GADGETS VERSUS EXPLOITATION AS DRIVERS OF WORLD HISTORY

March 14, 2008 at 6:58 pm | Posted in Books, Economics, Financial, Globalization, History, Research, Science & Technology, Third World, World-system | Leave a comment

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Gadgets or Exploitation?

The rightwing view of how world history unfolded emphasizes inventions, behavior (“Protestant ethic”) and sociobiology ( roughly, genes).

A wonderful exemplar of this rightwing “triple helix” of gadgets/behaviors/genes is provided by the book “A Farewell to Alms” by the well known economic historian, Prof. Gregory Clark of UC Davis.

The leftwing vantage point on these world history issues emphasizes crimes, looting, conquest, slavery and subjugation.

The world, in this view, is primarily an arena of criminality on a world scale before it is an ingenuity arena. Conquest, massacres and slavery fund the famous and glamorous waves-of-gadgets which follow.

Clark’s views are highly “Westcentric” and “rightwing” in the sense explained above. Such views are fundamentally a backlash against current world trends and not an explanation of them.

The “leftwing” views where exploitation is the main actor are also deficient.

See the following:

China as the Antidote to

Oppression and Exploitation?

A Farewell to Alms: A Brief

Economic History of the World

By GREGORY CLARK

Gregory Clark is chairman of the department of economics at the University of California at Davis and author of A Farewell to Alms: A Brief Economic History of the World (Princeton University Press, 2007)

A new sun rises in the East. Americans ask themselves, will China’s exports gently burnish the warm glow of their comfortable lives? Or will China’s dazzling glare burn away the foundations of American prosperity? Can the West coexist in harmony with a Chinese economic colossus? Or will the economic power of Asia become a threatening military and political power?

In Adam Smith in Beijing (Verso, 2007), Giovanni Arrighi, an economic sociologist at the Johns Hopkins University, sees the rise of the East as representing an opportunity to escape an international order based on oppression and exploitation. In the Arrighi cosmology, a ruling class of capitalists, first in Britain, then in the United States, has dominated the world since the Industrial Revolution, having their wicked hegemonic way with the weak. The riches of the West were created by the oppression of the rest.

Arrighi, along with Samir Amin, Andre Gunder Frank, and Immanuel Wallerstein, is one of the leaders in world-systems theory. This school has extended Marx’s idea of exploitation within societies to international relations. Trade between rich and poor countries is not equal exchange, according to this view, but instead systematic exploitation of the poor. Arrighi’s earlier books, particularly The Long Twentieth Century: Money, Power, and the Origins of Our Times (Verso, 1994), are widely cited. This latest work, however, illustrates why world-systems theory has found little purchase except in the most intellectually undemanding environments (including, apparently, sociology departments).

In 1800, China, before being overwhelmed by the military might of the West in the 19th century, had attained as high a level of economic development as Europe, Arrighi argues. But unlike Europe, Chinese growth did not depend on the exploitation of subordinate classes and countries. Militarily defeated, however, late imperial China was forced into subordination, and thus impoverishment, by the hegemons.

The Communist Revolution in China eventually created “extraordinary social achievements,” as Arrighi puts it, in literacy and health care in the Mao era that laid the foundation for recent economic growth. China has now returned to its earlier, noncapitalist, nonexploitative economic system: “accumulation without dispossession,” in Arrighi’s parlance. As its income has risen, China has emerged as an economic and political competitor to the United States in international relations. It now offers to poor societies, he says, “attractive alternatives to the trade, investment, and assistance of Northern countries.”

The disastrous misadventure of the Iraq war has hastened the “terminal crisis of U.S. hegemony,” Arrighi argues. Though the outcome is not decided, the neocon Project for the New American Century, to establish a truly global capitalist empire and contain the Chinese menace, is in severe jeopardy. An international struggle is being waged for the soul of humanity. If the Chinese triumph, then humanity can potentially achieve “the establishment of the kind of commonwealth of civilizations that Smith envisaged,” Arrighi writes, and “a socially more equitable and ecologically more sustainable development path than the one that has made the fortunes of the West.”

The likely success of the Chinese model, he predicts, will mean that the United States will not be able to “impose coercively upon the world its right to an extravagant way of life.” In other words, the rise of China will imply a decline in American living standards as cooperation internationally replaces exploitation.

How does the Adam Smith of the title enter this story? Arrighi wants to show that, ironically, modern Chinese growth represents the true fulfillment of Smith’s vision in The Wealth of Nations.

In Arrighi’s interpretation, Smith, the champion of capitalism and individual freedom, so beloved of the right, turns out to have been an enemy of unfettered liberty, and instead a friend of the Chinese bureaucratic-capitalism vision of growth. Milton Friedman, the Chicago School, and the whole economics establishment completely misread him. He was not an advocate of limited government and free markets.

Rather, Arrighi would have it, Smith’s main concern was the promotion of big government as a constraint on the evils of the market: “The dogmatic belief in the benefits of minimalist governments and self-regulating markets … were completely alien to Smith.” Further, Smith saw, even in 1776, “China rather than Europe as a model of the kind of market-based economic development that was most advisable for governments to pursue.” The Chinese model was to be preferred because it was a natural, inward-focused growth as opposed to the unnatural trade-driven growth of Europe, which relied on the expropriation of the raw materials of the rest of the world. The recent reforms of the Chinese economy also follow the approved Smithian path, Arrighi writes: “As Smith would have advised, Deng’s reforms targeted the domestic economy and agriculture first.”

How plausible is Arrighi’s interpretation of the current juncture of West and East?

A crucial failure in Arrighi’s thinking is his obsessive misconception that all economic growth in the West since the Industrial Revolution has been provided by the brains and brawn of the dispossessed of the developing world. Yet generations of research by economic historians — David Landes, Deirdre McCloskey, and Joel Mokyr, among others — show that the wealth of the West was homegrown, the result of a stream of Western technological advances since the Industrial Revolution.

Arrighi, for example, reflexively assumes that in the 19th century “Indian workers were forcibly transformed from major competitors of European textile industries into major producers of cheap food and raw materials for Europe.” In fact, technological advances in England, not any compulsion by colonial profiteers, drove out the much cheaper Indian workers from the cotton-textile industry. The East India Company, the ruler of much of India until the end of the Industrial Revolution, had every interest in maintaining the export of Indian muslins, one of the most valuable Indian exports in 1760.

Similarly the United States became an industrial colossus in the early-20th century through advances in techno-logy that included an ability to extract from American soil all the raw materials needed for its growth. Only in the late-20th century did imports of raw materials become of any importance.

Arrighi’s basic misconception leads him to conclude that growth among the rest must imply decline for the West. But the last 20 years, when significant growth has occurred both in China and in India, have been prosperous ones for the United States as well. Real income per person in America has increased by 50 percent in those years, despite the rise of China and India. That rate of increase is similar to the rise between 1950 and 1987, when China and India stagnated. There is no sign that the rise of the East is clawing back the growth of the West. That is because the overwhelming source of growth in the United States is technological advance within the U.S. economy.

The growth of the Chinese and Indian economies will exert pressure on U.S. incomes through the increased demand in the world economy for commodities — most important, oil. If everyone in the world were to consume as much oil as Americans do now, then world oil output would have to be more than five times greater than at present. As Chinese demand for oil has risen, China has been aggressively seeking supplies of oil in Africa and the Middle East, doing deals with countries hostile to the United States such as Iran and Sudan.

But even in that regard, the Chinese impact on American incomes through higher commodity prices will be modest. Even at current prices of roughly $100 per barrel, annual U.S. imports of oil are still less than 4 percent of national income. A further doubling of oil prices, to $200 per barrel, assuming we used just as much oil per person as at present, would consequently reduce U.S. income by less than 4 percent. But since technological advance is increasing income by more than 2 percent per year, that hit to the American economy would be compensated for by less than two years of normal growth.

And there is plenty of room for economizing if oil becomes permanently much more expensive. Currently in America we consume the equivalent in energy of six gallons of gas per person per day. But energy is even now so extravagantly cheap that most of it is squandered. We drive huge distances at the slightest pretext, in giant, gas-hungry vehicles. We live in cavernous houses — the average person in the United States, including each child, has 900 square feet of expensively conditioned, mostly unused space. Towns sprawl across the landscape so that the only way to get to work or to shops is by car. Sidewalks have disappeared in some locations as useless adornments from a bygone age.

Some countries in Europe, such as Denmark, which have by public policy made energy much more expensive, already use only the equivalent of about three gallons of gas per person, with little cost in terms of living standards. Over the long run, even more substantial reductions in oil usage are feasible at modest cost. So however big the future Chinese impact in world commodity markets, a perfectly satisfactory living standard will be feasible. The rise of China and India, with 2.4 billion people between them, is hastening an energy-scarce future. But that future is not one we need fear.

Arrighi’s assessment that China now offers poor societies “attractive alternatives to the trade, investment, and assistance of Northern countries” seems a conclusion that only the most ideologically blinkered could hazard. In recent years, Europe and the United States have switched, at least outwardly, to a policy emphasizing the promotion of democracy, human rights, and transparency in their relations with poor countries. There has been reluctance to draw up agreements with governments for access to raw materials when those countries’ ruling cliques will appropriate most of the benefit. China’s aid and trade policies in contrast have been exclusively rooted in its own economic interests, which in the case of poor economies typically lie in access to raw materials. There has been minimal concern with who actually benefits from these deals.

China has had little scruple in doing deals with corrupt or oppressive governments. It maintains friendly relations with the Myanmar junta, for example, acting as their main arms supplier and trading partner. Myanmar exports raw materials, mainly timber, to China, and it imports manufactured goods. But that pattern of trade is exactly what Arrighi so vigorously laments in the West-rest trade of the previous two hundred years.

In Africa, China has been happy to arrange deals with the ruling clique to get the oil and timber of the Congo Republic, even though President Denis Sassou-Nguesso (who came to power most recently in a civil war in 1997), his family, and his entourage are notorious for their extravagance with national resources while the masses live in squalor. Sassou-Nguesso attained notoriety by running up a $285,000 New York hotel tab in 2006 on a trip to deliver a 15-minute speech to the United Nations at the same time his country was begging for debt relief from the International Monetary Fund and the World Bank.

Arrighi’s interpretation of Smith is as contentious as his views on the modern world. There are many ambiguities in Smith’s writings. Smith’s comments on China in 1776 are limited, and his knowledge of conditions there was sketchy. But nothing in The Wealth of Nations suggests Smith saw China as a model for Europe to follow. Indeed he saw China as a stagnant society that had exhausted its growth potential.

“China seems to have been long stationary, and had probably long ago acquired the full complement of riches which is consistent with the nature of its laws and institutions,” he wrote. “But this complement may be much inferior to what, with other laws and institutions, the nature of its soil, climate, and situation might admit of.”

In summary, the evidence Arrighi offers for his sweeping cosmology is astonishingly thin. The book indeed is little more than an extended anti-market, anti-capitalism, anti-Western harangue. Statements of dramatic import are proffered with little explanation: “The decisive battle to contain the rising power of China is still being fought in Iraq”; the Iraq War “aimed at using military might to establish U.S. control over the global oil spigot”; “China is not a vassal of the United States, like Japan or Taiwan.”

The book offers more insight into the sad state of intellectual development in sociology departments, even at such prestigious institutions as Johns Hopkins, than it does into the realities of wealth and poverty in the world economy.

Gregory Clark is chairman of the department of economics at the University of California at Davis and author of A Farewell to Alms: A Brief Economic History of the World (Princeton University Press, 2007).

CAMBRIDGE FORECAST GROUP: CFG JAPAN BOOK

March 14, 2008 at 5:37 pm | Posted in Economics, Financial, Globalization, Japan, Third World, World-system | Leave a comment

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CAMBRIDGE FORECAST GROUP:

JAPAN BOOK

ISBN: 433150929X

Year & Month: 2002/12

Publisher: Kosaido

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CAMBRIDGE FORECAST GROUP: WORLD ECONOMY BIG PREDICTION BOOK « Cambridge Forecast Group Blog

March 14, 2008 at 4:58 pm | Posted in Economics, Globalization, Third World, World-system | Leave a comment

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CAMBRIDGE FORECAST GROUP: WORLD ECONOMY BIG PREDICTION BOOK « Cambridge Forecast Group Blog

BANK FOR INTERNATIONAL SETTLEMENTS BIS REVIEW NO. 30 2008: FINANCIAL TURBULENCE & GLOBALIZATION

March 14, 2008 at 4:45 pm | Posted in Economics, Financial, Globalization, Research, World-system | Leave a comment

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BIS Review

Bank for International Settlements

BIS Review No 30 available

Press, Service (Press.Service@bis.org)

Fri 3/14/08 11:55 AM

Publications, Service (Publications@bis.org)

Please find BIS Review No 30 attached as an Adobe Acrobat (PDF) file.

Alternatively, you can access this

BIS Review on the Bank for International Settlements’ website by clicking on http://www.bis.org/review/index.htm.

What’s included?

BIS Review No 30 (14 March 2008)

Stefan Ingves: Can the authorities manage crises in the financial system?

Mark Carney: Addressing financial market turbulence

Glenn Stevens: Monetary policy and inflation – how does it work?

Philipp Hildebrand: Globalisation and current developments in the financial markets

Irma Rosenberg: Current monetary policy – a difficult balancing act

Paul Jenkins: How trade and impediments to internal trade affect the Canadian economy

________________________________
please e-mail
press.service@bis.org.

BIS Review

Bank for International Settlements

BIS Review No 30 available

Press, Service (Press.Service@bis.org)

Publications, Service (Publications@bis.org)

Fri 3/14/08

GEOPOLITICS OF ENERGY: KLARE BOOK

March 14, 2008 at 2:10 pm | Posted in Books, Economics, Financial, Middle East, Oil & Gas, Research | Leave a comment

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Rising Powers, Shrinking Planet:

The New Geopolitics of Energy

Michael T. Klare (Author)

April 15, 2008

EDITORIAL REVIEWS

Review

“A brilliant exposition on one of the gigantic problems facing society. Klare is a top expert on the politics of energy and resources. Read him!”—Paul R. Ehrlich, author of The Dominant Animal

“Four centuries ago, as the conquistadors roamed through South America, it was the search for gold that drove the clash of empires. A hundred years later, as the great powers fought over the West Indies, it was the quest for land that could grow sugar cane. Today, the key commodity is oil. No one knows this subject better than Michael Klare, and his book is a trenchant and informative guide to what the fatal thirst for oil means for the tensions and rivalries of our fragile planet.”—Adam Hochschild, author of King Leopold’s Ghost

“If you want to understand the future of international relations, worry less about ideology and more about oil reserves. Michael Klare’s superb new book explains, in haunting detail, the trends that will lead us into a series of dangerous traps, unless we muster the will to transform the way we use energy in this country. As illuminating as it is unsettling.”—Bill McKibben, author The Bill McKibben Reader

“Once again, Michael Klare has vividly spelled out the geopolitical ramifications of resource scarcity as he did in both Blood and Oil and Resource Wars. His new book deals with our pending clash as we enter an unprecedented time of surging demand for oil while its conventional supply peaks. The book is a serious must read for any student of geopolitics.”—Matthew R. Simmons, author of Twilight in the Desert

“When danger looms, ignorance is not bliss. Rising Powers, Shrinking Planet defines a new benchmark for understanding the perilous complexities of strategic natural resources and how they shape the modern world. Klare articulates his message with sober honesty and appropriate urgency. If knowledge is power, it is also empowering; let us use this information to rekindle hope and commit to action, vigorously adopting the practical and profitable solutions that already do exist.”—Amory B. Lovins, author of Winning the Oil Endgame

Book Description

From the author of the now-classic Resource Wars, an indispensable account of how the world’s diminishing sources of energy are radically changing the international balance of power Recently, an unprecedented Chinese attempt to acquire the major American energy firm Unocal was blocked by Congress amidst hysterical warnings of a Communist threat. But the political grandstanding missed a larger point: the takeover bid was a harbinger of a new structure of world power, based not on market forces or on arms and armies but on the possession of vital natural resources. Surveying the energy-driven dynamic that is reconfiguring the international landscape, Michael Klare, the preeminent expert on resource geopolitics, forecasts a future of surprising new alliances and explosive danger. World leaders are now facing the stark recognition that all materials vital for the functioning of modern industrial societies (not just oil and natural gas but uranium, coal, copper, and others) are finite and being depleted at an ever-accelerating rate. As a result, governments rather than corporations are increasingly spearheading the pursuit of resources. In a radically altered world- where Russia is transformed from battered Cold War loser to arrogant broker of Eurasian energy, and the United States is forced to compete with the emerging ‘Chindia’ juggernaut-the only route to survival on a shrinking planet, Klare shows, lies through international cooperation.

Product Details:

  • Hardcover: 352 pages

  • Publisher: Metropolitan Books (April 15, 2008)

  • Language: English

  • ISBN-10: 0805080643

  • ISBN-13: 978-0805080643

CAPITAL MARKETS ASIA

March 14, 2008 at 1:05 pm | Posted in Asia, Economics, Financial, Globalization, Research | Leave a comment

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FinanceAsia Capital Markets:

Friday, Mar 14 2008

FinanceAsia Capital Markets Weekly (editors@newsletter.financeasia.com)

 

Fri 3/14/08

FinanceAsia Capital Markets Weekly (editors@financeasia.com)

 

DEBT

JBIC pulls off last-minute Eurodollar bond
Despite volatile markets and a tight timeframe, the Japan Bank for International Cooperation successfully raises $500 million.
By Dan Slater

Malaysia’s rating and outlook remain unchanged
The unexpected and potentially destabilising outcome of Malaysia’s recent elections has not affected the sovereign’s ratings.
By Rosie Slater

Depfa intensifies public sector investments
Asia’s wide spreads allow Depfa Bank a unique opportunity to accelerate its investments in the public sector in Asia.
By Rosie Slater

Crown mulls loan as market deteriorates
The logistics and moving company may turn to the loan market following the continued deterioration of the bond market.
By Rosie Slater

EQUITY

Another LG Display sell-down by Philips
The Dutch firm triggers an ADR sell-off after offloading $1.1 billion worth of LG Display shares at an 8.1% discount.
By Anette Jönsson

Suntech Power raises $500 million from upsized CB
The bonds are priced with a 36% conversion premium after the stock has fallen 66% since late December.
By Anette Jönsson

Solargiga returns with scaled-down IPO
The deal, which will be open for only two days, is offered at a fixed price allowing the solar power company to raise $127 million.
By Anette Jönsson

China Pacific Insurance calls off H-share IPO
The Chinese life insurer abandons its $3.2 billion offering due to limited pricing flexibility and a tough market, but two smaller listing candidates decide to go ahead.
By Anette Jönsson

Vietnam lifts investment cap for foreigners
The government increases the cap for foreign investments into unlisted companies from 30% to 40%.
By Lara Wozniak

COMMENTARY

Profitability cycle peaks for airline industry
Weaker airlines will be forced to restructure and some will go out of business due to high oil prices and falling demand, according to UBS analysis.
By Howard Winn

Credit crunch: Japan’s lessons for the US
Japan’s experience in the 1990s shows that a credit crunch can destroy wealth and dampen growth in the real economy for years. The US won’t be immune.
By Dan Slater

PEOPLE ON THE MOVE

BNP Paribas’ Yuen to join Bear Stearns
Taking on a new role as head of equity capital markets, Yuen will help to expand the US investment bank’s ECM franchise in Asia.
By Anette Jönsson

Deutsche Bank strengthens Asia ECM team
Two senior bankers relocate from Europe while Asian bankers Rowena Chu and Ashok Pandit are promoted.
By Anette Jönsson

Private bankers leave JPMorgan in Hong Kong
Six former executives from JPMorgan Private Bank in Hong Kong move to Deutsche Bank’s private wealth management business.
By Lara Wozniak

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FinanceAsia Capital Markets: Friday, Mar 14 2008

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