We have just shown the origin of the civilization choice: the recognition or denial of the mission of authority vested in every human being. From this divergence, the exercise of power and command will be quite different, humanistic or despotic. Between markets and societies, the choice of civilization continues. Let us start with the liberal ideology of the capitalist system of power.
Elites are destined to rule the world.
The extension of the Roman Catholic dogma on the separation between the faithful and those who live in sin without knowing and wanting to seek the common good, is found in the dogmas used by the systems of power that have succeeded one another, especially in the Western world through the dogma of predestination used by the sect of Anglo-Saxon Puritans who made a pact to govern the whole world on our planet.
The elitism stemming from Christian theocratic dogmas naturally spread to the new economic dogmas of capitalist industrial society. The notion of god has become secularized so that it can become more universal over theocracies and religious movements. An invisible hand is born, a kind of higher consciousness that finally leads human activities towards the realization of the Common Good, similar to that of the dogmas of the Christian Church and at the service of a learned and ruling elite according to a supreme will above humanity.
The elites are obviously the individual owners of the means of production, the private entrepreneurs who have economic power and influence political power. Employees, for their part, cannot be decently accused of living in sin, but rather of living in misery and the alcoholism that accompanies it until they have become good employees and workers in industrial-era factories and businesses.
The most presentable solution to exclude employees from any participation in economic power in the capitalist system is to mask their presence, not to speak of them but only of working hours, productivity, wages. The most important in the dogmas of the capitalist system are the theories on the freedom of markets, scarcity, competition, the exchange price, the accumulation of technical and financial capital, the power of shareholders and the freedom to invest, etc.
Some economists also give voice and pen to denounce and expose the economic imposture that governs liberalism and its doctrine of free trade, of the necessary freedom of markets to which people must submit in a freely consented submission, if possible, given that there are no other alternatives according to these impostors and as stated with the superb insolence of the ignorant and a naïve and stupid guilty stubbornness, Mrs. Thatcher in London in the 1980s: society does not exist, there are only markets, so there is no alternative to economic liberalism.
How rich countries got rich.
To better show what liberal ideology is and how capitalism works, we will use the French translation of the book by economist Erik S. Reinert which was released in early March 2012: “How rich countries got rich. Why poor countries remain poor,” published in Le Rocher, 2012.
The author rewards us with an enlightened presentation of the history of the economy, both schools, and above all he highlights the process of wealth creation, the virtuous circle of increasing returns, and the vicious circle of decreasing returns that leaves countries in poverty. We will continue the analysis of the functioning of the system of liberal power in Part 2 of the Networks of Life but here, in this choice of civilization, this book already allows us to show how this system of liberal economic power discards, denies, rejects and prohibits the place of the human being with the consequences of we know and suffer.
The history of authors and economic facts show that since antiquity, some knew how to develop a city, a region, a country just like others have been able to plunge and keep people in poverty, mainly through colonialism and diminishing returns.
This is an important element of the sham towards poor countries: we, the rich countries, have developed our industry through protectionism, but you, the poor countries, are forbidding protectionism, and if you cannot industrialize, so be it.
So poor countries should do what rich countries have done, but they should not adopt the rich countries’ current rhetoric.
The second element of the fraud is the mastery of the process of creating wealth with increasing returns.
The rulers of the economic power system have known it since ancient times, but according to their particular interests, they have banned or manipulated it, arranged it many times and this has always ended in periods of misery and revolt of misery. But they hide from us that we are now in such a period of crisis and of the return of poverty precisely because they have chosen to use these liberal doctrines, contrary to the virtuous circle of growth, to defend their rents and their personal wealth by sacrificing once again the common goods.
We take the heart of Reinert’s words in this book: the process of wealth creation that succeeded yesterday in cities organized into networks, into systems of power, and that we will use tomorrow in the development of networks of life.
Reinert’s 2007 London book uses the history of the economy to compare theories and real situations that show how some countries, some cities, have become richer and developed while others have remained poor or are today condemned to remain poor by rich countries. With Reinert’s book, we have the economic bases that complement the institutional bases: how the virtuous circle of economic growth is constructed, how cities and countryside developed, and then industrialized countries, how the vicious circle of poverty and lack of economic growth works.
Reinert shares examples and theories from around 1400, focusing on authors and achievements of the Renaissance and from the Enlightenment to the present day. He writes that this virtuous circle of growth already existed in antiquity but this author does not take the path of Egypt and Denderah (probably no publisher would have followed him on this yet so excellent path, at least for a poet). Likewise, Reinert did not address the control of the economy through the creation of money by private, central, and commercial banks, and he did not address the current question of the power of the Anglo-Saxon financial oligarchy. We will return to this in Part 2.
The two conceptions of the human being.
Reinert distinguishes two conceptions of the human being at the basis of the economic sciences, two visions of humanity which are summarized in the statements of Adam Smith and those of Abraham Lincoln. Here we find our words on the choice of civilization and the choice of retaining or not the mission of authority of each human being.
The following excerpts from this book are reproduced:
« The differences between the two theories of economics are profound, and are the result of two opposing ideas of the most fundamental characteristics of man, and of the most fundamental activity of man. Adam Smith and Abraham Lincoln carefully defined these two different views of human nature and the economic theories that flow from them.
- The barter theory was set out in Adam Smith’s Wealth of Nations:
he division of labor results from a tendency of human nature to… load, trade and exchange one thing for another… It is common to all men, and is not found in any other animal species that does not seem to know this or any other kind of contract… No one has ever seen a dog fairly and voluntarily exchange a bone with another dog.
- Lincoln described his theory of production and innovation in a speech during the 1860 election campaign :
Beavers have been building houses, but they’ve been building them no differently or better, for almost five thousand years… Man is not the only animal that works, but he is the only one that improves his work. These improvements he makes through discoveries and inventions.
These two different views of human beings’ fundamental economic characteristics lead to completely divergent economic theories and policy proposals. Adam Smith talks about inventions, but they come from elsewhere, outside the economic system (they are exogenous), they are free (perfect information) and they tend to affect all societies and all people simultaneously. Similarly, innovations and new technologies are created automatically and free of charge by an invisible hand that, in current economic ideology, is called “the market.”
The two theories stated two very different origins for humanity: or, for Abraham Lincoln, in the beginning there were social relations, whereas for Adam Smith, in the beginning there were markets….
Smith’s view, in the English tradition, leads to a hedonistic barter economy and a system of value and incentive.
Economic growth tends to be viewed as the mechanical addition of capital to labor.
In continental tradition, the essence of the human being is a potentially noble mind, with an active brain that constantly records and classifies the world around it, according to defined patterns. The economy is then focused on production rather than barter, and on the production, assimilation and dissemination of knowledge and innovations.
The driving force of this economy is not capital per se, but the human spirit and the will.
The first view of humanity makes possible a static, simple, calculable and quantifiable economic theory. The second, much more complex view also requires a much more complex and dynamic theory, the core of which cannot be reduced to numbers and symbols. It is important to note that “orthodox wisdom” in one theory can be considered entirely different in the other.
For Jeremy Bentham, “curiosity” was a bad habit; for Thorstein Veblen in 1898, “free curiosity” became the mechanism by which human society accumulated knowledge.
Following Adam Smith, four important concepts for understanding economic development were left out of the mainstream model:
- The concept of innovation, which had played an important role in the English social sciences for over 150 years.
- The idea that economic development is the result of synergy and that people who share the same labor market, composed of innovative industries, will have higher wages than others, an idea that has been present in European economic thought since the 15th century.
- The realization that different economic activities can be different carriers of economic development.
- Adam Smith’s reduction of production and trade to hours worked paved the way for the Ricardian theory of trade, still dominant today, in which the world economy is conceived and understood as the example of Adam Smith’s barter, when dogs exchange hours of work without any quality.
The first time a barter-and-trade theory prevailed was with the physiocrats in France in the 1760s. The second time was in the 1840s.
Primarily to provide its workers with cheap bread, England stopped protecting its agriculture by tariff barriers and, at the same time, sought to encourage other countries to do the same with their industry.
It was then thought that the growth of social inequality – what for a century will be called the “social question” – would disappear as soon as all restrictions on the economy were removed.
In the end, this led to much more serious social unrest. The modern welfare state was built step by step out of this chaos.
In terms of economic policy, no historical period resembles the 1990’s as much as the 1840’s.
Both periods are characterized by immense and irrational optimism based on a technological revolution.
In 1840 the steam age was expanding. In 1971, Intel developed its first microprocessor, and in the 1990s, a new economic techno paradigm was being deployed.
Such paradigms, based on the productivity vouchers of specific sectors, carry with them possible quantum leaps in development. But they also carry within them a speculative frenzy and many projects and practices that would like normal industries to behave like industries at the heart of this paradigm. (page 188)
In both periods, they were encouraged by a euphoric stock market that was determined to believe that it could be real – and for a long time it was real – simply because enough people believed it.
But most cases did not turn out well. (page 189). »
End of excerpts from Reinert’s book
These arguments use only our second source of knowledge, the intellectual and rational source. There is no question here of appealing to the teachings of our first source of knowledge, that which does not need to know how to read and write, the personal source of initiatory and spiritual. For the time being, we are content to follow what Erik Reinert has said and what politicians, authors and economists have said in his book.
Of course, Lincoln’s vision is in line with the intelligent and living conception of the human being that has existed since the origins of humanity and is very close to that which we develop in the organization of life networks. There is definitely a bit of spiritual path missing, but this limit is not unpleasant for us as long as the direction is the right one… and what more could we ask of an economist who in his book makes a lot of effort to remain comprehensible to other orthodox economists that he seeks to convince more than a poet already convinced since the dawn of time!
Much more than this question of the vision of the human being, we find in the book of Reinert, the clear economic explanation of the process of virtuous growth towards economic development. This mechanism will be described in more detail in Part 1, the operation of networks.
We take as the basis of our remarks the development of free cities in the time of the cathedrals, the example of the Decapolis of Alsace after 1354, almost fifty years after the destruction of the Order of the Temple. We knew that these examples include the technical solution, the process of economic development that we want to update in the organization of life networks, once we leave our systems of power. With this book by Reinert, we have this process and we know when and how it was used, how and when the leaders of the systems of power forbade this process of development to impose other theories in order to protect their personal wealth and political powers.
Not all economic activities are equal.
Reinert makes the fundamental distinction that not all economic activities are equal to create wealth. Some activities contain more intelligence than others, and some situations bring productivity gains and synergies that others will never have. We must therefore choose the right activities and the right situations to ensure the development of wealth in our systems or networks.
Excerpts from the book:
« Since time immemorial, the majority of the Earth’s inhabitants have simply lived in relative poverty and in an often fragile balance between population size and available resources.
As Alfred Marshall, one of the founders of neoclassical economics, put it, all migration in history has been created by diminishing returns: a growing population density balanced by the availability of natural resources and unchanged technology.
This mechanism is described in the Bible about the tribes of Israel who had to separate because the earth could not carry them to remain together.
In such a world, wealth and poverty were like a zero-sum game; the wealth was essentially acquired through existing assets that changed ownership. This worldview was codified by Aristotle.
« Around the thirteenth century, the Florentines, the Pisans, the Amalfitans, the Venetians and the Genoese began to adopt a different policy in order to increase their wealth and power, having noticed that science, earth culture, the application of arts and industry, as well as the introduction of extensive trade, could enable them to generate a large population, meet their countless needs, maintain a high level of luxury and acquire immense wealth, without having to conquer new territories.” Sebastiano Franci, Reformer of the Milanese Enlightenment, 176 4. (page 205)
At the end of the Renaissance, a change of mentality occurred: many factors combined to cause the progressive disappearance of zero-sum play as the dominant worldview, and at the same time to introduce an element of progress beyond the cyclical nature of history. (page 206). (page 206).
Very early on, it became clear to people that most of the wealth was in cities, particularly in some cities.
Cities were home to free citizens; in the countryside, people were usually serfs who belonged to the land and the local lord. Based on these observations, research was conducted to understand what factors made cities so much richer than the countryside.
Gradually, the wealth of cities was perceived as the result of synergies: people coming from many different businesses and professions and forming a community.
The Florentine scholar and statesmen, Brunetto Latini (1220-1294) described this synergy as “it is well common”, that is to say opening “the common good”.
Most early economists, mercantilists, and their German counterparts – the cameras – used these synergies as a fundamental element in understanding wealth and poverty.
It is the common good that makes cities great, repeats Nicolas Machiavelli (1469 – 1527), almost 300 years after Brunetto Latini. (page 207)
Through this social understanding of wealth, which can be understood only as a collective phenomenon, the renaissance has rediscovered and emphasized the importance and creativity of the individual.
Leaving aside these two perspectives – the common good and the role of the individual – one cannot understand either the Renaissance vision of society or the phenomenon of economic growth. (page 207). »
Aristotle’s worldview, like a zero-sum game, slowly gave way to the growing understanding that new wealth could be created – and not just conquered – through innovation and creativity (page 208). »
End of excerpts from Reinert’s book.
The Virtuous Circle of Economic Development
We are indeed in the thirteenth century, this flourishing century organized around monastic orders and knights who spread knowledge and defended it against kings and popes. We have shown the role of top-down subsidiarity played by this knowledge saved from Dendérah and Egypt by John, Antoine, Pacôme and then in 500 by Bernard de Nurcie, namely who was transferred to Cluny in the 900s to be protected from the threats of the popes of Rome.
The virtuous circle of economic development process is an ever-powerful lesson in organizational management: bring together people who are educated and trained in multiple trades to create a common project: a free city, liberated from the dominant system of power, yesterday the feudal system, today the liberal capitalist system.
Increasing returns are based on the learning effect (skill elevation, always a possible source of productivity gains), economies of scale that come from innovations in production to save the quantities of factors of production and especially from long-distance trade able to bring new customers especially when this trade is defended by military means.
The commercial fleets protected by the military navies were thus the instruments for the development of the wealth of the first rich countries, as was the fleet of the Order of the Temple which traded with the Americas long before 1492.
Erik REINERT’s analysis of the acquisition of this Common Good reveals a virtuous circle based on a competitive advantage consisting of a triple rent:
In economics, it is about obtaining rents to make higher profits to finance local development. This includes :
a very large and diversified industrial and craft sector (rent 1)
which controls a large raw materials market (rent 2).
The wealth created is protected behind strong barriers to market entry. These barriers to entry were superior knowledge, manufacturing techniques and, above all, the use of powerful synergies through diversified manufacturing activities (rent 3)
In politics, this production is supported by economies of scale obtained through trade secured by military power. Secure trade is long-distance trade, mainly by sea. Exports, once the domestic market is satisfied, bring positive economies of scale and take place within the framework of the Peace Treaty established at the level of the Confederation of Networks of Life.
In terms of productivity gains, the following are used: positive economies of scale, rising skill levels, technologies and modernization of the production tool, organizational and structural change with synergies and long-distance trade. All sources of productivity gains are used.
This definition of the Common Good within the framework of the humanist culture of the medieval period or that of today, as soon as we have abandoned the systems of power, contrasts antinomically with that used in liberal culture.
Decreasing yields are quite the opposite and apply mainly to agriculture: extensive diminishing yields when it comes to using ever more land to feed a population or livestock. Intensive diminishing yields when more work is needed to cultivate land or land is no longer sufficient to feed an ever-growing population without finding any synergy.
Definition of synergy:
synergy commonly reflects a phenomenon whereby several actors, factors or influences acting together create an effect greater than the sum of the expected effects if they had operated independently, or create an effect that each of them could not have achieved by acting in isolation.
In everyday language, the word is rather positively connotated, and is used to refer to a more favorable outcome when several elements of a system or organization act in concert. More prosaically, there is positive synergy when the result of an action or element is greater than the sum of the results of the parts. This is summarized very simply by the aphorism one and one make three.
Synergies in the Medieval Period
The field workers, the serfs who left the feudal system, were initially trained by the monks of the abbey. They become blacksmiths, masons, carpenters, musicians, doctors, fishermen, weavers or remain farmers, ranchers.
Together they will build the city and its ramparts and fortifications. When a feudal lord wants to come and recover a few families who have abandoned his land, even with fifty men of arms, he must stop in front of the city walls and if this lord insists, hundreds or a few thousand men in arms go up to the ramparts or go out to drive him out.
This new balance of power is also the result of a synergy developed within the framework of the new free city. This economic, cultural and political power cements this common good, this common property of the urban community. But the development process is not limited to the city.
As Reinert shows, there is complementarity between the development of the city and the countryside near the city.
Urban dwellers will use their income from craftsmen, traders, civil servants, artists, teachers to buy the crops of the peasants around. The farmers will produce more, achieve economies of scale and, with the help of the town’s craftsmen, they will improve their tools and agricultural methods. The crops will be sheltered in attics behind the ramparts, in the abbeys. The monks who make a vow of poverty, guarantee the equitable sharing of reserves during shortages or periods of poor harvests. Confidence is growing everywhere and surpluses are traded with neighboring cities. The situation is simple during this historical period: the complementarity between town and country creates local development.
A countryside that is not close to a city remains poor. A city built without agricultural land will develop because the wealth it creates will allow it to develop agriculture in the neighboring region. Examples are known: Venice, the Italian ports, the cities of Holland have no agricultural land at home so they can only rely on their craftsmen, sailors, merchants. Maritime cities will grow faster because they use thousands of craftsmen, carpenters, workers to build their commercial and war fleets.
The city of Delft, an example of synergy.
The example of the development of the city of Delft in Holland is a case study: from the size and polishing of the glass to make lenses, the city produces long-view lenses for the navy and commercial navy.
It attracts scientists who develop and use the first microscopes. The painters start to use the magnifying glass to create paintings that are extremely precise and meticulous, perfectly restoring the play of light, the details of a portrait like a photo before the hour. Lentils are also used by artists to make black rooms and magic lanterns long before cinema.
Trade, arms, science, artists are driving an increase in knowledge and income all around the city.
These successful experiences in economic development offer a political lesson
Cities must keep out of power the big landowners who think differently and are logical supporters of conservatism and ancestral traditions and whose particular interests threaten the interests of cities.
The management of the common property, of the common good in a city is a lesson of participatory local democracy as it used to be in Greek or Egyptian cities.
Nothing to do with the despotic and feudal power of the Lord of the Earth. But the political organization of kingdoms and empires is based on dukes, counts, lords who are above all soldiers who only know the wars of conquest and looting of wealth in neighboring regions. Marriages are above all an opportunity to enlarge your family domain and seal an alliance with a military power that is committed to protecting your own wealth. These lords and nobles are francs who have conquered the territory of ancient Gaul, with regard to current France. Their riches are essentially land and they live harvested harvests around their castles
Florence, located in an agricultural region, will forbid the access to power of the landowners and it will be the traders, artisans, artists who will manage the development of the city.
The search for innovation, the exercise of creativity, goes through the principle of subsidiarity taught by the monks and which will find its most visible application even today in the plans for the construction of cathedrals, once the development of cities will allow a surplus of workers that will have to be occupied in the realization of works over several generations.
As we will see in the political institution of free cities members of life networks, the most wise lords will offer land to the Benedictine monks so that they build abbeys and form the peasants in the crafts and the crafts and trade, teaching, medicine and arts. Except that the rapid and sustainable development of free cities will become a powerful counter-power in the face of monarchies.
In France, this development managed by the Benedictine monks and then their military order of the temple, will ruin the King of France thus sidelined from all these new riches. We know the solution of King Philippe le Bel so that the Ruinée monarchy does not disappear: the arrest of the Templars on Friday October 13, 1307 and the confiscation of their wealth.
The royal absolutism implemented after 1307, we will see in part 3, the conflicts between power systems and network organizations, is thus always in place. The Revolution of 1789 then the republics retained the centralization of power and they use the structure of a State to control the country and prohibit the return to a participatory local democracy as during the flourishing medieval period.
The logical mechanism of economic development.
This logic, this development mechanism will start from the industrialization of countries. With, however, an essential political change compared to the medieval period: the prohibition of common property and the exclusive use of private property including means of production. What changes everything !
Excerpts from Reinert’s book with our summary and rewording:
The competitive advantage in management temporarily provides an annuity, a surplus of profits compared to others, which ensures a leading position in a market.
The minority of the richest city-states, in Venice and Holland, held a dominant market position in three areas: in economics, they enjoyed rents that generated growing profits that could support real wages and large taxes to finance their state structures (police, military, justice, education)..
These city-states had a very large and diversified industrial and craft sector that controlled a large raw materials market: salt in Venice, fish in Holland
Finally, these city-states have developed a very fruitful foreign trade. (Venice was long the capital of the slave trade between Asia and the Middle East “great consumer of slaves” (although around 600 the messenger prophet Muhammad bought the slaves around him to free them), ndrl). Holland’s cities traded in textiles, gemstones, glass lenses and salted and marinated herring from their manufacturing output…
The wealth created was protected behind strong barriers to market entry.
These barriers to entry were superior knowledge, manufacturing techniques and, above all, the use of powerful synergies through diversified manufacturing activities. This output was supported by economies of scale achieved through trade secured by military power.
Historical examples of this mechanism of economic development:
After 1485, England
imitated the structure of the triple rent created by the city-states of Europe. By means of a very authoritarian economic intervention, England created its own triple rent system: manufacturing, long-distance trade and a raw material rent based on wool. England’s success eventually led to the death of city-states and the development of nation-states, with the synergies found in city-states extended to a wider geographical area. (page 214).
In England after 1485, royal absolutism and autocratic management replaced the network organization defended by the Order of the Temple and the attempt to restore the time of the cathedrals by Joan of Arc was discarded and destroyed by the papacy and the King of France allied for the occasion with the English troops. That’s not the most important thing. The bottom line is that the virtuous process of development works.
In France during the medieval period
the Templar Fleet was trading long distance with the Americas: the Iroquois Indians in the north, Mexico and the Andes in the center and south. Rent of the Order of the Temple at the level of raw materials was based on the management of 90% of the land properties of the soil of France, which ruined the king of France who had only 10% of the land left to live and pay an inevitably insignificant army. It took the crimes of Philip the Fair from October 1307 to destroy the Templars, the network organization of France and to found royal absolutism. The system of industrial power will remain on this mechanism, this process of wealth creation, except that in this system, in this process, the common interest, the common good, the common property managed by the monks and defended by the Templars, will be banned and will disappear. Restoring the commons, common property in the process of wealth creation and political, economic and social development is one of the fundamental missions of the movement expressed on fileane.com.
Industrial development, from protectionism to colonialism:
Therefore, the history of industrial development in the capitalist system of power can be summarized clearly and briefly through the means employed by the owners of the capital invested in factories and trade. European countries understood that they needed to develop a diversified industry, and to ensure investor confidence in the capital of industrial companies, governments protected their nascent industry with tariff barriers.
The original aim was to saturate the internal market with mass-produced material goods in order to overcome misery (from the point of view of the states) and to reach a critical size in order to achieve economies of scale in other markets (from the point of view of the capitalists). When the internal market was saturated, the solution of colonialism towards the countries that supplied the raw materials was necessary.
The explanation becomes clear through Reinert’s book: colonialism is the international extension of the protectionism that states have put in place to protect their industries and use the virtuous circle of economic growth. In short, colonialism prevents commodity-exporting countries from industrializing themselves. Of course, because otherwise, they would inevitably and logically come to ruin, or at least slow down, the development of the industrialized countries first.
Few countries opposed this colonialism. The first and most important was the United States of America, which revolted against English colonialism in the late eighteenth century. As early as the 1800’s, the US developed its manufacturing according to the well-known process, and obviously used protectionism to promote its young economy. The ban on industrialization by colonized countries necessarily leaves them in a state of non-industrialization, that is, ostensibly poverty and economic development.
Why poor countries remain poor and social classes get poorer.
Neo-liberal ideology uses the Anglo-Saxon Puritan dogma and capitalist doctrine, making it fearsome and criminal.
Without oversimplifying liberal capitalist doctrine, Adam Smith posed the theory of market and competition. The grocer’s cynicism leads him to want to get rich by eliminating his competitors and to achieve this, he will work better than the latter. Customers will move from bad grocers to the best. Capitalism thus destroys the wrong producers and strengthens the best. In this theory, it makes sense for some to get richer and others to get poorer because they are excluded from markets.
Without repeating ourselves here too much, for we shall return to this later on the cultural level, let us not forget that behind this capitalist doctrine hides the dogma of predestination of Anglo-Saxon Puritans and the elites who are associated with them. When we oppose them, our enemies, we must add the puritanical religious dogma and the capitalist doctrine, which is a formidable ideology and by nature criminal, mafia. Its purpose is to make others richer by exploiting others and making them poorer.
From this capitalist theory will follow that of the specialization of activities based also on the theory of division of labor: to be effective, you have to divide the work and then divide and specialize the tasks. This will be Taylor’s method, the scientific organization of OST work. All that is scientific therefore goes in the direction of division to better control. We are at odds with bringing together various jurisdictions to act together in the exercise of power in order to achieve shared objectives.
David Ricardo has given an international dimension to this theory and obviously there is no question at this level of speaking of bad countries or states. Each country, on the other hand, has a particular environment that is favorable for a given production and must specialize in the most favorable production. So there is a diversity of production situations: Portugal specializes in Port wine and England in the textile industry. But this theory, as we have seen, does not take into account the increasing and decreasing returns and the necessary complementarity between the two to enable economic development capable of growth and prosperity. Ricardo clearly legitimizes the colonial economy in favor of the industrialized and rich countries as well as today the power of the world government of the Anglo-Saxon financial oligarchy.
The Liberal Theory of Protectionism
To combat inequality and the damaging consequences of free trade around the world, some economists have championed the theory of protectionism. Let’s go back here again to Reinert’s book: How rich countries got rich. Why poor countries remain poor.”
excerpts from Reinert’s book:
« That is why the most fervent advocates of industrialization (for tariff protection), such as Friedrich List (1789-1846), were also the most fervent advocates of free trade in globalization, once all countries were industrialized.
In the 1840s, Friedrich List formulated a recipe for “good globalization”: if free trade were to develop after every country in the world had industrialized, free trade would be the best thing for everyone.
The only point of divergence is the timetable for adopting free trade and the structural geographical sequence in which development towards free trade takes place”» (page 226)
The protectionism of infant industries was used at the beginning of industrialization in both Europe and the United States. It was essential to protect companies before they reached their critical size and became profitable.
Globalization and the use of free trade, in application of Ricardo’s arguments, are tantamount to prohibiting this protectionism from emerging or developing countries, just as today it prohibits Europe from protecting its new industries which use the innovations they have developed. Multinationals and transnational corporations can then expand their dominance in global markets.
Keynes defended the national economy to ensure full employment.
This real impossibility of waiting until all countries have industrialized and satisfied the needs of their citizens before they go to exchange additional products on free markets has given rise to new theories, including Keynes’.
Even KEYNES warned: “Capitalism is the astonishing belief that the worst men will do the worst things for the greater good of everyone” (1930s).
Capitalism addresses the virtues of cynicism that producers need in Adam Smith’s theory to satisfy the general interest. Keynes is concerned above all with full employment and in this sense he defends a humanistic culture in which Labor precedes Capital. In so doing, he will admit that production must remain local.
” I have sympathy for those who want to minimize rather than maximize economic interweaving between nations. Ideas, knowledge, art, hospitality, travel: these things are, by their very nature, international. But let the goods be made domestically whenever possible and convenient. And, above all, that finance is first and foremost national“ John – Maynard Keynes
Quoted by Herman E. Daly, a former chief economist in the World Bank’s Environment Department, in a illuminating article about the harmful effects of free trade: Scientific American, November 1993.
In terms of the time dimension of production activity, it uses money even if it has a problem with its saving function.
“Money is a link between the present and the future” John – Maynard Keynes (1930)
He is also wary of the arguments of the leaders of the capitalist economic system who, in order to legitimize their desire to maximize their profits in the short term, ignore theories and models, the principles of organization of an economic activity and stick to pragmatism and practical decisions.
“Practical minds, which believe themselves to be utterly immune to any intellectual influence, are usually the slaves of some dead economist.” John Maynard Keynes in his General Theory.
Keynes’s words affirm the need to organize the activity of wealth production according to rules, those that we have presented so far: complementarity between increasing and decreasing returns, complementarity between the three forms of ownership, the practice of subsidiarity, national currency in relation to the development projects of the citizens of this country… In short, he abhors wild capitalism guided by the mere obtaining of maximum profits and which selects old theories to orient the economic sciences according to its private interests.
Keynes argued that production should remain national to the greatest extent possible, in order to ensure full employment and eliminate unemployment. Keynes argued that money should remain national in character, to finance only production, not as a means of speculation through uncontrollable hoarding by states.
He indicated that in the year 2000, it would be necessary to work 20 hours a week to ensure that everyone had the minimum income to obtain the goods and services essential to survival. But he never explained what citizens could do with the rest of the available working time, especially in the non-market economy or to use the first source of knowledge.
Today the debate focuses on smart protectionism:
offensive protectionism to defend a young European industry like renewable energy technologies against low-cost imports from China. Defensive protectionism to protect agriculture and its diminishing returns. Smart protectionism to defend the EU economy against the evils of globalization and market deregulation.
In this political debate, Reinert uses the words of Gunnar Myrdal (1974 Nobel Prize winner) to denounce the fraud:
« opportunistic ignorance » s based on the fact that we are open to a world where the assumptions of economic “science” are manipulated to achieve political goals.
Technology and increasing returns, which are the main sources of economic power, create barriers to entry.
By forgetting this, economists serve the vested interests of nations in power.»
Gunnar Myrdal (prix Nobel 1974)
Here we find the limit of these economic theories: Ricardo’s diminishing returns and free trade are useful for leaving people in poverty or for destroying industry and crafts in a country in order to impoverish it. But the increasing returns used as a barrier to entry are also an economic, if not political, weapon to impoverish countries.
Impoverishing countries to better dominate them.
A poorer population will have less means to revolt because it will be deprived mainly of knowledge and technology. It will be sidelined from the virtuous circle of increasing returns and will be weaker in the balance of power with the richest countries.
The leaders of the financial oligarchy use the dogma of free trade totally disconnected from reality precisely to break up education systems, training, public services and health services to weaken a society and make it incapable of opposing the plundering of its markets by neo-colonialism.
When a period of great innovation presents itself, wealth must normally increase by itself because of these innovations, so, like the trawl of the fisherman at sea, the leaders of global finance must arm themselves to capture as much as possible of this wealth and therefore ask the people to pay more taxes, to pay more for consumer goods and services.
The financial mechanism is simple and has been used in a cyclical manner since the 18th century: private central banks use innovations as a pretext for selling loans in profusion, and then suddenly, in a financial crisis that they have organized, they ask for the immediate repayment of these loans, or they organize the insolvency of their creditors in order to force them to sell at low prices the assets they have bought, mainly real estate.
In recent years, this mechanism has also affected those states that have become indebted to private central banks, and we are in the sovereign debt crisis that citizens must pay off by sacrificing their standard of living. For the Anglo-Saxon financial oligarchy, the current masters of the world, the use of diminishing returns vis-à-vis commodity-exporting countries and the use of free trade to justify the deregulation of financial markets are the two pillars of their power in the domination of the capitalist economic system.
The “hot potato” in the hands of neo-liberal politicians.
As Reinert writes, following the authors of the other school, that of intelligence and knowledge, increasing returns are indeed “a hot potato” in the hands of politicians.
It is not difficult to create a virtuous circle of wealth creation and development, but for a ruling minority in a system of power that wants to enrich itself at the expense of others, the insurmountable difficulty arises when it comes to distributing the wealth produced.
How can we suddenly explain that the wealth produced by well-trained, educated, intelligent and creative human beings, capable of managing and finding synergies, how can we explain that this wealth produced in abundance belongs almost exclusively to a ruling minority and not to the rest of the social group? This is absurd!
No one can accept such a theft, such a despoilment of wealth, unless the social group is dominated by a political regime that legitimizes and hides this despoilment and maintains its domination through a power relationship guaranteed by the army and masked through social conformism towards this domination of a ruling minority.
To avoid this “hot potato”, increasing returns are used as a barrier to entry into the markets and thus become a source of exclusion and widening inequality by condemning countries to poverty and this can go very quickly, for example Germany in 1945.
” We do not attack the rich out of jealousy, but by self -defense. The grabbing of wealth is the cause of poverty. The rich are not only indifferent to poverty: they create it and maintain it! ” Jodie Foster Actress.
The Morgenthau Plan in 1945 for defeated Germany:
A last proof of the fearsome effectiveness of this method goes back to 1945 when, with the Morgenthau plan decided by the British and American conservatives, it was a question of permanently impoverishing Germany as a war sanction.
Western and Soviet allies began to destroy and reclaim the machines of German factories in order to transform Germany into a predominantly agricultural country with diminishing returns. By 1947, the results were disastrous, and there were 25 million Germans in excess of the country’s agricultural capacity at the time.
Even before Stalin’s 1930 agrarian reform to collectivize land when natural disaster and drought struck the country, even before their starvation deaths, the Anglo-Saxon leaders realized that these Germans would prefer to join East Germany, which was then the showcase of communism to the West.
The Marshall Plan from 1947 for Europe.
The Marshall Plan, from 1947 onwards, was soon to reindustrialize all the countries bordering the Soviet bloc in order to develop them so that they could counter the threat of the Soviet Union. The Marshall Plan simply took up the recipes of the past, which the US had also adopted after independence. The construction of the European common market is based on the same foundation, that of increasing returns. “The common market was presented to voters on the premise that increasing returns would increase wealth (Cecchini Report, 1988)” (page 171).
It therefore becomes clear that the development of a central structure in Brussels that serves as a relay to the liberal doctrine of free trade can only be in contradiction with European roots and makes it impossible to complete the European construction, a European construction whose completion can be much better achieved through network organizations brought together in a confederation. However, today neo-colonialism still prohibits poor commodity-exporting countries from industrializing themselves in order to develop. The only difference with the past is that this policy is camouflaged, hidden under the theories of free trade and economic liberalism.
The Failure of Liberal Policies and the Development of Poverty
Each time history shows the failure of these liberal policies and the revolutions that followed these years of rapid and scandalous development of social misery.
The revolutions of 1789, 1848 were the consequence of these monumental economic errors. The wars of 1870 to 1945 succeeded these revolutions as if the leaders of the Anglo-Saxon financial oligarchy had understood that they were better to organize human disasters themselves to profit from them than to see a workers’ revolution ultimately misdirected for their private interests.
The end of the Cold War and the revolution in computer and telecommunications technology are two major events that explain this unbridled and unthinking belief in the success of business and the advent of a world government established by the financial powers of the ruling oligarchy. Speculation against the euro since February 2010 has been curbed by the Chinese central bank’s purchases of euros, but this is not enough to avert the threat of a worsening financial crisis and the use of austerity policies and the impoverishment of Western populations.
The resumption of the Cold War and Russia’s war against Ukraine in February 2022 and its consequences in Europe, for our part, means that the European Union must finally break out of the trap set up by the leaders of the Anglo-Saxon financial oligarchy, the sect of puritans who are predestined to govern the world, and that it must finally become a real political union capable of ensuring the independence of the member countries and the policies necessary to counter and eliminate the external threats posed by the three systems of empire which compete for which of them will lead the economy of our planet , a complicated rivalry since the development of nuclear weapons and which is a serious threat of a third world war capable of destroying humanity and the diversity of life on Earth.
Democracies are the political system that has delivered the best possible development so far, but it cannot prevent inequality from rising and their leaders from becoming scandalously rich. They are based on myths, ideals, fictions. In France, the republican ideal Liberté Equality Fraternité is famous worldwide but the fact that we still believe in it
People no longer believe in the merits of democracies, and they are beginning to learn, to discover the knowledge, the knowledge that is hidden from them under the deceptions of the leaders of our systems of power. As Reinert points out and shows through his book: the knowledge we need to emerge from our economic and financial crises organized by the financial oligarchy is found in history, in the facts of political, economic and social history which show us how cities, peoples and nations have developed.
And the history of the first peoples, the Moso, the confederation of Iroquois nations, the indigenous peoples of the Trobriand Islands in Melanesia, those of the Amazon, the Himalayas, are not the last to show us how to live better, how to develop peace and our loves.
Indeed, what do we have to gain by saving this system of economic power? Can we finally place in this system the common property, the common good that inspires so much confidence and distributes so well the wealth produced through the synergies of different professions and diversified human economic activities? Can we wait for all countries to develop industrially before we know whether the free-trade model can work globally? Does the power to organize a more developed and sustainably advancing humanity necessarily and only by the industrial stage of all countries? An economist’s vision can be limited to this perspective for reasons of rationality, logic, not the vision of a poet who uses both sources of knowledge.
The transition from abandoning capitalism to developing life networks.
In the fifth part of this essay, we will present the transition between the abandonment of our systems of power and the development of life networks using this realistic and efficient production process highlighted by Reinert, List, Schumpeter, Keynes and many others since antiquity. Like List, we are in favor of a reasoned and controlled progression in this paradigm shift, of worldview. Industrialization of states is indeed necessary to develop local networks of living and to guarantee participatory direct democracy at the local level.
This involves the elimination of oligopolies and the elimination of the transnational power of global production groups, the restoration of the political action of citizens among all countries. We will come to that. But this is not about staying in Keynes, joining the dismayed economists, the indignant or the revolted against capitalism.
Have they been able since 2002, and this first time we asked this question on the net, to say clearly what they want? Staying in a system of power: improve it or establish another, or leave our systems of power for the alternative of the network organization, which is much more than another canon, another heterodox school of economists more or less serious and lucid in their vision of the human being.
After 1400, the wealthiest city-states competed much more than in the 13th century, but they were no longer part of a network organization that guarantees regulation in the service of common property. As early as 1350, there was the financial crisis in Europe because of the monetary policies conducted by Venice which capitalized the money brought from Mexico by the Templars and which Venice would support in exchange for royal credits to kings and princes. Florence, for its part, capitalized the gold still available around the Mediterranean and whose origin dates back to ancient Egypt when it was enough to fall down to collect the gold of Nubia.
Reinert speaks of the 13th century without once speaking of the Order of the Temple, it is true that in the financial center of London or in the office of a publisher who is even slightly concerned about the development and growth of his activity, this taboo is not about to fall and is not poet who wants. We do not blame him in any way, each his share of work and economically his book is very useful to us who defend this vision of a human being who much better than the beavers and their ingenious wooden dams on the rivers knew for a few centuries build our cathedrals and find the knowledge of the oldest temples on the banks of the Nile as the knowledge of the temples nestled in the heart of the highest mountains of the Earth.
On fileane.com, we use Hannah Arendt’s input to structure and shape the action. Arendt drew on the organization of Greek cities, themselves copied from the functioning of the cities on the Nile to highlight the 3 levels of activity in an organization where the human being occupies the central place: the work essential to survival, the realization of works capable of ensuring development, direct political action in participatory local democracy.
With the contribution of Reinert’s book, we complete this form with its content: judicious use of increasing and decreasing returns to create wealth and ensure economic development. This is the engine under the hood of the vehicle; these are the braquets that the cyclist will use on his bike… We have all the knowledge capable of developing a society, a new civilization… and we no longer have any reason to endure these impostures coming from the leaders of our systems of power and from the politicians at their service to submit us to their evil enterprises.
We quote Mahatma Gandhi:
« a conscious and standing man is more dangerous to power than ten thousand sleeping and submissive individuals.» Mahatma Gandhi
The poet who sees beyond the earthly horizon
once the imposture of the tyrants is broken, repeats without getting tired that tomorrow will be beautiful as are the moments of life after the human life which he carries in him, in his gaze, through the words he chooses in his freedom to create endless wealth of life which have no price, on no human market because these words of the poets serve the social bonds from children to women and men to the depths of their ages, for centuries and centuries, long before the markets are used to allow some people to take over the production of whole peoples and leave them in poverty. such a thing is not to be said.
With this book of Reinert, we know much more to want it even more because as yesterday our ancestors have experienced strong economic development, we can again.
Tomorrow will be beautiful and it will be good to live our happy days, with the flight of wild geese in Japan or here, dogs, beavers without forgetting cats and all those we love to share their earthly existence.
And because we far prefer dawn and dawn to the pinkish of pink, the mornings that rise rather than the big nights, we sing between poets to follow Jean Ferrat
« The world will be beautiful, I say, I sign.» Jean Ferrat
The wise men also say:
« We now face the greatest challenge that our humanity has ever faced in its history: stop our own programs of self-destruction , and transform society through an evolution of the art of living.» Mahatma Gandhi
Therefore, we can return to our poet and to the exercise of his mission of authority in our social life networks.