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Occupy World Street!

by THOMAS H. NAYLOR

Ross Jackson is an interesting guy who has just published a very interesting and timely book entitled Occupy World Street: A Global Roadmap for Radical Economic and Political Reform (Chelsea Green, 2012).  Born a Canadian, Jackson has a PhD in Operations Research from Case Western Reserve University, but has lived in Denmark since 1964.  Not only is he the former manager of a hedge fund, financial derivatives, currency-exchange trading firm, but he currently heads up two international NGOs related to small, sustainable, ecovillages.

According to Jackson, “The current global structure is dysfunctional, undemocratic, corrupt, and exploitive of the environment, the developing countries, and even the citizens of the wealthiest nations.”  He goes on to say,

The current political leadership’s inflexible focus on economic growth makes it impossible to deal effectively with global issues like climate change, ecosystem damage, peak oil, and rationing resources.  Meanwhile, millions, if not billions of ordinary citizens are dissatisfied with the status quo and are crying out for change.  The dilemma seems to be:  those who can, will not; those who will, cannot.

Jackson’s understanding of the economic and environmental forces underlying what he considers to be the collapse of civilization is spot on.  It’s all about globalization!

Since globalization is often achieved through coercion, intimidation, exploitation, collectivism, monopoly, and American military might, local cultures, local values, local communities and local environmental concerns often receive short shrift.

Transnational megacompanies not only tell so called emerging market countries (most of the world) what they will produce, how it will be produced, when it will be sold, and at what price, but they also influence local working conditions, wages, benefits, and labor laws.  They often dictate local government monetary, fiscal, trade, and banking policies.  International money managers decide which foreign currencies are overvalued and which are not, as well as which countries should be punished for not playing by their arbitrary, self-serving rules.  This is truly a one-size-fits-all game.

No photograph was ever more prophetic in portraying the future of unfettered capitalism than a picture of Ronald Reagan and Mikhail Gorbachev each wearing cowboy hats taken near the end of their political careers.  So effective were Ronald Reagan and Margaret Thatcher in convincing governments everywhere to decentralize, to deregulate, to rein in organized labor, and to privatize public enterprises that transnational megacompanies like General Electric and IBM have virtually a free hand to operate globally with little or no interference from government or labor—just like the American West.  They play off one country against the other in pursuit of low-wage, tax-free, regulation-free manufacturing environments.

The U.S. government, Federal Reserve Bank, International Monetary Fund, World Bank, and World Trade Organization are all committed to transforming the world economy into a giant global growth machine regulated by an international gambling casino in which resource allocation decisions are driven by a high-speed, multinational, high-tech crap shoot.  Satellite communications, fiber optics, and the Internet make it possible to transform small, manageable local problems into unmanageable global problems overnight.

President Bill Clinton called for a New Global Financial Architecture.  But what he proposed was nothing new at all—more trade, more budget cuts, more privatization, more foreign investment, more megamergers, more computer networks, less government control, lower interest rates, more IMF bailouts, and, as always, more economic growth.  He wanted everything to be bigger, more complex, more high-tech, and more interdependent—bigger markets, bigger trade agreements, bigger loans, bigger bailouts, bigger  banks and financial institutions, and bigger telecommunication networks.  Our government’s cryptic message to the rest of the world is, “Just be like us.”  One-size-fits-all!

Economists justify globalization on the basis of the so called “trickle down effect,” in which the benefits of global trade to the superwealthy eventually trickle down to the poor. But half of the world’s population lives on less than $2 per day, and many of these people have no access to clean water, electricity, or sanitation.  World Bank figures suggest that the trickle down effect may not be working so well.  In 1987, 1.2 billion people in the world were trying to survive on $1 a day.  Now over 1.5 billion are trying to do so.

Jackson correctly places a lot of the blame for the destruction of the planet on neoclassical, free-market economics.  He correctly notes that economics is not a science but rather a pseudoscience pretending to be a science.

British economist Joan Robinson got right to the heart of the problem in her 1962 book Economic Philosophy when she said, “Any economic system requires a set of rules, an ideology to justify them, and a conscience in the individual which makes him strive to carry them out.”  In other words, underlying every sophisticated economic theory and mathematical model lies a political ideology.

Since the 1980s the prevailing ideology in economics has been the free market, globalization ideology of University of Chicago economist Milton Freidman.  Although Ronald Reagan popularized this ideology in the 80s, it was Bill Clinton and his Secretary of the Treasury Robert Rubin along with Fed Chairman Alan Greenspan who presided over its implementation in the 1990s.  They created a regulatory environment which enabled globalization to thrive.  George W. Bush was little more than a naïve cheerleader for globalization, who failed to notice when it started to unravel.

The problem of economics according to the high priests of the free market can be summarized as follows:  Given the distribution of income and wealth, how do we achieve global economic growth in such a manner that we simultaneously allocate resources worldwide in a socially optimal fashion with a minimum of interference by government and organized labor?  The underlying premise of this paradigm is that, if consumers, managers, employees, and stockholders do their own hedonistic thing, their interests will converge in the long run and society will evolve toward some form of socially optimal equilibrium.  “This is an ideology to end ideologies,” said Joan Robinson.  Tinkering with the distribution of income or wealth is strictly taboo.  So too is questioning the sustainability of never ending economic growth.

There is absolutely nothing new about economists providing the economic underpinnings to support the prevailing ideology.  Since the days of Adam Smith, economists have supplied the rich and powerful with the kinds of answers they wanted to hear.  As John Maynard Keynes once said, “Practical men…are usually the slaves of some defunct economist.  Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”

Many believe that the meltdown of the U.S. economy was caused by too much credit and too much easy money.  Yet the government’s strategy for dealing with the problem seems to be more of the same.  If China or Japan were to pull the plug on their investments in U.S. Treasury bonds, the U.S. government could become insolvent.

Economics has long been known as the “dismal science.”  Economics as practiced in the United States today is no science at all, but rather a political ideology disguised as a science.  Economics is the “abysmal science,” and that’s a problem for all of us.

The broken integrated global economy is uncontrollable, unstable, unsustainable and unfixable.  It will continue to meltdown until it reaches a state of disintegration which is sustainable, and that could take a long time.

I believe that the global economy that reemerges after the disintegration of the old economy is complete will be a radically different kind of economy.  It will be a highly localized, decentralized economy.  Interestingly enough, the problem of peak oil will play an important role in preventing the reintegration of the global economy.  As the global demand for crude oil begins to increase after meltdown is over, the price of crude oil will once again skyrocket upwards imposing a very high cost on long distance trade flows. Ironically, in the post globalization era crude oil, or the lack thereof, will help keep the world decentralized and localized, and that may not be all bad.

While there may be little we can do to stop this process, there is a lot to be learned from the experience.  Now is the time to begin thinking about how we want to live, love, work, play, and do business in a more localized world.  It could prove to be a much more meaningful experience than life under globalization.

Jackson would replace all of the existing multinational organizations such as the UN, WTO, IMF, and World Bank with what he calls a Gaian World Order “to reflect the focus on the oneness of all planetary life in the emerging holistic worldview.”
The Gaian World Order would be launched by a dozen or so small nations which would constitute what Jackson calls the Gaian League.  The Gaian League might include such countries as Bolivia, Sri Lanka, Costa Rica, Iceland, Norway, Venezuela, Senegal, Bhutan, New Zealand, Maldives, Tunisia, Mauritius, Malaysia, and Switzerland.  Once established, other nations would be invited to apply for membership.  The first order of business for the League would be the founding of eight other multinational organizations:  the Gaian Trade Organization, the Gaian Clearing Union, the Gaian Development Bank, the Gaian Congress, the Gaian Commission, the Gaian Court of Justice, the Gaian Resource Board, and the Gaian Council.  That’s a lot.

For those concerned with where life is going on the flagship earth and whether or not they want to go there, Occupy World Street is not only a wake-up call but also a call for action and a strategy for changing course before it’s too late.

Thomas H. Naylor is Founder of the Second Vermont Republic and Professor Emeritus of Economics at Duke University; co-author of AffluenzaDownsizing the U.S.A., and The Search for Meaning.

 

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