“A revolution is the climax of a long philosophical development and expresses a nation’s profound discontent; a Putsch is a minority’s seizure of power. The goal of a revolution is to overthrow tyranny; the goal of a Putsch is to establish it.” Ayn Rand
The day after Revolution the streets were in silence. Anarchy was the rule and a no man’s land emerged. The protests against the ruling party had started several weeks before. However, as my grandmother recalled, the problems that had ignited the most recent uprising had always existed: ” these were the very old unfulfilled promises long inherited from Colonial times.” Indeed, these promises were the idea that Government was here to rule over Us, to give Us and to provide Us for our needs and to care for our frailties. The Global South has known dozens of revolutionary movements, dozens of attempts of revolutions and a handful of sanguinary coup d’états. Unfortunately, not much if anything has changed after the uprisings.
Around the world today conflict continues in many areas that were once colonized or controlled by Western European or Soviet powers. The source of many of these protracted conflicts, in large part, lies in past colonial policies, and especially those “regarding territorial boundaries, the treatment of indigenous populations, the privileging of some groups over others, the uneven distribution of wealth, local governmental infrastructures, and the formation of non-democratic or non-participatory governmental systems.”
It is therefore essential, if one wants to understand current revolutionary movements, intractable conflict and its causes, to examine not only the issues and problems of the moment, but also influential historical factors and actors – most notably, past colonial policies and today’s ruling power of these metropolis over former colonies – and their lingering effects.
The idea that the government should provide for our needs is more accepted in post-colonial governments that inherited institutions of dependency and granted privileges by the metropolis. Imagine yourself traveling 200 years back in time to the period in which colonies were ruled by Western Capital. Interestingly, you will find yourself observing almost the same institutions and the same old problems that societies in the Global South still face today in Africa, the Middle East, South America, Eastern Europe and South Asia. The problems in these societies are the result of a long list of misguided decisions all centered in one fatal conceit: the conceit of revolution by force, not in defense, but in violation, of individual rights.
The colonial institutional heritage of the Global South is built around the abuse and violation of individual rights. Not a single revolutionary movement in the Global South has really aimed at restoring individual rights but to the granting of privileges for a minority. The minority groups have taken many forms, received many names and have taken many slogans. They have been revolutions organized by and in contraposition of one minority group versus a majority: of the poor versus the rich, of the middle classes versus oligarch classes, of national interests of capital versus foreign interests, of enlightened groups versus conservative groups, of different ethnic groups against each other, of indigenous groups tired of being exploited, and many many more.
In order for a revolution that aims at restoring individual rights to take place it would be necessary for all citizens to first redefine their code of values upon principles that allow them to pursue happiness without violating the rights of others. This means that for a “revolution and not a putsch” to take place in the Global South we need first to understand that today’s revolutions have no moral justification and are all gang warfare. As such, in order to change our immoral systems of government we require to first our own immoral code of values. This means that we need to learn our history and fix all those immoral decisions taken in the past by our former enslavers.
I believe that the ideal way for starting to learn which is the code of values that provides for a consistent philosophy of life that protects individual rights and allows for humans to pursue happiness is the philosophy of Objectivism and the Objectivist Ethics.
If successful, most probably, the ongoing revolutionary movements in the Middle East, Ukraine and Venezuela will reflect to be nothing but immoral putsches of the very same old privileged groups that they were supposed to fight. Corruption will take a new name, the citizens will be again defrauded by their leaders, immorality will again reign. the power currently upheld by immoral leaders is not a simple system of domination of one specific group but it completely traverses the entire social body. When social relations are not based upon a consistent and ethical code of values its result is “the immanence of force” that Foucault widely studied. In this game of power, the incessant struggle and confrontation will be reinforced, transformed and reshaped without any meaningful outcome. This never-ending cycle of revolutions will encrust and institutionalize itself if it hasn’t already. I truly believe that a Peaceful Philosophical revolution is Possible. It is up to you reader, to chose wether to start it or not.
Prices in a capitalist economy reflect the relative scarcity of a good or service as well as the amount and intensity of consumer demand. Free-market prices are the only viable means of rational economic calculation. If a good or service becomes in shorter supply, for whatever reason, its price will rise, all other things being equal. The higher price will give consumers the proper incentive to do what is needed whenever anything becomes scarcer: conserve, or cut back on consumption. DiLorenzo in “How Capitalism Saved America“
Last weekend I had the pleasure of attending the Oslo Objectivist Conference 2012 in Oslo, Norway in which I enjoyed a weekend of Philosophy, Objectivity and a celebration of Individual Rights. On Monday before returning to my base in Leipzig, I decided to spend the day enjoying the parks and streets of the city (one of my favorites) and during lunch I went to eat buffalo wings in front of the City Hall Park.
That noon I was reading the last pages of the book “How Capitalism Saved America” by Thomas DiLorenzo and was writing extensive notes in my notebook criticizing many of his arguments in favor of capitalism due to lack of consistency and integration. Leaving those morality issues aside, I was very interested in his historical explanation on the role that Unions (and privileged groups of interest) have had in destroying the foundations (principles) of capitalism in the United States since the foundation of the country. Curiously, that same day the Farmers Union of Norway gathered in front of the park to do a countrywide protest (news).
As DiLorenzo writes, Unions have claimed for decades to be representatives of the “interests” of society, workers, middle class, proletarians and et. al. However, it has been actually only in the interests of the Union’s leadership and their pursuit of cronyism that they have actually worked by being concerned only in “their own membership rolls and dues revenues”. Examples from the Unions intervention in the destruction of the most successful industries of the United States are explained by DiLorenzo’s book.
On Monday, the disgruntled Norwegian farmers decided to take the streets against the recent decisions of the government in April, 2012 to subsidy of Agriculture by granting only 625 million Norwegian Kroner instead of the 2.2 billion they asked. The Norwegian Farmers’ Union (NFU) decided to take their trucks and cows and occupy the doors of the City Hall in Oslo; in other cities and towns the mayors were even kidnapped by the unionists.
This protest arise after the Parliament decided that that food prices should rise 20 percent in the next 20 years in line with expected population growth, providing sufficient income to both achieve this and ensure continued recruitment to farming (this reminds me of Hayek’s ideas on the Fatal Conceit). The NFU doesn’t agree. They consider that the average annual incomes are under 300,000 kroner per man-labour year, whilst it is 469,000 on average in other sectors. They also claim to represent the “interests” of 100,000 jobs in agriculture and food industry and not only to be seeking for more money for farmers (yeah, right).
Norway is one of the richest countries in the world and its society lives in very comfortable conditions. The Leviathan in government charges immense amounts of taxes and inflation is incredible. Just to illustrate the size of Leviathan: The buffalo wings and a beer cost me the high price of 250 krone (aprox. 33 euro or US$41.00 in T.G.I. Friday’s) That same meal would have cost me much less if bought in the U.S. or anywhere else in the world .
How can they afford it? The population earns artificial higher incomes due to the government interventions in the economy and disrupts the economy of the country. How did the country reached such a condition can only be understood by taking a close and detailed attention to the role interventionism has in a country’s economy. The effect: high prices, unstoppable high taxes and widespread limitation of liberties behind the power that Unions, groups of interests, politicians and bureacrats have had in the economy for decades.
Slowly but consistently, the Unions and crony capitalists in the bureaucracy of the Norwegian country have made it impossible to be free to exchange products in the country without any type of government intervention. While Norwegians seem to be free, their daily lives are unconsciously been managed and controlled by a gigantic government that regulated every instant of their lives.
As DiLorenzo described, “Ludwig von Mises initially explained back in the 50s in this theory of government interventionism: one intervention (such as subsidies for railroads) leads to market distortions, which create problems for which the public “demands” solutions. Government responds with even more interventions, usually in the form of more regulation of business activities, which cause even more problems, which lead to more intervention, and on and on. The end result is that free-market capitalism is more and more heavily stifled by regulation. And on top of that, usually the free market, not government intervention, gets the blame.”
I would love to go back to Oslo and if possibilities arise to settle and live there for a couple years. I wish that my passion for buffalo wings will bring me to experience a story to write about and meditate again. As for now, I return to write about Capitalism while sitting in a desk in Leipzig, Germany.
The neoliberal (a.k.a. crony capitalism) ruling of the world during the last 50 years is usually generalized as a “big fish eats small fish” relationship. The story continues, with the big fish in Washington, Brussels and Moscow fed themselves with the riches of the world and profited from globalization. Meanwhile, the small fish continued breeding and feeding the always hungry lords. This general discourse is repeated in most if not all the academic papers dealing with postcoloniality and globalization.
The impact of the ideas of these intellectuals is widespread and not easily observable for the ignorant masses. As such, when you read the newspapers in Latin America or Africa in regard to the “new” nationalizations being undertaken by the “new” socialist/anti-neoliberal governments in Argentina, Bolivia, Brazil, Greece, Lithuania, and Sri Lanka since 2011 people usually ignores that there is nothing “new” in these actions.
These nationalizations of privately owned assets have been in many of the cases actual renationalizations of companies that were not owned by the principles of free market ideas, but that had been privatized by corrupt social democratic governments 50, 40 or 10 years before and who created new privately owned privileged companies. As a result of these social democrat and socialist governments many privately owned companies emerged as the bastions of crony capitalism, inefficiency and corruption. The previous, generally increased as closer the national industries were owned by crony private companies that owned single-crop cultive exports and resource rich regions.
To mention short examples of the previous, recently in Argentina Yacimientos Petrolíferos Fiscales (YPF; English: “Treasury Petroleum Fields”) was renationalized (not nationalized) by the government under claims of corruption, inefficiency and negative benefits to their national interests. In Bolivia, Transportadora de Electricidad (TDE) was nationalized by Evo Morales government. However, TDE was also a fruit of the neoliberal and crony capitalist deals established in 1952 after a coup d’état that established a military socialist democracy with the party Revolutionary Nationalist Movement (MNR) which allied into a military-nationalist clique that lasted for 50 years.
Privately owned companies produce always more efficient and better products than state-owned companies. However, privately owned companies that have benefited from government granted privileges for decades not necessarily will produce more and better services and products than state-owned companies. The previous is something that few of us dare to identify and explain with a non-contradictory historical and philosophical background. Meanwhile, the great majority of academics influenced by collectivist philosophies will start writing articles and books applauding the “successful” renationalizations and condemning those free-market authors who will write back and fight.
Indeed, there is a difficult road in defending private property and privately owned businesses in the context of countries and regions that lack respect for individual rights and the rule of law. As such, to defend the private vs collective in those circles it is necessary that first we identify how the societies are currently organized around the collective inefficient systems of social and economic organization. In the case of Bolivia and Argentina it is necessary for us to identify how these business and societies are not structured and organized around the principles of free market and individual rights. By understanding and explaining this clearly there will be a chance to change the discourse of discussion from “why is renationalization good?” to “why laissez faire capitalism is better than the privately owned business of crony capitalism?”
By 2011 the BRIC economies had some of the highest rates of income inequality adjusted to the Human Development Index among developing nations. At the same time, the BRIC countries had consistently had the highest GNP growth versus the previous 10 years among developing nations. How is it that there is not a parallel growth of the Human Development of its citizens? The answer and one of the biggest challenges for the BRIC countries is the fact that a large amount of the GNP is distributed among small elites that control their market economies.
Economists and investors such as O’Neill, Krugman and others largely emphasize the expected growth of the BRIC economies as indicators of where to invest their money. Unfortunately, they have not paid the same interest to what many other economists consider important: the human development of the people. Fortunately, there are still some economists who since the decade of 1970 paid a lot of attention to the issues of freedom and equality. Economists leaded by Milton Friedman, the Economics Nobel Prize of 1976, argued that economic policies should be focused in the freedom of its citizens as a primary value. To them, stressing equality per se could lead to economic inefficiency as well as it would put in risk Freedom itself. However, the same economist argued that it was necessary for developing economies that the government took a central role in poverty alleviation in order to keep the pace with the economic growth of its economies. Unfortunately, this poverty alleviation is not being done in the BRIC countries and the economic difference between the poorest and the richest continues to grow. Since the 60s, a large group of economists emphasized the negative effects of not paying attention to a free and equal development in emerging markets; economists like Friedman and Hayek wrote a lot in this regard and even recently Elinor Ostrom’s ideas, who won the Nobel Prize in Economics in 2009, are still not listened by those who have forgotten the importance of good governance economic policies.
India is the country in which this income inequality versus human development is more pronounced. Currently, India occupies the position #93 with an IHDI of 0.392 and the country has descended in the rank many positions since the last decade. Inequality in the earnings among Indians has doubled over the last two decades, making it one of the worst performers among developing economies. Why? This is again the result of the failed attempts by the Indian government to combat corruption, bad administration and under-payments and also of the unawareness of foreign investors.
The fact that foreign investors have no interest in securing the welfare of the Indian people is a problem. To them, the investment opportunities of this specific BRIC country are of value until they find a better economy to move their money to. However, the real stakeholders are not the foreign investors but the Indian Government and its groups of interest who should aim to secure the welfare of all of its citizens now that they have a chance. While the growth of this economies will continue the effect it will have in such unequal societies will result in some of the worst rates of poverty and hunger ever seen in history. By 2025 India will be the most populous country in the world but also, it will have 268 million people (20.3%) living still with less than US$1.25 a day as reported by economists in the World Bank. The Indian government should go aligned with the current trade liberalization in order to support higher productivity in the private sector and to exploit its comparative advantage of having a labor-intensive industry to foster the production of goods and services.
The group “The 99 percenters” (also known as the 99%) assembled in Wall Street to protest against the corporations of the United States that have benefited from the privileges granted from government through lobbying. They say to be tired of the social and economic inequality in their country. Somehow, they consider Corporations to be the one’s to blame for this inequalities.
Now, lets hold on for a second and consider what are they protesting against and who’s to blame. Then, lets try to explain what and whom should be really blamed before continuing this protests.
Social inequality: Is in fact the cultural and educational differences of those who know more than others.
Economic inequality: Is the result of those men who earn a salary that is higher than others; or of those who own a business and make more earnings than others.
Lobbying: Is the act of influencing decisions made by officials in the government in favor of some industries, unions, or groups of society.
Corporate greed: Is not to be confused with the profit that an entrepreneur earns in his ventures. Greed should better be understood as the result of living and satisfying one’s wants wants by seizing and consuming the products of the labor of others. Corporations that profit with the privileges granted by government are the only ones to be attacked and denounced; not those entrepreneurs who took risks and invest their savings.
These “99 percenters” are confused. They think that Corporations are to be blamed for the economic and financial crisis that started in 2008 in the U.S. However, it is their government and their bureaucrats that through Congress ad the FED enabled for the crisis to happen. This protests should have been taking place in front of the White House and the Senate instead of Wall Street. (Check this video of some of the protests in Wall Street agains the FED)
It is not all the rich and wealthy who benefit from government privileges. The ones who did are to be blamed. But more so, the one’s to be blamed and taken to justice are the the government officials who created the legislation that ensures that corruption and impunity continue without being punished.
As Fréderic Bastiat, the journalist and philosopher from the 19th. Century, once said:
The law has placed the collective force at the disposal of the unscrupulous who wish, without risk, to exploit the person, liberty, and property of others. It has converted plunder into a right, in order to protect plunder. And it has converted lawful defense into a crime, in order to punish lawful defense.
How has this perversion of the law been accomplished? And what have been the results?
The law has been perverted by the influence of two entirely different causes: stupid greed and false philanthropy. (…)
But, generally, the law is made by one man or one class of men. And since law cannot operate without the sanction and support of a dominating force, this force must be entrusted to those who make the laws.
This fact, combined with the fatal tendency that exists in the heart of man to satisfy his wants with the least possible effort, explains the almost universal perversion of the law. Thus it is easy to understand how law, instead of checking injustice, becomes the invincible weapon of injustice. It is easy to understand why the law is used by the legislator to destroy in varying degrees among the rest of the people, their personal independence by slavery, their liberty by oppression, and their property by plunder. This is done for the benefit of the person who makes the law, and in proportion to the power that he holds.
Globalization & Capitalism 