‘LATE’ CAPITALISM CRASHING DOWN ITS DEATH BED

‘LATE’ CAPITALISM CRASHING DOWN ITS DEATH BED

 

Erle Frayne D. Argonza

 

Good evening!

The events in the Eurozone are now getting to be more alarming. Forecasters are now claiming that another round of recession is in the offing, as the bubble burst that began in Greece will spread to Spain, Ireland, and other member-states of the EU.

Will liberal capitalism continue to live a life that seems to hang in the balance? Or will capitalism need to restore itself through totalitarian means? What’s so wrong with the system that it just can’t be sustained enough?

Let me share to you past blog writings about the subject: ‘mad economics’ and the ‘demise of liberal capitalism.’

[Philippines, 23 May 2010]

‘LATE’ CAPITALISM ENDS IN CRASHING BLOW POST-‘MAD ECONOMICS’

 

Erle Frayne Argonza

Good afternoon!

At this moment, I’m sipping coffee contained in a pack that is sold for worth P130, or $3.00. The pack is one of the domestic brands of brewed coffee blends, ready for the drip coffee maker, of the Arabica and/or Robusta varieties. In economic parlance, this coffee is a commodity because (a) it was intended for exchange and not for the coffee producer’s consumption alone, and (b) money was used to acquire (purchase) it.

I have such deep fondness for coffee, as I acquired my coffee-drinking behavior as a childhood habit yet. In my hometown of Tuguegarao (city), Cagayan province (North Philippines), coffee beans were grounded into powder form and sold right inside the ‘wet’ market, was brewed using the local decoction techniques, and was consumed by people of all ages from pre-school to senior’s age. That was then, and that was how I learned to drink this beverage at age 5 more or less. I was hooked to the habit since then, even as I continued to drink milk that I still do till now.
Both coffee and milk are among my health formulas, and both are commodities.

The question I’m asking now is, will commodity-based economics survive the times ahead? Both coffee and milk will survive for sure, but will the money economy that underpins them survive as well? As to the broader world system of capitalism, will it survive too or is it in fact on its death knell today?

Capitalism was the last of the world systems that embodied the ‘money economy’ to which it properly belongs. With the opening of the 20th century, the socialist world system appeared on the social landscape and attempted to serve as an alternative to capitalism, but this experienced its early demise as its implementers found out that it cannot be sustained after all. Both capitalism and socialism are embodiments of the ‘money economy’ as it later turned out to be, they are just but two sides of the same coin: the ‘money economy’.

Socialism is gone, and no matter what attempts there may arrive to survive it in some other forms, this variant of the ‘money economy’ is gone. Now capitalism is all alone, and it is getting more real than virtual that it too is bound to crash a catastrophic end, and with its demise, the “last of the (economic) Mojicans” is bound to disappear (my apologies to Mojicans if my note sounds ethnically incorrect). And with capitalism’s demise, the whole of the ‘money economy’ folds up like unto a book that had reached its last chapter, and deserves more to be consigned to the archives of history.

The Frankfurt school thinkers, notably Jurgen Habermas, cogitated that capitalism’s life span was extended somehow, and was dubbed as ‘late’ capitalism in this last phase of the world system. In this phase, state planning and interventionism were infused into the system to extend its life. Before ‘late’ capital came the mercantile, free enterprise, and monopoly phases of this world system. Will there be another phase to capitalism after ‘late’ capital?

Before I answer that extension of life span, let me stress that ‘late’ capitalism shall end in the following process and manner:

· The re-introduction of liberalization—of free market and free trade principles—into ‘late’ capital shifted engagements away from production, the real foundation of the economy, to the sphere of predatory finance, thus producing the gargantuan ‘bubble economy’. The ‘physical economy’ of production transmogrified into the ‘virtual economy’ that produces no real value other than imaginary or delusional values. It is ‘mad economics’ in operation, no longer the ‘rational economics’ of mercantilists, classicists and neo-classicists.

· The ‘mad economics’ led to the yawning gap between actually produced values and the aggregates of financial derivatives and debts combined, to the extent that the former shrinks at a rapid rate relative to the latter. As bubbles burst from one commodity sector to another, leading eventually to a crisis of gargantuan proportion, all the more will production shrink, unable to produce values that can input into the demand functions for fresh money to pay for aggregate credits, primary debts, secondary debt obligations, and so on.

· The crisis will then move on to the further shrinking of production, tightening of credit sources, and hyperinflationary situation in utilities (notably gas & power), food, base metals and other vital commodities. Total economic collapse results from the foregoing.

· The economic collapse then leads to social unrests, turmoil, upheavals, civil wars, food wars, water wars, and possibly intercontinental wars such as another 3rd world war. The clash of world powers and their surrogate emerging markets will become the flames of a possible long war akin to the 30 Years War (c.1618-48).

Let me now end at that instance. Suffice me to proclaim that the death knell of ‘late’ capitalism and the whole of the ‘money economy’ of the last 2000 years or so are ending. The ‘non-cognitive economics’ of the Roman to feudal era, the ‘rational economics’ of the Renaissance to monopoly capital era, and the ‘mad economics’ of ‘late’ capital were markedly the underpinning mediation processes of that entire 2000-year epoch. The epoch and its last phase of capitalism is rapidly drawing to a close.

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

CAPITALISM’S DEMISE: WHAT WENT WRONG?

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.]

NEO-NATIONALISM’S PREMISES & CONTENTIONS / Reform the international financial system

NEO-NATIONALISM’S PREMISES & CONTENTIONS / Reform the international financial system

 

Erle Frayne D. Argonza

 

The global financial system is indubitably a homestead of predatory financiers. Usury and global speculation, the masterpieces of financiers, are the enemies of nations. Usury in international finance is at an all-time high, raising questions about the legality and moral propriety of   current lending practices. Incidentally, the said financiers are the ones who exercise the clout within the International Monetary Fund and the World Bank, whose chiefs have always been CEOs from the bank headquarters of the financiers. The said banks have always acted out as the marketing agents of financial cartels, even as many nations that have followed the austere ‘structural adjustments’ imposed by them have been reduced to paupers.

 

It is high time for ‘white knights’ to appear in global finance, lending money accordingly for developmental and investment purposes at very low interest rates (lower than 1.5% annually) and at very long-term payments (25-50 years). Such institutions are now beginning to appear, but creditors remain cautious about their moves. Such institutions are autonomous from the power orbits of the Western financial cartels, are well niched in Asia (e.g. China), and appear to be creditor-friendly.

The reform though should go beyond the ‘white knight’ route. We must actively participate in Asia’s establishment of its own monetary fund and a single-currency regime, and take a leading role if opportunities allow. It may prove beneficial yet to re-institute a regime of gold reserve standard, which should back up the Asian currency. This same monetary fund will then serve as the regional ‘white knight’ that will provide credit to nations in need in the region and continent. The actions will also accelerate the economic cum political integration of the ASEAN and the economic integration for the entire East Asia, steps that will further stabilize the national economies and continuously sustain their respective growth. Meanwhile, a regional currency can stabilize soon enough upon its launching, that it would be a difficult job for criminal financiers to manipulate it, such as the success of the ‘Euro’ now exhibits to the globe.

 

Still another key intervention measure is the control of predatory speculation through a ‘Tobin tax’ on cross-border currency and related purchases (J. Tobin’s proposal in the early 70s). A tax of 0.75% alone on the current cross-border exchanges, which amounts to $300 Trillions annually, would generate $2.25 Trillions. The said money will then be used to fund the operations of international organizations such as the United Nations, UNDP and authentic international NGOs for social development purposes. The money can also be used by ‘white knight’ financing institutions of international scale. This set of actions will then induce reforms in the other institutions, with chain reaction effects leading to declining speculation in the long run, as the oligarchic bankers/financiers adjust their rates to more competitive rates in the face of challenges coming from global ‘white knights’.

[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.]

NEO-NATIONALISM’S PREMISES & CONTENTIONS / Strengthen national banking and the monetary system

NEO-NATIONALISM’S PREMISES & CONTENTIONS / Strengthen national banking and the monetary system

 

Erle Frayne D. Argonza

 

 

Economic stability at all levels demands the strengthening of a national banking system, and concomitantly the strengthening of monetary system with sovereignty-backed parameters and rules. First and foremost of monetary missions is the re-assertion of the powers of the Constitution of the Republic over the Bangko Sentral ng Pilipinas. Needless to say, the country today faces a weak national bank, and necessarily a weak monetary system engendered by it. Sovereignty questions impede the effective operations of national banking in the country, as indicated by the excessive meddling of the International Monetary Fund, acting as agent of the global financial cartels, in the Bangko Sentral’s operations. The first step should be a thorough investigation by the Congress of the Republic to determine precisely who owns and controls the Bangko Sentral, and conduct related oversight functions to assess the entire consolidated assets of the said bank inclusive of unaccounted precious metals.

Should there be a need to institute maximum monetary controls, the national bank should be mandated by the Congress precisely to exercise such controls through a regime of currency controls, where found warranted. In no way should our national currency be subjected to attacks by predatory financier speculators, as what the latter have been doing from the mid-1997 onwards. Money is the lifeblood of the economy, and rendering our money under a regime of free exchange rates and free trade leaves us extremely vulnerable to the machinations of such greedy forces, further weakening our national economy. Monetary controls are the best antidotes to the ailment of a weak currency. Were it possible to revive a system of gold reserve standard, then let such a strategy be studied and enforced, to ensure stability in monetary concerns and the currency markets.

The interest rate controls should likewise continue, but the state must see to it that the rate regimes are within the bounds of sovereignty parameters, representing thereof the national interest and the subsidiary interests of the various social sectors. And, should conditions warrant, our national bank should be among the key initiators for constituting new supra-national institutions, such as an Asian Monetary Fund, thus signaling our participation in reforming the entire financial & monetary system (see below). Our involvement in an Asian Monetary Fund could be a fitful strategy to finally exit from the International Monetary Fund, further strengthening our national banking and monetary system.

 

[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.]

NEO-NATIONALISM’S PREMISES & CONTENTIONS / Concur co-stewardships with communities affected by extractive industries

NEO-NATIONALISM’S PREMISES & CONTENTIONS / Concur co-stewardships with communities affected by extractive industries

 

Erle Frayne D. Argonza

Our mining sector had been in the doldrums for quite some time now. The production levels of both (a) base metals and (b) precious metals have surely been at lackluster levels. Meantime, logging has been totally banned to arrest further deforestration and its accompanying desertification and soil erosion. It is only in the energy sector where extraction has been impressively high, and the sector is appreciably a very dynamic one even in terms of R&D considerations. We are now at the crossroads concerning such sectors as mining and forest resources, where a revivified extraction is in the pipelines but couldn’t move because of constitutional and/or statutory constraints.

Note that most of the country’s natural resources for extraction are habituated by (a) tribal peoples and (b) migratory slash & burn peasants. Such populations have long ‘guarded’ the resource-rich habitats. It would surely be a faulty policy to drive them away—hidden under the euphemism of ‘relocation’—in order to give way to a mining concessionaire. Likewise would it be unsound to merely integrate some of their members as wage laborers for the extraction operations. Such actions, derived from regarding the people as ‘high disutility’ entities, are plain reactionary, even as they push the populations to the limits, leading to the folks to constitute hostile millennial movements and rebel separatists. The moves are reactionary as they contribute to the weakening of the nation, to the fragmentation of the national community.

The most pro-active path to address the concerned issue is to design and concur stewardship arrangements with the said populations. Three things are addressed by the stewardship: (1) the people will stay in the area, with better housing and amenities, who in turn will monitor and safeguard the entire operational sites; (2) where necessary, the same folks will be employed in the operations and administrative jobs where applicable, on a first priority basis; and, (3) the people will be co-owners of the firm, with equity/stock participation derived through a calibration of their productivity potency, historical role in stewardship of the area, and other variables. It is argued that this stewardship path is the win/win formula for the state, investors (market), and the communities concerned (‘social capital’/civil society). Consequently, the contribution to the GDP through resource extraction jumps up to a historic high level.

 

[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.]

NEO-NATIONALISM’S PREMISES & CONTENTIONS / Continuously open the market to external investors

NEO-NATIONALISM’S PREMISES & CONTENTIONS / Continuously open the market to external investors

 

Erle Frayne D. Argonza

 

National savings continue to hover at a pathetically low rate of seventeen percent (17%), which is significant but is way below the minimum of thirty percent (30%) to render it as ‘critical mass’, like that of our neighbors’. The problem cannot be addressed sufficiently than through a continuing inflow of capital from external investors. Note that in today’s global context, the term ‘foreign capital’ has already lost its meaning, as the boundary between ‘domestic’ and ‘foreign’ has been effectively erased. The cross-country partnering cum out-sourcing arrangements among diverse firms have become the norm of today’s business, rendering obsolete the previously sacrosanct notions of ‘domestic’ capital and ‘foreign’ direct investments. Not only that. Latest researches have verified that transnational corporations or TNCs now tend to create more values within their host countries and reinvest the profits locally than remit them back to their ‘home country’ (a term that has also begun to lost meaning).

This doesn’t mean though that such investors should be served ‘free lunch’, through very long regimes of tax havens or through spurious ‘strike-free zones’ (read: haven for wage freeze) which makes our laborers appear like wild jackals who need to be perpetually gagged. Some forms of valves (capital controls) should also be instituted, so that the capital investments and profits wouldn’t just flow out like hemorrhage the moment that the economy hits cyclical crisis. Surely, pro-active measures can be devised to let the said investors stay, more so for those that truly re-invest their ROI for their original and diversified business concerns, as well as to those that conduct dynamic R&D and truly transfer technology.

 

In today’s globalizing context, corporate ‘national champions’ have become obsolete. The bygone era of ‘national champions’ can still be observed in the names of certain firms, such as in the names Philippine Airlines, Philippine Long Distance Telephone, or in Bank of America, American Express. Asset re-structuring is the norm, and large corporations are becoming rapidly globalized. Mergers and de-mergers are happening at rapidly ‘chaotic’ paces. The circumstances challenge investors/stockholders to quickly grasp the lesson of   ‘thriving on chaos’ or else their ventures would face bankruptcies and foreclosures as what befell many former large ventures, inclusive of former ‘national champions’.

The thought that “foreign capital might harm national interest” is simply passé and out-of-context, in as much as the term ‘foreign’ has lost its meaning save for the antiquarian Old Nationalists who regard foreign things as essentially dangerous (but are they not using foreign frameworks in their perceptions of foreign things?). Let the investors come in, recombine their assets with our domestic investors’, extend their stock participation beyond the forty percent (40%) constitutional limit. Note that “our very own” big corporations are participating in ‘foreign’ countries, and their levels of investment participation go beyond forty percent (40%). It is high time that we readjust our thinking about the matter.

[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.]

NEO-NATIONALISM’S PREMISES & CONTENTIONS / Continue to stimulate growth through the ‘physical economy’

NEO-NATIONALISM’S PREMISES & CONTENTIONS / Continue to stimulate growth through the ‘physical economy’

 

Erle Frayne D. Argonza

This writer strongly argues that the greatest driver of the economy must be the ‘physical economy’. By ‘physical economy’ we refer to the combination of (a) agriculture, (b) manufacturing, (c) infrastructure, (d) transport and (e) science & technology (S&T) whose results further induce ‘production possibilities’ in the sectors a-d. An economy that is prematurely driven by the service sector, growing at the expense of the physical economy, will create imbalances in the long run, failing in the end to meet the needs of the population. A premature service-driven economy would be subject to manipulations by predatory financiers, who would do everything to destroy the national currencies and consequently the physical economy of the nation as well. An economy driven by derivatives and every kind of speculative pursuit is a ‘virtual economy’ such as what has dominated the USA since the era of Reaganomics.

I would hazard the thesis that our national economy moved to a service-driven phase prematurely. Look at all the fiasco after our ‘physical economy’ had rapidly declined in GDP contributions since the early 1990s, as the service economy advanced in its stead! Relatedly, the over-hyped Ramos-era ‘Philippines 2000’ economy was largely a ‘bubble economy’ driven by speculation and portfolio capital, and was more in kinship with the ‘virtual economy’ than any other one. We have not fully recovered from the bursting of that bubble, even as we are now threatened with another bursting of sorts—of the debt bubble, leading to fiscal crisis.

It pays to learn our lessons well from out of the immediate past experiences. And the clear message sent forth is: get back to the physical economy and re-stimulate the concerned sectors, while simultaneously perfect those services where we have proved to be competitive, e.g. pre-need sector, retail, restaurant/f&b. We should also strive to learn some key lessons from other countries’ positive experiences such as China’s, whose economy continues to grow enormously, and grow precisely because it is the physical economy that primarily drives it up and lead it—at an enormously rapid rate—towards development maturity, permitting China to outpace the USA’s economy on or before 2014 (using GDP Purchasing Power Parity indexing).

[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.]

NEO-NATIONALISM’S PREMISES & CONTENTIONS / Evolve from ‘capitalist markets’ to ‘social markets’

NEO-NATIONALISM’S PREMISES & CONTENTIONS / Evolve from ‘capitalist markets’ to ‘social markets’

 

Erle Frayne D. Argonza

 

 

The ‘capitalist market’ (or simply ‘market’) is the haven of financial predators and market sharks, while the absence of market is the homestead of the rent-seeker and exclusively-privileged partocrat (single party bureaucrat). As the cases of the ‘mixed economies’ and that of China’s have demonstrated, the market impeccably performs a   pivotal role in stimulating growth & development, and should not be wished away too soon. Rather, we should evolve a market that is not a ‘pure market’ in the classical sense.

As experiences world-wide have transparently indicated, leaving everything to the market redounds to: (a) diminished welfare, as indicated by low wages, low accessibility to social services, high unemployment, and massive exploitation of labor; (b) ecological disaster, indicated by environmental degradation, depleted natural resource base, destruction of indigenous communities and their natural habitats; (c) speculation in the capital and realty markets, leading to further instabilities and proneness to shocks, both internal and external; and, (d) lackluster product innovation due to low value given to S&T development, in societies where there is a lack of entrepreneurs, such as the Philippine case demonstrates.

The balance lies in developing a ‘social market’, where concern for private initiatives as well as for welfare are harmonized and balanced, while at the same time controlling speculation and optimizing conditions that induce innovations. Within the context of a social market, there should increasingly evolve ‘social enterprises’ or collectively-owned enterprises: cooperatives, people’s corporations, grammin, and other related types that are rising though still at an experimental phase. While private enterprises should continue to prevail, large-scale enterprises should begin to innovate on new physical asset-ownership schemes that would eventually see a large portion of the assets co-owned by ordinary folks and corporate employees. In the long run, the ‘social market’ will be a terrain where both wealth gaining and welfare providing functions will be fused exquisitely, signifying the end of state-induced welfare and the return of welfare functions to communities.

[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.]

NEO-NATIONALISM’S PREMISES & CONTENTIONS / People are the most important assets, revise accounting systems!

NEO-NATIONALISM’S PREMISES & CONTENTIONS / People are the most important assets, revise accounting systems!

 

Erle Frayne D. Argonza

 

 

The prevailing mindset perceives assets in terms of physical assets (estates, chattel, monies). Ownership is then defined in terms of right to control and dispose of such assets. Wealth is computed in terms of the values, calibrated through price, created through the utilization of the physical assets. For a while, the classicists introduced the notion of ‘labor theory’ of value, premised upon the value-producing powers of labor. But the efforts of the classicists failed to get translated into acceptable accounting systems, as such systems have always been based on physical assets and prices.

Look at what is happening among various agencies, especially business firms: there is a lot of ‘pirating’ of people going on among them! Likewise are there efforts to retrieve those same people ‘pirated’ by competing agencies. The same event holds true for the state and NGO sectors: ‘piracy’ on grand scales! This phenomenon is a clear manifestation that people, not physical assets, are the most important of all in an organization. When an agency loses good personnel, the effect is instantly debilitating, a debilitation that can be offset only through the timely arrival of replacements who are as good as the ones who left. The converse is also true: when an agency needs people to shore up its output levels, ‘pirate’ high-achievers from other agencies most especially those who have “made a name” in the sector concerned. The piracy of people in the entertainment world is even more instructive in indicating to us the central import of people, not physicals, as value producers. We need not belabor the point that the ‘piracy’ strategy comes often in the form of higher pay scales and incentives.

That is why it pays so much to manage people well, and to design new organizational principles that would bring out the maximum potencies of people most specially the highly talented ones. Bureaucracies have become outdated dinosaurs, as ‘flat organizations’ have become the wave of the present: the new organizations make plenty of room for self-initiatives, resourcefulness and innovativeness by good staff. Bureaucracies, which follow from only two principles—vertical (hierarchy) and horizontal—can stifle innovativeness, as experiences have shown. The ‘task master’ mindset and ‘boss mentality’, as well as the excessive stress on routinary processes, have turned off many achiever personnel most specially the highly talented ones whose nature of work is ‘symbolic/analytic’ (to use Reich’s term). Today, new principles are emerging that are leading to a massive ‘re-engineering of the organization’, such as Total Quality Management or TQM, web organizational structure, team work principles and ‘human resource empowerment’.

Yet inspite of such revolutionary changes and explosion of amazingly appropriate principles about organizations and human resources, no changes are happening in the accounting systems that can correspondingly reproduce the organizational principles taking place. The only appreciable concept is that of GDP Purchasing Power Parity or PPP, which computes total income on the basis of purchasing power of local consumers relative to those of the world’s strongest economy. Using the GDP-PPP, the Philippines’ GDP stood at $379 Billions as of the end of 2003, with GDP-PPP per capita at around $4,600 more or less. (See The World Factbook, 2004, for such index reports.) But this indexing does not in any way address the accounting question raised here.

Should the notion of ‘human capital’ become popular, the accounting system should consequently follow. The notions of ownership would then change, indicating the revolutionary implications of the paradigm shift. Those pretending ‘radicals’ of the day, many of whom are steeped in 19^th century socialist thought, tend to view the asset realm from the focal lenses of antiquated Victorian-era ownership concepts, and are no less conservative than the oligarchs they sordidly hate. They offer no radical solutions beyond changing (antiquated) asset ownership, strategies that eventually stifle innovativeness and human expression, as criminal Stalinist regimes have shown. New Nationalism must take on the challenge of presenting a far more revolutionary concept that can, in the end, contribute to evolving a strong base of ‘human capital’, ‘social capital’ and ‘strong nation’.

[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.]

NEO-NATIONALISM’S PREMISES & CONTENTIONS / Promote synergy with civil society in the development path

 

NEO-NATIONALISM’S PREMISES & CONTENTIONS / Promote synergy with civil society in the development path

 

Erle Frayne D. Argonza

In the old formulations, development was an exclusive endeavor of state and market players. That is, the directions of development were largely the handiworks of political, bureaucratic and corporate elites. There should be an admission that this structural formulation was a factor in generating the crisis-level ailments of mass poverty, large-scale unemployment, low wages, sluggish growth and dependence. So why retain a formula that had failed us miserably?

The current context, where a dynamic and colossal civil society operates, points to the ever-growing recognition of the potent role of civil society in co-determining the compass of development. At the grassroots level, development efforts will be accelerated to a great extent by involving civil society formations acting as ‘social capital’ base, as studies have positively demonstrated (citations from Peter Evans’ works on ‘state-society synergy’). Insulating the state from grassroots folks, as the same studies have shown, have produced dismal if not tragic effects, e.g. India’s non-involvement of ‘social capital’ in the erection and maintenance of irrigation facilities resulted to program failure in the end.

Building and maintaining ecologically sound, clean cities can likewise be effected through the tri-partnership of state, civil society and market, as demonstrated by the Puerto Princesa case. Under the stewardship of the dynamic city mayor (Mr. Hagedorn), the tri-partnership was galvanized. Businesses have since been conscious of operating on clean technologies and environmental responsibilities, city streets sustain hygienic images, traffic is well managed as motorists exude discipline, and civil society groups constantly monitor the initiatives that saw their hands dipped into their (initiatives) making. All we need to do is replicate this same Puerto Princesan trilateral partnering at all level and in all communities to ensure better results for our development efforts.

The ‘state-society synergy’ in our country had just recently been appreciated and grasped by many state players. Being at its ‘take-off’ phase, it is understandable that synergy is only a lip-service among many state players, notably the local officials. State players still regard civil society groups with ambivalence, while civil society groups are suspicious of state players whose sincerity can only be as low as their Machiavellian propensities would dictate. Such local state players desire to subordinate civil society groups, and many politicians have constituted ‘government-initiated NGOs’ or GRINGOS as cases of non-authentic subordinated groups. On the other hand, local-level volunteer groups can at best perceive domestic politicians as ‘Santa Claus’ providers, and utilize them largely as gift-giving patrons. Strengthening state-society synergy has a long way to yet, but it is not exactly starting at ground zero in this country. It is, by and large, a core variable in developing citizenry and constituencies, and must be advanced beyond its current take-off phase.

 

 

[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.]

 

NEO-NATIONALISM’S PREMISES & CONTENTIONS / Go back to basic needs

NEO-NATIONALISM’S PREMISES & CONTENTIONS / Go back to basic needs

 

Erle Frayne D. Argonza

 

 

“Spend for your needs but save as much as you can!” would be an apt idiom that could encapsulate the need to build up national savings within the context of an increasingly consumer-driven economy. It is argued that moderate consumption would be a most fitting behavior in today’s context, while under-consumption and over-consumption are out as they could burn us all out in the process. Consumption saved the day for us in the aftermath of the Asian crisis in 1997, so there is no reason to be morally repulsive about consumerism—provided that it should be a moderated consumerism. Low consumerism brings us back to export-driven strategies, our aggregated wealth production subjected to the vagaries of external markets that are beyond our control; high consumerism, contributing further to high debt levels, as the credit card culture entice people to acquire more articles of consumption through debts, perennially driving our economy to ‘bubble bursts’.

The emerging situation should have taught our market players the appropriate lessons at this time. The era of omnipresent and omnipotent markets—for goods of relatively ageless utility, stored in large inventories—is now a foregone era. What we have now is fragmented markets (chaos economics explains this well; see Tom Peters’ works), so the adjustment would be in the form of market niches. Market players should veer away from storing large inventories of a broad array of products, as obsolescence and changing consumer taste undermine the profit-gaining side of such a practice. Rather, they should be sensitive to emerging demands, and customize services and/or tangible goods based on such demands. We Filipinos particularly change taste so often, “madaling magsawa” as we say it in the vernacular. Which means that fixed products, based on fixed ideas, are simply out of context and out-of-date, and must be reformulated towards more flexible product mixes matrixed with constantly emerging ideas.

On a macro-scale, there is the continuing need to ensure ‘food security’ and its expression in other sectors as well. We should continue to be sensitive to the needs of the larger economy, such as the need for capital goods. We should design ‘vital & strategic commodity security’ frameworks and policies through a combination of domestic production of such goods as well as importation strategies. The continuing absence of strategic industries such as integrated steel could prove degenerative for development efforts such as it has done to our country, while completely shutting us off the international markets for some other goods could likewise be deleterious in the long run since domestic producers would be exercising rent-seeking, pricing articles way beyond five hundred percent (500%) of their opportunity costs as amply demonstrated by industrial chemicals (before the country began importing from China). As current experiments in grain & livestock management show, with appreciable success, the strategy should be to combine domestically produced goods with imported articles, the proper mix of which should be the subject of continuing eco-scanning and constant studies. In the end, all of our individual, community and national needs will be met, building stability and security amid a ‘chaotic’ or turbulent global condition.

[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.]

LAISSEZ FAIRE VERSUS DIRIGISM: PARADIGMS AND FAIRY TALES

LAISSEZ FAIRE VERSUS DIRIGISM: PARADIGMS AND FAIRY TALES

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.]

ECHOING THE NEO-NATIONALIST THEME

ECHOING THE NEO-NATIONALIST THEME

Erle Frayne D. Argonza

This paper echoes the emerging discourse referred to as New Nationalism. Note that various writers have formulated theories anchored on New Nationalism. Their theories out-rightly impact on public policy and development practice, such as the framework articulated by Robert Reich (see The Work of Nations). Here at home, economists such as Emmanuel De Dios have begun to echo themes of harmonizing nationalism and globalization.

The framework base of this paper will be (a) political economy combined with (b) institutionalism. The current approach of comparative political economy had proved to be a very instructive one, this being the most central framework in development studies and public policy studies, with its analytics carried out through cross-national methodology. This approach will also be integrated with the emerging cross-disciplinal trend of institutionalism, a framework that was actually started by sociologists, and is particularly strong in studies on civil society & development, state-society synergy and organization theory.

Being an Asian, this analyst will also liberally subscribe to core tenets of Asian thinkers, notably Mahatma Gandhi’s. New Nationalism should as much as possible integrate the Eastern and Western theoretical streams to be able to find meaningful anchorage in the whole of the Asian continent.

It is hoped that the article will be of use to various end-users for reflective purposes, particularly to advocacy groups and state agencies that are in the process of rethinking paradigms & issues revolving around public policy.

[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.]

CORPORATE SOCIAL RESPONSIBILITY (CSR): CORPORATE DEODORANT OF ‘LATE’ CAPITALISM

Erle Frayne Argonza

Good afternoon from Manila!

The late dictator Ferdinand Marcos, the Philippines’ most brilliant and deviously cunning chief executive, was so elated one day during his tyrannical incumbency. The reason for the unusual elation was this: his soldiers captured Bernabe Buscayno, the first national head of the Maoist insurgent group New People’s Army or NPA, who was a prized catch for the strong man. After some military interrogation, Buscayno was directed to be brought to the presidential palace to face Marcos, who at one point in the encounter, asked Buscayno for a remark. Obliging like a school boy, Buscayno replied that “no matter how evil a person can be, s/he can still be transformed into a good person.”

The enormously witty man Marcos was dumbfounded by the witty remark from the Maoist rebel, for that comment made its mark so clear: Marcos is evil, yet he can still be reformed. Probably pissed off by the stubborn rebel, who never the least conceded to defeat so as to bow in obeisance in recognition of the chief executive, Marcos made sure that Buscayno will suffer miserably inside the prison cell.

You see, I cited that story of Buscayno, as a matter of reflecting on the rationale behind Corporate Social Responsibility or CSR. Buscayno, who has been active in the cooperative movement in the Philippines after his release from prison in 1986 (the year Marcos was overthrown), could very well repeat his witty line when asked about CSR, with a curt reply that “CSR, no matter what evil may be behind it, can be reformed.”

Asians put greater stress on ‘becoming’ as a category more than ‘being’ (Westerner’s granite category), that is why we Asians are inclined to see positive reformations of things or beings whose evils may be irredeemable. And this I can say of CSR: it is an ideological deodorant for Big Business greed, but somehow it can be reformed. To use Organization Development language, it can be ‘re-engineered’.

CSR is already a re-engineering of philanthropy in fact, and belongs squarely to ‘late’ capitalism. Old fogey philanthropy operated with a Victorian underpinning: I possess the money, and you recipient are a Beggar who came to me. You are lucky enough because I am giving you part of my purse, for I have none reserved for you folks save for the theatres, performers and socialite circles thay may the better be served by my extra monies for posterity’s sake. …

Well, Big Business was able to re-engineer its image precisely by reformatting old-fogey philanthropy (which was a reformatted version of medieval charity of the pretentious church Orders or ‘corporations’). CSR appropriated the ‘social development’ practices (social technologies) of NGOs and peoples’ organizations or POs, stressed the supposedly core element of ‘compassion’, and voila! CSR was born! How effable, how sweet, how infinitely Angelic and Godly is this ‘new way’ of helping people by the Gods of Corporate World! Hail capitalism! Hail beneficent Gods!

Deodorant, pure deodorant! Take a look at Lucio Tan, who at one time was the top landlord-capitalist oligarch in the Philippines. A one-time Marcos croney, Tan made enormous fortunes from Marcos’ time to the present, probably with start-up capital coming from the dictator’s purse (but which Tan refuses to admit in public). Tan’s fortunes made him land in the Fortune 500 (world’s richest), yet he was also found wanting in the manner of paying taxes. His unpaid taxes may be worth P80 Billion (almost $2 Billion) today, and is still growing, yet not a single cent was paid to the state by this notorious oligarch for those ‘tax evasion’ cases…Yet Tan has captured the eyes of fund recipients from his CSR give-away items, even as he is fondly regarded as an angelic patron by the same armies of beggar recipients. (Beggar here means not the literal beggar, but the condescending image of oligarchs on recipients: filthy Eaters, ‘useless eaters’).

Capitalism is a system that is founded on greed and hoarding, and no sagely or wise personage, or the most evolved beings could ever rationalize capitalism as a system that will sustain the drive towards Nirvana or represents the final liberation of humans from their subhumanizing hovels of dense life. Besides, this current phase of capitalism—‘late’ capitalism—is now DEAD, and the dead system is rapidly crashing down. Only those materialistic ‘eaters’ whose perceptions are as delimited as their own astigmatic perceptions of reality principles can ever justify that capitalism is still working, for the reality we have today is that of ‘virtual economy’ of the most perverted, evil greed of all.

If CSR would have to survive the times, as ‘late’ capitalism is now DEAD, then now is the time to refurbish its image. Because its life is deeply embedded in the corporate purses, this image-change is hard to imagine at all. But being of the Asian-yogic way of life, being a mystic and development expert at the same time (though now in the twilight of social development engagements), I wish to give CSR a chance and see it grow along the trajectory of the hereafter that was declared by Buscayno: transformed from ‘evil’ to ‘good’.

I’d end this piece by clarifying to you a reality we know among mystics: demons can also return to the Path of Light. Yes, Fellows, those Belzeebub abominations, those Asuras or Demonyos, those Diaboli, or whatever term you may use for the same species of evil demented beings, many of those abominations have already returned to the state-of-balance and are now taking the Path of Light back to the Almighty I Am Presence (God)! Yes! CSR can!

[28 August 2008, Quezon City, MetroManila]

SMITH-RICARDIAN ‘FREE TRADE’ JUSTIFIED SLAVE TRADE

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 20^th 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.]

ADAM SMITH: ‘INTELLECTUAL PROSTITUTE’ FOR BRITISH EAST INDIA & SLAVE TRADERS

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 ‘4^th 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.]