Madness is something rare in individuals — but in groups, parties, peoples, and ages, it is the rule. (Friedrich Nietzsche)
Collective Error is hard to discern because everyone shares it, it appears as truth. One such Mistake is Globalisation. It has Long since been forgotten what the great Economist John Maynard Keynes thought was desirable: “Ideas, Art, Knowledge, Hospitality and Travel should be international. Goods, On The other hand, Should be produced locally wherever reasonably possible; But above all the Finances should remain largely in the national Context.”
No efficient Use of Resources
Electric Cars might not have to be made in every Region, but why not Bikes?
The economy must be a good Deal more international today, when Keynes may have imagined it more than ninety Years ago. At the Time, the crossing of the Atlantic Took at least another Week, and the Container had not yet been invented.
But as today is managed under the Title “Globalization ,” there is not much left to do with efficient Use of Resources. More than Half of the world’s GDP is produced, coordinated, processed and marketed by multinationals. They provide us with some good Products, but especially short-lived Disposable Goods.
Dresses or mobile Phones
The Textile industry is an Example of what Is now the second largest Polluter after the Petroleum industry. The Cotton Farmers in India become Indebted and then kill themselves in their tens Of Thousands every Year, the processors poison the waters, the approaching Slaves suffer in the Factories, the Parts are once carried and end Up in the Garbage or in the Markets of the Third World, where they Break local Businesses.
The only Positive thing about this negative Food Chain: It is earned quite thickly and money is constantly being pulled from real to finance, so that the Index rises and everyone can believe that we are on the right Track.
Profit Margins are also exorbitantly high in supposedly competitive Industries. One Example is Apple iPhone XS, which retails in the US for $1249. Its Items cost $443. You can add about $300 more for Workers, Development and Administration. There are $500 left, which is around 40 Percent “Profit,” a decent Word for usury Price.
At the other End of the Technology Scale, at the T-Shirt, it looks similar. From a typical final Sale Price, the Bangladeshi Seamstress earns just 0.6%. The Rest is accounted for a bit of Transport Costs, Taxes and above all, profits at a wide range of levels, most of which are deducted and removed from the Economic Cycle. The 300 largest Groups In Europe made an average of 9.8 Percent Profit in 2015.
Most of the world Trade Takes place within Corporations
Two-thirds of international trade takes place in the group’s own network of companies. Everything is optimized: environmental standards in one country, social standards in another, taxes here, subsidies there. Optimizing means, under today’s economic conditions, that costs are passed on to the general public. The useful product the customer needs is no longer in the foreground only the Profit. The margin in percent per € which is invest. To do this, we monopolize markets with the help of politicians, push wages and pass the environment on to our children, who are still being fooled and insulted.
The result is unemployment (among young people in Europe, for example, 30 percent), expansion of the Precariat (in Germany around 20 per cent), destruction of the environment (the seas are on the edge of collapse, the climate is on the way), the spread of problematic technologies, Bullshit Jobs, tension and Fake.
The beginning was the beautiful theory of David Ricardo
How could this happen? This spoilage began with a little seductive happiness-cheaper products-and a theory from a time when rich Englishmen from their country of origin declared the world. In 1817, David Ricardo (1772-1823), who had become rich on the London Stock Exchange and had retired from working life as a scholar, laid the intellectual foundations of free trade with his theory of comparative cost advantage.
England subsequently forced its trading partners to free trade, but protected its own industry wherever possible and thus became the dominant world power. Later, the US did the same. Ricardo’s theory is almost universally accepted. “There are few statements that reach more consensus among economists than that that that open world trade promotes economic growth and increases the standard of living,” says Gregory Mankiv, chairman of the economic department at Harvard University, the Vatican of Orthodox economy. Other well-known economists see the matter more critical. According to John Kenneth Galbraith, free trade has “reached the status of a god”, but “none of the world’s most successful trade regions have achieved their status through neoliberal trade rules”.
What does the theory of comparative cost advantage say? David Ricardo describes them with a fictional example of cloth and wine production in England and Portugal. In England, the production of 1000 rolls of cloth requires 100 worker and 1000 barrels of wine with 120 workers, in Portugal, 90 workers for 1000 rolls of cloth and 80 workers for 1000 barrels of wine. Although Portugal has an absolute cost advantage in both categories, it is worthwhile for the country to specialise in wine production, to leave the weaving to the English and to import the cloth from them. Why? In Portugal, the production of wine is more efficient than that of cloth, and in England it is reversed. The Portuguese seem to be able to make more money when they send the weavers to the vineyards.
The comparative cost advantage is a theory and is not based on observation and experience. It only works under certain assumptions and neglecting certain effects, i.e. only in the sandbox. Despite their enormous impact, this is their great and decisive weakness.
What is wrong with the theory
Ricardo’s mistake in thinking is that the main cost of World Trade products is not made up of Man Days, which, although comparable around the world, are no longer used as means of payment since the Babylonian temple bookkeeping. Wages are paid in money, and the differences in global labor costs were already significant at Ricardo’s time when slaves were still held.
Ricardo also assumed that the governments and companies in England and Portugal act for the benefit of their inhabitants. In fact, the main players are joint-stock companies whose goal is to maximize their profits. If your money promises more Profit elsewhere, it moves there, and the productive harmony between the Portuguese winemakers and the English weavers is in the bucket. Today, the players are multinational groups that control the entire chain of exploitation from production to sales and determine the rules and restrict competition in their favor via their lobbies and their financial power. Long-term profits striking over production costs can only be achieved if competition is limited.
“Capitalism is not an economy in which private actors make high profits when they take particularly high personal risks,” says Sahra Wagenknecht. “Rather, the highest profits are achieved precisely where the risk is dominated by the market Constitution – few groups, newcomers hardly have a Chance-rather low, the state engages in many ways under the arms of the companies and their owners decreases a good part of the risk.”
International free movement of persons and Migration as a prerequisite
In order for the groups to be able to produce where wages are low and sell where purchasing power is high, they need three freedoms: the free movement of capital, goods and services across borders.
This business policy can go on for a while. But if there is not enough work, or where the costs are low, wages do not rise, the game is over. At this point we stand today.
That is why the EU, as a political Union, has introduced a fourth freedom, the free movement of persons. It allows people from low-wage countries to migrate to the rich zones, which become more competitive, albeit poorer, as a result of falling wages.
This would tend to meet one of the assumptions of David Ricardo,namely that the same wages are paid on the whole planet. But the European sandbox shows that this would only be possible under the task of sovereignty. The pioneers of liberalism, Friedrich August von Hayek, saw this already in 1976, as a mandatory consequence of the economic globalization: “The abolition of sovereign nation-States and the creation of an effective international legal order are a necessary complement and the logical consummation of the liberal program.”
Building such a legal order from below, to some extent through a global referendum, is illusionary. From above it is prescribed to enforce only with piety.
The WTO as an executor
This shows the history of globalization. After neoliberalism with Reagan and Thatcher in the US and the UK had broken into the social market economy for the first time in the 1980s, it was about globalizing the concept. The Instrument for this was the replacement of the GATT general agreement on tariffs and trade by the WTO. After seven years of secret negotiations of the so-called Uruguay Round, the 1994 WTO treaty was ready for ratification.President Clinton ordered the “Fast Track” procedure, which limited the negotiation time of the giant treaty in Congress to 20 hours. Newt Gingrich, spokesman for the House of Representatives, set a new world record in breaking an election promise. Before the election, he fired on all cylinders against the revised GATT, which was only supported by 35 percent of the U.S. population. Three and a half weeks later, he agreed with Clinton and the accession to the newly established world trade organization WTO was carved.
Referendum in Switzerland avoided
In Switzerland, the only country in which a referendum on the economic detachment of the nation states would have been possible, the consultation procedure was started before the documents were available in German. For the referendum have been provided to eligible groups with expertise on the environmental and Social impacts, and quiet.
In the final vote in the National Council on this historic and floating treaty, only the unwavering Jean Ziegler turned against it. A Referendum failed miserably after Christoph Blocher had cleverly reassured the farmers, the last remaining critics. In 1992, when he was still a popular opponent of small globalization at the EEA vote, he seduced her two years later at the large and even less controllable economic border opening. The Greens remained silent, the environmental organisations and the relief agencies alike. They all apparently believed that freedom for the strong would also benefit the weak.
Companies are increasingly leveraging democracy
Today, 25 years later, we live in another world, decorated with a bit of facade democracy. In economic matters, the decision-making power of the nation states is effectively broken. If national decisions do not suit them, companies can move their production or tax domicile to another country. That’s what small companies do. I know companies that are attracted to another city because of the trade tax for a few hundred € more profit.
Even more power of financial markets. If a country does not regulate in conformity with the market or accepts deficits in favour of its citizens, like Italy last, “the markets” allow interest rates to rise and thus can force a large Player to its knees in weeks. The capital won.
One must understand the world as an organism, with cells and organs that protect themselves with flexible membranes against harmful influences and thus not only maintain their own functioning, but also that of the whole. The political equivalent is the principle of subsidiarity, according to which tasks are taken over by the respective lowest unit, which receives the necessary autonomy. The higher levels, for example, states or international organisations, are not an end in themselves, but rather serve the viability of the lower levels.
At the top level, however, so much power and capital have now accumulated that the necessary reforms seem impossible in a democratic way. It’s not undemocratic either. Only: Where is the third way?
Somehow we have lost our orientation because of globalisation. For the time being, that is something that we can stand by.