Posted tagged ‘Adam Smith’


December 18, 2014


Erle Frayne D. Argonza

Across the continents, where markets have predominance in the economic sphere, there has always been the antipodal tendentialities of laissez faire and dirigisme. The bone of contention has been the state’s role in the economy. These tendentialities have surely represented two (2) hard-line oppositional streams.

Mercantilism, the progenitor of dirigism, contended that regulation should govern production, distribution, consumption and exchange. The (interventionist) state should be at the center of regulation, with the central goal of all economic pursuits being the accumulation of the wealth for King. Old Nationalism had held on to this contention, with the revision that wealth should be accumulated for the nation as a whole and no longer merely for the King, wealth that is correspondingly allocated to the folks in the form of wages and welfare (this ‘wealth for nation’ line is admittedly a concession to the Smithian physiocracy, a competitor discourse). Only the state, not the market, can best perform redistributive responsibilities for welfare, jobs and wages. Necessarily, development should be undertaken with strong state regulations in the four intervention areas mentioned. The Keynesian revolution revived the dirigist contention, using a demand-side premise, and held sway across the globe for around half a century since its inception.

Laissez faire, whose earliest articulators were the physiocrats, opposed dirigist doctrines with extreme zeal. Accordingly, the state should only intervene in matters of defense, justice and public works, and should keep its hands off the market. Accumulating wealth is a matter of private sector concern (industrialists and landlords), while free trade must be the condition of international exchange and distribution. Even matters of welfare must be left to market mechanisms to provide. Development efforts, i.e. the ones undertaken by ‘3rd world’ economies, must follow the laissez faire path. The logic behind the contention is that the market will produce the entrepreneurs who will be enticed to embark on bold ventures should they be left on their own to take off ‘infantile enterprises’.

The problem arises when, due to the predominance of non-market mechanisms, such as clientelist relations and redistribution-based exchange systems (haciendas, latifundia), development could hardly take off at all. In cases where entrepreneurs are of residual numbers, such as the one demonstrated by Philippine experience, laissez faire strategies would prove pathetic in results. This entrepreneurial scarcity had justified the adoption of dirigist policy frameworks, the principle ones being those that guided the ‘import substitution industrialization’ of 1947-1968. Various 3rd world states have sponsored the dirigist path, employing diverse models (socialist, mixed market-socialist), with fairly good results for many of them. The articulators of such states have argued that no country had ever prospered thru the laissez faire route, and that laissez faire can only work out when development had reached a highly mature level when consumerism propels growth, and where economic fundamentals are very strong and stable.

Many developing economies actually encountered tremendous snags as their states chiefly sponsored development efforts. Rent-seekers of every kind appeared on the scene, serving as barriers to the effective entry of possible investors from among potential competitors. In the Philippine case, asset reform in the agrarian sector had been a perennial failure, thus further complicating the already complex maize of structural problems. What happened, according to the defenders of laissez faire doctrines, was that dirigisme made the ensconced patrimonial groups become further entrenched, thus leading to a vicious cycle of slow growth, high poverty, high unemployment, and relative stagnation.

Such a situation served as the impetus for embracing neo-liberal reforms over the last twenty-five (25) years by the developing economies, the Philippines included. Laissez faire returned with a vengeance, popularizing free trade in the international sphere, and structural adjustments in the domestic sphere and public sector, to note: liberalization, deregulation, privatization, liberalized currency markets/devaluation, down-sizing, minimal/residual fiscal stimulus & budgets for social services, tax reforms and decentralization. Such a policy regime of ‘structural adjustments’ were instrumental in integrating national markets into a globalized one where there is freer flow of tradable goods, investments, information and labor. Not only that, the antipathy of foundational physiocracy towards manufacturing (biased for agriculture) returned, as cheap imports (owing to liberalized trade) destroyed established industries leading to ‘de-industrialization’.

Where are we twenty-five (25) years after instituting market reforms under the aegis of ‘structural adjustments’ (note: we began through the ‘structural adjustment loans’ of the World Bank, c. 1979)? National income continues to grow at dismally low rates, poverty had increased during the latter phase of the reforms (decreased only recently), unemployment remains high amid positive growth, and our developmental stage continues to be stuck up in the ‘growth stage’ (failed to reach ‘maturity’). Globalization, with its attendant ‘structural adjustment’ policies, has weakened nations, even caused fragmentation in others, a fact that had likewise been replicated in the Philippines with its separatist movements. Free trade had destroyed domestic industries (the USA case was hit so hard by this one), as some had to fold up (Marikina shoes exemplifies the Philippine case) and transfer elsewhere (Procter & Gamble-Philippine is an example). With weak or nil ‘safety nets’, chances are that many producers (e.g. fruits, vegetables) will lose against cheaply-priced imports. One thing is clear for the case of many developing economies, including the Philippines: market reforms failed miserably to get them to development maturity, even as it set back the development path of others.

So if both dirigisme and laissez faire have been failing in making life better for the nation and the majority of the people, what discourse than can work out to salve the ailments of most developing states? Expectedly, a ‘renaissance of nation-states’ has become the wave of the present, with many of its articulators defending a return to dirigisme in its old form—in its highly protectionist form. I used to be among such articulators, even as I now argue that Old Nationalism can have deleterious results when pushed to the extremes. We can’t wish globalization away, it is here to stay and galvanize some more, even as it challenges us all to path-find the opportunities that it can offer while neutralizing the threats that could result from it. In other words, re-echoing Herr Reich’s and Mdm Arroyo’s elucidations on the subject, I am now wont to advocate for a New Nationalism or neo-nationalism, a discourse that advances beyond the narrow confines of extremist dirigisme and laissez faire.

Let me move next to the key premises and contentions of ‘new nationalism’-Philippine style.

[From: Erle Frayne D. Argonza, “New Nationalism: Grandeur and Glory at Work!”. August 2004. For the Office of External Affairs – Political Cabinet Cluster, Office of the President, Malacaňan Palace.]



September 14, 2008

Erle Frayne Argonza

To all fellow men and women out there who may have deep fondness for the liberal capitalist model of economic adaptation, I hope that you can make some adjustments in your cognitive banks. Capitalism is not a permanent facet of human life, but merely one among various epochs that will come to pass. Only impermanence is sacrosanct in the cosmos, so please refrain from singing hallelujah to a world system that is on its death knell as I articulated in a previous article.

And please refrain from swallowing hook-line-&-sinker the contentious propaganda of Francis Fukuyama about the ‘end of history’, that accordingly history had concluded with the galvanization of liberal capitalism, that history makes no more sense. Fukuyama’s theory is a slapstick narrative of hyper-valuation of the ‘mad economics’ of late capitalism and hypo-statization of reality that has no relation at all to the real in the world out there. Fukuyama had taken as ‘real’ what is actually ‘virtual’, and froze time much like unto a fairy tale of timelessness, of history-less Nietzschean moment that is fit more for infants than for adult humans.  

Fukuyama epitomizes the ‘mad economics’ of all those Pied Pipers of the global oligarchy for whom he works, and his discourse is akin to the ‘mad discourse’ so described by the late Michel Foucault. The ‘mad economics’ of Friedman, Hayek, Fukuyama, and all those technocrats who serve as processors and bagmen for the global oligarchy, is precisely symptomatic of that colossal ailment of a world system, and as we all know, madness can never salve ailments but rather hasten the system’s death. Caput! Blow your horns, prepare dirges to this Dead One!

Unless that you yourselves have become maddened by the seemingly infinite monies flowing unto your purses as you are among the beneficiaries of ‘late’ capital, unless that you are indeed now suffering from combined maladies of sociopathy and schizophrenia, unless that sanity had departed from thee forever, please heed the last plea of your own conscience where sanity had retreated: CAPITALISM IS DEAD! No amount of propagandizing, of contorted interpretations, can ever change the course of history at this juncture, as we are all headed for a TOTAL SYSTEM COLLAPSE in the months ahead. Read that please: MONTHS AHEAD, not years ahead.

What went wrong with capitalism? I’m sure all of you fellows knew what went wrong, do I even need to answer that? Your previous thinker mentors, among economists and sociologists, forewarned you all of the forthcoming demise of capitalism, but you paid nary an attention to those brilliant minds as you were so engrossed in your ‘conspicuous consumption’, behaving more like some infantile EATERS or as anthropoids rather than as thinking and spiritually evolving humans. You are all very much human, so please consistently behave like one, and begin by listening to the Inner Voice of your conscience, for that voice is your soul’s.

Let me summarize the diagnostics, forewarnings and/or prophecies of our thinker mentors from the West, and I’d stress WEST because there are some other thinker mentors from the EAST and SOUTH whose peregrinations are so recondite they are not so easily digestible. Let me just stress the WEST as this is what is common to us all. So let me re-echo the thinkers and their theories:

·        Karl Marx & Friedrich Engels: The internal contradictions between the private nature of capital (ownership of means of production) and the social nature of production. The ‘crisis of overproduction’ and the ‘law of the falling rate of profit’ are attendant patterns. Social revolution results, then the alternative society will be constructed.


·        Max Weber: Industrial capitalism’s granite product, the bureaucracy, led to dehumanization. He never forecast though whether this dehumanizing system can be sustained—but please read between the lines. (His contemporary Emile Durkheim had a similar observation about ‘anomie’ or normless state of urban/industrial society.)


·        Thorsten Veblen: The end-phase of industrial capitalism is markedly pathological. ‘Conspicuous consumption’ is the disease of this phase, the toxic behavior from the ruling class that later filtered down to the emerging middle class.


·        Joseph Schumpeter: The internal contradiction between the desire for profit and the revolutionary character of innovation. The demise of capitalism will see the possibility of the technical class taking over society and build that alternative system later.


·        Daniel Bell: The ‘post-industrial’ society had already been born right inside capitalism. A distinct modality in itself, post-industrialism will eventually prevail in a system that isn’t capitalist (or money economy) but rather knowledge-based. The ‘service worker’ had arrived on the social landscape, the prototype class of the future.


·        Theodore Adorno, Jurgen Habermas, Herbert Marcuse: ‘Late’ capital is characterized by the pervasiveness of ‘instrumental reason’, where reason is used to justify the non-rational (‘madness’ in Foucault’s argot), where state planning/intervention was infused into a system that scorned intervention.


·        Alvin Toffler: Both capitalism and socialism are based on hoarding, both are variants of the same industrial society of yesteryears, both are based on ‘2nd wave’ capital-intensive technologies and non-renewable energy sources. The ‘post-industrial’ society is altogether distinct, isn’t based on hoarding, production-consumption (‘prosumer’) is based on ‘3rd wave’ knowledge-intensive technologies and renewable energy sources, knowledge cannot be hoarded.   

I need not articulate further, do I? They all converged on one theme: capitalism is transitory, it bred social maladies (alienation, dehumanization, anomie, conspicuous consumption,…), is systemically flawed, and will be dismantled at sometime in the future.

No matter how delimited their theories maybe, as they all proceeded from certain perspectives (they were all ‘paradigm’-based in the jargon of Thomas Kuhn), they all proclaimed—in either tacit or explicit fashion—the coming demise of the system. They weren’t as silly as Fukuyama who popularized seemingly ‘satanic verses’ (distorted precepts) about a non-changing, permanent economic landscape called ‘liberal capitalism’, but were rather so adroit at social forecasting that they saw a vision of the future as they were articulating on their empirical observations of the present society.

So, fellows out there, prepare for the months and years ahead. We are headed towards those stormy months, years, maybe even decades. How the future society will come to shape is not easy to forecast. “Something blurs the Force, darkens our sight of the future,” declared a Jedi Master in the Star Wars cinema fame. Let me end right here.

[Writ 22 August 2008, Quezon City, MetroManila.]


September 10, 2008

Erle Frayne Argonza

Magandang umaga! Good morning from Manila!

As one can see in the title, Adam Smith’s ideas about political economy were unoriginal or copycat. So I’m going to articulate some notes about the matter. This may come as a shocker to the devotees of Smith and fanatical ideologues of liberal or free market capitalism, but it had to be accepted. This is a matter of fact, not of speculation or libel.

This note is not intended to demean Smith nor to denigrate those whose actions are copycat, far from it. Doing copycat items is among the pathways to success, this lesson is greatly stressed most specially among marketing professionals. If one cannot succeed through innovative or original ideas and practices, then take the ‘copycat way’. Network marketing had already perfected the ‘copycat way’ in fact, by way of optimizing the principle of duplication  (duplicate those presentation lines and themes before your niche customers or clients).

There are people who have this wrong notion that Smith invented liberal capitalism, and this has to be corrected. A simple knowledge of economic history will do. Having taught economic history at the Philippine’s premier university (U. Philippines) for some time, I know as a matter of fact that couples of influential writers emerged in the theoretic domain—who were focused on economic questions—before Smith appeared in the social landscape. Smith appeared when physiocracy, to which Smith properly belongs, was already making waves in France through the works of such gentlemen as Quesnay and Mirabeau.

But as one can see, Smith was a Scot, of the British Isle, and right in his own backyard there were couples of gentlemen too who wrote voluminously on the subject of political economy, from a vantage point that was already departing from the mercantilism of the previous couple of centuries. The departure concerned the sources of wealth, where the same thinkers opined that the ‘sphere of production’ had to be emphasized more than the ‘sphere of exchange’ which the mercantilists, notably Thomas Mun, discoursed on.

Some representative thinkers who preceded Smith were the following:

·        Sir William Petty (1623-87): Considered the founder of political economy. A charter member of the Royal Society.


·        John Locke, Sir Dudley North, David Hume, David Hume: Further propounded on basic principles of political economy. E.g. rent, trade, role of government.


·        Richard Cantillon: His book Essai sur la nature du commerce en general (1755) was “the most systematic statement of economic principles” (E. Roll, A History of Economic Thought).


·        Sir James Steuart: Wrote the voluminous Principles of Political Economy (1767), which was among the first textbooks in economics of that time.


·        Honore Gabriel Riqueti, Comte de Mirabeau: Enlightenment thinker, involved with the French revolution, a political moderate who opined that modernizing France better follow the US model of industrialization path. He influenced many younger physiocrates.


·        Francois Quesnay: Formally a fellow of the ‘economistes’ or ‘physiocrates’, was known for his popularization of the ‘tableau economique’ (economic table, title of his book), bringing political economy closer to empirical science.


·        Jean C.M.V. de Gournay: Another eminent fellow of the ‘physiocrates’, who collaborated with Quesnay in advancing principles of political economy.


·        Nicolas Baudeau : Wrote Introduction a la philosophie économique (1771).


·        G. F. Le Trosne: wrote De l’ordre social (1777).


·        André Morellet:  “ best known by his controversy with Galiani on the freedom of the grain trade during the Flour War” (quoted from Wikipedia).


·        Mercier Larivière and Dupont de Nemours: Also eminent members of the ‘physiocrates’.

Smith actually lived in Paris during his youthful heydays, where he stayed with the equally youthful Duke of Buccleuch circa 1764-1766. The Parisian exposure was Smith’s way of baptism into the illustrious physiocrats’ thought streams, and the rest was history.

So to my fellows in the professional world and this planet who continue to churn thoughts that Smith was the ‘originator of capitalism’, please rethink your opinions. Historical facts do not the least substantiate your thesis. Rather, what is right is that Smith brought political economy even closer to empirical science than ever, and his Wealth of Nations was a monumental effort during his time to construct a text book on the subject that was considerably a scientific material more than philosophy (ethics, metaphysics) though Smith still wrote philosophical treatises within the ambit of the methods of philosophy.

I need not belabor the point that Smith didn’t invent empiricism. Just by reflecting on the names above, one can see the names of giant figures in British empiricism (e.g Hume, Locke), who themselves took off from intellectual giants that preceded them (e.g. Francis Bacon).

So, please disabuse yourselves of Smith as ‘originator’ of anything. He never even boasted of originating anything at all. Rather, he systematized thought constructs that were already prevalent during his heyday. The purposes of his economic doctrines were already explained in some other articles writ by me.

[22 August 2008, Quezon City, MetroManila.]  


September 9, 2008

Erle Frayne Argonza

To continue on the theme of laissez faire, a doctrine started by the French physiocrats and systematized further by the Scots, let it be known that the principle of ‘free trade’ generated by physiocracy was largely a doctrinal defense of slave trade. [Physiocrats were philosophers who focused on economic problems, while philosophes who focused on political, ethical, and epistemological problems.]  

I already elaborated in a previous briefer that Adam Smith was an ‘intellectual prostitute’ whose services were procured by the British East India Company, precisely for the purpose of crafting in theoretical form the ‘free trade’ doctrine that was to justify, though subtly, the slave trade of that historic juncture. I gained the information about this rather shady background of Smith from a fellow political economist, Butch Valdez, a Fellow in the defunct Independent Review circle of 1990s Manila.

The physiocrats were already quite sophisticated in their modeling of economic reality then existing, and from out of that physiocratic subculture emerged Adam Smith whose synthesis of the existing doctrines of his time produced the Wealth of Nations. In the same book and related philosophical writings, Smith discoursed both on micro and macroeconomics, explaining in physiocratic terms the source of national income (termed ‘wealth’ at that time) from out of domestic engagements by landlords, capitalists and laborers, as well as international operations notably those accruing from overseas colonies’ operations.

It was from the latter that David Ricardo, disciple of Smith, took off to articulate the principle of ‘comparative advantage’. In the writings of Ricardo, the discipline of political economy moved much closer to empirical science, a feat that I myself had come to admire. David Ricardo was hardly any ‘intellectual prostitute’ to reckon with, but rather was he a financier who engaged in the evolving bourse and speculative pursuits of his own time. But slave trade was very much alive during his time, and there could be no doubt on his part that his theory of international trade served in no small measure to justify the conduct of slave trade.

In my youth yet did I come to learn, from the likes of Alejandro ‘Ding’ Lichauco, a Harvard-schooled economist and corporate executive, that free trade couldn’t be enforced without imperialism. It was a perfect income-generating strategy for Britain particularly since this world power had an entire empire to manage. Absent that Empire, and free trade will collapse. (Ding Lichauco was later a leading Fellow of the Independent Review in the 1990s.)

However, it was only much later that I was able to connect free trade directly to slave trade practices, thanks to my Fellows in the Independent Review, notably Butch Valdez. Slave traders were legion around the years 1700-1850, or up to the decade preceding the US Civil War and China’s Taiping Rebellion, and at one time British traders alone owned over 20,000 ships plying the oceans to market African slaves. Within America, Portugal and Spain both engaged in the same trade, though including Indians aside from Blacks, often with the blessings of the Vatican. It was huge bucks, this slave trade, more so that the bourses began to factor slave availability and chattel quality in the valuation of certain cash crops, which then factored in the valuation of main stock trading articles and nascent insurance forms.

The very same slave traders had in their employ not only those early stock traders in London and elsewhere, but also lobby groups and journalists whose tasks included bribing legislators and bureaucrats to keep them blind about the noxious trading of human chattel. There was no way that slave trade could survive in a policy environment of high regulation, more so in a context of ‘activist state’ intervening so heavily in investment areas (dirigist development).

It was only in a state with least regulations did slave trade flourish, the only regulations it seems coming from God Almighty (who would punish the traders for their sins post mortem). But even God Almighty had a long-drawn policy of non-interventionism in the physical plane, a laissez faire attitude that favored the physiocrats and their notorious slave trader sponsors. As far as Earth was concerned, it was the oligarchs who are gods till now, and so they define which doctrine to advance at every turn of epochs, historic periods and cyclical episodes.

Since the slave traders then had to reckon with powerful mercantilist doctrinaires such as Colbert, whose writings influenced France’s intellectual and governance circles and US’ policy makers notably A. Hamilton, there was no way that slave trade would fail to catch the eyes of politicians and libertarian groups, and before long the same trading ‘best practices’ would be criminalized as malpractices. The same mercantilist policy makers, who were dirigists and regulationists, swarmed the Kings’ courts everywhere, who didn’t mince words in attacking slave trade and slandering the traders before the nobles and mediocre bureaucrats (who always needed some godfather thinkers as mentor-guides for their actions).  

That was why physiocracy failed to gain foothold in its own home ground of France, and had to be exported to the neighboring British Isle where it obtained further fertilization. Finally, upon the further expansion of the British Empire, physiocracy caught the eyes of the nobles, politicians and bureaucrats. At that moment of convergence of interests for laissez faire, Smith was already ripe for the picking, via the British East India Company, whose satisfactory work was vigorously propagandized by the coteries of doctrinal converts.

Smith gained not only fame but also great following, and among his followers emerged David Ricardo and Thomas Malthus. The works of Smith and his contemporaries, five to seven decades later, inspired another coterie of philosophers, the Classical Evolutionists (Darwin, Spencer, Morgan, Tylor, Frazer, etc), whose theories of ‘natural selection’ (Darwin’s) and/or ‘survival of the fittest’ (Spencer’s) were defended via the physiocratic principles of scarcity and competition.

With a fairly equal number of free market-free trade theorists at hand, promoted in public and private circles by an emerging financier class that was awash with money and enjoyed wide social networks among the elites, free trade came to challenge and demolish mercantilist doctrines in shock waves of mighty discourses. Needless to say, for a certain period, the slave traders celebrated to the highest heavens their shallow victory for seeing their candidate doctrine ascend the intellectual pinnacle, their intoxication behooving them into believing perhaps that they were Gods of Olympus, a deluded image inherited by their financier pedigrees of today.  

That was then. Till slavery in its old form eroded. Free trade declined at the inception of the 20th century, but was later revived by the Chicago school and its adherents. Are we then ready to slide back into another round of slavery? What would be the forms of slavery this time, if the old form refuses justification and public acceptance? Isn’t the trading of human labor overseas a mere disguise for slave labor? Isn’t the privatization of jails—currently being experimented in the USA—an undisguised slavery as the prisoners will be considered chattel of Big Business, the same corporate groups that fund the purses of ‘corporate social responsibility’?

I’d end this piece right here. A pleasant day to everyone.

[21 August 2008, Quezon City, MetroManila.]


September 8, 2008

Erle Frayne Argonza

Amigos y Amigas, Buenos dias! Magandang umaga! Good morning!

The title of this briefer may come as a shock to all those who pretend to know Adam Smith and, more so, for those who revere Mr. Smith as a cult Icon. Just to clarify to everyone, being a political economist and ‘economic sociologist’, I hold Smith personally in high esteem as an intellectual, and this briefer is not meant to flaunt irreverence on this gentleman. Smith’s place in economic history is already granite rock, no matter if laissez faire or physiocracy has become obsolete before World War II yet.

The thing is, fact of all facts, contemporary thinkers such as those guys from the ‘Chicago school’, led by Nobel notable J. Friedman (weren’t there Nobel winners who were demented, nay demonic in mindset? E.g biologist Watson, who claimed that Blacks are genetically inferior in mental intelligence). The revival of laissez faire, as one can see, was responsible for flawed policy regimes that led to the series of short cycle crisis since the early 70s yet, and which is now leading finally to the Great Depression that will mark the death blow to liberal capitalism that is now on its terminal phase. From this point of time onwards, there can be no more return to laissez faire without bringing back humanity to a catastrophic Dark Age reminiscent of that demonic age of the Medieval Era when sanity fled humanity for nigh 200 year at least.

I used to be a Fellow of the Independent Review circle here in Manila, a circle of eminent and illustrious intellectuals and business leaders (I was the only humble fellow here in the 1990s).  Unfortunately, this group disbanded in 2002, due perhaps to methodological differences (I was active only till 2001 when I left for the USA for about a year). Entry to this group was by invitation, and that was how I got wind up of it: a female student of mine at the De La Salle University (DLSU Manila) had some of my articles (readings in class) read by his father, the Undersecretary Butch Valdez (Dept of Education) who in turn extended the invitation to the Independent Review circle thru her daughter.

Within the circle, it was Butch Valdez, the eminent Principal of the Valdez & Co that is one of the Philippines’ top auditing firms, who studied with intensity the physiocratic paradigm. He came across various readings about the life and works of Adam Smith, and wrote series of articles in the Independent Review (a journal-type magazine) in ‘97 and ‘98. Being among DLSU’s privileged coterie of most brilliant alumni, Valdez’s most revealing inquiry—Smith’s being a paid intellectual for the slave traders—did come as a shock to me, though it doesn’t shock me anymore that intellectuals do prostitute themselves before high paying clients (Antonio Gramsi and Edward Said devoted kilometric pages about intellectuals, both the ‘organic’ and the ‘autonomous’ types).

The research findings of Mr. Valdez concerning Mr. Smith can be summed up as follows:

·         Previous to the years before the ascent to eminence of Smith, slave trade and the British East India Co or BEIC were among the accepted economic modalities. Needless to say, the BEIC was engaged in the trading of slaves. [Actually, my research went beyond that, as the same BEIC was also engaged in the DRUG TRADE, in the opium trade, and had an army of its own separate yet from the King’s army.]


·         Physiocracy, which bannered ‘free enterprise’, was especially important for the BEIC and related monopolistic imperial groups since the paradigm promoted ‘free trade’ as well. Laissez faire was in a clash with mercantilism’s dirigist policy regime, remember, as it was also opposed to mercantilism’s promotion of industrialism even as laissez faire championed agriculturalism and the ulterior interests of the landlord class. Needless to say, physiocracy championed the cause of the gentry or big planter landlord and was scornful of the industrial class (in the Philippines there is nary a disjunction between ‘landlord’ and ‘industrial’ interests anyway, they are in conjunct.)


·         At that historic juncture when the British Empire was expanding and eclipsing its power, the BEIC desired to optimize its profits from out of diverse trading engagements, most of all for optimizing the slave trade. It need not belabored that slaves were tied up to colonial plantations, and plantation economy was the only modality permitted by the British Monarchy as the definitive economic formation for the ‘4th world’ peripheries (colonies). The BEIC engagements’ optimization can best be done by procuring the services of intellectual mercenaries who could articulate in sophistical vogue the very doctrinal expectations of the Lords of the BEIC Hierarchy  (a ‘Committee of 300’, per my research findings).


·         It was precisely at that juncture of expanded slave trade when the BEIC’s talent scouts eyed the services of a Scottish gentleman, named Adam Smith, who could fit into the mental Pied Piper prototype for BEIC enslavement pursuits.  It would be no wise to contend that Smith was a mental robot or ‘Manchurian Candidate’ controlled by overlords behind the scenes, for Smith was a man of his own mind, and up to the last instance he was indeed that ‘organic intellectual’ for the slave traders. He just couldn’t qualify as ‘independent intellectual’ though, for Smith was, in the yardsticks of the autonomous intellectuals, a ‘prostituted intellectual’ or ‘intellectual prostitute’.

The rest was history. Both the erudite and simpleton among the schooled populations of Earth know what Smith’s economic doctrine is all about. And many folks today are aware that the neo-liberal policy regime of the moment was a rehash of the same Smithian physiocracy.

I do wish that I could converse with Antonio Gramsci face-to-face today and request this noblesse thinker whether the term ‘intellectual prostitute’ is appropriate an inference for Adam Smith. I might have erred in judgement. Mr. Smith was a willing party to the enslavement, plunder and looting by the British oligarchs, and this ‘willing party to’ aspect may cancel out my inference altogether. Sous rapture, to quote Jacques Derrida.

At any rate, I have shared my notes, and thanks to the gentleman Butch Valdez for his inquiries shared to our circle. Thanks to Gramsci and Said too for their recondite peregrinations about intellectuals. Fellows, I hereby leave the inferential option to you, to decide whether Smith was indeed ‘intellectual prostitute’. Have a nice day!

[Writ 21 August 2008, Quezon City, MetroManila.]


August 18, 2008

Erle Frayne Argonza

Is the global economy moving downward towards a devastating collapse?

If we employ a long-term Kondratieff cycle to model the world economy, we can see that the period beginning in 1935 approximately (when the big market economies US-UK-Germany moved towards another cycle of growth approximately after the Great Depression, should have ended around 1995 approximately, after which comes another great depression.

As early as 1989, ramblings of a global collapse began to murmur in the US economy. Mexico, Japan, Argentina, and other economies followed in the 1990s, while Europe went through a general low-growth trend that was the most sustainable for the continent as a whole. Then came the Asian meltdown of 1997. Then the USA again went through a recession in 2001, a pattern that has been repeated again from 2008 to the present. It seems that the pillars of the world economy couldn’t get out of a short-term crisis without having to crash back to another episode of short-term crisis altogether.

Is it really a ‘short-term’ crisis in the first place? Or is it in fact a ‘systemic crisis’, and that the financial downspin the Northern economic pillars are going through could very well be the terminal phase of a very long cycle of growth that began after the end yet of the Treaty of Westphalia (1648)? That in fact, several long-wave Kondratieff cycles have already passed over since that time, and that finally the system is DEAD in the wood?

Well, not only the financial system but the whole of CAPITALISM is already on its death throes. Those oligarchs behind the systems now dying won’t see the systems they built die down just that without “bringing down the other houses” with them, it seems. Which means that, right after the terminal phase of the system, another huge, catastrophic war will come, which will later see another Westphalian-type treaty or so that will re-carve the contours of polities into a Post-Westphalian totalitarian technotronic global order.

Below is a briefer from the Executive Intelligence Review that summarizes the issue at hand.   

[18 August 2008, Quezon City, MetroManila. Thanks to Executive Intelligence Review database news.]

End of the Line for Financial System; Bankruptcy Issue Raised

Aug. 10, 2008 (EIRNS)—The death of the financial system was the implicit subject of several articles in the financial press over the weekend, reflecting the way reality is setting in and attitudes are changing.

  • “Investment banking is dying,” was the blunt statement by William Cohan, in a op-ed in today’s Washington Post entitled “The End of the Masters of the Universe?” Cohan says that the revenue streams of the investment banks are drying up, and that there is genuine fear in the corridors of power on Wall Street.
  • “We have a banking crisis and an agency crisis and a mortgage crisis and a coming credit card crisis. We’ve never seen anything like that before. And it all seems to be coming home to roost at the same time. That’s never happened either,” Charles Geisst, a professor of finance at Manhattan University, told yesterday’s Washington Post. He said the Great Depression was the last time the financial markets were hammered by such a variety of factors, adding: “But we did not even have credit cards in the 1930s; there was no such thing as student loans.”
  • The specter of generalized bankruptcy was raised by Yale finance professor Robert J. Shiller in an op-ed in the New York Times. Citing the failure of Bear Stearns and the government measures to bail out Fannie Mae and Freddie Mac, Shiller asks, “What if the next case is worse? No one in government seems to feel a responsibility for warning about such possibilities and formulating a detailed policy for dealing with them.” Shiller says that “Bankruptcy law is a good place to start. After all, the dreaded financial meltdown would amount to a wave of bankruptcies…. What would happen to the economy if hedge funds had to liquidate, one after another, in a financial crisis? We need to rethink the theory and practice of bankruptcy, given the new complexities.”

Shiller points to the inherent limitations in current bankruptcy laws, which were largely drawn to protect narrow financial interests, and are poorly suited to deal with systemic problems, when a “subsidized system of triage would be needed to identify which companies should be saved, with the main criterion being the possible economic impact of their liquidation.”

These comments, taken as a whole, represent the way discussions of the “unthinkable” are beginning to percolate, and converge upon the outlook of Lyndon LaRouche. Shiller’s mention of triage by bankruptcy echoes the emergency measures proposed by LaRouche, of putting the financial system itself through bankruptcy, protecting the population with a firewall, and freezing the financial paper while we determine what debts will, and won’t, be honored. Whatever Shiller may think about LaRouche’s proposals, he is implicitly admitting that the system is finished, and that we must prepare for its demise, making decisions on the basis of the interests of society, and not merely the narrow interests of financial institutions. Reality is setting in, and reality leads inexorably to the policies outlined by LaRouche.