and to unify
internal markets. Unification of internal markets and
wide-ranging trade relations (both as market outlets and raw
material sources) were essential for the Industrial Revolution in
the next era. England was the first to meet these conditions. The
vastly growing tax base resulting from industrialization yielded
England (after unification with Scotland and Wales: Britain) an
undisputed hegemonial status for more than a century. The USA
created a unified nation state too late and -being federal- this
stayed too weak during the 19th century to compete with Britain
as a core power then. Industrialization was hardly hampered by
this however, because in the process the USA had acquired -almost
uniquely in the world- half a continent and vast natural
resources to explore and exploit.
Wealth as a rule is created by co-operation and distributed in
competition.
Communism wrongly assumes that wealth can both be created and
distributed in co-operation. Communist theory does not provide
for enough competition to motivate the effort needed to create
wealth.
"Free enterprise economics" wrongly assumes that anywhere
circumstances can be created in which wealth can be created in
competition while retaining enough co-operation. "Free enterprise
economics" does not take into account the disruptive effect of
competition on the ability to retain enough co-operation in the
areas and among the groups that initially in that competition.
The amount of competition that can easily be accommodated in a
core state with a generally co-operative environment, cannot be
accommodated in a peripheral area. Competition can be
accommodated by the creation of nation-states that redistribute
enough wealth internally top keep geographically included losers
contented and that geographically exclude the other losers.
Wealth is created at a cost.
- Not only a cost in human effort, but also a cost in natural
resources.
- Part of the effort and part of the resources don't contribute
directly to wealth creation. Part of it is invested in "capital"
(means of production, know-how, infrastructure etc.). Another
part produces side-effects (desirable side-effects like social
status and psychological well-being for the producers and
undesirable side-effects like pollution, waste and disruption of
eco-systems and ot the esthetical value fo the environment).
- Wealth creation not only involves costs, it also occupies non
depletable givens like space and (relatively unique) locations.
E.g. a natural harbour or a location favorable for creating an
artificial one can only be utilized by a limited number of
people, depriving others of that opportunity.
- To the extent that natural resources are not automatically
renewed at the same speed of being depleted, some-one has te bear
the burden of renewing them or the loss in value from not
renewing them, it not now, than future generations.
Creation of wealth is -ever since the garden of Eden- essentially
and necessarily a co-operative effort. Since say 1650 it can only
be really understood as a global phenomenon. If wealth falls to
some more than to others no system of national of business
accounting can unravel to what extent this is proportionate to
relative virtue and to what extent this is a result of unequal
and unjust distribution of wealth, effort, resources, capital,
side-effects, opportunities and the burden of renewal of
resources. Any attempt to blame either the winners or the losers
for the obvious imbalance and its negative consequences is
ideological in the usual pejorative sense. Neither ideology
(system of ideas) will change the world to the better, for both
are intimately linked to specific positions in the status quo by
the dominant "grammar of production of meaning" (ideology in the
sense of the critical semiologists) which is -in MoQ-terms- the
dominant intellectual pattern of values, as I explained in my
8/10 23:35 +0200 posting to Sam. Bo's recurrent idea that the MoQ
will change things for the better (21/10 9:16 +0200: "the Western
sphere is the next candidate for a quantum jump into an
easternlike insight and the MoQ is the WAY.") is the same kind of
wishful thinking which Marx and most Marxists displayed by
predicting socialism (and subsequently communism) as an
inevitable sequel to capitalism. The MoQ is at best a basis (as a
"metaphysics" is only a "first theory") for that quantum jump.
So, yes, I agree with you that the "hypothesis that successful
economies arise from the flocking of the greedy" is "kind of
silly, though ... there" is "a bit of truth to it.". It was a
tease meant to show that your idea of 17/9 21:15 -0400 "we are a
very wealthy people .... due to our values of ... freedom and
creativity" is equally silly and only partially truthful. Both
are simplistic SOM-based causal explanations.
You wrote 29/9 19:00 -0400:
"I would rather be at the mercy of free enterprise and various
(though limited) competing options for employment or self
employment than at the mercy of a government bureaucrat forcing
me to take it or leave it at the point of a gun."
I hope it has become clear to you, that neither you nor I have a
choice within the dominant social pattern of value. It just
depends on the historical phase of development this pattern is in
and on the geographical spot we happen to be born on. Both areas
with "free" enterprise and centrally commanded "economies" are
necessary parts of the present world system, or at least were so
until 1989 (the falling of the Berlin wall). Even in that world
system they are not the only alternatives.
Yes, I value my present birth place in a "free" enterprise (core)
area with an acompanying properly functioning state over a birth
place in a "centrally commanded" (semiperipheral) area. But I
would still prefer such a birth place in a "centrally commanded"
area over a birth place in a peripheral area, where the very
weakness of the state (whether it is nominally socialist or
capitalist orientated) puts me "at the mercy of world market
conditions", which I am not now and would not be in a
semiperipheral area either.
With friendly greetings,
Wim
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