Re: [Futurework] Hitherto, a Ricardian free trader

[Ed Weick]

Interesting way of putting it, Ray.  At the urging of a friend of mine, a computer programmer, I watched the movie "Matrix" the other day.  I still don't understand what it was about, but one of the bad guys in it described humanity as a destructive virus intent on consuming the earth.  (You could tell he was a bad guy because he wore dark, dark shades and looked very thin in his black suit.)   Well, perhaps he has a point.  A book I'm reading, Samantha Power's "A Problem from Hell", deals with the various genocides of recent history, and most certainly does not make us look very good.   Some economists, such as Herman Daly, have tried very hard to get their brethern of the dismal science and their political masters to recognize "externalities" in the national accounting process.  While everybody has nodded "Yes, yes, we should do that" very little that is practical has been done.  To give you an idea of what Daly and company are after, I'll quote from a piece of work I did last year:   Alternative Accounting The usual measure for GDP consists of two elements. One is product that must be used to replace or replenish machines and equipment that have been used to produce the national product, or “depreciation”. When the latter is subtracted from national product one is left with the other element, the product that is available for the current purposes of investment and consumption. This is termed “Net Domestic Product (NDP)”. The problem, however, according to proponents of full-cost accounting, is that depreciation estimates and other “costs”, as conventionally measured by national accountants, are understated and hence NDP is overstated, giving a false impression of available product. To move to a full-cost accounting system, two adjustments would have to be made. One is simply to extend the principle of depreciation to cover consumption of natural capital stocks depleted through production. The other is to subtract expenditures necessary to defend society from the unwanted side effects of production and consumption. The concept of consuming natural capital is easily understood, especially in an economy dependent on non-renewable resources, but even in one dependent on renewable resources that are over-exploited, such as cod in Newfoundland. Once the resources are gone, they are gone. They cannot be replaced, and if enough of them are used too quickly, an economic decline is unavoidable. Defensive expenditures, on the other hand, are essentially unwanted by-products of the production and use of national product. They can include the over-exploitation of environmental resources in the general course of economic growth, the costs associated with urbanization (pollution, crowding, commuting etc.), and the costs of unhealthy consumption and behavioral patterns. Instances of putting full cost accounting into practice are rare. Statistics Canada has worked on the development of a new component of the national accounts that will integrate environmental factors into the traditional Canadian System of National Accounts. These new accounts would provide data on the physical quantities and monetary values of Canada's natural resource stocks; on the depletion and uses of these resources; on waste emissions to the environment; and on environmental protection expenditures. Hope this helps and makes us look a little less like viruses, at least intellectually.   Ed Weick     > Coming from an agricultural and cultural background rather than an > industrial one, it has always struck me that the models that you described > seem to be within the mega system rather than the system itself.    One of > the areas that I have trained in is Kinesics.   In Kinesiology we work for > the health of the physical system from a holistic perspective.    Systems > within a body or megasystem, that take too much energy or that throw off the > whole system are known as cancers.  Cancers may be perfectly healthy systems > in their own right.    They may also thrive as long as the mega-system > survives but ultimately they cause a decline in the whole. > > I have argued over the years, that the economic systems that you and others > have explained are systems that do not contribute to the health of the whole > human and environmental system.     That although they have their own logic, > just as does a cancer,  they ultimately contribute to the decline of the > whole system of the earth.   America is built upon one such system as was > Imperialism and Communism.   Ultimately they were and are doomed to fail > because they cannot answer the questions that place humanity within the > system of the earth and all of the other mini-systems that make up the > whole.   Any cultural system that is unable to come to grips with limits and > find other ways to expand its human horizons without eating itself, is > doomed almost from the beginning. > > I have argued from my beginnings on this list that the psycho/economic roots > of industrialism and what that means as work, in the Western sense,  was > incomplete, bordered on failure and demanded a serious look by serious > minds.   It seems you now have begun to question the logic that you have > espoused in the past.   I congratulate you on that and encourage the > continued exploration of such with your considerable intellect.    As such I > hold great optimism that we will have some very good posts from Bath in the > future. > > Best to you and yours and may your voice be strong. > > Ray Evans Harrell > > > ----- Original Message ----- > From: "Keith Hudson" <[EMAIL PROTECTED]> > To: <[EMAIL PROTECTED]> > Sent: Sunday, August 03, 2003 4:01 AM > Subject: [Futurework] Hitherto, a Ricardian free trader > > > > Until fairly recently I was an out-and-out free trader in the Ricardian, > > 19th century tradition. At the drop of a hat I could write an essay > > excoriating the present-day antics of large corporations in seeking to > > consolidate intellectual copyright and outlaw plagiarism by  less > developed > > countries trying to lift themselves up by their bootstraps. Similarly, I > > would condemn those politicians, totally untutored in economics (but > > usually receiving large backhanders from businesmen), who would seek to > > protect their home industries from more efficient industries from abroad > > for apparently patriotic reasons even though import restrictions would > > impose higher consumer prices on the mass of their populations. > > > > By way of example, I would have pointed to15th century western Europe, > > wallowing in recession, still recovering from a century or more of > warfare, > > which had destroyed the slender trade routes that it had with the > > Mediterranean, namely the Champagne Fairs which stretched across France to > > Genoa and the other prosperous cities of Italy. These, in turn, linked to > > China via the Great Silk Route. But after these routes were cut off, the > > individual countries, principalities and the independent city-states of > > western Europe had to manage on their own -- and they weren't doing very > > well. Whatever trade existed in western Europe at that time largely > > consisted of food supplies sent into the cities in exchange for > small-scale > > craft goods to the countryside and, whenever bad weather or drought > > intervened, people would starve on a massive scale or fall prey to > disease. > > The Black Death didn't happen once -- it would reappear decade after > decade > > whenever the vitality of the population was at a low ebb. In short, their > > economic machine was grinding down -- with many other consequences. > > > > While poor old western Europe was in the pits, India, China and the > Islamic > > Empire were doing very well, thank you very much. The main thing that > > finally rescued Europe was the weakened state of the Roman Catholic > Church. > > For centuries the Church had railed against trade because it saw rich > > merchants and bankers as rivals to their own money-making powers. > > Encyclical after encyclical had gone out from the popes trying to ban free > > prices in the market place and also the charging of interest (or usury, as > > it was called then). However, by the 15th century, the Church was losing > > out, mainly because of the intellectual quality of its own scholastics in > > the great universities, such as Bologna and Salamanca, which had been > > established a few centuries beforehand and were beginning to be > > independent. Everytime the Church went backwards in condemning trade and > > usury, their own scholastics in the universities managed to move the > > discussion forward again. Nevertheless, the popes still had tremendous > > power and, in 1479 and 1494, gave gracious permission to Spain and > Portugal > > to start trading again, this time by ship in order to bypass landlocked > > Europe. Portugal, in particular, was in desperate straits and needed the > > gold that it thought lay in Africa, and the spices that they knew lay in > > Asia. The Portugese were able to do so because, by then, their fishermen > > had developed their coast-hugging boats into much more versatile > > ocean-going vessels suitable for long-distance cod fishing which were able > > to tack into the wind. > > > > Columbus was thwarted because the land he discovered to the west happened > > not to be east Asia -- or the Indies as it was then called -- but most of > > the other explorer-traders were more successful by sailing southwards and > > eastwards, rounding Africa, thus finding the real Indies. Then England and > > Holland and other European maritime nations piled in and long-distance > > trade thus resumed. Europe never looked back from then onwards. The > > countries of Europe were particularly fortunate by an accident of history > > in that the whole of the south-east Asia was open to them. In the early > > 15th century, the then Chinese Emperor had done what the popes of Rome had > > not been able to do. He had banned Chinese sea-going trade completely. > > Until that time, the whole of south-east Asia was dominated by the much > > larger and much more heavily armed junks which wouldn't have allowed the > > puny European boats any sea-space at all. > > > > The rest, as they say, is history. In due course, the industrial > revolution > > finally got going in Europe. However, apart from the inclusion of  North > > America into the affluent trading network, and the recent revival of China > > and some of the south-east Asian countries (and the possible, though > > unlikely, revival of India) that's largely where we are today.  Huge land > > masses and large populations in Africa, South America, Central Europe and > > the Middle East have been unable to break in for various reasons. True, > > they are trading with us, legally and illegally, but only because they > have > > oil, which we need, or drugs, which we don't. But, by and large, although > a > > small minority of them, such as the South American Mafia, African > dictators > > and the Saudi Arabian royal family have wealth beyond our imagination, > most > > of their populations live in poverty and misery. > > > > Free trade or no free trade, these excluded populations are likely to > > remain in the cold, unfortunately. For much deeper historical reasons that > > I'm not able to try and describe in this posting, these excluded masses do > > not seem to be able to develop the entrepreneurial culture which is > > required. For another, the present high standards of living in the west > > depend almost completely on supplies of cheap fossil fuels which will soon > > be in decline. Given our present type of energy technologies, there is no > > way that Africa, South America, Central Europe and the Middle East will > > ever enter the system, even if they were able to adopt the economic > > conventions of the west. > > > > My personal view, therefore, is that the argument for and against free > > trade has now become largely academic, given that the main issue in the > > coming decades will be bitter and savage wars fought over the declining > oil > > and gas supplies. Western Europe, in the form of the European Union, seems > > to be very slow in letting down its protective trade barriers, so I think > > the economic future for the next decade or two will be almost totally > > dominated by America and China. > > > > However, if we gradually move towards technologies based on solar power, > as > > I believe we will do, then genetic engineering will enable the production > > of organic-based products rather than those which are metal-based which > > require the highly intensive energy given by a fossil-fuel energy system. > > This will mean that the production of consumer goods will, in principle, > be > > able to be far more diversified than at present. All countries ought to be > > able to benefit. In being able to exchange genetic know-how via the > > Internet and future telecommunications systems, we will then be much more > > concerned with Free Information rather than Free Trade. Fortunately, > > copyright-restrictionists will no more be able to prevent the free flow of > > information anymore than the medieval guild masters and the early > > industrialists were able to prevent the leakage of secret manufacturing > > procedures. > > > > KH > > > > > > Keith Hudson, 6 Upper Camden Place, Bath, England > > > > _______________________________________________ > > Futurework mailing list > > [EMAIL PROTECTED] > > http://scribe.uwaterloo.ca/mailman/listinfo/futurework > > _______________________________________________ > Futurework mailing list > [EMAIL PROTECTED] > http://scribe.uwaterloo.ca/mailman/listinfo/futurework Ed Weick