By Nico Rahim

There is much talk of renouncing the paradigm, of moving beyond autistic economics—a system that is profound within its narrow scope yet oblivious to the natural sciences and human dignity.  We no longer need renunciation.  We no longer need to show the bad as bad, for it is known.  What we need is construction—a counter project—a new paradigm that consists of more practical application than idealist rhetoric.  I will attempt to sketch an alternative model, one that speaks to the great ecological and social problems facing us today.  In this short article it will be nearly impossible to give everything its due attention, to speak to every string within the vast and complex weave.  The purpose is to initiate a dialogue of construction, beyond simple criticism of the current model.  Critique is always easier than construction—we must not be lazy.

We now find ourselves at a very pivotal epoch within the course of human history. Economic growth has damaged or altered 60 percent of the ecosystems on Earth; making the world a less hospitable place for both humans and the other living creatures we share this space with.  The United States is sliding closer and closer to a state of militaristic fascism as it finds itself in a position where the only way to insure its economic supremacy—via the petrodollar—is through intimidation and military dominance.  Neoliberal economic agendas of the WTO, IMF, and World Bank erode labor rights and environmental restrictions in rich and developing nations, making the middle and lower classes worse off.  The European Union lacks democratic safeguards to protect national interests and the people’s will within sovereign nations.  Africa is growing poorer and poorer.  Latin America—who is in many ways a beacon of hope—finds its recent leftist success based on financing from Venezuela’s unsustainable oil production.  Throughout the world we see a growing trend of polarization between the rich and poor.
           
While popular resistance to neoliberal global capitalism is growing there has been little intellectual progress in developing an alternative.  Within progressive communities throughout the world there has been much talk about changing the paradigm, of refusing the fundamental precepts of neoclassical theory and neoliberal policy.  The recent World Social Forum in Caracas gave hope to a global movement resisting neoliberal global capitalism.  The forum’s motto may be, “Another World is Possible,” but what is that world?  It may be anti-globalization, but what is it for?  Will it advocate simply another prefix to global capitalism?
           
Since the fall of the Berlin Wall and China moving from a totalitarian communist state to a totalitarian capitalist one, there has been little discussion of an alternative model.   Sure, there are discussions on the fringes, but outside of South America—a region that will be home to the radical change and in 50 years will be an economic model for all to follow—there is no influential academic, policymaker, or popular movement that speaks of a world that embodies an economic structure other than global capitalism. David Schweickart wrote of this in After Capitalism: “Virtually all the progressive struggles being waged at the present (and there are many) are taking place within the imaginative and conceptual horizon of capital.”
           
Alone, fair trade initiatives, true cost accounting, Tobin taxes, and the like will not curb the significant problems facing the current system.  Their remedies will be just another band-aid on the widening income gap.  The corporate structure needs restructuring, workers need control, workers need a voice.  People are allowed to vote for their president, why aren’t they allowed to vote for their boss? (In saying this I concede the idealism given the problems the US has had with fraud in the past few elections).  The time has come to tear apart the corporate model, to make executives accountable to their workers and workers accountable to their peers.
           
Today, corporate power controls state power.  According to a report released by the Institute for Policy Studies, of the largest 100 economies on earth 52 are corporations and 48 are political nations.  This is calculated using annual sales and GDP in 2002 to compare the size a nation’s economy to that of a corporation.  Money is power; in international policy corporations are economically larger, thus more powerful, than most countries.  Domestically, politicians—Republican and Democrat alike—cater to the “special interests” who best grease their palms.  There are many more Jack Abramoffs who have yet to be discovered.

Faulty Theory—Both Left and Right

The idea of democracy has been a novelty to subdue the masses since its modern conception during the high point of the Enlightenment.  The utopian idea of democracy has never existed, regardless of what children are coerced to believe through their education.  Global capitalism has autonomy over democracy, and by its very definition there is little democratic about capitalism.  Under the current system capital is king and democracy is its subject. Those holding capital have power to acquire more capital and those holding little to no capital too often find their only options are debt and years of repayment until death.  Today, the ballot box offers no liberation from the grip of capitalistic oppression, people choose between candidates who may differ socially but differ little economically.
           
Socialism of the 20th century is dead; it died long before the fall of the Berlin Wall.  The same is true for social democracy: still visible, but not alive, it only serves as an image representing a false reality, like Lenin’s pickled corpse that was so long displayed in the former USSR.  The Marxist philosophy that was put into practice in the past should be left for the historians and not for applications in our current times.  Marx had little understanding of the natural sciences and ecology, thinking man could rise above nature rather than find his place within it.  John Gray, author of Straw Dogs, wrote of Marx, “Along with other Enlightenment thinkers, Marx believed that technology could transmute the base metal of human nature into gold... Instead, animated by faith that humans are destine to master the Earth, he insisted that freedom from labour could be achieved without any restraints on their desires.”
           
Although Marx may have been off-base in this particularity, his words still hold more truth than not. Eric Hobsbawm best articulates Marx’s future where he wrote in his book, The Age of Extremes, “However, clearly, if Marx would live on as a major thinker, which could hardly be doubted, none of the versions of Marxism formulated since the 1890s as doctrines of political action and aspiration for socialist movements were likely to do so in their original forms.”    It is incorrect to equate Marx with Stalin’s Gulags or with Mao’s Cultural Revolution.
           
It has been said that environmentalism is dead.  To that I say good riddance.  It is of no surprise that environmentalism is dead giving that it never truly lived, for it never truly was lived.  How much good does recycling a glass bottle do when we’re changing global climate systems through our so-called economic progress?  What good is it saving a remote forest from logging when the last rural areas amidst urban sprawl are being suburbanized and gentrified?
           
I’m all for recycling, the protection of air, water, and land, and policies to help the poor and underprivileged live more comfortable lives.  But chiseling away for meager gains, getting dirty in the political game of lobbying are vain attempts for change.  Today the work of leftist reformers are like Sisyphus pushing the boulder up a hill in Hades, the reward is a moment of glory only to have the boulder roll back down, having then to start from the beginning.  I’d rather have syphilis than live my life like Sisyphus.
           
To date, the efforts of progressives has been like Viagra to this impotent system, with the affliction of ED in this case being Economic Dysfunction.  Like an old man trying to “get off,” the progressive Viagra will not promote life and longevity, only a momentary fix to a system that is bound to die.  If humanity waits until the modern economic paradigm dies of natural causes we will only see natural catastrophe.
           
We live by a system of false value in all meanings of the word.  Well before Marx it was understood that use value and market value of a given commodity were two vary separate things.  Market value is based on the assumption that the cost of a good or service is in equilibrium with its benefit through the market mechanisms of supply and demand.
           
But, supply and demand are not the objective measures that they have been so long praised for as being.  It is true that classical and neoclassical economic theory has understood that resources are scarce (going all the way back to Adam Smith), but the paradigm’s fetish with labor, capital, and natural resources’ ability to substitute for one another has created a schizophrenic and contradictory system.
           
Through the paradigm’s fetish with substitution the idea of scarcity of resources has been completely ignored.  The system acts as though infinite growth is possible; that through substitution infinite combinations of finite resources make this growth possible.  But this assumption violates the laws of nature.
           
The first law of thermodynamics is that energy and matter can neither be created nor destroyed.  At first glance this may seem to support the idea of infinite growth, the assumption being that since it cannot be destroyed it then must be able to be used in infinite combinations.  But the second law of thermodynamics states that all energy and matter has a tendency toward entropy, from order to disorder.  This makes the idea of infinite combination false in practice.  Once a resource is used the state of the energy and matter making up the resource changes in a way that its use value declines, and to the degree that there is no market value. 
           
There is one caveat about thermodynamics and the production process.  The second law of thermodynamics may make it seem that any attempt to recycle is futile—in many ways it is under the current production model—but smarter use of materials, specifically low-entropy materials, will create significant benefits. Energy, and the materials used to create energy are highly entropic, while matter mater much less so.  Metals, polymers, and other materials—while not 100 percent efficient—are easily reusable through many industrial cycles.
           
The Second Industrial Revolution, which I will discuss in detail later, seeks not material substitution as its savior, but material reuse.  This is not possible with fossil fuels, which are high-entropy materials; it is impossible to reuse fossil fuels after they burned, as is the same with wood and biomass.  This is significant because the current economy is based on ever increasing energy consumption.  Nearly 85 percent of the world’s energy comes from fossil fuels, which cannot be reused.
           
Nonetheless, neoclassical economists are ignorant to the realities of nature.  This is best seen by the comment made by Nobel laureate Robert Solow who stated, “if it is very easy to substitute other factors for natural resources, then there is in principle no ‘problem.’ The world can, in effect, get along without natural resources, so exhaustion is just an event, not a catastrophe.”  Solow’s comment harkens a the wise words of the apt-quoted Eric Hobsbawm, “The theories on which the neo-liberal theology was based, while elegant, had little relation to reality.”  Although his statement was given in a historical account to readers beyond our epoch—thus the past tense—for us this theology shapes out present reality regardless of whether or not it has any relation to reality.
           
When fossil fuels are burned, energy and matter are not destroyed, but the state of the matter is changed resulting in a little carbon ash and various particulates and greenhouse gases that are released into the air.  The potential energy turns to kinetic as the matter is diverted and diluted so that there is little usable potential energy in the matter.  Neoclassical economics’ fetish with substitutes basically creates the belief that a product’s waste is just as usable as the original state of the good.  This would be like the established medical profession trying to convince the public that people can live healthy and well-nourished lives by substituting their own shit in place of fresh fruit and vegetables.  But then again the established medical profession is trying to convince people that solutions to people’s mental and physical problems come in pill form, so maybe that was not a good analogy.
           
The current production model is far from sustainable; we are bankrupting future generations by the way we are living today.  According to the Global Footprint Network, an ecological economic think-tank, there are 1.9 hectares of productive land per person through out the world.  Yet, the average ecological footprint is already 2.3 hectares per person.  The earth would need to grow by 50 percent in order for our global consumption to be sustainable.
           
The ecological footprint offers some powerful insights into the true cost of consumerism; the ecological footprint for the US citizen is 9.57 hectares, while it is only 0.5 hectares for the citizens of one of the world’s poorest countries, Bangladesh.  The 1.9 hectares per person is calculated for the global population of 6 billion but the global population is expected to grow by 1.5 billion by 2050.  So by that time the hectare per person will be around 1.52, twenty percent less than it is today, yet our consumption is on course to continually increase.  The shoe is shrinking as the foot is growing; indeed, under the modern paradigm things do in fact look grim.
           
This all relates to value in that the price in which goods are valued at are much less than their actual cost, their true cost.  To acknowledge this would be to acknowledge that nearly every one of us lives beyond our means.  Americans are now in an up roar that the prices of gas is rising, but if gas’ true cost were its actual price gas would be much more expensive than it is now.  In a survey by the Sierra Club of eight studies on the true cost of gas found the average cost to be $6.05 per gallon.
           
If the market mechanisms of supply and demand are to work effectively then the direct and indirect environmental costs of a product’s supply chain must be factored into the equation.  Today even if people hold environmental and social responsible values it is nearly impossible to put those values into practice through market transactions for the actual costs and benefits are not factored in the price.
           
In the current pricing method under neoclassical economics does not take into account the environmental, social, and health costs associated with a given good or service.  Under true cost pricing the price of tobacco products would incorporate the health costs associated with smoking.  The price of a banana would incorporate the environmental costs of shipping the fruit a few thousand miles to your market.  Local produce would be cheaper than produce grown a thousand miles away.  An Iowa State University study in 2001 showed that the produce consumers bought within the state traveled an average of 1,494 miles.
           
Organic produce would cost less than conventional produce.  In 1999 an Essex University study determined that on average taxpayers in the UK spent 2.3 billion pounds a year to counter the damage to the environment and human health caused by the farming industry.  This cost includes the cost of purifying water contaminated with pesticides, nitrates and other farm pathogens.
           
Ecological footprints and true cost accounting will not amount to shit unless the dominant paradigm they prove as obsolete is rejected and replaced. There are three fundamental imperatives—categorical imperatives to give a Kantian spin—of the new paradigm.  First, the economy must produce at a sustainable scale, second there must be just distribution after sustainable scale, for it is sustainable scale that will promote justice in intergenerational distribution.  The third is efficient allocation, efficiency does have importance, but if you place efficiency above all the economy is dehumanized.

Sustainable Scale and the Second Industrial
Revolution

You never know what is enough until you know what is more than enough.
—William Blake, “The Proverbs of Hell”

We now know how much is too much.  Maybe our current situation has been necessary to show humanity how much is enough.
           
While it is true that in evolutionary time humans will disappear almost as quickly as they came, that a movement toward sustainability is futile for it attempts prolong something that is bound to die.  But, I am human.  I choose life over death.  If humanity continues on its current trajectory death will come sooner than later.  Change is necessary, not only for our children and theirs, but also for generations whose present is beyond our comprehension.
           
Environmentalist James Lovelock, author of Gaia: The Practical Science of Planetary Medicine, sees the Earth’s behavior as that of a self-regulating organism, an organism he calls Gaia.  He wrote:

Humans on Earth behave in some ways like pathogenic organisms, or like the cells of a tumour or neoplasm.  We have grown in numbers and disturbance to Gaia, to the point where our presence is perceptibly disturbing...the human species is now so numerous as to constitute a serious malady.  Gaia is suffering from Disseminated Primatemaia, a plague of people.

Lovelock sees four possible outcomes for humanity, “destruction of the invading disease organisms; chronic infection; destruction of the host; destruction of the host; or symbiosis—a lasting relationship of mutual benefit to the host and invader.”  To this John Gray responds, “Of the four outcomes, the last is the least likely.  Humanity will never initiate a symbiosis with the Earth.” But, is there any other practical goal for humanity other than symbiosis?
           
The Millennium Ecosystem Assessment Synthesis Report, a United Nations sponsored report, found that over 60 percent of the Earth’s ecosystems—which support life through such means as fresh water, capture fisheries, air and water regulation, and the regulation of regional climate, natural hazards and pests—have been damaged and used unsustainably.  We have changed ecosystems in the last 50 years “more rapidly and extensively” than in any other time in human history.  The report also found that 10 to 30 percent of all animal species are in danger of extinction. 
           
Architects of the report, some 1300 experts from 95 countries concluded:

The over-riding conclusion of this assessment is that it lies within the power of human societies to ease the strains we are putting on the nature services of the planet, while continuing to use them to bring better living standards to all... Achieving this, however, will require radical changes in the way nature is treated at every level of decision-making and new ways of cooperation between government, business and civil society. The warning signs are there for all of us to see. The future now lies in our hands.

The time is now; we must develop a sustainable model that promotes life and longevity, one that looks beyond increasing rate of GDP and corporate profit margins.  

The main premise behind sustainable scale pioneered by such ecological economists such as Herman Daly, Robert Costanza, and Joshua Farley, is that the economy is a subsystem of the global ecosystem, so the economy cannot exceed the scope of the ecosystem with out significant negative consequences.
           
There is such thing as uneconomic growth; that is to say that the cost of the economy’s growth is greater than the benefit of the growth.  Most economists today would disagree with this statement not being able to let themselves believe that growth could actually be detrimental to society and the environment.  But the belief of detrimental growth is held for the mircoeconomy.  In microeconomics there is a specific threshold of optimal scale where any further growth creates more disutility than utility for the firm or household.  In economic terms this is when marginal benefit is equal to marginal cost.  Herman Daly calls this the “when to stop rule.”  Because of this “when to stop rule” I prefer to use Daly’s term, “overdeveloped,” when referring to the richest, most developed nations in the world, for they are in fact overdevelop.  At least under the current production model.
           
If macroeconomics is simply the aggregate of all micro transactions why is the idea that there is an optimal scale so inconceivable to so many economists?  This is not a rhetorical question, for the answer to this is actually quite simple, mainstream economists’ believe that the micro economy functions as a sub-system within the macro economy thus its bounds must be the macro economy, but the macro economy is not perceived as a sub-system of anything else thus it has no bounds to growth.
           
There is no agreeing to disagree here; the assumption is unquestionably false.  Neoclassical economics has been called autistic, and is, for this very reason, it has created it’s own self-contained imaginary utopia removed from the rest of the social and physical sciences.
           
The term “sustainability” has become a modern catch phrase among many progressives, but its definition remains ambiguous.  Sustainability, or better put, sustainable consumption and waste production, is in its most basic definition the production of capital from natural resources, and in turn the production of waste, at no rate greater than which the global ecosystem can regenerate the natural resource and filter humanity’s waste effectively.
           
Sustainability is not just an environmental issue it is a social issue.  Unsustainable consumption is a pubic health issue.  This can be seen in most major metropolises where breathing the air for one day is like smoking a pack or two of Marlboro Reds.  Unsustainable production is in most cases more detrimental to the poor and working class than the bourgeoisies.  We see this in modern industrial areas where the workers a forced through economic reasons to live and raise children in the excrement of society’s production.
           
To date there not a model that determines the precise location of the when to stop rule, at the point where the macroeconomic marginal cost of growth meets the marginal utility.  This does not meet that it is not calculable; currently there is significant research developing to determine just this.  But, it is important to note that before the early 20th century Gross Domestic Product was a foreign term, an aggregation uncalculated, but it did not mean that it didn’t exist.

Sustainability through conservation is simply unfeasible.  How can we reduce consumption while billions in the world are not consuming enough?  This is may be a distribution issue, an issue I will discuss in great detail soon enough.  It is not solely conservation we need, but innovation.  Conservation alone will result in chaos.  While it is true an economy based on growth must be overcome, the reality is we cannot go back to a primitive state where people individually live off the land and provide for their own.
           
If we want true sustainability there needs to be a Second Industrial Revolution, products needs to be designed reused. Cradle to Cradle, co-authored by architect William McDonough and chemist Michael Braungart, gives powerful insights as to how the second industrial revolution should be shaped.  Their idea is a cradle-to-cradle perspective to production rather than a cradle-to-grave, this means designing products in a way that they can be used again—through many cycles—rather than a production design that generates significant volumes of waste.  The demands and goals are staggering and uncompromising, but they seem to be the only way for us to go from here.  They write:

The goal is zero: zero waste, zero emissions, zero ‘ecological footprint.’  As long as human beings are regarded as [environmentally] ‘bad,’ zero is a good goal.  But to be less bad is to accept things as they are, to believe that poorly designed, dishonorable, destructive systems are the best humans can do.  This is the ultimate failure of the ‘be less bad’ approach: a failure of the imagination.  From our perspective, this is a depressing vision of our species’ role in the world.  What about an entirely different model?  What would it mean to be 100 percent good?

The current design model; from cars and computers to newspapers and sneakers, are designed with great inefficiency when one looks beyond the materials first cycle of use.  McDonough and Braungart wrote “According to some accounts more than 90 percent of material extracted to make durable goods in the United States becomes waste almost immediately.”  We seem to live in a disposable world, turn on the TV and you will see dozens of commercials that show you how easy it is to throw it away and forget.  From razor blades and dusters, to paper towels and diapers, these products may seem small and insignificant but the same ideology is true for heavy industrial machinery and toxic materials legally released in small amounts that wreak havoc on ecosystems and human health.
           
McDonough and Braungart state, “To eliminate the concept of waste means to design things—products, packaging, and systems—from the very beginning on the understanding that waste does not exist.”
           
While recycling initiatives throughout the overdeveloped world may have had valiant volition, they have offered little practical solutions.  Given paper, plastic and metal products are not designed to be recycled, second-generation recycled product are of lower quality than the original, for the recycled material itself is of a lesser purity, whether it be aluminum, copper, plastic, or paper.  So they not actually recycled, but are rather downcycled.  Plastics and metals often contain harmful chemicals, from paint, fillers, etc. McDonough and Braungart wrote of this, “Downcycling can actually increase contamination of the biosphere... Electronic-arc furnaces that recycle secondary steel for building materials are now large source of dioxin emissions, an odd side effect for a supposedly environmental process.”
           
To understand the cradle-to-cradle production methods we must understand the difference between a biological nutrient and a technical nutrient.  A biological nutrient is a material that is designed to return to the biological cycle.  Biological nutrients have been essential to life since it appeared on Earth in form of single celled organisms.  In nature—not to say humans are outside of nature—there is no waste.  Waste and decay create food for life, or simply put in the words of McDonough and Braungart, “waste equals food.”
           
This is not to say that life outside of humans is harmonious with all life complimenting other life.  Species have come and gone well before the dawn of humanity, with the arrival of one species being the cause of death of another.  Gaia has always created balance—often by brutal means—life goes on but many times at the expense of certain species.  From here, one could easily infer a very anthrocentric view.  Humanity may be the cause of mass extinction for various species around the planet, but it is simply part of the life cycle, going back to the words of Robert Solow, we can look at extinction as “just an event, not a catastrophe.”  But, mass extinction will greatly alter the ecosystem we depend on for our own wellbeing.
           
Technical nutrients are materials taken out of their natural state by human production, i.e. isolated elements or synthesized compounds.  Technical nutrients, while beneficial to the industrial cycle, are detrimental to biological cycle.  Technical nutrients must function within a closed industrial cycle, thereby not flowing into the biosphere, or at least not to any significant degree.  But, in today’s production model this is not the case, technical nutrients are not designed to be reused within the industrial cycle but to be disposed of within the biological cycle.  Forced recycling, as stated earlier, is not a remedy that will save us.
           
This must change.  It is not that we do not have the technology, it is simply we are not properly allocating investment.  This is precisely why we need Economic Democracy.  

Just Distribution means Economic Democracy

Economic democracy is based on three principles: worker self-management, social control of investment, and a competitive marketplace.  There are also other features of the counterproject that must be included to ensure an economy that promotes “life, liberty, and the pursuit of happiness,” “liberté, égalité, et fraternité,” and other phrases—now cliché—that the West’s revolutionary past sought achieve, and gave only to a select few. 
           
As long a capitalism has autonomy over democracy, their will never be such a thing as “just distribution,” the fight to rid the global of poverty will never be successful.  Given that there is a point where growth is detrimental the old idea that only through economic growth will the 1.2 billion people living in abject poverty be rescued is obsolete.
           
Corporations are innately undemocratic institutions, they are structured from the top down, with the elite few: board members, executives, and stockholders calling the shots.  There have been calls for stockholder advocacy, for stockholders to hold the managers accountable for the social and environmental impacts of the corporations.  But the stockholders exclude the majority of workers.  Sure, nearly 50 percent of Americans own stock of some kind but for most, their stock assets are tied up in mutual and pension funds where they have little to no knowledge of where their money actually goes.  Stockholders—while not being bad people—are going to look out for their investment, not for equality in distribution.
           
For capitalism’s dogmatists the accumulation of capital is the highest moral virtue.  Go to any university’s economic or business department, a large percentage of the faculty will say that Ayn Rand is their favorite philosopher.  Even Allen Greenspan, the former maestro at the Federal Reserve Bank, hails Atlas Shrugged as his favorite book.  It says a lot one the most powerful economic figures in the world buys into a pseudo-philosophy that portrays the poor as being lazy, stupid, and totally deserving of their misery.
           
Lest we forget that the now deified godfather of capitalism, Adam Smith, was also a moral philosopher.  He wrote in his book Theory of Moral Sentiments:

The disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition, though necessary both to establish and to maintain the distinction of ranks and the order of society, is at the same time, the great and most universal cause of the corruption of our moral sentiments.

Without democratic control over capital, capital will continue to be consolidated into the hands of a few.  1980, with Reagan and Thatcher at the head of their respected countries, was the dawn of the neoliberal era, wherein 25 years since almost every restriction on big business has been repealed, labor and financial markets were deregulated along with the loosening of anti-trust laws.  Through neoliberal policy the weak restriction democracy had had on capitalism has been destroyed.  Capital is being consolidated at a rate that has not been seen since the time of the robber barons in late 19th century.
           
According to the Census Bureau since 1979 median family incomes have risen by 18 percent, but the incomes of the top one percent have increased by 200 percent. Furthermore, in 1970 America’s poorest fifth received 5.4 percent of the national income with the richest fifth receiving 40.9 percent.  In 2004 the poorest fifth received 4.4 percent with the share of the richest fifth growing to 46.5 percent.
           
Social mobility is decreasing at the top and bottom, and the middle class is shrinking, the US is more and more becoming a country of have and have nots.  When the local economy goes bad the rich have the ability to get up and move, but the poor are stuck. 

National policy needs to promote zero-unemployment, meaning employment for all those willing and able to work.  Schweickart wrote, “Unemployment is the invisible hand—carrying a stick—that keeps the workforce in line.”
           
In overdeveloped countries around the world wages are stagnant if not falling while unemployment remains low.  Marx’s analysis shows when employment is very low workers’ bargaining power increases given that there are few to replace the workers if labor contracts or acceptable wages cannot be agreed upon.  Inversely, when unemployment is high workers’ lose bargaining power for there is a “reserve army” to take their places if wages are not agreed upon.
           
This has significant resonance in today’s world of global capitalism, not only must the domestic “reserve army” of the unemployed be considered, but also those around the globe.  Today many workers are losing bargaining power in jobs where the labor can be easily exported.  Workers are now forced to accept lower wages in fear that if they put up too much of a fight their job will be outsourced.  When workers have control of the production process this threat will be greatly reduced, thus the downward pressure on wages will be reversed.
           
Today, academics and policymakers almost universally accept the idea of the non-accelerating inflation rate of unemployment or natural unemployment.  Natural unemployment is the rate of unemployment that does create inflationary pressure.  Although inflation can be detrimental, it is not the ultimate economic evil mainstream economist would have you believe.  MIT Economist Paul Krugman wrote of this, “It is one of the dirty little secrets of economic analysis that even though inflation is regarded as a terrible scourge, most efforts to measure its costs come up with embarrassingly small numbers.” 
           
As long as income increases at a rate faster than the rate of inflation workers are better off.  Retired people and others on fixed incomes not adjusted to the rate of inflation are worse off with inflation, but this can easily be compensated.  Banks and financial institutions are the biggest losers when it comes to inflation for debt does not increase with the rate of inflation, a $1000 dollar debt repayment is worth less than the original $1000 lent during a period of inflation.  University of Massachusetts, Amherst economist, Robert Pollin wrote, “This is why financiers are usually adamant in their opposition to inflation, and why they frequently welcome increases in the unemployment rate diminish inflationary pressure.”
           
Poverty is necessary to the current state of capitalism precisely because unemployment is necessary.  Unemployment creates poverty, and poverty breeds poverty. Face the facts, if you are in the poorest 5 percent your chances of achieving an average income is only one in six.  Economically America has prided itself on flexible labor markets, meaning employers face little restrictions when dealing with employees, even so the US seems to be falling behind the more worker friendly labor markets in Europe social mobility.
           
The income gap between those with and without a college degree doubled from 1979 to 1997.  It is much easier for people with a university degree to move up the income bracket than it is for people without a degree. The Economist said in it’s “Survey of America,” “America is quickly becoming a stratified society based on education: a meritocracy.”
           
The level one achieves is very much dependent on one socio-economic position in life, sure there are rags to riches success stories but, for every one of those there are many, many more people who only are not able to pull themselves out of the socio-economic class they find themselves born into.  Geographically, the rich live around the rich and the poor live among the poor.  Schools are funded the municipal property taxes, thus the rich areas often with a smaller population than the more populated low income area have a much large tax base to educate less children and adolescents.  This leaves children in the poorer more populated areas at a absolute disadvantage to the children in middleclass and wealthy areas.  Children from poor high schools often do not have the education or the resources to go to college.  This further solidifies the trend of increasing class differences in the US.
           
From 1976 to 1995 the richest quarter of the population increased their share in America’s elite universities from 39 percent to 50 percent.  A child from the top 25 percent are six times more likely to receive a BA than a child from the bottom twenty-five percent.
           
The chances on getting a good job depend on having a university degree, having a university degree means having a solid elementary and secondary education, but a good elementary education depends on what the geographic location a child is raised in, and this is usually based on their parents socio-economic status.  The utopian capitalist belief that one can come from poverty to become greatly successful and thus wealthy through intelligence and hard work is a myth to keep the poor working rather than organizing.  The way the system is organized now gives the very mediocre and average children of wealth undue power, just look the leader of the so called free-world is today, George W. Bush, a life time underachiever.
           
This is also a race issue, given that black, Latino, and Native Americans make up a significant portion of America’s poor.  How can the US expect to see any kind of racial equality if gentrification, the modern manifestation of segregation puts black, Latino, Native Americans, and other minority group at a fundamental disadvantage from Kindergarten to high school and beyond?  This relates to capital in that minorities find themselves in situations where they do not have the means to acquire capital.  In today’s society capital is more powerful than a vote.  This is why the children of capital find themselves receiving tenfold what the children without capital receive from the government.   Occasionally poor communities are the recipients of capital from development, whether it be governmental or corporate, in situations of corporate development the poor often find themselves packing unable to keep up with the rent increases, but in both cases development will not occur unless there is money to be made by capitalists outside of the community.

Hobsbawm feared the worst for the current paradigm:

To put it brutally, if the global economy could discard a minority of poor countries as economically uninteresting and irrelevant, it could also do so for the very poor within the borders of any and all its countries, so long as the number of potentially interesting consumers was sufficiently large. 

Unfortunately, his fears were not based on future speculation but on current realities. 
           
Living wages are necessary, without living wages society will never be able to rid itself of the working poor.  The livable wage fluctuates from region to region and city to city depending on housing prices and the local consumer price index.  Today many cities across the US have instituted living wage ordinances, usually starting at the poverty line to 30 percent above.  Livable wage ordinances range from a low of $6.25 in Milwaukee, Wisconsin to a high of $12 in Santa Cruz, California, though I doubt $6.25 in Milwaukee is a truly livable wage.
           
Free markets create a mass of working poor.  Today, the minimum wage does nothing the alleviate poverty and does nothing to help workers lose their dependence on welfare assistance.  According to the Economic Policy Institute 26.8 percent of the workforce earned poverty level wages in 1999, up from 23.7 percent in 1979.  Think about it, if there is zero-unemployment targeting in conjunction with mandatory livable wages the current welfare state will be no more, able workers will no longer need direct monetary assistance to make ends meet.  We will be able to rid ourselves of domestic poverty as we know it.  Of course, it is not this simple, there are other factors that cause poverty and that need to be address, such as greater educational investment and job training in poor communities.
           
National policy must provide universal healthcare, this is not only a humanitarian issue but an economic issue as well.  Uninsured working and low-income families often forgo preventive medical care due to costs, treatable ailments become disabling ailments, burdening taxpayers with disability payments.  Also, small businesses often struggle to provide health benefits for workers, with universal healthcare business will not be burdened with healthcare costs, while they pay taxes to provide healthcare, economies of scale with a national healthcare fund will reduce the financial burden for small and large firms alike.

Worker self-management destroys the current corporate model, bringing democracy to the workplace, while still leaving in place dynamic and innovative system that satisfies human need.  In worker self-management workers are responsible for the entire production process, from facility operation, production techniques and workplace organization, to disciplinary action, profit distribution and rate of output. 
           
The strongest example of the successes of worker self-management is the Mondragon Corporatión Cooperativa (MCC) in the Basque region of Spain.  MCC was established by five engineers who under the tutelage of the “red priest,” Don José Maria Arizmendiarrieta, who set up a small cooperative factory that produce small cookers and stoves.  By 2000 MCC grew to a cooperative conglomerate with a workforce of 53,000 annual sales of $6.6 billion, and assets over $13 billion consisting of banks, research centers, appliance and metal cutting tools, as well as retail stores and educational institutions.  The Mondragon “experiment” has been successful in keep the allowable pay differential at 4.5 to 1. Within the MCC skilled engineers and managers earn 30 percent less than comparatively skilled workers in private firms, but this is due to the mandatory wage differential. But, in turn, 18 percent of managers within the MCC did not feel apart of the firm whereas over 50 percent of managers in private firms feel so alienated.
           
It will be certain, the highest paid individuals under the current corporate structure will still be the highest paid under worker self-management; leadership is necessary as is vision, intelligence and personal fortitude.  But, they will not be as well paid as they now are under the corporate structure, this will not significantly affect effective demand, as the top incomes decrease the lowest increase.  There will be in place maximum pay differentials—as is the case in the Mondragon experiment—that allow for greater justice in distribution.  This is not to mean that leaders and highly skilled professionals will suffer, they may not be able to splurge on frivolous luxury items to the scale that they now do, but there needs and wants will still be more than satisfied, but no longer at the expense of those “below” them.
           
When workers control business, corporations become cooperatives—employment becomes ownership. There is no reason to believe that cooperative firms will be less productive than current corporate firms.  Cooperatives are still for-profit firms, but instead of profits going solely to outside investors they are redistributed to the workers as well.  So, the more profitable a firm is, the more workers earn, thus giving greater incentive for workers to be more productive. Workers decide whether profits are paid to them in dividends, reinvested into the firm, or a mixture of both.
           
Current microeconomic theory still holds true for worker self-managed firms for these firms still function under market mechanisms.  Firms will find equilibrium between marginal cost and marginal revenue, meaning they will only employ as many workers that they have the revenue to support.  The reality is while democracy in the workplace creates greater job stability by reducing the threat of outsourcing—one would not vote to send their job overseas—and creates greater balance in pay scale.  Work self-management is not a model that alone will promote full employment; this is where the state must step in a noted earlier. 
           
We need to get one thing strait, most entrepreneurs are not capitalists and most capitalists are not entrepreneurs.  From small businesses to a spin-offs of an established firms innovation and entrepreneurial activity is essential for a healthy dynamic economy.  Small businesses are the life-blood of community.  Small business is not contradictory to the Economic Democracy model, small businesses can expend and become large cooperatives—there is much room for growth.  The practice of worker self-management must be augmented for small business, democratic control may need not apply to firms with under 20 workers, but living wages will still provide worker safeguards.
           
Under the current economic model small business is a dying breed.  Chain stores are taking over.  Wal-Mart, Target, Home Depot, and the like drive small business out of business.  They have destroyed Main Street USA and have increased sprawl and environmentally detrimental development. 
           
Worker self-management will bring profits back to those who worked to make the profits possible.  Unrestricted capitalism is very good at turning a profit, but it is very bad at turning them over.  We see this The Economist wrote of the US’s precarious situation in February 2004, “America’s after-tax profits rose to their highest as a proportion of GDP for 75 years.... The flip side is that labor’s share of the cake has never been lower.... Over the past three years American corporate profits have risen by 60 percent, wage income by only 10 percent.” 
           
Workers are not getting their fair share.  Even John Bates Clark, a pioneering neoclassical economist understood there does come a time when it is necessary and just for workers to revolt when he wrote in his book The Distribution of Wealth, first published in 1899:

If they [workers] create a small amount of wealth and get the whole of it, they may not seek to revolutionize society; but if it were to appear that they produce ample amount and get only a part of it, many of them would be revolutionists and all would have the right to do so. 

Today, workers have every right to do so. An expanded system of credit is the only thing that keeps most working people throughout the overdeveloped world from becoming revolutionists.  Workers are only privy to enough credit to meet their wants and to boost demand, and an income that is enough to barely meet their needs and minimum credit payments. 
           
The question still stands of how private investors are to factor into this equation. Under true socialism there would be no private investment, no financial markets, for investment—in totality—becomes an operation of the state.  But I am unsure of the feasibility of such a model.  I would like to advocate private investment being bound to social control, not all together disbanding it.
           
Individuals with savings and disposable income invest to earn money—through dividends from a firm’s profits or through increasing value of the security.  The transition between the corporate model and worker self-management will be a tricky one, a complete worker takeover and seizure of assets would rob millions of their savings.  Workers could collectively buy-out investors, but as it currently stands it is very unlikely for worker to generate the capital to do so.  After the crash of Argentina’s economy in 2001—thanks to IMF imposed policy—many factories closed, workers were able buy-out factories and reopen them under collective control.  But, we cannot hope or encourage disaster to effectively allow workers to gain control.
           
Workplace democracy does not necessarily stand in opposition to investment.  Firms can be restructured, with workers managing the entire production, still being beneficial to investors.  Maximum pay differentials will redistribute income within a firm but in no way will take away from a firm’s profitability.  It is quite possible that with worker takeovers outside investors will lose confidence and sell; such an increase in supply and decrease in demand would send stock prices plummeting downward.  But this would only expose the exuberant bubbles that have been created under the present economic model.  The profitability of firms would change little.  For the most part stock price have little affect on a firms performance, although it is true a firms performance does affect their stock price.
           
The decrease in stock prices in this case would not mirror firms’ performance but would be based purely on speculation.  This could have a disastrous effect on demand; investors would loose money and would significantly decrease there spending.  But, this seems to be a growing pain that must be worked through.  Today, a significant amount of wealth is based on nothing other than speculation.  Think about it, when stock prices plummet and money is lost there is no one gaining, the money does not turn up elsewhere, it essentially disappears.  Money is abstract; it is no longer based on anything tangible, it is completely faith based.
           
At the high point of the stock market bubble in 1998 the price to earnings ratio was 44.2 for Standard & Poor’s stock price index, this meant that investors were willing to spend $44.20 for each dollar of reported earning.  These investments are not totally based on a firm’s profitability, but are based on the belief that future investors will speculate the security is valuable.  The more profitable a firm the more investors are willing to pay for a security, but all else equal, stock prices increase at a faster rate than earnings, wealth is generated out of thin air.
           
To use the words of John Maynard Keynes, private investment is based on animal spirits of speculation.  Keynes wrote in The General Theory of Employment, Interest and Money:

Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation.  When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.
 
When these bubbles burst, there will be hardship, but stock prices must be brought back to reality.
           
Current financial markets hold great responsibility in the widening gap between the rich and poor.  Investment takes risk, but it is a positive sum game with the summation of losses and gains being much higher than zero. Schweickart wrote of this, “To be sure, there are losers, but overall for more money is won than lost.”
           
This positive sum gain is beneficial for those who can afford to play, but for those who are unable to play, they see them selves falling further and further behind.  Private investment is slow to adapt the social and environmental challenges we face today.  The second industrial revolution will not be driven by private investment, but by public.       
           
Recently there has been a movement for social and environmental responsibility in investing—reign in the animal spirits—while commendable it is simply not enough.  For democracy to have autonomy over capital, democracy must have control over investment.  There are a few ways to achieve this; some voices on the far left have called for the total disbandment of the stock market, of all private investment, and for state seizure of all factors of production so that cooperatives and small enterprises simply rent factors of production, such as factories and built capital, from the state.  With this the state will institute a capital assets tax to generate funds for investment, funds will be distributed by need and by per capita based on a given regions population.
           
I am hesitant to fully support this.  Government regulations providing living wages, healthcare, and zero-unemployment targeting combined with worker-self management will create greater income distribution and capital control.  Government policy should also phase in true cost accounting so that prices internalize all external costs.  True cost accounting is needed for supply and demand to work in any beneficial sense.  As mentioned earlier, true cost accounting would make organic agricultural products less expensive than conventional.  The current household goods would become very expensive, from electronics and appliances to cleaners and furniture, but more ecologically friendly products would be introduce and more widely used than the current ecologically detrimental goods.
           
True cost accounting alone will greatly shift demand in the direction of sustainability toward a second industrial revolution.  With true cost accounting a fundamental change in the production model will not only be the right move, but the economically beneficial move as well.

Global Crisis in Theory, Global Crisis in Practice

Looking at global distribution issues, things are even grimmer than what they seem when looking at domestic distribution problems for the US. This can be seen through the fact that in the 1990’s the world’s 15 poorest nations became even poorer. Under neoliberalism multinational corporations have more freedom to control capital than nations. The WTO is not an effective body to regulate corporate trade given that it is corrupt with corporate interests.  The representatives for the world’s richest countries only represent the interests of the multinational corporations within those countries.
           
According to a United Nations Human Development Report released in 1998, the wealthiest 225 individuals in the world possess wealth equal to the combined incomes of the bottom 47 percent.  Schweickart says of this, “Roughly, the average wealth of each one of these individuals is equal to the combined incomes of ten million people earning the average income of the bottom half of humanity.”
           
           
David Ricardo’s theory of comparative advantage, today’s dominant trade theory, might have been correct for its time, 19th century England, but no longer holds true. Under comparative advantage a nation will specialize in producing the good that has the lowest opportunity cost to produce, in other words a nation will specialize in the good or service that yields greater output per inputs relative to another good than their competition. This is often why poorer nations specialize in labor-intensive goods rather than capital-intensive.
           
Under the principle of comparative advantage the depletion of natural resources are not considered, nor are the costs of transportation and of specialization.  Furthermore, it is assumed that all trade is voluntary, that an individual or nation will not engage in trade unless it is beneficial to one’s interest.  Under globalization trade is no longer voluntary it is necessary, the IMF and World Bank seek to develop export driven economies.  We see this in countries suffering from famine—specifically Ethiopia, instead of feeding their population they are forced to sell their agricultural commodities to meet the loan payments to the World Bank.  There is no longer the freedom to trade or not to trade.
           
But the greatest failure of comparative advantage is that is does not account for capital flows, this fact was even acknowledged by David Richardo himself.  In today’s economy capital flows to the nation with the absolute advantage rather than to where the comparative is.  The world’s richest nations have the absolute advantage for the majority of goods and services.  Under circumstances where capital flows to the world’s richest nations it is impossible to distribute wealth globally. 
           
MIT economist Paul Krugman said, “If there were an Economist’s Creed it would surely contain the affirmations ‘I believe in the Principle of Comparative Advantage,’ and ‘I believe in free trade.’” This alleged creed is eerily similar in both rhetoric and relative faults to the creed of the International Psycho-Analytic Association has above its door, “Let no one enter here who does not believe in Oedipus.” Neoclassical economics, like orthodox Freudian psychoanalysis, is extremely insightful and profound in its narrow focus, but the both fall short in their attempts at universalizing their methods and models to describe global relations.  Just as the Oedipal model (mommy-daddy-me) fails account for non-libidinal human desire the model of comparative advantage fails to account for the social, ecological aspects of trade as well as capital flows.
           
Capital flows to the nations with absolute advantages are a significant reason why growth is not working in the fight to alleviate global poverty.  According to the New Economics Foundation:

Global economic growth is an extremely inefficient way of achieving poverty reduction and is becoming even less effective. Between 1990 and 2001, for every $100 worth growth in the world’s per person income, just $0.60 found its target and contributed to reducing poverty below the $1-a-day line. As a result, to achieve a single dollar of poverty reduction, $166 of extra global production and consumption is needed, with enormous environmental impacts which counter-productively hurt the poorest most.

Over the past 25 years the financial liberalism of the “Washington Consensus” has governed global development strategies through its ideological stranglehold over the IMF and World Bank.  These intuitions seek to develop countries to become a “beneficial” player in the global economy, this means dismantling barriers to trade, i.e. environmental and labor restrictions.   The Washington Consensus requires countries to free their interest rates, eliminate government subsidies to industry, and to open up their markets to capital inflows and foreign direct investment.  This means opening up the economy to Western business interests whose primary focus is to make a profit, even if it is at the expense of the people and communities of the newly financially liberalized countries.
           
The neoliberal developmental strategy of financial liberalization does nothing to liberate developing and least developed nations, it only gives multinational corporations liberty to acquire more capital within those nations.  Economist Robert Pollin proposed methods of increasing employment in South Africa, which faces an unemployment rate of roughly 40 percent at an African National Congress conference in Johannesburg, South Africa in 2002.  Pollin accounts his frustration when fellow economists at the conference did not accept his proposal for it did not fit the neoliberal mold of the Washington Consensus.  He wrote:

At one point, I blurted out in frustration that, ‘you and your colleagues certainly know your economics.  But it seems to me that you are using your abilities to rehash all the reasons why the orthodox textbooks tell us that pursuing an aggressive attack on unemployment is not possible I would rather see you focusing you energies on the ways in which advancing employment can be made workable.’
The response by this official sent shivers through my body.  He said, “You’re right.  If we don’t do something about 40 unemployment, in five years South Africa will Rwanda look like a picnic.’...  And still, despite his blunt recognition of South Africa’s deepening unemployment crisis, he immediately retreated back to affirming the varieties of the country’s neoliberal policy commitments.

Those commitments are to the IMF.  Neoliberal policy does little to deal with unemployment and poverty problems facing most of the world’s developing and least developed countries.  In 2000 the United Nation’s International Labour Organization released a report that stated 30 percent of the world’s labor force, roughly 820 million people, are either unemployed or employed in a job that provides less than a subsistent wage.
           
The most effective way to create more justice in global distribution is to allow the people of developing and least developed nations to control their natural resources and capital assets.  Whether it is diamonds in the Congo, oil in Iraq, or precious and semi-precious mental mines in the Andes.  North American and European multinational corporations control the resources; take the profit, leaving the people of the nations with many low paying jobs and a few middle management positions for the local aristocracy.  We see this in Latin America where the Washington Post reported through trade liberalization the income gap between the richest 10 percent and the poorest has increased from 37 to 1 to 48 to 1.
           
We see this in agriculture as well; in rural India Coca-Cola bottling plants have drained aquifers, stolen water rights, and polluted land at the expense of local farmers.  Currently, under reconstruction policy in Iraq, small farmers are being forced to abandon their seeds and farming methods that they have developed over a few millennia and are now forced to buys seeds and pesticides supplied to them from powerful US companies such as Monsanto and Syngenta.   Jeremy Smith said of this in the Ecologist, “The people whose forefathers first mastered the domestication of wheat will now have to pay for the privilege of growing it for someone else. And with that the world’s oldest farming heritage will become just another subsidiary link in the vast American supply chain.”
           
This is the toughest reality of changing the paradigm; Western nations have been and are willing to use military force to secure corporate control over foreign capital assets and natural resources.  The US is fighting a war right now not to promote democracy but to secure US corporate control over Iraq’s vast petrol resources.  Wars fought over resources are nothing new; Rome’s main motive for war was economic in their final sack of Carthage.  War over resources has been normal practice throughout the rise of global capitalism, from the Spanish-American War where the US “liberated” Cuba from the Spanish to bring down the price of sugar, to the current war in Iraq.
           
In the 1950’s the democratically elected president of Iran, Mohammed Mossadegh, was over thrown in a CIA backed coup after he sought to nationalize Iran’s oil reserves.  At the time BP, then Anglo-Iranian Oil Company controlled all of Iran’s oil, with the Iranian government receiving 16 percent of the reported profits, far less than the agreed 50 percent.
           
The US-backed assassination of President Salvador Allende in Chile, democratically elected with a plurality but not majority.  Capitalism’s autonomy over democracy in evident in Henry Kissinger’s statement, “I don’t see why we need to stand by and watch a country go communist due to the irresponsibility of its own people. The issues are much too important for the Chilean voters to be left to decide for themselves.”  Allende was succeeded by Pinochet, a US-backed military dictator, who is currently under house arrest facing charges for crimes against humanity in the country he once ruled.
           
Western nations have long supported fascist and totalitarian regimes around the world that are friendly to Western business interests, capitalism has trumped democracy around the world.  There will never be any justice in distribution unless people and national interests are able to free themselves from the exploitation of multinational corporations.
           
When nations control their resources they will be able to fund social and education programs that will yield higher skilled individuals who will bring up a nations standard of living.  We see this currently in Venezuela, where the government recently has invested significantly in poverty-stricken areas, promoting healthcare and education.  The short-run affects have been very positive; standards of living have been increased through government intervention alone.  When President Hugo Chávez first took office in 1998, 40 percent of the population lived in poverty, today that number has been cut by a third.  The long run affects—still unseen, yet easy to infer—is a better-educated better skilled population better suited to develop a complex and vibrant domestic economy.  Venezuela is exceptional in one major way, it now boast the world’s largest oil reserves. 
           
When we contrast Venezuela with Nigeria, we see an entirely different picture.  The Nigerian government and domestic companies have little over the petrol reserves within their boarders, and the IMF is coercing them to privatize there dwindling petrol asset in order to receive debt relief.  It is ironic; the IMF will only forgive a portion of Nigeria’s debt—in excess of $20 billion—if it give up its most significant source of income.  Nigeria is the world’s seventh largest oil exporter yet 70 percent of its population lives in poverty.

Developing economies must be allowed to develop their domestic markets—a managed market not free market—to create consumers within their own economies. Free trade could only work in an economically heterogeneous world, where nations are economically strong enough to compete globally.  Overdeveloped nations have absolute advantages in nearly all forms of capital-intensive production, while developing nations have absolute advantages in natural capital and labor-intensive forms of production.   As it stands under free markets and free capital flows developing nations face great challenges in developing industry—specifically for domestic markets.
           
Jobs from the overdeveloped world are being exported to the developing world; most jobs created in developing nations are by subsidiaries of multinational corporations who export products to foreign developed markets.  These are too often jobs found in sweatshops, where are soon as workers organize to demand better pay and working condition corporations can close up shop and move on to the next country who will open itself up to exploitation—either through corrupt elites or IMF imposed policies.
           
Allowing nations to develop domestic economies means promoting import substitution policies, protecting domestic markets from foreign competition, at least until the time they are able to compete on a global scale.  This was the development strategy for most developing nations before the onset of financial liberalization and the Washington Consensus.  Looking at rate increases of GDP, developing nations did much during this time.  According to Robert Pollin, developing nations (not including China), grew at an average annual rate of 5.5 percent between the years of 1961 and 1980.  Yet since the time of aggressive liberalization growth rates fell in the developing world to an average of 2.9 percent annually between the years of 1981 and 1999.
           
Looking at the East Asian economies of South Korea, Taiwan, Singapore, Hong Kong, and to a lesser extent Thailand and Malaysia—a.k.a. the “little tigers”—we see that their economic success was not because to their willingness adapt free trade measures and open themselves up to foreign direct investment, but it was from import substitution, the protection of an development of infant industry.  This was in conjunction with policy aimed at increasing domestic demand.  In 1957 South Korea and Ghana had nearly identical GNPs, today South Korea is one of the richest developing economies while Ghana is still one of the poorest.
           
The little tigers are considered late industrializers, who would have been unable to achieve their current economic success without managed markets and import substitution.  Stephanie Seguino, University of Vermont economist, said of these nations:

In the case of East Asia, “catch up” required the government to intervene in markets to nurture domestic capabilities. The goal was to help domestic firms compete, based on acquiring new technologies from abroad, thereby raising their productivity. Thus, new and strategic domestic industries were protected from foreign competition via import tariffs, quotas, and outright restrictions. This “breathing space” allowed firms to learn by doing.

To be fair, Seguino’s article, “Gender Inequality in a Globalizing World,” was not to praise these nations—specifically South Korea—for the managed market success, but to criticize their exploitation of women in the process.
           
Trade is vital for all economies, but economies cannot thrive if they are based on exports alone.  The current fair trade movement has made significant noise in overdeveloped nations, and has greatly helped the lives of farmers throughout the developing world.  Fair trade organizations work with farmer cooperatives, not with industrial farms owned by multinational corporations.  Minimum prices—well above market prices—are set for given agricultural commodities produced in developing countries as well as a social premium that goes into an investment fund for healthcare, education, and infrastructure.  The current practice of fair trade is primarily a niche in the market for premium goods like coffee, tea, sugar and fruit.  The work of fair trade organizations is valiant but to fair trade should not be a market niche but should be the goal of international policy.

In this epoch of global capitalism this creation of a counterproject—this revolution—must not be relegated to one or a few countries, it must be international.  This is not a new idea, Marx and Engels wrote in The Communist Manifesto:

In the national struggles of the proletarians of different countries, [communists] point out and bring to the front the common interests of the entire proletariat, independently of all nationality...[However,] the proletariat must first of all acquire political supremacy, must rise to be the leading class of the nation, must constitute itself as the nation...The first step in the revolution by the working class is to...win the battle of democracy.

We must bridge the people global North and South we fighting our localized problems, but they all have the same root.
           
From Christianity and modern humanitarianism to Kant, Hegel, Marx, and even Nietzsche the idea that man can transcend the natural limits of earth is an illusion.  The ideology that supports neoclassical economics and the political systems within it places unfounded optimism in scientific innovation and technology; it is believed that technical advancement will liberate humanity from the natural constraints of earth.  If we continue down this line of thought we will encounter death and destruction of biblical proportion.  It seems that globalization is spreading the protestant work ethic the way colonization spread smallpox.  It is ironic that the protestant work ethic’s death drive seems to be set on making the apocalypse of Revelations a reality.  But there will be no messiah to liberate the human soul as humanity turns to dust.