[Marxism] Knowledge Society and Capitalism

["Jurriaan Bendien" <andromeda246@xxxxxxxxx>]

For a detailed historical refutation of David Ricardo's "law of comparative
advantage", see: S. Sideri, Trade and Power: Informal Colonialism in
Anglo-Portuguese Relations. Rotterdam (Netherlands): Universitaire Pers
Rotterdam, 1970.

Andre Gunder Frank commented in 1970 that:

"Between 1600 and 1750, Portugal itself underdeveloped, and was not able to
expropriate so much of its Brazilian satellite. Portugal was ever more
converted into a satellite. The treaties of the seventeenth century, and
especially the Treaty of Methuen in 1703, brought on the destruction of
Portugal's textile industries, the take-over by Great Britain of its foreign
and even domestic trade, and the conversion of Portugal into a mere entrepot
between Great Britain and Brazil and other Portugese colonies. Portugal did
become an exporter of wine, in exchange for the textiles it could no longer
produce, because of the flooding of its market by British products - which
David Ricardo in 1817 had the temerity to interpret as a law of 'comparative
advantage'. Portugal became a satellite-metropolis which took an ever
smaller
part of the economic surplus of its own Brazilian satellite thanks to the
monopoly position it still retained, while Great Britain took over the
economic monopoly and spoils. Illuminating in this connection are the
observation of the Marquis of Pombal, Prime Minister of Portugal and its
second Colbert, who clarified the situation and therewith the roots of
Portugal's underdevelopment in 1755, some years before Adam Smith inquired
into the causes and nature of the wealth of nations, and half a century
before Ricardo assured the world that Portugal's production and exchange of
wine for Britain's textiles was a universal law for the good of all. Pombal
wrote: (...) "These foreigners, after having acquired immense fortunes,
disappeared on a sudden, carrying with them the riches of the country...".

- Andre Gunder Frank, Capitalism and Underdevelopment in Latin America.
Harmondsworth: Penguin, 1971, p. 183-184.

For a theoretical critique of the Ricardian theory of foreign trade, see
Prof. Anwar Shaikh's essays on foreign trade and international exchange
available online at: http://homepage.newschool.edu/~AShaikh/ or see some of
Samir Amin's books, or Guglielmo Carchedi, For Another Europe (Verso). Or,
if you read German: Elmar Alvater and B. Mahnkopf, Grenzen der
Globaliserung. Munster: Westfalisches Dampfboot, 1996. Robert Went
summarises some of the debates in his book "The enigma of Globalisation".

Essentially the Ricardian theory of foreign trade (actually pioneered
initially by Adam Smith in a more primitive way, and developed in a modern
setting as the "Hechsler (Hecksler?)-Ohlin theorem") is the theoretical
underpinning of the "globalisation" theory that the expansion of
international trade benefits each country participating in it, because it
allows each country to specialise in whatever it is best at producing. In
turn, this theory is the basis for rejecting any notion of "imperialism" as
nonsense, or else as exclusively a reference to political policies of
countries seeking to extend their influence internationally. Finally, this
means development strategies based on "import substitution" (to promote
development of local industry and create jobs) is rejected because import
substitution allegedly cannot reverse unfavorable terms of foreign trade.

In reality, international trade operates on the basis of competition, guided
by the profit motive (shareholders' returns), utilising productivity
differentials, fluctuating exchange-rates and protectionist measures -
nations with a stronger bargaining position in the world market defeat
weaker nations, and force a pattern of economic development on them which is
favorable, or compatible with, the requirements of the stronger nations.

The result is an international division of labor which mainly favors the
already fully industrialised countries (principally, the OECD countries),
i.e. economic activities not compatible with the imperial metropolis are
wiped out, and activities which are so compatible are established.

Thus, Ricardian "specialisation" does occur in the world economy, but often
at the expense of destroying any kind of balanced development within the
less developed countries; the result of that is typically high unemployment
and under-employment, as the traditional social and economic structures are
demolished, without any coherent economic structure taking its place. The
weaker countries are unable to compete internationally, except within a
small range of products (often agrarian products and minerals).

Obviously international trade also has benefits; if there were no benefits
for trading partners, they obviously would not trade. Thus, a limited amount
of economic development and industrialisation becomes possible for poorer
countries. But the point is that some gain much more from the trade than
others, and countries are forced into trading whether they like it or not,
to obtain a net income.

The end result is a vast increase in socio-economic inequality within and
between countries, juxtaposing highly developed export-oriented sectors with
sectors where production techniques remain primitive and labor-productivity
remains low. In the richest regions, every possibility for human development
seems within reach, leading to the thesis of "the end of history" (life
cannot get better than this, this is the limit of human development) but in
the poorer regions, this development is largely denied.


In a hypothetical socialist world economy, it would in principle be possible
to achieve many cost-economies, because costs and benefits are no longer
viewed simply in terms of private profits and expanding sales. In other
words, many costs and benefits which appear to private enterprise only as
"externalities" would become internal to the balance-sheet, and the
specialisation of some would no longer be at the expense of others.



If some producers of a product are put out of business through competition
by other businesses producing the same product, this is again inefficient,
if there exists in reality a growing world need for the product, and the
only obstacle is that monetarily-effective demand is lacking. If very large
numbers of people are unemployed and under-employed, this is not only a
human cost, but also very inefficient. If very large numbers of people are
involved in work consisting only in mediating commercial transactions to
enrich private owners, this is also inefficient from the point of view of
society as a whole. If enterprises produce goods at the expense of
despoiling environments that will take future generations an enormous amount
of work to clean up, this is not efficient either.



The intellectual challenge for socialists is to devise systems which combine
planning techniques, markets and democracy in ways which are both efficient
and just, not on the basis of dogma but on the basis of real effect. But the
debate about that will probably continue for more than a hundred years at
least, since the problem is essentially not one of technical know-how, but
one of the articulation of power. It requires a powerful political force
with a development "ethos" which has real integrity in this sense.



People tend to do what is in their self-interest. For their self-interest to
correspond with socialist ideals of human development requires forms of
association and organisation that really promote this; they must be able to
see for themselves, that what is in the interest of all, is also in their
self-interest, not merely theoretically, but in practice. However
unfortunately most Marxists do not think in these socialist terms - they
think only in terms of a doctrine which people must accept. In that case,
none of the basic problems are solved, because they cannot even be posed. If
you have all the answers already, no questions remain to be asked.



Modern American society offers almost a perfect antithesis to the concept I
have just mentioned: thus, for example, Mark Weisbrot comments in a recent
column that "The real purpose of the Bush team's tax policy was to rewrite
the tax code to create, as Mr. Bush calls it, "an ownership society": one in
which owners do not pay taxes, but workers do."
ttp://www.cepr.net/columns/weisbrot/ownership_society.htm In that case, the
interest of the ordinary citizen, who lives by working, and the interest of
the state (which supposedly safeguards collective interests) is
counterposed. The state levies taxes from workers in order to enrich
business owners, justifying this by arguing that, after all, private
business creates jobs - jobs which provide additional tax funds and profits
benefiting a minority of the population - that there is no free lunch and by
pointing to the benefits of private ownership. It is a total mess of
contradictions. Yet these contradictions do not automatically create a
socialist political awareness. That is a political question - at the most
basic level, people must become aware that they have common interests, a
common stake, in a way of doing things that is different from the status
quo.



Jurriaan








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