Daily Archives: May 23, 2011

The wages of globalism

There is a New World Order, but it is not the one envisaged by conspiracy theorists. Far from being covert, it is out in the open, a vast network of ideologues occupying the positions of power and influence in the Western world whose declared intent since 1945 has been to create a world fit for liberal internationalists to live in. From small beginnings it has grown to the point that there is a general acceptance by Western elites that liberal internationalism is the only acceptable political policy.  This elite includes not only politicians,  but also those who control the media, state institutions, academia and  big business.

This NWO’s primary institutions are the UN and all its agencies, the IMF and the World  Bank.  Supporting them are a large and  ever growing catalogue of treaties which formally commit great swathes of the  world to elements of the liberal internationalist ideology, the organisations arising  from such treaties (for example, NATO, the World Trade Organization, the North American Free Trade Area) and supra-national political entities (most notably  the EU). In addition, there are the departments controlled by national  governments which disburse and control the foreign aid given directly by  states. Finally, there is a vast web of powerful non-governmental organizations  whose activities dilute national and regional identity and autonomy in the name  of ‘human rights’ environmental protection and the amelioration of poverty. All  of these institutions, organizations and treaties hamstring nations in their political choices, in anything from the control of immigration to deciding what  to do about the emissions of carbon dioxide and methane.

The destruction of democratic control

Democratic  control  vanishes as  national elites adopt policies  which  dilute  the power of  national  governments  to make decisions.  Potent examples  of  such policies are  free trade, the free movement of labour and,  most ambitiously,  the creation of  supra-national political entities like the EU. These policies   are then enshrined in treaties which make  the adoption of  different policies  difficult going on impossible. Domestic laws are also frequently  passed to prevent honest public discussion of  subjects which are disagreeable to the internationalist political elite.

The  eventual consequence  of  this process  of internationalisation is, in practice, to persuade all established  political parties with a realistic chance of  forming a government  to agree
to  work within the constricted political  framework created by  the treaty  obligations and national  laws which  prevent free public discussion of  whether the new status quo should be change.  This also means that the political differences between the parties narrow, because by the  act of accepting the  constraints means that the range of possible policies is dramatically reduced.

Once the  shift from national to supra-national politics is made the electorate are  left with no  meaningful choice between the established parties. Nor is there any  realistic chance of  a new party with different  policies arising  which can successfully  challenge for power. This is because either the political  system favours the established parties  to the point where they cannot be overthrown  (Britain is a prime example with its need  for a party which wishes to be taken seriously as a contender for  government to produce candidates and party organisations for 646  constituencies, a mammoth task ) or because  there is a system of proportional representation which  means that the electorate can never vote to  elect a party to govern on a manifesto because governments are invariably  coalitions (for example, Italy) .

The loss of  democratic control is most  advanced in  the EU and nowhere is the loss greater than in Britain, which unlike all the  other major EU states has  no history  of  dictatorship in  modern  times.

The  inevitable consequences of “inevitability”

Like  Marxists, liberal internationalists imagined that their new socioeconomic order  was inevitable. They could not conceive that anyone would not see the ‘superiority’  of their way of thinking if only they could  be brought into close and sustained contact with it. They thought that if the  West ‘engaged’ with the rest of the world, the large majority of which was (and  is) under dictatorships of varying severity, the rest of the world would  embrace liberal democracy as a matter of course.

To this end  they developed the doctrine of ‘soft power’, whereby the West used aid and  trade to seduce the rest of the world from its mistaken, old-fashioned ways –  aid being the overt tool to force their values on others while trade was  intended to foster capitalistic ways of business which, so it was believed,  would inevitably force even the most hidebound and natural autocracies to adopt political systems akin to those in the West.

That this was pure fantasy was obvious from the start, because it ignored both human  nature and the strength of individual cultures. The experience of post-war  decolonisation should have taught the liberal internationalists that it is not possible consciously to create the institutions of liberal democracy – such as parliaments and an independent judiciary – in fact as well as name, nor the cultural norms which underpin them. These things are organic social growths  which arise, if they arise at all, out of the general nature of a society. Sadly,  the liberal internationalists did not learn the lesson. Like those who argue that communism has never failed because it has never been tried, they believed that if their ideas had not proved successful before that was not because they  were unrealistic but because they had not been tried in conditions in which they would flourish.

Until the  end of the Cold War, proponents of liberal internationalism were constrained by  two things. The first was the division of the First and Second Worlds into, for  want of a better description, the liberal democratic West and the Communist  East, with most of the rest of the world siding with one power bloc or the  other. This meant that the reach of the liberal internationalists was limited  to the developed world and those parts of the developing world which came under  its aegis. Much of this problem dissolved, temporarily at least, when the
Soviet Union collapsed. The second  constraint was the tiresome (to liberal internationalist minds) persistence of  national sovereignty in the developed world, primarily through the maintenance of protectionist economic policies and the existence of national populations  which enjoyed a high degree of racial and cultural homogeneity. Mass  immigration into the West and state-sponsored multiculturalism became liberal  internationalist policy during the early  days of the Cold War, and have now seriously undermined the cultural solidarity  of Western nations. But until the 1980s, national economic self-sufficiency  remained high. Then along came Margaret Thatcher and everything changed. British  Labour Party thinkers were among the first socialists to embrace  laissez-faire economics. Initially, they did  this because they were demoralised by the electoral success of Thatcher, and  agreed to embrace the market as the price of regaining power. But what started  as a venal political compromise soon became a prime  ideological tool.

As  Thatcherism unfolded and spread throughout the world, it dawned upon some on  the Left that the removal of trade barriers and the further loosening of  immigration controls in the name of creating a free market, far from being a  capitalist device to entrench conservatism, was in truth a magnificent engine  to destroy the nation state and allow the tenets of liberal internationalism to  be widely disseminated and more thoroughly enforced. We have now arrived at a  situation whereby the major parties in all Western countries have virtually  identical economic views, which means they are unable or unwilling to deal with the ongoing global economic meltdown.

The  economic consequences of globalism

Free trade,  or at least freer trade, reduces the self-sufficiency of countries by forcing  developed economies either to export industries to lower wage economies or  simply give up trying to operate in certain industries. The result of this has  been a serious narrowing of the economic base. Nowhere is this seen more dramatically  than in Britain where the economy has become dependent on financial services,  an economic activity which can be switched rapidly from one country to another  if circumstances change, and which, as we have seen during the last year, is in  any case a dangerously unstable kind of national economic foundation.

At the other end of the developmental scale, the aid policies of the developed world,  the economic institutions they dominate (such as the IMF and World Bank) and  the effective independence from any state control of Western multinationals,  have driven many developing states towards economic practices which have  radically altered their native economies for the worse. In the poorest, least  developed states, the political policies with regard to international trade and  consumer demand of the developed world (and latterly the developing world in  the shape of the Chinese) has slanted their economies towards dangerously narrow  economic bases, most commonly built on the extraction of raw materials,  tourism and the production of food and horticultural products for export.

The less  self-sufficient a country is, the more unstable its economy becomes. As the  variety of its economy lessens, it becomes more susceptible to economic shocks  in the rest of the world. A country with a narrow range of exports is at the  mercy of a change in global demand for those products, while the increased  imports which are needed because of its narrowed economic base leave the country vulnerable to wide fluctuations in their price and availability. The  recent violent ups and downs of commodity prices, especially oil and gas, are a  savage reminder of this fact. So much of  the West’s industrial capacity has been shifted to the developing world, most  particularly to China, that any substantial reduction in exports from that
these new sources of manufactured goods to the West  would have severe and immediate effects on countries which now lack the industrial capacity to easily make up the shortfall. China alone could cause  grave problems if she substantially restricted her exports. Such a reduction in  exports is quite possible. First, China’s domestic consumer demand is growing  rapidly as its population gets wealthier. Second, as China and much of the  Third World industrializes, there may simply not be enough raw materials to go around  and in the future China might not be able to obtain sufficient raw materials to  supply both her home market and foreign demand. Third, there is a good deal of  political tension inside China, between the dirt-poor countryside and the rapidly enriching urban population, between the 100 million or more ethnic  minority population within China and the Han Chinese, between the Communist Party  and the rapidly expanding entrepreneurial class. Fourth, China is deadly  serious about regaining Taiwan and, notwithstanding growing trade links with  the country, is naturally hostile to Japan. Fifth, there is also the question  of the Russian far East. This vast region is rich in natural resources and  populated by a mere six million Russian citizens – and that number is declining every year as Russians return to the more prosperous Western part of the country. The temptation for China to grab this territory is great.

Why free  enterprise cannot be left to its own devices

I have no doubt that the market is  the most efficient means of conducting the vast majority of economic activity,  especially within a sensibly protected domestic market, but it flies in the
face of reality  to believe that Adam  Smith’s famous “invisible hand” will produce the  most desirable result in all circumstances.  Indeed, Smith himself acknowledged  that certain projects, such as road building, should be  undertaken by the state because they would  never be adequately provided  by private enterprise – and that strategic activities, such as the native”
manufacture of armaments, should be ensured by the state for  reasons of national safety and security. Here  is Smith on the Navigation Acts:

“…the  Act of Navigation by diminishing the number of buyers [means]…we are thus  likely not only to buy foreign goods dearer, but to sell our own cheaper, than  if there were a  more perfect freedom of trade. As  defence, however, is of much more importance than opulence, the Act of  Navigation is, perhaps, the wisest of all the commercial regulations of  England.” 1

It is also  a fact that private enterprise relies on the state to maintain a system of law  which both allows contracts to be enforced and public order to be maintained,  two things vital to the working of private business. Moreover, what is commonly  called a free market is in fact a state-controlled market, being dependent on  anti-monopoly laws  enacted by the state  and enforced by the state, the natural end of a truly free market being monopoly or at least greatly reduced  competition.

The problem with private enterprise is that it is essentially amoral – Stalin pungently  described the mentality of those driven by the profit motive with the brutal  sentence “When we hang the capitalists they will sell us the rope.”  That is not so far from the truth as to be ridiculous. Those who are driven by  the profit motive will satisfy that before anything else. Such behaviour is not  simply or even primarily the sating of individual greed – although in  individual cases it can be just that – but a simple consequence of trading in a  competitive market.

At the most  basic level, the need in private business to maintain a sufficient cash flow to  keep the business running concentrates the mind wonderfully to the exclusion of  other concerns. Publicly quoted companies  are expected as a matter of course to try to grow their share price, pay  healthy dividends and expand the business. What may seem to be selfish and  damaging behaviour can be no more than a struggle for survival, even if the  mentality of those who command private companies often contains a good helping  of self-advancement, greed and ego. (Gordon Gecko’s “Greed is good”  mantra in the film Wall Street did not come from thin air but reflected  reality, albeit hyperbolically).

Of course,  history shows many instances of capitalists behaving philanthropically and with  concern for the general good, but the catalogue of such acts is infinitesimal  compared with examples of capitalists behaving selfishly for short-term gain  without concern for the societal consequences. A classic British example  occurred after the Great War when Stanley Baldwin called for private  businessmen who had profited  from the conflict through reduced foreign competition and massive government  contracts – those “hard faced men who had done well out of the war” –  to make voluntary donations to the Treasury, his family leading the way with a  donation of several hundred thousand pounds. The response to his call was  negligible.

Because unrestrained capitalism will naturally tend to look to its own narrow and  frequently short-term interests, governments need to regulate it sufficiently  to restrain its pernicious effects. The more competitive a market, the more ruthless and reckless the behaviour of those competing within it. The more  ruthless and reckless the behaviour  becomes,  the greater the need for the state to restrain it. Except in a  few areas, such as aerospace, where the entry cost to the industry is  prohibitively high, the freer international trade is the more  competitive the market will be.

Nowhere is  government regulation more needed than in the field of finance, as the present  crisis vividly reminds us day by day. This is because banks and allied  undertakings are the prime drivers of the money supply through their offering  of credit (when a loan is made the money supply increases by the amount of the  loan, because the lender still owns the money and the borrower has the use of  it). Their creation of  credit dwarfs the  amount of coins and notes in circulation and credit  created by government borrowing. The lack of  proper controls over  lending through  simple and readily understandable measures such as  credit controls has effectively privatised  control of money, with the financial  institutions being allowed to contaminate the economy by  creating money of widely varying quality; a good analogy would be with a  currency  based on gold with the government minting to a consistent  standard, while allowing private companies to mint coins to whatever  standard they  chose.

The present  global financial crisis is probably the prime example of governments failing to  exercise necessary regulation since the Great Depression, the consequence of  this failure being that the financial institutions  were able to offer credit incontinently and so contaminate the whole financial  system.

For those who believe that the market is all, let them think upon these facts.  Laissez-faire first gained practical expression as an elite economic ideology  in Britain in the 1840s when Robert Peel began dismantling  the protectionist system which had served England and then Britain so well for  three centuries (it was under this economic regime that the Industrial
Revolution occurred). Since these  changes the periods of great economic upheaval have been when laissez-faire has  been the ‘official’ ideology. Economic crises regularly arose from the 1860s until the Great Depression of the 1930s. Between 1931 and the election of the  Thatcher government in 1979 Britain experienced no economic upheaval equivalent  to what we are currently undergoing, let alone the Great Depression. That was the period of unabashed state involvement in the economy and protectionist  policies.

In short, every major economic crisis for the past century and a half has come during  times when laissez-faire policies were in the ascendant. That alone makes a  strong case for state intervention. I hasten to add that the sort of state  intervention which is necessary is not a wholesale nationalisation of industry,  but commonsense regulation such as credit controls and the protection of strategic industries such as food and energy.

The future

The day of  liberal internationalism is probably almost done. As in the latter days of the  Soviet Union, the visible discrepancy between reality and the ideology has  become so vast that it has moved from being sinister to absurd. Even  Francis Fukuyama, the man who famously claimed that the fall of the Soviet  Union meant that capitalism and democracy had beaten all its ideological  competitors out of sight is no longer so sure of his ground, although he still  believes that capitalist democracy is the best game in town. Here he is writing  very recently:”I wrote an essay in 1989, The End Of History, and in it  argued that liberal ideas had conclusively triumphed at the end of the Cold  War. But today, US dominance of the world system is slipping; Russia and China offer  themselves as models, showing off a combination of authoritarianism and  modernisation that offers a clear challenge to liberal democracy. They seem to
have plenty of imitators…..

“A critical issue that will shape the next era in world politics is whether gains  in economic productivity will keep up with global demand for such basic  commodities as oil, food and water. If they do not, we will enter  a much more zero-sum, Malthusian world in which one country’s gain will be  another country’s loss. A peaceful, democratic global order will be much more
difficult to achieve. Growth will depend more on raw power and accidents of geography than on good institutions. And rising global inflation suggests that  we have already moved a good way towards such a world” (2)

The  skeleton of liberal internationalism will remain for a while in institutions  such as the UN and in the rhetoric of its disciples who continue for the moment  in positions of power and influence, but the hard reality of changing  circumstances will make it impossible to sustain it as an active philosophy.
The present financial crisis has seriously discredited laissez-faire economics,  while the resurgence of Russia and the rise of China, India and other large  Second World countries such as Brazil will radically change the patterns of geopolitical  influence in most of the world. The West, especially the United States, is  increasingly in hock to China and the various non-Western sovereign wealth funds and looks ever more tired of international entanglement.

The big winner from globalism to date has been China, which has swallowed up much of  the manufacturing work of the developed world, is running a truly colossal  trade surplus and has foreign reserves exceeding a trillion pounds. Most  tellingly, she has not gone down the laissez-faire route, being still very much  a command economy with Chinese control of businesses in China maintained by an  insistence that in joint ventures with foreign companies the Chinese are the  majority shareholder.

This does  not necessarily mean that that the West will end up being dominated by China  (or Russia and India). Just like Western nations, China and other potential  global rivals all have serious internal problems of  their own which could at any time plunge them into political and economic  disaster. And the financial crisis may mean that Western countries begin to  take a more responsible attitude towards their economic assets  The only thing certain about the future is that  the world will be a more uncertain  place than it was between 1945 and 1990, when the competing  Western and Communist power blocs produced  an abnormal degree of  international stability.

The  stability  produced by  the Cold War is  extremely important. As an under graduate in 1970 I wrote an essay which  pointed out that this stability was greatly to the  advantage of the West because it produced general stability, greatly reduced the opportunity for mass migration and shielded the West from a great deal of economic competition.

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