re Mckeever...

["Gregoire de Nowell (ci-devant)" <GN842@xxxxxxxxxxxxxxxxx>]

I had an interesting conversation yesterday with Peter Breiner, a colleague
and "passive reader" of PKT, who pointed out (referencing an article in
the economist) that Chile had discovered a special form of protectionism.
Apparently, foreign investors are not "automatically" granted the right
to purchase Chilean currency.  The Chilean currency is "rationed" to
outside purchasers: they can't buy as much as they want, or pay as much
as they are willing to pay, and therefore can't drive the price of the
Chilean monetary unit (whose name escapes me) upward.  The currency therefore
is literally undervalued by deliberate policy.

Shrewd thinkers will see that this is in a sense equivalent to a general
tariff on all imported goods, but its effects in fact differ from a tariff.
First, a tariff, classically, is opposed by import/export oriented agriculture
(importers of manufactured goods, exporters of agricultural produce, e.g.,
Southern Cotton), while industry lobbies for tariffs in order to sell to
the agricultural interests who really would rather buy elsewhere.  But
the undervalued currency offers a differnt cost/benefit breakdown.  It
lowers the price of Chilean goods in world terms.  Chilean wine is
artificially low compared to French, Australian, and Argentinan wine.
Chilean manufactured goods get a similar "export break."

The undervalued currency is hard to retaliate against.  Tit-for-tat in
tariff policy usually brings a countervailing tariff against the
country which has initiated the trade discrimination.  But it is very
difficult for a large country such as the U.S. to manipulate its currency
to target specifically a country which is undervaluign its own.

The undervalued currency discriminates against imports and reduces consumption
of such goods as oil and foreign manufactures.  It gives the national
bourgeoisie a leg up in bidding for local profitable investments, and
decreases their exposure to foreign competitors.

It would seem, oddly, that this "Chicago school" country has discovered a
way to wear the mask of liberalism while practicing Listian interventionism
with unusual subtlety.  As an economic recipe it apparently "works," at
least for now.

So, first point regarding McKeever's query: nation-states are very much
alive in the manipulation of capital, when they want to be.  We perhaps
need to discriminate between those nations whose "passivity" reflects
the political power of international capital vs. those whose "independence"
represents more locally entrenched interests.

The second point regarding McKeever's query is that multinational firms
also have state-regulatory agendas, which they may or may not choose to
pursue in multiple national arenas.  It is as likely that their activities
will help encouralge the building up of state power (in ways consonant with
their interests) as to tear it down.   The dynamic of alternating support
and antagonism to the state is a fundamental dynamic of capitalism.

g de n