Thursday, November 10, 2005

Reality is More Complex than Some Imagine



Julian Brookes, the editor of MotherJones.com (San Francisco, California) interviews John Ralston Saul on the telephone. The interview can be read at: http://www.motherjones.com/news/qa/2005/11/saul.html

John Ralston Saul wrote “The Collapse of Globalism” along the lines of presenting a largely straw man and then attacking it furiously on all matters, large and small, connected and unconnected, good and bad analogies and partial pictures of what has happened in practice. It is short of being an exposure of a global conspiracy by malign forces – the rich and powerful – who ‘rule the world’. Fortunately for readers, almost alone, Saul has seen through the deceptions of the ‘global conspirators’ and exposes them to his readers with the convincing clarity of the ‘man they could not fool’. If Saul’s book was written as fiction, the ‘hero’ would fight against the odds and the perfidious duplicity at great risk to himself until with a mighty heave he brings the evil ‘global conspirators’ to a richly deserved denouement, and the eternal gratitude of the entire world.

The picture of the world upon which Saul casts his gaze is much more complicated than he imagines. There are multitudes of sometimes overlapping power centres, few of them centralized into a single power centre. International agencies operate in an uncoordinated manner, as they must: the UN and its sub-agencies, the World Bank, the IMF, the WTO, EU, NAFTA, CAFTA, ADP, NATO, etc., national governments, regional associations, national state agencies, private corporate bodies and their trade associations, trade unions, political parties, insurgency forces, NGOs, lobbyists, pressure groups, international and local media, religious organisations, sporting bodies, cultural associations, PTAs, producers, consumers, residents, citizens, electorates and the rest.

Saul’s vision is that powerful private global corporations sit at the top of these local centres of power and their writ rules the world through ‘globalism’, the new ideology, a religion even.

Into this milieu of largely competing sources of power, the global corporation allegedly has ruled supreme for thirty years and has been exposed as a non-solution to the world’s problems (these latter are not defined, but has something to do with the failures of Keynesian orthodoxy from the post-war years). Now it has been said that a ‘week is a long time in politics’ (Harold Wilson, UK PM) but the time scale for a change in the world’s economic structures is much greater than a mere thirty years; try a century or more. The idea that a few individuals in a few global corporations can adjust crucial economic parameters, motivations, incentives and penalties, and literally change the world, is only believable in university classrooms and libraries by those who have lost contact with ‘the ways of the world’ (as Adam Smith expressed it).

People are not wooden chess pieces, as Smith also said in a famous passage (“Moral Sentiments”, VI.ii.2.17, pages 233-4). They do not act like automatons and change instantaneously their multi-motivated behaviours to accord with a view of the world that believes human actions and reactions to changing circumstances operate with infinite velocity. Some, many, sometimes everybody, will resist having to change at all. Zealot driven fanatics try to overcome resistance to their strictures with violence, mental and physical. Smith cautioned against such behaviour. ‘The man of public spirit is prompted altogether by humanity and benevolence’ and ‘When he cannot conquer the rooted prejudices of the people by reason and persuasion’, he will not attempt to subdue them by force’.

Those who are ‘wise in their own conceit’ have great expectations of the good or ill effects of what they propose or oppose. To assume that the adoption of a policy of, for example, free trade, will be transmitted into all its beneficial or negative consequences instantly (or 'ever'), Smith said, was ‘utopian’ (“Wealth of Nations”, IV.ii.42: page 471).

In the real world, the array of power centres, mentioned above, are divided, some sharply, on any policy that is adopted by any one or all of the other power centres. Inevitably, some swoop on ‘difficulties’ in one area to pursue their agendas from another area, which is what was really behind Asian governments adopting certain policies after the collapse of the Asian financial markets, much of it fed by local Asian pyramid type speculation in property development (some of it corrupt, and close to the centres of political power) and by overseas financial speculators (a breed of financial expertise that pre-dates by a long time the temporary political ascendancies of Thatcher or Reagan!).

Even the practice of so-called globalism is distorted. Among the most obvious is the continuation of agricultural protectionism in the European Union and the United States, and, it must also be remembered, the continuation of intra-developing countries protectionism on each other – intra-African trade is miniscule. This is not by design, but by the rooted prejudices of groups within each country’s political system. Opening up to total free trade in all countries for all products is not practical and neither has it happened in 60 years, hence to pretend to measure the success or failure of a policy on the basis of thirty years of continuing protectionism, with elements of free trade, is problematical.

The cases of India and China are interesting. They opened their markets (slowly) and de-regulated some aspects of their controlled economies. It is raising living standards at a faster rate than anybody expected. Their experience is no different from that of non-British nations joining industrialisation in the 19th century – they all got richer, not in money (a mercantile fallacy exposed by Smith) but in real incomes, i.e., what they bought each week.

Of course, national political elites articulate these events as their national or personal succesess, but this has more to do with their rooted local prejudices than reality. So it was in 19th century Germany, as the writings of Frederic List (1854) amply demonstrated. The fact remains that access to world markets has lifted millions of poor Indians and Chinese out of dire absolute poverty, because wealth creation – the production and sale of real goods, not mere money accumulation – through successive rounds of increasing divisions of labour, 'truck, barter and exchange', and re-investment in enhanced amounts of productive capital (not mere money accumulation) spreads Smithian ‘opulence’ faster than aid, grants and charity ever can.
Saul’s prognosis for the real problems of the world’s economies is a dead-end. It gives fanatics, mainly refugees from the collapse of Marxian communism and their younger activists, an excuse to disrupt WTO and G8 meetings (as if these events are world shattering in their implications). Along with all the other obstacles to expanding markets, many in the richer western economies, are encouraged to persuade their political representatives to block ‘foreign’ imports on the spurious grounds that lower cost imports from the developing and the developed world somehow harm their consumers by raising their real wages, when, in fact, it only temporarily harms some producer groups. Smith favoured ‘transition’ periods for those affected negatively on grounds of common humanity. He was a realist not an ideologue.

Take a longer view. Calm down. Count the good news and set it against the bad. Above all don’t panic. There is no conspiracy, there are no hidden enemies and there are no malign forces working for our destruction, except in racy fiction.

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