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Apologies to the list. I should have noted that
my very recent posting on the subject was in response to a posting by Victor
Milne.
I want to add a little to my comments on one of the
issues he raised: that of governments being sovereign over international
capital. In my response I used the example of Jamaica, which started out
with such high hopes when it gained independence from Britain in 1962 and is now
seriously fraying at the edges if not yet disintegrating, and which is
enormously dependent on international capital. It is in no position to
dictate. It can only negotiate from a relatively weak position. I
would imagine that many third world countries are in this
situation.
To what extent can the present predicament be laid at
the doorstep of international capital? Jamaica is a small island, about
the size of Canada's tiny perfect province, Prince Edward Island. Yet its
resources must somehow support 2.5 million people. Most of these people
live in poverty and many in dreadful poverty, and the indigenous tax base on
which government can draw is therefore very limited. It extracts as much
as it can with a sales tax, adding to the burden the poor must carry. As I
mentioned in my previous posting, revenues from bauxite and tourism are very
important, indeed critical, to government operations. One of Michael
Manley's achievements was to extract higher revenues from the bauxite industry,
which probably needed access to Jamaica's reserves at the time. Whether it
still needs such access is less clear. Getting tough with bauxite could
simply drive the industry away. Tourism is already being driven away by
reports of growing violence. Without the revenues these industries
produce, the position of the Jamaican government is probably hopeless.
International capital is aware of this, and behaves like capital anywhere.
It tries to be a "good corporate citizen", but its ultimate
responsibility is to its shareholders.
There is a third element to the Jamaican economy, one
that is difficult to quantify and impossible to control. Jamaica is now
recognized as a major drug repackaging and transshipment point. Drugs come
in from South America, are parceled up somewhere in the slums of Kingston
(probably) and sent out again. Money is being made. The vast
shanty-towns of Kingston may not be as poor as they seem on first
impression. Their organization is known to be mafia-like, with gangs and
dons and connections going right up to the top of the leading political
parties. International capital must of course play a role in the drug
trade, but it is not the capital of the visible economy. Rather, like the
drug trade itself, it is underground capital, uncontrollable and
untaxable.
When I was in Russia a couple of years ago, I ran into
a similar situation. There a distinction is made between the formal
economy and the "shadow economy". The government can exercise
control over the former but not the latter. And again, those who operate
in the shadows have connections to the highest political levels.
All of this is by way of addressing the issue of just how, in much of the
world, governments can be "sovereign". It would be nice if they
were, but what does "sovereignty" really mean in situations like the
above?
Ed Weick
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