The IMF/World Bank/GATT/NAFTA/WTO/ MAI/GATS/FTAA Military Colossus

The entire world wants TVs, stereos, cars, nice homes, and all else they see in movies and on TV screens. So globalization is going to happen. The problem is not globalization per se; it is corporations structuring world property rights to their advantage, a continual expansion of inequality structured in law through privatization of the commons.

Structuring inequality into law (restricting rights to the commons for some and expanding the rights of others) has been an integral part of the formation of civilizations. The first person powerful enough to claim title to a piece of valuable and productive land could claim the wealth produced while sitting in idleness and splendor.

Anyone claiming such rights in a primitive culture would be immediately challenged. Communal rights were established so each could claim their share of the fruits of the earth. But claims of private ownership were eventually made by powerful people and the taking away of others' rights to the commons began. Powerful people (those first idle people eventually called aristocrats) over the centuries, piece by piece, claimed title to the land and at the peak of aristocratic power there was no common-use land left. Excessive rights for the powerful to the wealth produced by money and technology were also structured in law.

The origin of today's private property system of exclusive title to nature's wealth was feudalism. The revolts of the common people (the America Revolution, the French Revolution, and many internal political battles) slowly eroded feudal rights. Due to the threat of more revolts, some of the rights of the commons were returned to the people through the common people being permitted residual-feudal exclusive title to land.[eee]

The next gain in rights for the common people was the broad expanse of America , Australia , and parts of Africa . Although powerbrokers attempted to establish exclusive rights to land for themselves, they could not do it. Though it worked well to exclude the natives who had no political rights, so long as white immigrants could go over the next hill and squat on unclaimed land, there was no one available to work those openly-monopolized lands. As rights to land in America spread to the common people and became known, the threat of revolution expanded those same rights in Europe .

   To assure loyalty from the diverse populations within the German empire, Bismarck introduced a form of Social Security. Then labor took over Russia in 1917 and promised full blown social security to all their citizens. Labor throughout the world took notice. Thus, to prevent a ballot box revolution during the Great Depression of the 1930s, powerbrokers within the imperial centers had no choice but to grant more rights to the masses. Social Security, unemployment insurance, and welfare rights became the norm (not only in Fascist countries but especially in those nations).

   Overthrowing governments controlled by labor (the Soviet Union) was an essential part of the war plans of both the Axis powers and the West. After WWII, those plans were in shatters. Soviet influence now extended across half of Europe.

   The rapid rebuilding of the shattered Eastern Europeans under labor governments, the much less damaged Western nations failing to rebuild their economies under Adam Smith philosophy, and the rapid expansion of governments by labor in Asia, frightened the managers of Western states. Adam Smith philosophy was totally abandoned and Friedrich List philosophy was fully embraced; financial and technological support was poured into Western Europe and the periphery countries of Asia, Japan, Taiwan, and South Korea. With the possible exception of the masses granted rights to land and technology as Europeans settled America, this was the greatest gain of rights for the common people.

The powerful were frightened that communism (those communal property rights where the struggle started) was going to replace capitalism as the governments of choice throughout the world. Under that threat, countries on the borders of fast expanding socialism (all Western Europe, Japan, Taiwan, and South Korea) were given access to technology, finance capital, and American markets. More important was the unwritten contract with labor within the imperial centers that they would be well paid in this massive struggle between capitalism and communism (private property and communal property). It is that unwritten contract, and the massive funds spent in that struggle, that provided the high standard of living that has become common in America, Europe, Japan, Taiwan, and the Asian tigers.

   For 40 years the buying power of both the imperial centers and the periphery of empire were based upon money expended to fight the Cold War. Without the massive expenditure of money protecting emerging industries (Friedrich List philosophy) in nations that bordered fast expanding socialism, there would have been no prosperous imperial center.

Citizens of the resource-poor imperial centers are unaware that their society is an empire nor do they realize that their good living is based upon the expenditure of money on arms to control the resource-rich periphery of empire and lay claim to their wealth.

The massive wealth distributed is only a small part of what could have been produced and distributed under democratic-cooperative-(supercharged)-capitalism (a modern legal structure for all to receive their share of the wealth of a modern commons even as they retain individualism, competition, and their private property use-rights). The excessive rights of subtle monopolies claim too great a share of the wealth produced and too much is wasted in capital destroying capital and more is wasted in wars. If all had rights to a modern commons through elimination of subtle monopolization, as described in Chapters 1-through-5 and in the following chapters, wealth would no longer be claimed by these non-productive subtle monopolies.

Subtle monopolies are non-productive because they lower production far below society's potential and they lower distribution efficiency. Under democratic-cooperative-(supercharged)-capitalism, there would be instant distribution of wealth to all relative to their contribution to the production of that wealth. The massive increase in wealth produced and distributed under full and equal rights proves that subtle monopolists do not produce. Powerbroker's claims to wealth are through the excessive rights of monopolization subtly structured into law by their predecessors.

A large share of laws passed gives more rights to some and less to others. This is the continual struggle over who will receive the wealth produced from the gains in efficiency of the wealth-producing-process. The shrinkage in the buying power of non-supervisory American labor and the broad expansion of the buying power of the owners of capital ever since 1973 (even though much perfectly good industrial capital is destroyed by other industrial capital) and the same process in other countries of the allied imperial-centers-of-capital over the past 10 years proves that greater inequality (further subtle monopolization of the wealth-producing-process) is still being structured in law. Capital has not only received all the efficiency gains from improved technology, they are now claiming a part of what once went to labor.

Structuring inequality in law is ongoing as the imperial-centers-of-capital establish the rules of world trade. "The heart of the GATT-Bretton Woods system is what is known as MFN-most favored nation."[153]GATT, NAFTA, WTO, MAI, GATS, and FTAA, though supposedly defining equality, bend the will of weak nations to that of powerful nations. That process determines which nations will industrialize and which nations will remain as providers of resources for those imperial-centers-of-capital. Those permitted to industrialize will accumulate capital and those consigned to provide the natural resources to feed those industrial nations will remain poor and in debt:

Many people learned for the first time at Seattle of the existence of the QUAD, the Quadrilateral Group of Trade Ministers, which was formed in 1981 and acts as an informal committee guiding the global trade regime. Before public meetings of the WTO, members of the Quad-the United States , The European Union, Japan , and Canada [all CEOs of, or closely connected with, global corporations]-meet privately, making key decisions without the participation of other representatives of the world community. Once the QUAD reaches agreement, a larger, select group of twenty to thirty countries are invited to come together in informal meetings. Only after that do the 143 members of the WTO discuss and vote on proposals that are typically, by this point, faits accomplis. The poor countries of the world are forced to fall in line by the pressure of the economic and political muscle arrayed against them.[154]

Howard Wachtel understood this process well:

When the WTO replaced GATT on January 1, 1995 , all of the GATT rules and its 47 years of precedents were folded into the WTO…. The WTO is an organization of some 500 highly paid professionals, mostly lawyers… [which] make significant decisions about international trade out of the public's view. It has no written bylaws, makes decisions by consensus, and has never taken a vote on any issue. It holds no public hearings, and in fact has never opened its processes to the public.…Its court-like rulings are not made by U.S.-style due process. Yet WTO today [because it has a dispute settlement mechanism with enforcement powers] rivals the World Bank and International Monetary Fund in global importance….Three minimalist GATT principles continue to operate through the WTO. The first is the famous most-favored-nation status (MFN): Products traded among GATT members must receive the best terms that exist in any bilateral trading agreement.... [The second:] Goods produced domestically and abroad must receive the same "national treatment"-equal access to markets…. [The third] is "transparency," which requires that any trade protection be obvious and quantifiable-like a tariff. ... The WTO has the authority to resolve disputes and to issue penalties and sanctions.[155]

The plan was to

give GATT a "legal personality," known as the Multilateral Trading Organization (MTO) [later organized as the World Trade Organization or WTO], that could strictly enforce global trading laws.... MTO [now WTO] will have the power to pry open markets throughout the world.... The proposed agreement would also extend GATT oversight from "goods" (machinery for instance) to "services" (insurance, banking). In order to protect trade in services, GATT would guarantee intellectual property rights-granting protection for patents and copyrights.... MTO would have the authority to restrict a developing nation's trade in natural resources (goods) if it didn't allow a first world country's financial service company sufficient access to its markets.... GATT panels may some day rule on the trade consequences of municipal recycling laws or state and local minority set-aside programs. In any trade dispute, the nation whose law is challenged must prove its law is not a trade barrier in secret hearings. The new GATT says plainly, "Panel deliberations shall be secret." Under this system, newly elected federal executives could allow the trade or environmental laws of their predecessors to be overturned by mounting a lackluster defense of the laws. And since the defense would occur in secret, without transcripts, interest groups and the public would never know the quality and vigor of the defense. Environmental or health and safety laws (and possibly labor rights and human rights laws) affecting another nation's commerce, no matter how well intended, will be more easily challenged. Again, the executive branch from the challenged nation would defend the law in star-chamber proceedings in Geneva -out of view of media and interest groups back home.[156]

David C. Korten points out,

the burden of proof is on the defendant to prove the law in question is not a restriction of trade as defined by the GATT.... Countries that fail to make the recommended change within a prescribed period face financial penalties, trade sanctions, or both.... The WTO is, in effect, a global parliament composed of unelected bureaucrats with the power to amend its own charter without referral to legislative bodies.... [It] will become the highest court and most powerful legislative body, to which the judgments and authority of all other courts and legislatures will be subordinated.[157]

After WWII, the U.S. State Department "devoted a great deal of time and energy formulating the legal structure" to limit others' rights to place conditions on trade within their country:[158]

[A]ny member can challenge, through the WTO, any law of another member country that it believes deprives it of benefits it is expected to receive from the new trade rules. This includes virtually any law that requires import goods to meet local or national health, safety, labor, or environmental standards that exceed WTO accepted international standards.... [Both national and local governments] must bring its laws into line with the lower international standard or be subject to perpetual fines or trade sanctions.... Conservation practices that restrict the export of a country's own resources-such as forestry products, minerals, and fish products-could be ruled unfair trade practices, as could requirements that locally harvested timber and other resources be processed locally to provide local employment.[159]

The equality and transparency in world trade supposedly guaranteed by GATT, NAFTA, The WTO, MAI, GATS, or FTAA are fraudulent. While weak nations are forced to open their markets, legal structures, and financial institutions, tariffs between the organized and allied imperial-centers-of-capital remain one-quarter that between the developing world and those imperial centers. And the buying power of developing world export commodities and labor continue to fall as the imperial nations continue to tighten the screws of financial, economic, diplomatic, covert, and overt warfare.

Those structural adjustment rules get ever tighter. MAI was described by Business Week as, "The Explosive Trade Deal You've Never Heard Of." The then Director General of the WTO called the secretive MAI rules as, a "Constitution for a single global economy."[160] Under IMF/World Bank/ GATT/NAFTA/WTO/ MAI/GATS/FTAA structural adjustment rules, governments of the developing world could not provide supports to their industry and severely restricted supports to education and health care.

Cuba was able to develop an education and health system equal to America precisely because she escaped the clutches of the IMF/World Bank and the structural adjustments they would have imposed.[161] When former World Bank Chief Economist Joseph Stiglitz was forced out of the Word Bank for suggesting relaxing structural adjustment rules he was asked by interviewer Greg Palast of the London Observer if any nation avoided the fate of structural adjustments. Stiglitz replied, "Yes! Botswana . Their trick? They told the IMF to go packing."

That 90-minute interview on BBC Television's Newsnight went much further and confirmed everything we are outlining about these imposed structural adjustments: A reading of Palast's The Best Democracy that Money can Buy: The Truth about Corporate Cons, Globalization, and High-Finance Fraudsters (2003) will confirm that the purpose of this unspoken economic warfare through imposed structural adjustments is specifically to hold down the price of developing world resources and labor and to transfer that wealth, natural and processed, to the imperial centers. Joseph Stiglitz was awarded a Nobel Prize in economics in 1991 for his courageous stand.[162]

There is the secret of resource-rich impoverished countries and resource-poor wealthy nations. Weak nations are forced to participate in the world economy under exactly the opposite rules under which every powerful nation developed. All wealthy nations provide enormous subsidies to their industries and agriculture, they all placed, and some still place, high tariffs on manufactured imports and low or no tariffs on raw material imports. They all provided, and still provide, subsidies to exports. There are also land donations, tax breaks, and below cost services in bidding wars to gain or retain industry as well as wage subsidies, and outright cash incentives.

Even as structural adjustment rules deny the periphery of empire the right to control their imports and exports or subsidize their industries the imperial-centers-of-capital maintain some level of embargo against over 70 countries.[163]

These embargoes are pressures forcing those countries to bend to the dictates of the imperial-centers-of-capital. Not only are direct and indirect subsidies provided within the imperial centers, the highly developed infrastructure (roads, railroads, ports, and airports) in the developed world, as well as basic research, which greatly cheapens production costs, are largely paid for and maintained by public funds.

More Financial Warfare

In response to the West's economic warfare that maintained low oil prices, oil countries formed OPEC and raised the price of crude oil. Enormous sums of money immediately started moving from the West to the East. This was a crisis of the first order. As the West controlled the money creation process, they turned to financial warfare to rectify the problem:

In the early 1970s, the United States and, to varying extents, the other OECD countries, responded to OPEC's increases in oil prices by heavily expanding the money supply. The resulting inflation, together with the administered pricing policies in many basic U.S. industries, sharply increased the prices of U.S. exports and thus the cost of many imports to developing world countries. Such an inflationary policy enabled the OECD countries, as a group, to keep their current accounts in balance, despite the large oil prices.... In effect, the United States largely insulated itself from the oil price hikes by passing the burden on to the developing world, whose current accounts deficit mounted. The developing world, in turn tried to ease this burden by borrowing heavily rather than by deflating.[164]

We will quote from our previous work:

In short, those petrodollars were transferred to the developing world, then returned to the developed world through export purchases and capital flight, and then dollars were printed to lower the value of Arab petrodollar deposits. If the petrodollars lent to the developing world had been used to build industrial capital and agricultural self-sufficiency, inflating the dollar would have effectively reduced their debts along with the intended reduction of developed-world debts to the oil cartel.

But, as this money was spent on consumer goods (that properly should have been, on the average, produced by themselves) and funneled into personal bank accounts in the developed world, the developing world gained only the debt. The gains of the Arab cartel were largely erased as the value of their money was essentially halved and the developed nations retained their subtle monopolization of world capital in the form of a $1.7-trillion debt trap for the developing world (1998 [now $2-trillion, 2002]) which could only be paid off through sales of valuable resources.[165]

Petrodollars not consumed by wars were deposited in American and European banks and then lent to the developing world for non-productive purposes:

Banks everywhere, flush with petrodollars, had to struggle to find big customers to whom they could make big loans. Brazil , Mexico , Argentina , Nigeria , and others were wonderful customers, borrowing hundreds of billions worth of these "recycled petrodollars," as they were called.... Just moving that money out the door was an achievement because the sums were so vast. Bankers had to struggle to find clients. Never mind that at least $500-billion of those loans turned sour. Never mind that for a decade the biggest borrowers did not make a single payment. Nor, in all likelihood, will they ever.[166]

If labor in the developing world had been better paid that surplus capital would have built industry to service that market. But the combination of low wages on the periphery of empire, low commodity prices, and debt, is an excellent method of guaranteeing the world's natural resources are reserved for populations within the imperial-centers-of-capital:

Debt is an efficient tool. It ensures access to other peoples' raw materials and infrastructure on the cheapest possible terms. Dozens of countries must compete for shrinking export markets and can export only a limited range of products because of Northern protectionism and their lack of cash to invest in diversification. Market saturation ensues, reducing exporters' income to a bare minimum while the North enjoys huge savings.... The IMF cannot seem to understand that investing in ... [a] healthy, well-fed, literate population ... is the most intelligent economic choice a country can make.[167]

By 1996, developing world commodity export prices had fallen 60% and the worldwide currency collapses on the periphery of empire since may have dropped those prices, plus developing world labor values, another 50%.[168] The steadily lowering of commodity export prices and the resultant steadily increasing poverty in the developing world, is a record of the success of the IMF/World Bank/GATT/NAFTA/WTO/MAI/GATS/ FTAA/military colossus in maintaining access to, and low prices for, the world's labor and natural resources:

Structural Adjustment [demanded by the IMF] is best summed up in four words: earn more, spend less. While such advice might be valid if it were given to only a few countries at once, dozens of debtors are now attempting to earn more by exporting whatever they have at hand; particularly natural resources including minerals, tropical crops, timber, meat and fish. With so many jostling for a share of limited world markets, prices plummet, forcing governments to seek ever-higher levels of exports in a desperate attempt to keep their hard currency revenues stable. The "export-led growth" model on which the fund and the World Bank insist is a purely extractive one involving more the "mining" than the management-much less conservation-of resources.[169]

Countries without the industries to produce for themselves are far underpaid for their resources and labor. A share of what is earned is intercepted and diverted by corrupt managers, the developing world must borrow to survive, and their debts grow ever bigger. William Greider describes the inevitable steady spiral into debt when too great a share of a country's resources and labors are "confiscated" by predatory capital and the locally corrupt:

A debtor who repeatedly borrows more than the surplus his labor or business enterprise produces will fall further and further behind in his obligations until, sooner or later, the inexorable pressures of compound interest defeat him ... interest [is] usurious when the borrower's rightful share of profit [is] confiscated by the lender.... The creative power of capital [is] reversed and the compounding interest [becomes] destructive.[170]

Professor Lester Thurow explains:

The fundamental mathematics is clear. To run a trade deficit, a country must borrow from the rest of the world and accumulate international debt. Each year interest must be paid on this accumulated debt. Unless a country is running a trade surplus, it must borrow the funds necessary to make interest payments. Thus the annual amount that must be borrowed gets larger and larger, even if the trade deficit itself does not expand. As debts grow, interest payments grow. As interest payments grow, debt grows. As time passes the rate of debt accumulation speeds up, even if the basic trade deficit remains constant.[171]

Loans to the developing world were made irresponsibly:

[E]xternal loans were not used to finance large-scale industrial or other projects designed to improve the productivity of the national economy. The military dictatorships used them instead to open up domestic markets to imports in order to allow the middle classes a brief, and therefore all the more passionate, frenzy of consumption.... Those debts] are still being paid for today with even greater poverty, unemployment and destitution for the majority of the population. Much of the contemporary wealth of such nations, including Argentina , can be found in numbered Swiss bank accounts rather than between Terra del Fuego and La Plata .[172]

As American citizens have won lawsuits against banks for their defaulting on loans that were loaned less blatantly irresponsible-and as "every debt crisis in history since Solon of Athens has ended in inflation, bankruptcy or war"[173]-the wealthy world should cancel those unpayable, unjust debts. With a market value as low as 14.75-cents on the $1 and an average of 28-cents on the $1,[174]the supposed value of those $2-trillion in loans are already largely gone anyway and the remaining value will melt if, or should we say as, the crisis deepens. As America defaulted on much of its development debt in the 1800s, there is precedent for forgiving that debt. And any honest accounting of underpaid labor and resources would show the wealthy world in debt to the impoverished world.

As money will flee back to the safety of the imperial-centers-of-capital when a financial crisis on the periphery occurs, the center gets stronger (initially) as the periphery gets weaker. (Equality of pay for equally-productive labor would eliminate the current borders of subtle-monopoly capital and thus eliminate those collapses caused by the flight of capital. There would be no borders to flee across.) Since the collapse of the Soviet Union and the acceptance of the Western model by China , there is no fear of losing the periphery to democratic forces in those countries and thus there is no reason for the already-allied imperial centers to provide Friedrich List protection to any needy country.

But will the world return to a balance of a wealthy center with an impoverished but functioning periphery (successful financial warfare)? Will the world economy stabilize with a secure allied center and even lower prices for the resources of the periphery (super-successful financial warfare)? Or has control of technology and control of trade been lost, resulting in ultra-cheap manufactured products pouring into, and collapsing, the allied center (another great depression and failure of financial warfare)?

The $11-trillion gain in the American stock market between 1989 and 2000, created in part by money fleeing the periphery, lost $5-trillion of that in the next 36 months. But the gain in real estate and bond markets has, so long as land prices hold, more than cancelled out those losses. So, at least until the World Trade Center/Pentagon bombing of 9/11/2001 , the economies of the imperial centers were still strong even as the periphery economies worldwide were collapsing.

To gain allies to fight the Cold War, a few key countries on the periphery ( Japan and the Asian Tigers) were allowed rights within the subtly-monopolized banking and trading system. Their collapse was a substantial loss of rights to participate as equals in the world economy. But, once a population has enjoyed those rights, it is very politically difficult to take them away. If denied relatively equal trading rights, those once successfully developing nations will understand those economic warfare maneuvers and may ally together.

So an attempt will be made to soften the current collapse on the periphery. It remains to be seen if finance capital will flow back to the periphery after the 9/11/2001 terrorist attack. If that money does flow back, many developing world industries will have new owners. Finance capital monopolists of the imperial centers will have, during that financial crisis, bought title to those industries and resources for a fraction of true value. With capitalists on the periphery now owning much less of their nation's wealth, economic activity on that periphery cannot return immediately to its previous vigor:

However, if the increased wealth flowing to the center of empire trickles down to the masses through both lower prices and buying power generated from stock market profits, it is possible for the center to be more vigorous than ever. But a collapse of Western stock markets would eliminate the trickling down of wealth and reduce purchases. That reduction could multiply through the economy, and the recessions and depressions on the periphery will have come home to the imperial-centers-of-capital. A substantial softening of European and American economies would blow back upon the already collapsed economies of Southeast Asia and put heavy pressure on the Chinese economy. If economies fall to that level, only relaxing the monopolization of finance capital and restructuring world trade (meaning equal rights, equal access to technology and capital, equal trade, etc., along the guidelines [in the Conclusion]) can establish a vigorous world economy. [175]

The Economic Insanity of Capital Destroying Capital

The excessive accumulation of capital by stateless corporate imperialists, and the denial of capital to the world's powerless with their lack of prosperous internal market economies, are two sides of the same coin. There is too little buying power among the dispossessed to purchase all the production of industrial capital. When there is already a surplus, capital building more industry without developing more consumer buying power will destroy other capital.[176]

Michael Moffit points out:

"Until we get real wage levels down much closer to those of Brazil 's and Korea 's, we cannot pass along productivity gains to wages and still be competitive." With factory wages in Mexico and Korea averaging about $3 an hour, compared with U.S. wages of $14 or so, it looks as if we have a long way to go before U.S. wages will even be in the ball park with the competition. The decline of U.S. industry is the natural and logical outcome of the evolution of the multinational corporate economy over the past twenty-five years has been a bitter pill to swallow and it will become increasingly distasteful as time goes on. One consequence will be a nasty decline in the standard of living in the United States.... [W]e have the outlines of a true vicious circle: the world economy is dependent on growth in the U.S. economy but the U.S. domestic economy is [now] skewed more towards consumption than production and investment, and this consumption is in turn sustained by borrowing-at home and abroad.... The deal with surplus countries essentially has been as follows: you can run a big trade surplus with us provided that you put the money back into our capital markets.[177]

Instead of sensibly and ethically increasing the wages of the poorly-paid to the level of the well-paid, capital plans to lower the wages of the well-paid to the level of the underpaid. Though capital may see short-term gains, in the long run, if capital insists on looking only at their short-term profits, it is a race to the bottom:

So long as global productive capacity exceeds global demand by such extravagant margins, somebody somewhere in the world has to keep closing factories, old and new.... South Korea will be losing jobs to cheap labor in Thailand and even China may someday lose factories to Bangladesh .[178]

Japan 's industrial capacity has operated at 65.5% for 12 years. By 2003 the entire industrialized world was producing at the same two-thirds capacity.[179] With enormous world over-capacity and so little buying power within their economies, the developing world can neither buy the products of industry nor build industry to produce for their own people.

Neither can industry or markets in the imperial centers be sustained. The Friedrich List protection philosophy of giving key countries on the periphery of empire enough industry and market share to gain their loyalty and stop fast expanding socialism permitted substantial capital to be built on that periphery. The low wages in the industries of the latest countries to attempt to develop and the lowering of wages within previously fast developing countries, whose economies and/or currencies have collapsed, does not permit those workers to buy the products they produce. Thus most of that production must, under fierce competition, be marketed to the wealthy world. So long as Adam Smith free trade is practiced, the low prices those products can command will eventually hollow out the economies of America and Europe :

The world's existing structure of manufacturing facilities, constantly being expanded on cheap labor and new technologies, can now turn out far more goods than the world's consumers can afford to buy.... The auto industry is an uncomplicated example: Auto factories worldwide have the capacity to produce 45-million cars annually for a market that, in the best years, will buy no more than 35-million cars.... Somebody has to close his auto factory and stop producing.[180]

This is economic insanity. Perfectly good industries are shut down in the imperial centers and rebuilt on the periphery. When those industries shut down, local businesses close for lack of customers and the values of both homes and commercial property collapses. But, due to their underpaid labor, equal values are not established on the periphery. "There is currently no mechanism within the market system to build consumer buying power and implant this new technology where it is badly needed while keeping the already producing factories servicing the already established market."[181]

Under the current subtle-monopoly system designed to reserve the wonders of the wealth-producing-process for the powerful, those industries can be built quickly. But the markets of an efficiently functioning economic infrastructure (roads, schools, universities, businesses, homes, postal system, trucking companies, and airlines) can be built only slowly.

The struggle over the wealth-producing-process wastes more than wars. As shown below by developing an efficient economic infrastructure under democratic-cooperative-(supercharged)-capitalism, all that waste and the waste of those wars can be eliminated and an efficient economic infrastructure can be quickly built by simply paying equally-productive labor equally. With labor on the periphery equally-paid they can purchase the production from new factories in their region. Meanwhile the factories within the imperial centers can stay open to service their already established market.

Money is used to combine three factors of production-land (natural resources), labor, and industrial capital-to produce an economic infrastructure and consumer products (true wealth). When money is created to establish economic infrastructure (roads, railroads, industry, businesses, universities, et al.) the wealth created is the value that backs that created money.

Currently, "the immediate discounting of a nation's currency on the periphery of empire if it attempted to print money [to produce industry or infrastructure] exposes how control of trading currency monopolizes buying power for imperial-centers-of-capital."[182] Reversing those financial warfare rules makes it clearer yet. Equal pay on the periphery of the abandoned empire, along with the right of the periphery to create currency in step with the increased value of the economic infrastructure being created, will expand buying power in step with increased industrial capacity. As that industrial capacity expands money circulation, more buying power is created, and poverty decreases. Elimination of subtle monopolization allows the magic of the economic multiplier to function and produce a healthier/wealthier society.

Practicing Economic Policies Opposite that Imposed Upon the Undeveloped World

The wealthy world prescribes precisely the opposite economic medicine for poor nations as within their own economies. The European community easily agreed that West Germany must put $1.5-trillion into the former East Germany to simultaneously build industry, social infrastructure, and buying power.[183]And when Greece , Portugal , and Spain , relatively poorer than the rest of Europe , wanted to join the Common Market, these leaders implemented a 15-year-plan that reads as if it came right out of Friedrich List's protectionist classic. This included "massive transfers of direct aid ... to accelerate development, raise wages, regularize safety and environmental standards, and improve living conditions in the poorer nations."[184]Emerging former colonies receive no such care for developing consumer buying power and protection of tender industries so their economies can become viable.

The problem is understood when studying the rejoining of West and East Germany . Though it will eventually succeed, Germany 's expenditure of $1.5-trillion to merge their nation has, at this point in time, failed. Even as massive amounts of money were being transferred from West to East over half a million East Germans moved to West Germany and yet the official unemployment in the East remained at 17.5% while that in the West was 7.5%.

The reasons for this are straightforward. West German labor and industry can produce all the products necessary for East Germany , no West German industry is going to voluntarily release a part of its market share and no West German worker is going to voluntarily give up his or her job. Both industry owners and workers are solidly within the current flow of commerce and they are not about to voluntarily give any of that up.

Without a change in capitalism's philosophy similar to the support and protection provided by Germany for East Germans and that provided by the European Union to Spain, Greece, and Portugal, the economies of other East European and Central European countries will be a very long time gaining equality with Western Europe. Quite simply, Eastern and Central European industrialists do not have the technology, industrial capital, and finance capital to compete with Western industries, their labor is not paid enough for their economies to accumulate that capital, Western capitalists are not going to give Eastern Europe their industries and Western workers are not going to give them their jobs. If Western industries are built in Eastern Europe wages will be low, all profits will go to the current owners of capital, Western Europe will be hollowed out, but compensating buying power will not have been created in Eastern or Central Europe .  

The day may come, theoretically, when the wages of all Europe will equalize. But by that theory the wage levels will be that of the lower-paid nations. West Europeans will never tolerate their standard of living dropping anything close to the level of the East. They will do everything possible to prevent the lowering of the value of their industries to a level that would permit product sales to workers receiving East European and Central European wages. Some form of democratic-cooperative-(supercharged)-capitalism remains the only viable choice for developing Eastern Europe and the rest of the developing world.

Sincerely Sharing the Wealth-Producing-Process

Powerful countries have lots of experience in calculating needed resources and how to obtain them for their own needs. If they were sincere in wanting to develop the undeveloped world, they could easily calculate the waste of the current economy and the waste of wars, take inventory of the world's resources, and draw up a working plan for sustainable development of the world's poor nations. Western Europe first integrating its production of steel and coal (done specifically to eliminate wars between those nations) so all can prosper and later the European Union integrating Western European economies provide models.[185]

It is necessary to expand those principles to all regions of the world and for all people within a region to share equally. Since this would mean big adjustments in the structure of their economies, it is highly unlikely we will hear those options suggested by the imperial centers. Power only responds to equal power. Only through allying amongst themselves and thus gaining power can weak nations force the imperial centers to open up sincere development options.

Under the current world trade structure, the developing world cannot compete with the developed world. But they can compete with each other. All true wealth is processed from resources and most the world's resources are in the developing world. By forming trading alliances, bartering their resources to the wealthy world in trade for technology and access to markets, creating their own trading currencies manufacturing their own consumer products, and by trading within that alliance and wherever else the trades would be equal, those nations can quickly develop.

Note: these are all rights under which every industrialized nation developed and those same rights are now denied the periphery through imposed structural adjustments. Any nation that seriously considers taking control of their own destiny faces immediate embargo and covert destabilization. If they cannot be covertly destabilized, they face overt war. Only by allying together can the periphery gain the power to negotiate equally with powerful imperial-centers-of-capital.

As production and distribution within a country is the health of an economy, a region (not a small or even a medium sized country) should be designed to be largely self-sufficient in food and industry. With adequate resources within their borders, this region could barter access to resources for the developed world for their access to technology and capital. More capital can be obtained from an equalizing surcharge on those resources (export tariffs equalizing unequally paid labor, the negotiations spoken of above) and radically simplified and more equitable methods of capital accumulation as discussed in Chapter 3.

Natural resources should be priced relative to the cost of mining the world's poorer mineral deposits in the resource-poor developed world. To conserve scarce energy, reduce pollution, conserve resources, equalizing surcharges (tariffs) should be collected and used to pay for renewable energy capitalization, other leading technologies-and for primary, non-polluting, renewable energy research. To limit disappearing funds, industry and infrastructure should be built by local engineers and local companies under contract rather than broad loans made for corrupt officials to manage.

"Once roughly equal in technology and labor equally paid, surcharges would be eliminated and honest free trade would flow between those regions." The goal is to turn 'win-lose' or 'lose-lose' trade wars into 'win-win' equalizing managed trade. If a region or country lacks natural resources, they should be permitted a higher level of industrial capital. Trade between unequal regions should be managed trade while trade within regions and between roughly equal regions would be free. As technology, labor skills, and capital accumulation equalize, protections would be lowered.

Undeveloped world industry would be protected from the deep pockets and experienced industry of the developed world and labor and industry in the wealthy world will be protected against equally-productive, low-paid labor in the developing world. The now allied undeveloped regions would develop competitive and balanced economies. A resource depletion tax, a renaming of the equalizing surcharge, would be retained for rebuilding soils and funding sustainable lifestyles:

If wages paid in basic industry are equal to wages paid by the consumer of those products (Adam Smith's concept of labor retaining the value of what it produces[186]), this will create initial buying power and the expenditure of those wages on consumer needs will produce more buying power (the economic multiplier and development of a market economy). Once the internal market economies of impoverished nations are developed and a skilled labor force trained, those countries should be integrated with, and enjoy free trade between, other developed regions using the maximum efficiencies (comparative advantage) of each region. "What is needed is a global regulatory framework for multinational corporations-a set of common standards for labor rights, tax and wage rates, and environmental protection-as well as the means, both national and international, to enforce them." Instead of policies that bring well-paid labor down to the wages of the lowest paid, equalizing managed trade would be raising the wages of the poorly paid to those of the better paid.[187]

William Greider says it well:

[The developed world] ought to reject any new trade agreements that do not include a meaningful social contract-rules that establish baseline standards for health, labor laws, working conditions, the environment, wages. The world economy needs a global minimum wage law-one that establishes a rising floor under the most impoverished workers in industrial employment.[188]

Wealth is only the representative value resulting from combining natural resources (land), labor, and industrial capital. By peripheral nations using the currency of an imperial center as its trading currency, the imperial center can actually print money to own industry within those periphery countries. A country is not free when another country has such leverage over its entire economy. By forming regional trading blocs and printing their own trading currency to establish industries, the developing world has all three requirements for the production of wealth, resources, labor, and industrial capital. The industries built and the wealth produced by those industries provides the value to back the newly printed money:

It must be emphasized that when this capitalization is complete each country will have equal rights (within its region) to resources, industrial capital, and markets. Those rights automatically translate into the ability of that nation's citizens to feed themselves and job rights that, in turn, translate into buying power and that society's share of social wealth. Nations that are poorer in resources need to be assigned a higher level of industrial capital. But the regional average should still be that all-important ratio of approximately one unit of industrial capital to 30-units of social capital (see below); and all capital should, on the average, be regionally and locally owned.[189]

Most of the recommendations above were applied when Greece , Portugal , and Spain joined the Common Market: The European Union planners "implemented a 15-year plan which included massive transfers of direct aid designed to accelerate development, raise wages, regularize safety and environmental standards, and improve living conditions in the poorer nations."[190] These suggestions, equalizing the rights of capital and labor and returning the world's natural resources to their rightful owners, go a little further:

Currently the cost of minerals in the United States is only 1.7% of GNP and the cost of fuel only 2%. This demonstrates that there is plenty of room to increase the price of minerals and carbon fuels to a level that the lower grade deposits in the developed world can be mined and renewable energy utilized. The recycling of minerals would then be profitable and renewable energy would be competitive.

With labor equally paid, initially through tariffs and resource depletion (landrent) surcharges balancing production costs, the world can then mine all deposits (rich and poor), maximize product life (because consumer products now appear expensive), and can recycle (because they are actually now cheaper) the consumed minerals, paper, plastic, and other materials. Though developing-world resources may appear higher priced under these rules, they are really cheaper. Far more people will be provided with the amenities of life even as the world's resources and ecosystems are protected, which is the proper measure of cost.

Once resources are no longer wasted producing arms-and social efficiencies such as those outlined in the classics of Thorstein Veblen, Stuart Chase, Ralph Borsodi, this author's previous work, and many others documenting the enormous wasted labor and resources-are instituted, the developed nations can afford to use their poorer deposits, develop new technology, or trade (equally now) with those who have rich deposits.[191]

Military power is the final arbiter on control of resources and markets. If the undeveloped world is organized broad enough, they can offset the military power of the imperial centers. A large military would now be an expensive handicap. The world should disarm and a fully democratized United Nation's force should provide security throughout the world. Industry, labor and finance capital formerly producing and maintaining arms can now produce for the world's true needs. The world's intelligence services should be maintained with their primary duty being detection of unrest and terrorism.

With $21-trillion worth of social capital and $1-trillion worth of industrial capital (1990), less industry wasted by the military, America has roughly 1-unit of civilian industrial capital to 30-units of social capital.[fff] The developed world need only supply those all-important industrial tools (3.7% of the wealth in a balanced economy); with those tools the developing world can produce their own social capital (96.3% of the wealth).[ggg] By avoiding the American throw-away economy model, a secure, quality life is possible with only 20% the resource consumption of Americans.[192] Thus, by subtracting industry producing for the military and allowing for further technological efficiency gains, we can logically reduce industrial needs to 14% of America 's level in 1990:

We have calculated that a society can be well cared for at 20% of the American consumption rate, or with as little as 14% of U.S. per-capita industrial capacity at the peak of the Cold War. As of that date (1990), the value of industrial tools stood at about $5,600 per person in the United States . (Homes, cars, roads, bridges, electric power, water systems, sewers, etc., are social capital. Steel mills, factories, and so forth are industrial tools.) By the above calculation, one would consider 14% of that-or under $900 industrial capacity per person-as adequate for an efficient, peaceful society.[hhh]Allowing 3.5-billion people without modern tools, $3.15-trillion of industrial capital is needed to develop the world to a sustainable level. That is 18.5% the amount spent on arms by the world since WWII.

Assuming it would require 45 years for the developing world to be educated and to build social capital as it was being given industrial capital, and assuming a doubling of the developing world's population in that time span, it would require $6.3-trillion. That larger figure would be only $140-billion annually, or 14% of the $1-trillion spent on arms each year worldwide at the time of the Soviet collapse. Until that collapse, NATO and Warsaw Pact countries accounted for 86% of that expenditure, or about $860-billion (1990), and the Western alliance spent well over half of that. Thus it would require only 14% of the money habitually spent on arms by the world during the Cold War to industrialize the world. As the Eastern bloc has collapsed, this leaves only the West, but the $140-billion a year needed to industrialize the world is only 28% of that spent by the West to win the Cold War (48% of that spent annually by the United States alone).[iii]

Once a region is developed, industrial needs drop sharply.[jjj] A 1998 report by the United Nations Development Program (UNDP) calculated the annual cost for universal access to a number of basic social services for all people in all needy countries at: $9-billion for clean water and sanitation; $12-billion for women's reproductive health; $13-billion would provide every person with basic health and nutrition; and $6-billion would provide basic education for all. That $40-billion, or 5% that spent on arms each year, is enough to eliminate the worst poverty.

The US will spend twice that rebuilding the World Trade Center, much more each year protecting against terrorism, and those losses are only a tiny fraction of the losses worldwide from government-sponsored wholesale terrorism suppressing the world's breaks for freedom. So restructuring to democratic-cooperative-(supercharged)-capitalism and equal sharing of the world's wealth, thus eliminating terrorism, would be a good return on that investment.

Instead of sustainable world development why is capital insisting on privatizing the world's water systems, electric systems, natural gas systems, et al, and doubling, tripling, and even quadrupling the charges? In spite of the enormous waste of capital destroying capital, despite the waste of wars, and despite the waste of monopolies within internal economies the rights of capital are so excessive and the capital accumulations are so enormous there are no other both safe and profitable areas to invest it. An analysis of the capital and resources wasted within those three areas of the economy will conclude that the alleviation of poverty in 10 years and sustainable development of the world within 50 years under democratic-cooperative-(supercharged)-capitalism can be accomplished.

Obviously, if the developed world was sincere about eliminating poverty it could be done very quickly.