C. Bond,
When you said that S.A. was being "drained", I asked:
"> Okay, but by what and whom?"
You replied: "Comrade, if you have to ask, you won't understand the answer."
No, be specific. NGO employees buying foreign cars are not draining the South African economy.
The next exchange:
>> "The $ prices of your exports have crashed..."
> But the rand prices have skyrocketed with the epidemic devaluation of
local
> currencies in the 3rd world.
So have the prices of imported Caterpillars and mining equipment. And if you're talking SA, all the additional forex is leaching out to the London hqs of the major mining exporters, since early 2000 (which is the main reason the rand crashed in half... which is being felt here my spikes in inflation and interest rates, so that makes my point even stronger)... ______________________________________________________________
Hold on, Comrade. Caterpillar is not a South African company. Are you for or against global trade? Should South Africa throw its hat into the heavy equipment ring against the Japanese and Koreans when Cat can't make money? Trade as such isn't a drain on forex, clearly. International trade can pump up a currency.
I agree that local currencies are "leaching" out of the third world, but isn't that on the savings/accumulation side rather than the trade side? Thus, the IMF focus on making third world currencies stable vehicles to save with. ______________________________________________________
Next exchange:
> "...while trade lib has crashed your local capacity to
> import-substitute,..."
> Meaning that imports from countries whose currencies you can barely pay
for
> are still super-competitive in local markets. How so?
No, the typical "phasing" of structural adjustment is to get rid of tariffs while the currencies were still relatively high, leading to massive deindustrialisation of a sort that cannot just be reversed when import prices soar as currencies crash. We're talking pretty permanent damage to industrial sectors (like Zimbabwe's) that were amongst the fifth most powerful (in relation to GDP) in the world. ______________________________________________________________
So you get rid of import tariffs while your currency can buy a lot and imports become super-competitive. Okay, doesn't that mean the currency was overpriced to begin with? On this inevitable de-industrialization, Zimbabwe may have de-industrialized but China certainly hasn't. Why?
___________________________________________________________
>> "your import bill keeps soaring..."
> Again, why, when foreign exchange is such a nightmare?
Because power relations are such that the greedhead local elites can always go to the black market and pay absurd amounts for forex to bring in relatively tariff-free luxury goods (in SA there's no black market -- they just use up massive resources doing so legally). ______________________________________________________
I don't believe that the luxury goods market could possibly have that kind of effect on the currency of South Africa. The numbers don't add up. Now, if you want to tell me that people don't save their money in the rand-denominated credit system, that I'll believe. ________________________________________________________
>> "and includes conspicuous-consumption goodies enjoyed by a tiny fraction
of
>> elites and expat foreign-aid staff (and NGO leaders),..."
> So what?
Hey whose side are you on? _____________________________________________________
I'm on your side, but not if you're attacking shiny cars while more important questions are out there. ______________________________________________-
>> "and today you've got "responsible" international allies like Oxfam
trying
>> to teach you that your poor people can rise up if only the int'l trading
>> system was a bit more fair-"
> Doesn't the focus on international trade come in part from the fact that
> internal economic development in the 3rd world has proven more than
elusive
> despite years and years of socially-conscious advice?
> What do you think of
> the approach championed by Hernando de Soto and his Institute for Liberty
> and Democracy?
The commodification of everything, isn't it? If you want the classic critique of land/housing markets and credit collateralisation, try David Harvey's 1973 book, Social Justice and the City. What's new in de Soto, fromold-timey unworkable modernisation theory? Virtually no attempts to commodify and collateralise the housing and land of the urban and rural poor worked in colonial Zimbabwe (1950s), especially, and in the rest of Southern Africa from the 1960s (the colonial/apartheid states called it "community development") and especially the late 1980s with all manner of variants of microneoliberalism such as microfinance. _____________________________________________________
So no commodification? So you're telling Karl Marx he's wrong? Clearly de Soto is fighting the capitalist revolution and not the socialist revolution, but what's the alternative? A barter economy without an effective legal system? Who does that work for but local strongmen and mafia-types? Unless you're going to a command economy (and let's face it, the odds are against that, for reasons good and bad) and even, to some degree, if there was a command economy, you would have to monetize, commodify, legalize and make uniform the trading structure in the society.
Whatever, de Soto's motives are, he's on target, is he not, when he identifies the central problem of the third world to be a divided economy with most (poor) people in the largely informal local sector and the elite living on another planet, where you hook into the Net, bank with Citigroup and trade with multinationals? _____________________________________________________
> Isn't there the Japan, Korea, Taiwan model?
Policy-wise, I'd go for the massive land reform in the latter two; nationalisation of the banks in SK; vigorous state industrial policy, including keeping TNCs out in all three... but not much more than that. Check Marty Hart-Landsberg and Paul Burkette's book on East Asia published by St Martins in 2000. ___________________________________________________
Massive land reform so people can make no money producing corn and soybeans into a world glut? Tell me what kind of yearly wage you expect a land-reformed peasant to make on 50 acres when a farmer in Washington state can't make it on 500. Can you deny that in a world of combine harvesters a person swinging a hoe or driving a plow behind a team of oxen is wasting his time?
Clearly new industries need protection, but what they need more than that is capital comprised of real money, not Weimar Republic garbage. ______________________________________________________
> Isn't the IMF
> (whatever one thinks of their methods) just as focused on preserving the
> value of local currencies as the protectionists are?
No, their main focus has been financial liberalisation these past ten years, plus high real interest rates to slow it a bit. ________________________________________________________
High interest rates and financial liberalization are meant to strengthen
the currency. They haven't worked, but what's your answer?
_________________________________________________
> Isn't the value of
> local currencies essential? Isn't autarky a goal so unrealistic as to be
> unreasonable?
Depends on what terms.
> If autarky is unrealistic, mustn't local currency hold value
> in international trade?
Depends entirely on what one does with the local social surplus. ___________________________________________________
Very important, that last bit. Isn't the central question keeping maximum
surplus in-country, leveraging it to the sustainable max and even bringing
in foreign surplus if you can? In-country or out, how do you convince a
saver (or capital supplier) of any stripe (including government) to risk
real, valuable savings against future South African cash-flows? How do you
convince her that that future cash flow will be reliable and denominated in
a reliable currency?
____________________________________________________________
>> "-and the likes of Keynes and Daly get painted as "extremists."
> Obviously the "extremist" label is silly, but can we say that Keynes may
be> significantly outdated?
Or you can say that the Washington Consensus is the outdated Treasury View. ________________________________________________________
You may, so long as you keep in mind that the Keynesian view informed the attitude that "sovereign nations don't default." We know that isn't true.
The neo-liberals have objectively failed in the developing world, but the "industrial policy" bunch have failed in even stronger economies. Look at Japanese deflation and French unemployment. The trouble is that only neo-liberals are dealing with the question of currency/credit quality. They're talking to themselves. Serious thinkers and activists like you on the big-gov/big-NGO side aren't even talking their language. ______________________________________________________________
> ...
> Okay, but then you have as well to make the argument that cheap cash crops
> produced by 1st world farmers (subsidized, but also efficient) are worse
for
> the people in the favellas and the shantytowns than more expensive cash
> crops produced by local subsistence farmers (inefficient).
Check Michael Perelman's work on this. Part of that argument also relates to "inefficient" biodiverse grain stocks and other plant life which is being destroyed by invasion of the TNC food marketers. _________________________________________________________
You can talk all the biodiversity you want, a subsistence farmer behind an ox team can't compete with a guy on a tractor. It's just that simple. Farming is a business of scale. __________________________________________________________
>> "Daly's 1996 departure speech from the World Bank, where as environmental
>> economist he was repeatedly frustrated, concluded optimistically, "Take
it
>> as a prediction--ten years from now the buzz words and hot concepts will
>> be`renationalization of capital' and the `community rooting of capital
for
>> the development of national and local economies.'"
>> I think "re-nationalization of capital" and "community rooting of
capital"
>> are not the same thing at all.
Right, but why not both? _______________________________________________
I think the question is becoming whether or not a national capital is an anachronism. What would the deficit-laden US economy be worth if the whole world didn't hold a lot of its savings in dollars? Why would countries with as comparatively vital and productive economies as those of the EU decide to abandon the idea of a national capital?
Aren't micro-lending, credit unions and asset-backed securities the same thing as "community rooting of capital"? Isn't it a question of having one system of trade for everyone, rather than having a master system (with easy access to capital) and a subordinate system of trade (with no access to capital or only on punitive credit terms)? _____________________________________________________________
> For development to progress, we have to know
> what local capitals are worth and that means monetizing them somehow,
> whether we call it "monetizing" or not.
Or we take a more sceptical view of the way that markets value "progress" and try to demonitise and decommodify life. We've been doing that lots with Aids drugs here, trying to save millions of lives. Join us? ________________________________________________________
How many AIDS drugs have been developed in Africa? How many Africans will really have access to even the cheapest, patent-infringed AIDS drugs? Even patent-ignoring drug factories have to buy chemicals on the open market - with money. That means they have, at some point, to get money in return for their product and that virtually excludes most of Africa's rural poor, does it not? How many doses of AZT can a Ugandan sweet potato farmer with 50 acres pay for with a year of hand and animal work? How about with 20 acres? 10 acres? 5?
Lives may not be a commodity, but people require commodities to live.
_______________________________________________________
>> "These are, even to my socialist ears, more sensible sentiments than
Oxfam's
>> utopian attempts to reform globalization through, in part, expanding the
>> reach of multinational trading capital. Oxfam fails to recognise not
only
>> the merits of self-reliance, but also that enormous amount of
>> socio-environmental damage is done by virtue of the transport, energy,
>> packaging, marketing, waste and currency fluctuations associated with
>> unnecessary cross-border trade of goods and services in the name of an
>> alleged "comparative advantage," which in any case is mainly invented or
>> artificial."
> I think your argument against "transport, energy, packaging, marketing" is
> anti-development.
Anti-capitalist and anti-underdevelopment, yes. ________________________________________________
See above. ________________________________________________
> You can't relegate people to subsistence farming.
Huh? ____________________________________________
See above. ______________________________________________________
> Interdependence is always superior to "self-reliance".
Keynes called for globalisation of people, not of capital. I'm with him. _______________________________________________________
So what do people globalize with? ________________________________________________
> I agree that there
> is a great deal that is artificial in trade, particularly in the matter of
> currency, but trade works for the first world, why shouldn't it work for
the
> third world?
The law of combined and uneven development. ______________________________________________
If it's a law, it can be amended.