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Thinking about humanity and the global economy ..., Late Xmas card from the Vagabond ship ...,
I am not a professional economist – but, I think that I have some common sense.
The world economy has long since been globalised. If one goes back to Columbus' trip to the Americas, there was a process started at that point of global European dominance, bolstered by African slavery, and the exploitation of labour and resources which propelled a massive process of capital accumulation directed into Europe. The period of industralisation which followed, has brought the world to the present juncture, and must likewise be deemed to have been an extension of "globalisation" since (however one views the global economic processes) goods and services have been traded around the world for centuries – and this process could not be termed anything but "globalisation". What distinguishes this modern post-industrialisation period is the degree to which financial services and money, as distinct from trade linked to physical production and a gold standard, has seen financial capital in the West superseding manufacturing (again - at least if one considers mainly the US and Western European countries).As strange as it sounds, protectionism has been central in the process of this so-called "free-trade" movement – if one merely considers the trade arrangements between the wealthy North and the poorer South:-
Again, if you listen to the same economist's ideas, it will give you a different way of seeing how the world economy actually operates:-
By contrast, it is funny to hear the former head of the World Bank, speak about his concerns about poverty:-
My view is that the Washington agenda is to maintain the dollar as world reserve currency while simultaneously contributing more to global economic inequities than to upliftment of poor countries' economies. The Southern borrowers are more useful as purchasers of Northern produce, and are not intended to be competitor manufacturers. However, adverse terms of lending ( consider the monumental failures of the IMF's conditionalities around the world) has nevertheless seen a few countries advance regardless of the financial harness that restrained economic progress. Despite the policies of the IMF and World Bank, countries such as China, India, Brazil and others are now breaking out of the financial bind and are improving their living standards. The obverse of this is that the lower production costs for manufacturing in the Southern hemisphere has been reflected in loss of significant manufacturing in the Northern manufacturing economies. Thus, with the fiscal houses of the North in significant disequilibrium coupled with huge losses of manufacturing jobs, has brought on the global crisis we are witnessing.
N.B. Stiglitz argues around the issue of deficit spending in the US but somehow he is unable strongly to make the most obvious links of opportunity costs operating within the US economy:-
A. More expenditures on the defence budget makes less funds available for domestic expenditures for job creation, social expenditures and infrastructure and the like.
B. He does make some sensible observations on the "banksters" . More money to Wall Street, is a corresponding denial of funds for other productive areas of the economy which monies the central government could have used to stimulate the failing and contracting US economy. In fairness, he speaks of a "misallocation of capital" and that phrase is accurate.
C. Refusal to raise taxes to realistic rates of progressive taxation, while having regressive tax rates, does reflect in the reduction in the funds collected for use by the Federal Government in the US.
In all Stiglitz says, he does not seem at all to view the aggregate human population in the world and likewise the total pool of countries on the planet in anyway inter-related and relevant to global supplies of resources and allocation of global capital and relevance to global labour movements. Of course, he is the Nobel Prize economist and I am not. One question is posed to him that asked – "Who is going to buy the bonds" – and that type of question should have led a truly thoughtful economist from a parochial set of thoughts about the US economy to the US's domestic situation seen as interlinked to the global economic situation. In listening to Stiglitz, I never got the feeling that he was viewing the world economy as truly interlinked, nor appreciating the interactive nature of the world's economy at present, albeit he side-swipes this reality.
What seems to be happening in the global economy , at least to my eyes, is a contest led by the US to deprive China of resources. There were some 35,000 Chinese working in Libya at the time that the US/NATO attacks commenced; likewise China had a presence in Sudan. Is it mere coincidence that the US has targeted those areas to stir unrest and war? We find the same process, again in an oil rich country, with the US policies towards oil rich Iran. Further, there is this hegemonic push by the US, which desperately seeks, through a series of military moves, to keep the US dollar as the world's reserve currency.
If a phrase is to sum things up – it is that a new global economic architecture is urgently needed. Short of that, brace yourself for more intensive militarism as the US struggles to maintain its global economic dominance.
Courtenay Barnett
www.globaljusticeonline.com
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William Markiewicz