Chapter 3. The Unwitting hand Their Wealth to the Cunning

Classical Economists Sir William Petty (1623-87) down through Sir James Steuart (1712-80) built the philosophical foundation for Adam Smith free trade. In a replay of controlling the countryside to control resources and markets, each classical philosopher pointed out the necessity of using the powers of government to restrict self-provisioning in the countryside so as to provide labor for new industries and a market for those industries. “Classical political economy was, first and foremost, meant to be a formula for accelerating the overall accumulation process” and was meant to guide all wealth produced by the increased efficiencies of technology to the already wealthy.1 The elimination of today’s inequalities and injustices which have their foundation in those earlier classics addressed above is the inherent goal of this work. Most the early classical philosophers were members of polite society writing a philosophy for, and publishers publishing for, other elites—a process still ongoing yet today. Speaking for the common people were Gerard Winstanley in the 16th-Century, Jean Jacques Rousseau in the 17th-Century, Johann Herder in the 18th-Century, and Karl Marx in the 19th-Century.2 Friedrich List, in 1841, the primary source for this chapter, addressed the rights of European empires and the emerging United States but did not address rights of nations and people on the periphery of empire.

Borrowing heavily from Sir James Steuart (without acknowledgment) Adam Smith wrote his bible of capitalism, The Wealth of Nations, exposing mercantilism and promoting free trade. In-depth descriptions of 18th-Century mercantilist trade describe well the proto-mercantilist trade between the cities and countryside 600 years earlier and mirror the neo-mercantilist trade between developed and undeveloped nations for the next 230 years when the world was supposedly operating under Adam Smith philosophy. For neo-mercantilists to restructure their overt plunder of weak societies into covert plunder through inequalities of trade, it was necessary to ignore statements in The Wealth of Nations that contradicted neo-liberal trade philosophy. Though more were included, Free Trade was diplomatic code for continued mercantilist unequal trade. Adam Smith again:

A small quantity of manufactured produce purchases a great quantity of rude produce. A trading and manufacturing country, therefore, naturally purchases with a small part of its manufactured produce a great part of the rude produce of other countries; while, on the contrary, a country without trade and manufactures is generally obliged to purchase, at the expense of a great part of its rude produce, a very small part of the manufactured produce of other countries. The one exports what can subsist and accommodate but a very few, and imports the subsistence and accommodation of a great number. The other exports the accommodation and subsistence of a great number, and imports that of a very few only. The inhabitants of the one must always enjoy a much greater quantity of subsistence than what their own lands, in the actual state of their cultivation, could afford. The inhabitants of the other must always enjoy a much smaller quantity…. Few countries … produce much more rude produce than what is sufficient for the subsistence of their own inhabitants. To send abroad any great quantity of it, therefore, would be to send abroad a part of the necessary subsistence of the people. It is otherwise with the exportation of manufactures. The maintenance of the people employed in them is kept at home, and only the surplus part of their work is exported…. The commodities of Europe were almost all new to America, and many of those of America were new to Europe. A new set of exchanges, therefore, began to take place which had never been thought of before, and which should naturally have proved as advantageous to the new, as it certainly did to the old continent. The savage injustice of the Europeans rendered an event, which ought to have been beneficial to all, ruinous and destructive to several [most] of those unfortunate countries.3

John C. Miller, Origins of the American Revolution, points out that Britain’s Navigation Acts were mercantilism translated into statute law, and that Britain’s Staple Act completed the structure of British mercantilism.4 Before Britain’s near defeat by Napoleon and his continental system, these protectionist maxims later so vehemently denied under Adam Smith, were,

plainly professed by all English ministers and parliamentary speakers: [1] Always to favour the importation of productive power, in preference to the importation of goods. [2] Carefully to cherish and to protect the development of the productive power. [3] To import only raw materials and agricultural products, and to export nothing but manufactured goods. [4] To direct any surplus of productive power to colonization, and to the subjection of barbarous nations. [5] To reserve exclusively to the mother country the supply of the colonies and subject countries with manufactured goods, but in return to receive on preferential terms their raw materials and especially their colonial produce. [6] To devote especial care to the coast navigation; to the trade between the mother country and the colonies; to encourage sea fisheries by means of bounties; and to take as active a part as possible in international navigation. [7] By these means to found a naval supremacy, and by means of it to extend foreign commerce, and continually increase her colonial possessions. [8] To grant freedom in trade with the colonies and in navigation only so far as she can gain more by it than she loses. [9] To grant reciprocal navigation privileges only if the advantage is on the side of England, or if foreign nations can by that means be restrained from introducing restrictions on navigation in their favor. [10] To grant concessions to foreign independent nations in respect of the import of agricultural products, only in case concessions in respect of her manufactured products can be gained thereby. [11] In cases where such concessions cannot be obtained by treaty, to attain the object of them by means of contraband trade. [12] To make wars and to contract alliances with exclusive regard to her manufacturing, commercial, maritime, and colonial interests. To gain by these alike from friends and foes; from the latter by interrupting their commerce at sea; from the former by ruining their manufactures through subsidies which are paid in the shape of English manufactured goods.5

As William Pitt refined the First Earl of Shaftesbury’s formula for British trading supremacy, Britain seems to have decided that the protectionist policies through which she had become immensely wealthy had all been a mistake. In his classic, The National System of Political Economy (1977 edition), Friedrich List outlines how Britain, under the guidance of William Pitt, for the first time eulogized Adam Smith’s doctrine of free trade. While secretly maintaining the old maxim of becoming wealthy by selling expensive manufactured goods and buying cheap commodities from weak dependent societies as outlined in the above 12 protectionist maxims, the British state department, British intelligence and British industry were funding think-tanks, correspondents, writers, and lecturers to impose their interpretation of Adam Smith’s free-trade philosophy across the world.6

Friedrich List alerts us that, Adam Smith free trade—as interpreted, designed, and managed by neo-mercantilists—is a brer-rabbit/don’t throw me in the brier patch scam designed to prevent the rest of the world from industrializing. This maintains their technological dependence and protects the flow of the world’s resources cheaply to the imperial centers.

Friedrich List points out that the forces of production are the tree on which wealth grows and an individual may be better off purchasing something cheaper from another society but collectively everybody is better off if a society produces its own basic commodities, machine tools, and finished products.7 For those who understand the multiplier factor this is obvious. However, note the relative equality that must be assumed and it is specifically that equality which is missing.

Napoleon knew well that any nation would be impoverished if their industry and trade were dominated by another: “Under the existing circumstances … any state which adopted the principles of free trade must come to the ground … [and] a nation which combines in itself the power of manufacturers with that of agriculture is an immeasurably more perfect and more wealthy nation than a purely agriculture one.”8

And List tells us that both “Adam Smith and J.B. Say had laid it down that … nature herself had singled out the people of the United States [and most of the rest of the world] exclusively for agriculture.” The Wealth of Nations had no allowance for industrial development beyond a few select nations and Friedrich List, who challenged the philosophy of Adam Smith because his native Germany could not develop under a philosophy designed to maintain the supremacy of Britain, allowed only for the industrialization of the temperate zones. Even List’s staunchest supporters criticized his philosophy for not considering the rights of all people throughout the world.9 An honest philosophy for world development, as we are advocating, must put rights for all as a first consideration.

Adam Smith recognized that by protection an undeveloped nation could “raise up artificers, manufacturers and merchants of its own” but claimed this would lower the price of their agriculture products.10 Considering that agricultural production would be marketed to those employed in the new local industries and that dependency of others on British commodities markets and manufactures was the centerpiece for maintaining the wealth of his native Britain, this was a difficult logic. This tells us Adam Smith was considering only the rights of an imperial center and had relegated the periphery to providers of resources for that empire.

For the newly-free American colonies, France, and later Germany William Pitt’s promotion of a philosophy for their dependency was easy to see through. “Such arguments did not obtain currency for very long [in France]. England’s free trade wrought such havoc amongst the manufacturing industries (which had prospered and grown strong under the Continental Blockade system) that a prohibitive règime was speedily resorted to under the protecting aegis of which, according to Dupin’s testimony, the producing power of French manufactories was doubled between the years 1815 and 1827.”11

List’s insights into the “distinction between the theory of values and the theory of the powers of production” and the “difference between manufacturing power and agricultural power” were gained through observing firsthand both the rapid development of the newly-free United States as they ignored Britain’s promotion of Adam Smith [unequal] free trade and “the wonderfully favourable effects [to the continent] of Napoleon’s Continental System and the destructive results of its abolition.”12

Adam Smith pointed out that, “England had founded a great empire for the sole purpose of raising up a people of customers…. The maintenance of this monopoly has hitherto been the principal, or more properly perhaps the sole end and purpose of the dominion which Great Britain assumes over her colonies.”13 Historian Barbara Tuchman concurs:

Trade was felt to be the bloodstream of British prosperity. To an island nation it represented the wealth of the world, the factor that made the difference between rich and poor nations. The economic philosophy of the time (later to be termed mercantilism) held that the colonial role in trade was to serve as the source of raw materials and the market for British manufacture, and never to usurp the manufacturing function.14

America’s Freedom is based on Economic Freedom

The Grand Strategy of Britain to control the industry and markets of the American colonies was the primary reason for the American War of Independence. America’s founding fathers recognized that the “consumption of foreign luxuries, [and] manufactured stuffs, was one of the chief causes of [the colonies’] economic distress”:15

In the harbor of New York there are now 60 ships of which 55 are British. The produce of South Carolina was shipped in 170 ships of which 150 were British…. Surely there is not any American who regards the interest of his country but must see the immediate necessity of an efficient federal government; without it the Northern states will soon be depopulated and dwindle into poverty, while the Southern ones will become silk worms to toil and labour for Europe…. In the present state of disunion the profits of trade are snatched from us; our commerce languishes; and poverty threatens to overspread a country which might outrival the world in riches.16

The famous Boston Tea Party, touted as one cause of the revolution, was only a particularly theatrical protest over a rather minor example of this systematic injustice. Not even a horseshoe nail was to be produced in America, and under no circumstances were manufactured products to be exported to countries within Britain’s trade empire. The colonialists

could import only goods produced in England or goods sent to the colonies by way of England. They were not allowed to export wool, yarn, and woolen cloth from one colony to another, “or to any place whatsoever,” nor could they export hats and iron products. They could not erect slitting or rolling mills or forges and furnaces. After 1763, they were forbidden to settle west of the Appalachian Mountains. By the Currency Act of 1764, they were deprived of the right to use legal tender paper money and to establish colonial mints and land banks.17

After American independence England’s Lord Brougham proposed destroying America’s infant industries by selling manufactured goods to them below cost. “He thought it ‘well worthwhile to incur a loss upon the first exportation [of English manufactures], in order, by the glut, TO STIFLE IN THE CRADLE THOSE RISING MANUFACTURES IN THE UNITED STATES.’ ” This experience (and the fact that Spain and France now blocked America’s expansion) caused Americans to lay the foundation for their own Grand Strategy, copying Britain’s neo-mercantilist trade policy. Gaining full freedom required military might and led to establishing the Naval War College and a powerful navy.18

U.S. statesman Henry Clay quotes a British leader: “[N]ations knew, as well as [we did], what we meant by ‘free trade’ was nothing more nor less than, by means of the great advantage we enjoyed, to get a monopoly of all their markets for our manufactures, and to prevent them, one and all, from ever becoming manufacturing nations.”19

Lord Brougham’s economic warfare plan was thwarted when, 36 years after gaining their political freedom and theoretical rights in the Revolutionary War and while Britain was busy battling Napoleon on the Continent, Americans fought the War of 1812 to remove Britain’s iron grip from America’s commerce. America was now both politically and economically free. It was by winning the War of 1812 that America truly gained its independence. Until then, the American economy, and thus the fundamental rights of Americans, was dependent upon the whims of British neo-mercantilists backed by British naval power.

America, Canada, New Zealand, and Australia were the only former colonies to eventually gain both their political and economic freedoms.a There is more to independence than the political freedom first gained by the American Revolution: the right to vote, free speech, and choice of religion. For example, the states could trade between themselves, but they could not trade freely with the rest of the world due to the British navy’s denial of that basic right, which thus maintained colonial dependence upon British industry and shipping. A humiliating treaty (Peace of Versailles, 1783) had been forced on the colonies that “permitted only the smallest American vessels to call at the island ports and prohibited all American vessels from carrying molasses, sugar, coffee, cocoa, and cotton to any port in the world outside the continental United States” and Britain’s navy was there to ensure compliance.20 But when Britain was fighting Napoleon on the Continent, the War of 1812 broke those trade barriers and gave the United States economic freedom.

With its great natural wealth, rapid industrialization, and rich gold and silver discoveries, America was able to break free from Britain’s monopolization of finance capital.

Friedrich List Wrote His Classic observing America’s Industrialization

Friedrich List, the German diplomat, writer, and promoter of a German state with no internal tariffs, observed “the wonderful favourable effects of Napoleon’s Continental System, and the destructive effects [on the continent] of its abolition” when France was defeated at Waterloo.21

Thirteen years after the American/British war of 1812, Friedrich List arrived in America, became an American citizen, and studied America’s protectionist break for economic freedom. America’s Grand Strategy, designed by America’s founders and promoted through List’s German language newspaper Outlines of Political Economy, provided the foundation for his 1841 protectionist classic, The National System of Political Economy.22 America took the philosophical lead in protection of industry and markets, from 1816 to 1945 was one of the most protected nations, and virtually every nation which has ever successfully industrialized did so under the protection principals laid down by Friedrich List.

List analyzed how the British had industrialized; their strategy of technological monopolization and control of trade; noticed the collapse of European industry when sales of English products penetrated Europe after Napoleon’s defeat; how America had ignored British free trade propaganda, protected its industry and markets, and became wealthy; and how Britain’s promotion of free trade was a subterfuge to maintain control of markets. He then designed a philosophy under which his beloved native Germany, or any other nation, could industrialize, protect their tender industries and markets, and become powerful.

America’s founding fathers, especially Alexander Hamilton, had made the same analysis. The prosperity Americans enjoyed once they had gained both their political and economic freedom exposes the Grand Strategy of the original promoters of Adam Smith to keep America’s, and the world’s, wealth going to British vaults. America’s treasured independence is little more than breaking the chains of financial dependence. Financial independence depends on gaining control of industrial technology, access to raw material and fuel to process into more industrial tools and useful products, as well as access to markets to sell enough products to pay for necessary imports. Gaining their economic freedom to manufacture and trade is what most colonial nations were unable to do.

Adam Smith’s philosophy, although quite just between equally developed nations and quite valuable as an analysis of trade between nations of equal power, is the industrial world’s self-protective philosophy being forced upon the rest of the world under the guise of it being for their own good.

America Allies with the Old Imperial Nations

America’s two Grand Strategy choices (championing the economic freedom of other colonized nations or joining the imperial nations in neo-mercantilist siphoning of their wealth) were complicated by its being forced to take sides in the battles between the old imperial nations (the two world wars) and by the almost certain post-WWII collapse of the American and European imperial-centers-of-capital if the entire world became nonaligned or if they allied with, or federated with, the emerging socialist-centers-of-capital.

The enormous industrial success of Germany’s Bismarck and later Hitler’s Third Reich following List’s precepts proved the sound logic of that philosophy, as did America’s protection for European industrial development under the Marshall Plan. That support was protection, even though it came from without. Under threat of the entire world gaining their economic freedom, and thus the loss of crucial resources and markets, the old imperial nations allied, informally, under one protective bloc.

Containing fast expanding socialism required the allied imperial-centers-of-capital to bring Japan, Taiwan, and South Korea under the umbrella of protected trade. Their success again proved the soundness of List’s philosophy and that the managers-of-state knew exactly what they were doing; protecting crucial allies and maintaining—frequently imposing—the dependency status of others. When the leading threat to the allied imperial-centers-of-capital disappeared with the collapse of the Soviet federation and those protections were partially withdrawn, the financial meltdown of those once -allied nations on the periphery of empire again proved the validity of protecting tender emerging economies.

Those Asian Tigers still had full rights to sell their production but their industrial capacities, developed to feed the imperial center, were far overbuilt. Except for Japan, their populations were grossly underpaid, thus unable to purchase their own production, and their rights to capital to make that adjustment disappeared with the flight of capital in the 1997-98 financial meltdown. “That financial Meltdown was pure theft.”

Capital looks for a small stock market and injects liquidity into it. This little stock market starts rising and the locals who have been trading on it start making huge profits. They tell their friends and relations and soon all the savings that were in the local banks are sucked into the market. As soon as the market has taken more liquidity than it can withstand (sophisticated computer models can monitor just this) the foreign capital sells its portfolios. It then sells all the local currency it has acquired through the sales of shares thereby driving down the value of the local currency. In short it takes its dollar-profit and runs.23

The IMF/World Bank was imposing structural adjustments which reduced regional development and buying power. Private capital analyzed that overcapacity, knew that much of that industry must close down, fled, and then returned to buy up key industries for pennies on the dollar.

Removing protection was little more than turning loose the dogs of speculation through structural adjustments requiring access to Asian markets for speculative capital. Some leaders of the nations that underwent financial meltdowns complain that Federal Reserve Chairman Alan Greenspan, then Deputy Secretaries of the Treasury Robert Rubin and Larry Summers, and “their henchmen at the International Monetary Fund—have turned countries like Malaysia and Russia into leper colonies by isolating them from global capital and making life hellish in order to protect U.S. growth. The three admitted they had made hard choices—and they will even cop to some mistakes.”24 These same “usual suspects”—as Professor Stephen Gill, Professor of Political Science at York University in Toronto, calls those always paraded forward to justify such policies—derailed Japan’s plan for an Asian Monetary Fund (AMF) which would not have required the massive structural adjustments that quickly collapsed those tiger economies.25 The “hard choices” faced by these “usual suspects” can only be the taking care of one’s own and letting others take care of themselves. Greenspan, Summers, and Rubin knew they had no reason to worry:

As the crisis spread across the region, the US Treasury and the Federal Reserve were serene about its global consequences. They knew from a wealth of past experience that financial blow-outs in countries of the South provided a welcome boost for the US financial markets and through them the US domestic economy. Huge funds could be expected to flood into the US financial markets, cheapening the cost of credit there, boosting the stock market and boosting domestic growth. And there would be a rich harvest of assets to be reaped in East Asia when these countries fell to their knees before the IMF.26

We must remember that historically all rising centers-of-capital are a threat to established centers-of-capital. Such financial and economic warfare has been the latter’s policy when threatened, and is the policy today even if unrealized by the second and third echelons of power:

In any long and broad historical perspective the free market is a rare and short-lived aberration. Regulated markets are the norm, arising spontaneously in the life of every society.… The idea that free markets and minimum governments go together … is an inversion of the truth.… The normal concomitant of free markets is not stable democratic government. It is the volatile politics of economic insecurity.… Since the natural tendency of society is to curb markets, free markets can only be created by the power of a centralized state.… A global free market is not an iron law of historical development but a political project.… Free markets are the creatures of government and cannot exist without them.… Democracy and free markets are competitors rather than partners.… [just as the disastrous British free market 100 years ago which culminated into two world wars, the current] global free market is an American project.… In the absence of reform, the world economy will fragment, as its imbalances become insupportable.… The world economy will fracture into blocs, each riven by struggles for regional hegemony.27

In financial warfare, currency markets become a weapon of mass destruction. The speculator

takes out huge forward contracts to sell pounds for French francs at 9.50 to the pound in one month’s time: say forward contracts totaling £10-billion. For these he must pay a fee to a bank. Then he waits until the month is nearly up. Then suddenly he starts buying pounds again in very large volumes and throws them against the exchange rate through selling them. So big is his first sale of pounds that the currency falls, say 3 percent against the franc. At this point other, smaller players see the pound going down and join the trend he has started, driving it down another 3 percent. Overnight he borrows another vast chunk of pounds and sells into francs again, and meanwhile the word is going around the market that none other than the master speculator is in action, so everyone joins the trend and the pound drops another ten percent. And on the day when the forward contract falls due for him to sell pounds for francs at 9.50 the pound in the spot market is down at 5 francs. He takes up his huge forward contract and makes a huge profit. Meanwhile there is a sterling crisis, etc. etc.28

John Gray, author of False Dawn, points out that the imperial centers are also at risk:

A global free market … no more works in the interests of the American economy than of any other. Indeed, in a large dislocation of the world markets the America economy would be more exposed than many others.… In this feverish atmosphere a soft landing is a near impossibility. Hubris is not corrected by twenty percent.… Economic collapse and another change of regime in Russia; further deflation and weakening of the financial system in Japan, compelling a repatriation of Japanese holdings of US government bonds; financial crisis in Brazil or Argentina; a Wall Street crash – any or all of these events, together with others that are unforeseeable, may in present circumstances act as the trigger of a global economic dislocation. If any of them come to pass, one of the first consequences will be a swift increase of protectionist sentiment in the United States, starting in Congress.29

With U.S. President George Bush’s imposition of 30% tariffs on imported steel in 2002 may have been the first signal of such a crisis.

Successful Protection of the “Free” World Validates Friedrich List

Throughout the century the flood of ‘foreign aid’ grew and grew until in the half century preceding 1914 Western Europe, led by Great Britain, ‘had invested abroad almost as much as the entire national wealth of Great Britain…. If the same proportion of American resources were devoted to foreign investment as Britain devoted … in 1913, the flow of investment would require to be thirty times as great. The entire Marshall Plan would have to be carried out twice a year.’30

The economic miracle after WWII was the rebuilding of Europe in five years under the Marshall Plan. However, if the entire industrialized world today provided industry to the developing world at the relative rate that Britain exported capital at the height of her empire’s expansion, the annual “donation” of capital from the currently developed world to the developing world would total over four-times that given Europe during the 5-year period of the Marshall Plan. Note we say “donation,” not “export,” of capital. If control of world trade is to be maintained as capital is “exported,” developing world labor must remain underpaid and overcharged. This prevents development of purchasing power in the undeveloped world and—due to that lack of buying power—wealth will continue to flow from the impoverished world to the wealthy world. Europe and Japan were simultaneously granted the right to protect their industry and labor as well as access to American markets Thus they could simultaneously raise the pay to their workers and repay that “exported” capital where under current free trade rules it is typically unpayable.

Although Adam Smith free trade was being preached, Friedrich List protection was provided to Japan, Taiwan, and South Korea, and later, until the Soviet Union collapsed, all of Southeast Asia and China were allowed under that umbrella. Within that bloc, capital and access to markets was provided on easy terms, equality of trade was maintained, and labor was continually being better paid. Under those Friedrich List protection policies, buying power and prosperous economies were developing.

The rest of the undeveloped world were not afforded protection and their share of world trade dropped from 28% to 13% as their commodity prices dropped 60% and are still dropping.31 That is Friedrich List protection of tender industries within a block of nations with need for group protection, not Adam Smith free trade as designed, preached, and managed by neo-mercantilists. Southeast Asia and China had only moved in under the protection provided Japan, Taiwan, and South Korea at the height of the Cold War and the rest of the undeveloped world remained the providers of raw material and markets.

The clincher that the imperial-centers-of-capital are practicing Friedrich List protection philosophy under the cover of Adam Smith free trade philosophy was the 1997-to-2003 economic collapse on the periphery of empire while the centers held firm. With the exception that China is still intact as this book goes to press, this is a perfect model of a successful neo-mercantilist policy laying claim to the wealth of weak nations under the cover of free trade.

To maintain credibility and thus protect the center, structural adjustment rules—which are little more than the withdrawal, and forced elimination, of protections that brought on those collapses—may possibly be relaxed. Such an event will be acknowledgment that Adam Smith (as interpreted and applied) was wrong and Friedrich List was right.

Secondary Industrial Powers are at Greatest Risk

Even the center collapsing will prove List and disprove Adam Smith. If there is another worldwide collapse such as that of the 1930s we must remember that world trade was in British pounds and Britain—with its ability to print and allocate the currency of world trade—suffered the least of all industrialized nations and that the nations on the periphery of empire defaulted on their debts and actually found life easier during the depression than before. It was the emerging industrial nations, especially the United States, which suffered the most.

We can analyze why. Money flees the periphery of empire for the safety of the center. That money is available both to push up the stock markets of the center and invest in the real economy. IMF loans to the financially troubled countries are made under the condition that those funds repay investors in the imperial center. Typically those IMF funds never leave the center of empire. The worried investors of the center are credited, the IMF funds debited, and the collapsed nation now has the identical debt as before, only it is now owed to the IMF. While the center is still holding and with money seeking safety bloating its financial institutions, speculators and stock market “bottom fishers” borrow those funds, and purchase equities and property on the collapsed periphery. Prices and sales in the center hold due to the flight of capital back to the center, the cheapening of imports, and the purchase of industries on the periphery for pennies on the dollar. Resources, labor, and production costs in the peripheral nations drop by half or more as a factor of currency collapses and enormous wealth transfers from the periphery to the center. So long as that center holds, wealth is now (1998-2005) being transferred at a rate unheard of in modern times.

The emerging nations will be at greatest risk but, with the substantial technology and skilled labor they now have, they too have the option of repudiating unjust debts, creating their own trading currency, and reorganizing their economies to trade with the resource-rich impoverished nations that are now at least partially free of the old imperial-centers-of-capital.

The above was true at the time it was written but no longer. For perspective, we will leave this subchapter as is. But the final subchapter carefully lays it out that a collapse today will be like no other in history.

The Dilemma of the Old Imperial-Centers-of-Capital

Choosing its ethnic, religious, and cultural European cousins, America took the helm of the imperial nations and led the battle to suppress the world’s break for economic freedom. But, now that the Cold War is won, the questions facing the powerbrokers are:

(1) Do the wealthy nations develop the world and establish equality of trades?

(2) Do they include only China and Southeast Asia and form a subtle bloc of 40% of the world trading unequally with the other 60% (a trading empire feeding upon the remaining 60% of the world)?

(3) Will the corporate imperialists decide (state department policies are, as is much domestic law, corporate decisions) to “contain” the once fast-emerging Chinese and Southeast Asians and return to the old standard of white, Western Christian, European-cultured, wealthy nations—an allied imperial-center-of-capital, 15% of the world’s people—covertly and militarily controlling the world?

(4) Or will the world break into three competing trading blocs—the newly expanded and allied Europe, a Western hemisphere bloc, and an Asian bloc (three trading empires)?

This is a bigger dilemma than it first appears. Previous capital accumulations were little more than the world’s wealth siphoned from defeated people of color to the winners of colonial wars, the white, Western Christian, European cultures. The need for allies to defeat fast-expanding socialism and the nonaligned movement for the first time brought non-white nations (Japan, Taiwan, South Korea and now China) into the fold.

As over 60% of the developed world (40% of the total world) become people of color, to many of the powerful it will be the primary problem. But if these racial jealousies can be overcome, if the financial meltdown of the developing world is reversed, and if the waste of the world’s wealth can be eliminated, there would be substantial capital and resources to develop the remaining 60% of the world.

Footnotes

1. The following books will lead you to primary sources on nations, especially America, successfully developing protecting their industries and markets. Though some—because they were needed as allies—developed under others protection, there are no nations which successfully developed without protection for their industries and markets. Friedrich List, The National System of Political Economy (Fairfield, NJ: Auguatus M. Kelley, 1977): Clarence Walworth Alvord, The Mississippi Valley in British Politics: A Study of Trade, Land Speculation, and Experiments in Imperialism Culminating in the American Revolution ( New York: Russell & Russell, 1959); Paul Bairoch, Economics and World History: Myths and Paradoxes (Chicago: University of Chicago Press, 1993); Correli Barnett, The Collapse of British Power (New York: Morrow, 1971); Oscar Theodore Barck, Jr. and Hugh Talmage Lefler, Colonial America, 2nd ed. (New York: Macmillan, 1968); Samuel Crowther, America Self-Contained (Garden City, N.Y.: Doubleday, Doran & Co., 1933); John M . Dobson, Two Centuries of Tariffs: The Background and Emergence of the U.S. International Trade Commission (Washington DC: U.S. International Trade Commission, 1976); Alfred E. Eckes, Jr., Opening America’s Markets: U.S. Foreign Trade Policy Since 1776 (Chapel Hill: University of North Carolina Press, 1995); James Thomas Flexner, George Washington: The Forge of Experience (Boston: Little Brown and Co., 1965); William J. Gill, Trade Wars Against America: A History of United States Trade and Monetary Policy (New York: Praeger, 1990); John Steele Gordon, Hamilton’s Blessing: The Extraordinary Life and Times of Our National Debt (New York: Walker and Co., 1997); Irwin, Against the Tide; Emory R. Johnson, History of Domestic and Foreign Commerce of the United States (Washington DC: Carnegie Institute of Washington, 1915); Richard M. Ketchum, ed., The American Heritage Book of the Revolution (New York: American Heritage Publishing, 1971); Michael Kraus, The United States to 1865 (Ann Arbor: University of Michigan Press, 1959); John A. Logan, The Great Conspiracy: Its Origin and History, 1732-1775 (New York: A.R Hart & Co., 1886); William MacDonald, ed., Documentary Source Book of American History, 1606-1926, 3rd ed. (New York: MacMillan, 1926); John C. Miller, Origins of the American Revolution (Boston: Little Brown and Co., 1943); Samuel Eliot Morison and Henry Steele Commanger, Growth of the American Republic, 5th ed. (New York: W.W. Norton, 1959); Sir Lewis Namier and John Brooke, Charles Townsend (New York: St. Martin’s Press, 1964; Gus Stelzer, The Nightmare of Camelot: An Expose of the Free Trade Trojan Horse (Seattle, Wash.: PB publishing, 1994); Peter D.J. Thomas, The Townshend Duties Crisis: The Second Phase of the American Revolution, 1776-1773 (Oxford: Clarendon Press, 1987); Arthur Hendrick Vandenberg, The Greatest American (New York: G.P. Putman’s and Sons, 1921). Back to text

Endnotes

1. Michael Perelman, The Invention of Capitalism: Classical Political Economy and the Secret History of Primitive Accumulation (London: Duke University Press, 2000), especially p. 91: Thomas C. Patterson, Inventing Western Civilization (New York: Monthly Review Press, 1997). Back to text
2. Perelman, The Invention of Capitalism, Chapter 3. Back to text
3. Adam Smith, The Wealth of Nations (New York: Random House, 1965), pp. 413, 426, 642. For free trade philosophy before Adam Smith, see Perelman, The Invention of Capitalism and Douglas A. Irwin, Against the Tide: An Intellectual History of Free Trade (Princeton, N.J.: Princeton University Press, 1996), Chapter 3. Back to text
4. John C. Miller, Origins of the American Revolution (Stanford: Stanford University Press, 1959), pp. 4-6. Back to text
5. Friedrich List, The National System of Political Economy (Fairfield, NJ: Auguatus M. Kelley, 1977), pp. 366-370. Back to text
6. Ibid, pp. xxvii-xxviii, 368-69. Back to text
7. List, The National System summarized. Back to text
8. Ibid, p. 73. Earlier theorists on protection against mercantilists were: Alexander Hamilton, 1791; Adam Muller, 1809; Jean-Antoine Chaptal, 1819 and Charles Dupin, 1827, see Paul Bairoch, Economics and World History: Myths and Paradoxes (Chicago: University of Chicago Press, 1993), p. 17. Back to text
9. List, National System, Memoirs and p. 99. Back to text
10. Smith, Wealth of Nations, pp. 66-67, 636-37; see especially List, National System, pp. xxvi, xxvii, 11, 73-75, 150-55, 99-100, 351. Back to text
11. List, National System, pp. 73-75. Back to text
12. Ibid, p. xxv. Back to text
13. Quoted by Herbert Aptheker, The Colonial Era (New York: International Publishers, 1966), pp. 23-24; taken from Smith, Wealth of Nations, pp. 579-80, 626. Back to text
14. Barbara Tuchman, The March of Folly (New York: Alfred A. Knopf, 1984), pp. 130-31 (emphasis added). For early mercantilist theory see Irwin, Against the Tide, Chapter 2. Back to text
15. Charles A. Beard, An Economic Interpretation of the Constitution (New York: Macmillan Publishing Co., 1941), p. 46. See also Michael Barratt Brown, Fair Trade (London: Zed Books, 1993), p. 20. Back to text
16. Beard, Economic Interpretation, pp. 46-47, 171, 173. Back to text
17. Philip S. Foner, From Colonial Times to the Founding of the American Federation of Labor (New York: International Publishers, 1982), p. 32. See William Appleman Williams, Contours of American History (New York: W.W. Norton & Company, 1988), pp. 105-17; Smith, Wealth of Nations, pp. 548-49, Book IV, Chapters VII, VIII; James Fallows, “How the World Works,” Atlantic Monthly. December 1993, p. 42 ; Frederic F. Clairmont, Rise and Fall of Economic Liberalism (Goa India: Other India Press, 1996), p. 100. Back to text
18. Williams, Contours of American History, pp. 192-97, 339-40; Aptheker, Colonial Era, pp. 23-24; List, National System, especially pp. 59-65, 71-89, 92, 342, 421-22; Chapter XI; Dean Acheson, Present at the Creation (New York: W.W. Norton & Company, 1987), p. 7; Richard Barnet, The Rockets’ Red Glare: War, Politics and American Presidency (New York: Simon and Schuster, 1983), pp. 40, 60, 68. 34. Back to text
19. Williams, Contours of American History, p. 221. Back to text
20. Barnet, Rockets’ Red Glare, p. 40. Back to text
21. List, National System, pp. xxv-xxvi. Back to text
22. Ibid., in Memoirs. See also Irwin, Against the Tide, pp. 125-27, Chapter 14 and Eckes, Opening America’s Markets, Chapter 1. Back to text
23. Feisal Mansoor, “The Health of Nations,” Lanka Monthly Digest (December 2000) Back to text
24. “The Three Marketeers,” Time. February 15, 1999, pp. 34-42. Back to text
25. Stephen Gill, “The Geopolitics of the Asian Crisis,” Monthly Review (March, 1999), pp. 1-9. Back to text
26. Peter Gowan, The Global Gamble: Washington’s Faustian Bid for World Dominance (New York: verso, 1999), pp. 104-05. Back to text
27. John Gray, False Dawn (New York: The Free Press, 1998), pp. 210-13, 217-18; see also p. 199. Back to text
28. Gowan, The Global Gamble, p. 96, see also pp. 95-138 and Richard C. Longworth, Global Squeeze: The Coming Crisis of First-World Nations (Chicago: Contemporary Books, 1999), pp. 225, 243. Back to text
29. Gray, False Dawn, pp. 217, 224-25. Back to text
30. Acheson, Present at the Creation, p. 7. Back to text
31. Lester Thurow, The Future of Capitalism: How Today’s Economic Forces Shape Tomorrow’s World (England: Penguin Books, 1996), p.67. Back to text

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