The link between politics and economy is beyond doubt. There is a relation of causality between both. In the history of humanity this relation is clearly visible. In periods of economic crisis and extreme unemployment the trend to the violence increases and vice verse, in times of prosperity the trend to peace increases. For example, the two great confrontations of the 20th century, the First World War 1914-1918 and the Second World War 1938-1945 was preceded by a period of severe economic crisis and it may be assured that the two phenomenon’s were essentially a consequence of the economic situation.
The economic ruin fed the animosity feelings of the countries and created radical leaders as Benito Mussolini and Adolf Hitler that incited to the war.
Other local conflicts of the 20 century had the same origin: the poverty, the unemployment and the struggle for the resources.
The 21st century is not an exception and the rule of the history might repeat again.
For that reason the comprehension of the economic reality is something very important, because it let us anticipate what would happen in the world political scenario.
Two decisive facts dominate the global economic situation: the financial collapse and the natural resources crisis. Both phenomena are closely joined and will determine the political future of the humanity, especially the war and the peace between the nations.
This information of Reuters on February 12 2009 is a clear explanation of the situation:
“World economic crisis is top security threat: U.S. Intelligence
By Randall Mikkelsen– 1 hr 41 mins ago
WASHINGTON (Reuters) – The global economic crisis has become the biggest near-term U.S. security concern, sowing instability in a quarter of the world's countries and threatening destructive trade wars, U.S. intelligence agencies reported on Thursday.
"The financial crisis and global recession are likely to produce a wave of economic crises in emerging market nations over the next year," said the report. A wave of "destructive protectionism" was possible as countries find they cannot export their way out of the slump.
"Time is our greatest threat. The longer it takes for the recovery to begin, the greater the likelihood of serious damage to U.S. strategic interests," the report said.
The report represents the findings of all 16 U.S. intelligence agencies and serves as a leading security reference for policymakers and Congress. Besides reviewing adversaries, it also considered this year the security impact of issues including climate change and the economy.
It said a quarter of countries have already experienced at least "low-level" instability, such as government changes, linked to the economy.
There have been anti-government protests in Europe and the former Soviet Union, and growing economic strains in Africa and Latin America, the national intelligence director, Adm. Dennis Blair, told Congress in delivering the report.
"Instability can loosen the fragile hold that many developing countries have on law and order, which can spill out in dangerous ways to the international community," Blair told the Senate Intelligence Committee.
Steps such as devaluations, tariffs and export subsidies were possible from countries desperate to boost economies.”
The report is enough illustrative and do not require more explanations.
Since its birth, capitalism created big crisis
The financial capitalism has dominated the world economy since the last decade of 19th century until the first decade of the 21st century, approximately 120 years. During that time, the financial capitalism accumulated a huge amount of money to build the modern world but it has generated, as well major crisis and losses for millions of people and thousands of businesses around the world who have lost their heritage as a result of its speculative practices. For example, “during the period following the First World War the U.S. banks showed a tendency to abandon the field of real banking business and becoming agents of financial speculation. Instead of extending loans, commercial banks used their short-term deposits to buy long period bonds recommended by the major banks and to buy or sell securities to the public willing to invest their money." (1)
(1) Harry Elmer Barnes. Historia de la Economía del Mundo Occidental.. Unión Editorial Hispanoamericana. México. 1973. Pages 622-623.
Through the so-called "controlled companies" financial capitalism appropriated full productive sectors from where all its actions were executed.
In the twenties led by the voracious American financial capitalism even lowered the wages of the workers to obtain more benefits that, among other errors, destroyed the purchasing power of workers and pushed the country towards the Great Depression.
"From 1920 to 1932 approximately 11,000 banks closed in United States before the "total closure" which occurred in early March 1933. Only 18,800 banks remained open. There is a contrast between the 11,000 banks which broke in the United States which the occurred in the same period in Canada, where only one bank was broken, the Home Bank, that closed their doors in 1932. While in United States by 1920 there were about 30,000 banks, Canada only had 10 banks with about 3,970 branches.”
As it can be seen in the quotations above, the financial capitalism led Capitalism system to its first big trial.(2)
(2) Idem,page 624.
How the American society overcame the Great Depression of 1929
Theoretically one could say that the 1929 crisis was caused in United States for two main reasons: a) the greed of bankers and b) the indifference, the “leisser faire” by the government, which created the conditions for the collapse of the economy. It was a misunderstood economic freedom that put the capitalist system near its end. Through a political action by the government of President Franklyn D. Roosevelt, the United States was able to overcome its most serious economic disruption.
These actions were not only economic but also a political concept known as “The New Deal” in which the state intervention was the main issue. The first thing President Roosevelt did to address the crisis was ---under strict control of the government--- to reopen the financial system—which had closed their doors in March 1933. Through a stringent law stopped the speculation in the stock market, established limits on the excesses of the electricity industry, which had been associated with the predatory practices of financial capitalism; enacted the National Industrial Recovery Act to encourage industry, reorganized the transportation, created the Federal Emergency Relief Administration to provide direct employment to the unemployed, created the Federal Surplus Relief Corporation in October 1933 to provide food, clothing and fuel to the unemployed, began a comprehensive public works program to provide direct employment to workers, revalued the dollar; and through the Home Owners Refinancing Act of June 1933, prevented the seizure of million people who could not pay their mortgages, among other important actions.
History repeats itself. And in the years 2008 and 2009, President Barack Obama took a set of measures similar to those adopted by President Franklyn Roosevelt in the thirties of the twentieth century.
Origin of the Global economic failure 2008
In the decade of the eighties in the 20th century appeared again in the horizon a new crisis that affected the most important industrial countries. In those years the mistakes of the global financial system began to be appreciated; in the precedent decade ---the seventies--- the financial international system gave loans of billions of dollars to the undeveloped countries at usury rates of interest.
The global crisis began when in the eighties the undeveloped countries could not pay their debts. In that moment the financial system employed their power and influence over the governments of the richest countries to impose a new method for recovering the loans and to avoid the bankruptcy.
The method was a new system of political economy that was named Globalization. Globalization is a system based in the principles of the Neo liberalism. The main objective of the new economic system was to impede the banks bankruptcy and to improve their benefits.
Bankers were aware that the debt was not recoverable but they created a formula for maintaining the debt as healthy assets. The formula was very simple: the refinancing of the debts at perpetuity, changing papers by other papers when these expire. Another formula employed by the financial system has been to issue billons of shares and bonds ---the most without real value--- to be negotiated in the Stocks Market of the world. The majority of these shares and bonds are a great risk because are surcharged or do not have any value, because do not have any support.
This has been the procedure used by the financial system and the cause of the main crisis of the 20th century, as the Great Depression of the thirties and the economic disaster of the first years of the 21st century.
In the eighties, the Globalization and the Neo liberalism was adopted as an official policy by the government of Margaret Thatcher in the United Kingdom and Ronald Reagan in the United States, and it was imposed to the rest of the world through the World Bank and the International Monetary Fund.
The mechanism was simple: the World Bank and the International Monetary Fund dictated a series of conditions to the undeveloped countries: a) adoption of the free market policies b) none intervention of the States in the economy of the countries c) privatization of the more profitable public companies to be sold to the international capitals.
These conditions were imposed to the undeveloped countries under a threat. The country that did not accept the conditions would not receive new loans of the international financial system and their debts would not be refinanced.
Of course, all the undeveloped countries accepted because they had no other option.
Political consequences of the Globalization
The results of the Globalization were not the best. The Globalization process was a failure. As a consequence of its imposition, the political panorama of many regions of the world changed.
In many countries the governments that adopted the Globalization model fell. In other countries leftist governments emerged. Latin America is perhaps the best example. Since the decade of the eighties, 10 Latin American countries have leftist governments.
The establishment of leftist governments in Latin America is a direct consequence of the Globalization and the Neo liberalism policies.
In the first decade of the 21st century the countries with left-wing governments are: Argentina, Brazil, Bolivia, Paraguay, Ecuador, Venezuela, Dominica Island, Cuba, Uruguay, Honduras and Nicaragua. In Honduras the situation changed in the year 2009 and a new government of right wing won the elections of November 2009.
The situation of Mexico must be considered in an especial manner, where a leftist candidate ---Andrés Manuel López Obrador--- lost the election in 2006 by very few votes and where there is a strong leftist movement with an important parliamentary force. This means that ---at medium term--- Mexico might fall in the hands of the left-wing. The same is happening in another country of Central America, El Salvador, where the Political arm of the former guerrilla, the “Frente Farabundo Martí”, in January 2009 won the parliamentary elections. In March 2009, the former guerrilla won the Presidency of that country, through Mauricio Funes. In Perú, other leftist, Ollanta Humala participated in the elections of the year 2006 and obtained an important voting.
It is necessary to highlight that Brazil and Mexico are between the major’s economies of the world. The Globalization and the Neo liberalism ---and especially the financial speculation that is the origin of the poverty of millions of persons worldwide--- also leaded these countries towards the left.
A way for promoting the democracy
The best road for promoting and strength the democracy is through the economic success. It is possible to create millions of new employments, to recover the economy and preserving the environment. Only it is necessary the political decision. For example, the creation of a Global Program of Reforestation ---ecological employments--- would be an effective form for combating the jobless and helping the conservation of the nature.
It is necessary to give the appropriate place to the real economy and to understand that the true wealth is not the money but the material production, especially the food, the water, the natural resources.
It is necessary a new ---holistic--- approach of political economy that highlight the supremacy of the real economy.
lunes, 30 de noviembre de 2009
martes, 17 de noviembre de 2009
The Political Economy in the 21st century, Theory of the Political Supremacy
To get the human beings happiness must be the purpose of the economics.
Objective of the essay
The goal of this essay is to demonstrate the necessity of building a new approach of political economy that helps to create a best world.
Historic vision
The development of the economic thought practically began in the 16th century. Previously, some philosophers, Thucydides (455-4009), Xenophon (430-355), Plato (384-322) and Aristotle (384-322) made some contributions to the economics. In fact, the term economy comes from the Ancient Greek and was Aristotle who made a first approach to the Theory of Value. In his book Politics, he distinguished between the value of use and the value of change and realized also some considerations regarding the Quantity Theory of Money.
In the Roman Empire we find the contribution of the Emperor Diocletian; he established the first control of prices in the economy and appears too the work of Varron (116-27) on agricultural economics.
After, in the Middle Age (centuries V to XV), highlight the Summa Theological of Saint Thomas of Aquino (1225-1274), who exposed the value of the just price, the just salary and condemned the usury.
Some years after appear the work of Nicholas Oresme (1340-1382), who criticized the reduction of the value of the money made by kings. The work of Oresme was the inspiration of Thomas Gresham (1519-1579) who demonstrated ---some years after--- how the less valued currencies displace the most valued currencies.
The Mercantilism
Gresham inaugurated the Mercantilist thought in the 16th century. The Mercantilism defended the thesis of the state intervention in the economy. The mercantilists sustained that the wealth of nations was represented by their stocks of gold and silver and by a positive balance of payments; this means, by the promotion of the exports and the restrictions to the imports.
Among the principal mercantilists authors must be mentioned the names of Juan Botero (1540-1617) and his book Reason of State; Antoine Montchretien ( 1575-1621), who employed for first time the term political economy; Jean Baptiste Colbert (1619-1683); William Petty (1623-1687), with his book Political Arithmetic, considered, moreover, founder of the economics and Richard Cantillion (1680-1734) considered too founder of the economics.
The Physiocrats
Between the years 1760 and 1770 emerge in France a new economic vision. It was the thought of the Physiocrats, who’s sustained a different idea regarding the causes of the wealth of nations.
The Physiocrats thought that the agriculture was the base of the wealth and not the bullion (gold and silver), neither the advantages in the foreign commerce as had assured the Mercantilist theory until that moment. They believed in a natural order and were opposed to the state intervention in the economy. This represents the opposite thesis to the Mercantilism.
The principal exponent of the Physiocracy was Francoise Quesnay (1694-1774), who created the Tableu Economique in 1758, a model of economic analysis where he demonstrated the flows of the economy. This work was the base of the modern econometrics years after.
Classic Economy
In the year 1776 occur a fact that would change the economic history. It was the publication of the book An Inquiry into the Nature and Causes of the Wealth of Nations, of the philosopher Adam Smith (1723-1790). This book is considered the main economic work of all the times.
Smith contradicted the appreciations of his predecessors and argued that the industrial production is the most important cause of the wealth of nations increase and made a severe opposition to the intervention of the state in the economy.
Smith inaugurated the period of the Classic Economy, which other principal figures were Thomas Robert Malthus (1766-1834); Jean Baptiste Say (1767-1832); David Ricardo (1772-1823); John Stuart Mill (1806-1873) and the main critic of the Classical Economy, Karl Marx (1818-1883).
This broad period of time, since the 16th century until the 18th century was characterized by a fact: the consideration of the economic phenomenon as a whole discipline: the political economy.
I think that the political economy was a method of analysis that took in account not only the economic conditions but the society as a whole. This method was used the same by the Mercantilists, Physiocrats and the Classic Economy.
The modern economics
In 1890 with the publication of his book Principles of Economics, Alfred Marshall founded the modern economics.
In the three previous centuries 16th, 17th and 18th, the economics was considered a subject of the Moral Sciences, a branch of the politics, and for that cause and methodological reasons it was called political economy. The founders of the economics were aware of the paper of the state in the economic behavior of the society.
Marshall developed the microeconomics. John Maynard Keynes called him “the founder of the diagrammatic economics…”
In 1903, thirteen years after the publication of his Principles, Marshall gets to create the Cambridge School of Economics and to separate the economics studies of the Moral Sciences and the politics. Since that moment the economics and the economists began a new road. They leaved the political economy and centered its efforts in concrete problems, in the microeconomics and in the new mathematical economics.
In the 46 years between 1890 ---with the publication of the Principles of Marshall--- and 1936 when appear the thesis of John Maynard Keynes, General Theory of Employment, Interest and Money, the Marginalist and mathematic trend dominated the scenario.
In that historic period emerged important figures that would tackle specific economic affairs. Francis Edgeworth (1845-1926) with is Mathematical Physics and his Theory of Distribution; Wilfredo Pareto (1848-1923) and his Manuale di Economia Politica; John B. Clark (1847-1938) Distribution and Wealth; Eugene Böhm-Bawerk (1851-1914) Positive Theory of Capital; Frank Taussing (1859-1940) Tariff History of the United States; Werner Sombart (1864-1920) DES Moderne Kapitalismus; Gustav Casel (1866-1945) the Nature and Necessity of Interest; Arthur C. Pigou (1877-1959) Wealth and Welfare and Ludwig von Mises (1881-1973) the Theory of Money and Credit, among other economists.
In the already 46 years mentioned ---between 1890 and 1936--- the economic crisis acquired a new and intense dimension. The Communism obtained the power in Russia in 1917 and the radicalism found a fertile field in the impoverished European population. The inflation and the unemployment reached unbelievable figures in those years. This let the promotion of men as Benito Mussolini and Adolf Hitler and was the main cause of the First and Second World War. In the United States the Great Depression of 1929 threatened the real bases and the intellectual support of the North American capitalism.
The economic crisis discredited the economics and the economists: the old political economy and the new modern economics of Marshall and his pupils.
The paper of Keynes
John Maynard Keynes rescued the prestige of the economics. With his General Theory, he demonstrated that the control of the inflation and the unemployment were possible. He evidenced that the holistic method of the political economy was indispensable for resolving the economics problems. He tackled the crisis with an integral vision and proved that the control of the state and their investments are essentials for the economic progress.
The Keynes’s theory was a practice success and was applied in the United States, in Europe an in the rest of the world since the decade of the forty years.
“Keynes was the most important economic thinker of the 20th century. His influence was of such magnitude that the thirty years of the world economy success between the years 1945 and 1975 were called the Age of Keynes.
But as none remedy to the economics problems is permanent, the years of the Keynes success began to experiment problems and the crisis reappeared again. The increase of the oil prices since 1970 was one of the causes of the new global situation.
The monetary system established in Breton Woods in 1945 started to present problems at the end of the fifty years, when some European countries doubted of the dollar strength as instrument of international reserves, generating the prelude of a new world economic crisis.
In the seventy years appeared a new trend that hardly criticized the Keynesian model. It was the famous School of Chicago, which principal figure was the professor Milton Friedman, who revived the Quantitative Theory of Money. He asserted that the inflation is a monetary problem and that reducing the amount of money and adopting a policy of freedom to establish prices, wages and interests rates the inflation may be dominated…”
(1) Pablo Rafael González. Apreciación Crítica de la Política Monetaria, el bolívar oro. Monte Ávila Editores Latinoamericana, 2007. Pages 33 and 34.
Effects of the Neo liberalism
The intellectual position of the professor Friedman and the School of Chicago ---Neo liberalism--- was adopted by the government of Margaret Thatcher in England since 1979 and by the government of Ronald Regan in the United States. This policy was assumed by the International Monetary Fund and the World Bank in those years and imposed to the rest of the world through the globalization.
The outcome of the globalization has been the enhance of the poverty and the environmental damage, the privatization of many of the public institutions of the undeveloped countries, the increase of the public services tariffs, the inflation and the augment of problems of balance of payments of the developed and underdeveloped countries.
For the industrial nations, one of the principal effects of the Neo liberalism and the globalization has been the financial crisis of the year 2008. The model affected and weakened the mechanisms of controls of the governments on the financial institutions.
The other great error of the model has been giving preeminence to the financial capitalism and to put the real economy in second place. These facts caused the explosion of the current crisis.
Conclusion
I think that the political economy is a method of analysis that take in account, holistically, the paper of the economics in the society. The political economy is not a doctrine but a system of thought for the global comprehension of the economics, politics, environmental and social relations.
The sin of the modern economy has been their partial approach, the micro vision of the economics. The modern economics has worked deep in the trees but has loosed the perspective of the forest.
The mistakes of the politicians and economists explain why does more of the three fourth parts of the world population remain in the poverty and the half live with less of $2 per day.
New challenges have arisen, among them the natural resources crisis as consequence of the overexploitation of the resources and the pollution. These phenomenons have created a new paradigm for the economy.
In the 21st century it is necessary to recover the method of analysis of the political economy and to build a new political conception for attacking the poverty, managing the problem of the natural resources and preserving the environment. With willpower it is possible to reach both objectives; God save the next generations.
Objective of the essay
The goal of this essay is to demonstrate the necessity of building a new approach of political economy that helps to create a best world.
Historic vision
The development of the economic thought practically began in the 16th century. Previously, some philosophers, Thucydides (455-4009), Xenophon (430-355), Plato (384-322) and Aristotle (384-322) made some contributions to the economics. In fact, the term economy comes from the Ancient Greek and was Aristotle who made a first approach to the Theory of Value. In his book Politics, he distinguished between the value of use and the value of change and realized also some considerations regarding the Quantity Theory of Money.
In the Roman Empire we find the contribution of the Emperor Diocletian; he established the first control of prices in the economy and appears too the work of Varron (116-27) on agricultural economics.
After, in the Middle Age (centuries V to XV), highlight the Summa Theological of Saint Thomas of Aquino (1225-1274), who exposed the value of the just price, the just salary and condemned the usury.
Some years after appear the work of Nicholas Oresme (1340-1382), who criticized the reduction of the value of the money made by kings. The work of Oresme was the inspiration of Thomas Gresham (1519-1579) who demonstrated ---some years after--- how the less valued currencies displace the most valued currencies.
The Mercantilism
Gresham inaugurated the Mercantilist thought in the 16th century. The Mercantilism defended the thesis of the state intervention in the economy. The mercantilists sustained that the wealth of nations was represented by their stocks of gold and silver and by a positive balance of payments; this means, by the promotion of the exports and the restrictions to the imports.
Among the principal mercantilists authors must be mentioned the names of Juan Botero (1540-1617) and his book Reason of State; Antoine Montchretien ( 1575-1621), who employed for first time the term political economy; Jean Baptiste Colbert (1619-1683); William Petty (1623-1687), with his book Political Arithmetic, considered, moreover, founder of the economics and Richard Cantillion (1680-1734) considered too founder of the economics.
The Physiocrats
Between the years 1760 and 1770 emerge in France a new economic vision. It was the thought of the Physiocrats, who’s sustained a different idea regarding the causes of the wealth of nations.
The Physiocrats thought that the agriculture was the base of the wealth and not the bullion (gold and silver), neither the advantages in the foreign commerce as had assured the Mercantilist theory until that moment. They believed in a natural order and were opposed to the state intervention in the economy. This represents the opposite thesis to the Mercantilism.
The principal exponent of the Physiocracy was Francoise Quesnay (1694-1774), who created the Tableu Economique in 1758, a model of economic analysis where he demonstrated the flows of the economy. This work was the base of the modern econometrics years after.
Classic Economy
In the year 1776 occur a fact that would change the economic history. It was the publication of the book An Inquiry into the Nature and Causes of the Wealth of Nations, of the philosopher Adam Smith (1723-1790). This book is considered the main economic work of all the times.
Smith contradicted the appreciations of his predecessors and argued that the industrial production is the most important cause of the wealth of nations increase and made a severe opposition to the intervention of the state in the economy.
Smith inaugurated the period of the Classic Economy, which other principal figures were Thomas Robert Malthus (1766-1834); Jean Baptiste Say (1767-1832); David Ricardo (1772-1823); John Stuart Mill (1806-1873) and the main critic of the Classical Economy, Karl Marx (1818-1883).
This broad period of time, since the 16th century until the 18th century was characterized by a fact: the consideration of the economic phenomenon as a whole discipline: the political economy.
I think that the political economy was a method of analysis that took in account not only the economic conditions but the society as a whole. This method was used the same by the Mercantilists, Physiocrats and the Classic Economy.
The modern economics
In 1890 with the publication of his book Principles of Economics, Alfred Marshall founded the modern economics.
In the three previous centuries 16th, 17th and 18th, the economics was considered a subject of the Moral Sciences, a branch of the politics, and for that cause and methodological reasons it was called political economy. The founders of the economics were aware of the paper of the state in the economic behavior of the society.
Marshall developed the microeconomics. John Maynard Keynes called him “the founder of the diagrammatic economics…”
In 1903, thirteen years after the publication of his Principles, Marshall gets to create the Cambridge School of Economics and to separate the economics studies of the Moral Sciences and the politics. Since that moment the economics and the economists began a new road. They leaved the political economy and centered its efforts in concrete problems, in the microeconomics and in the new mathematical economics.
In the 46 years between 1890 ---with the publication of the Principles of Marshall--- and 1936 when appear the thesis of John Maynard Keynes, General Theory of Employment, Interest and Money, the Marginalist and mathematic trend dominated the scenario.
In that historic period emerged important figures that would tackle specific economic affairs. Francis Edgeworth (1845-1926) with is Mathematical Physics and his Theory of Distribution; Wilfredo Pareto (1848-1923) and his Manuale di Economia Politica; John B. Clark (1847-1938) Distribution and Wealth; Eugene Böhm-Bawerk (1851-1914) Positive Theory of Capital; Frank Taussing (1859-1940) Tariff History of the United States; Werner Sombart (1864-1920) DES Moderne Kapitalismus; Gustav Casel (1866-1945) the Nature and Necessity of Interest; Arthur C. Pigou (1877-1959) Wealth and Welfare and Ludwig von Mises (1881-1973) the Theory of Money and Credit, among other economists.
In the already 46 years mentioned ---between 1890 and 1936--- the economic crisis acquired a new and intense dimension. The Communism obtained the power in Russia in 1917 and the radicalism found a fertile field in the impoverished European population. The inflation and the unemployment reached unbelievable figures in those years. This let the promotion of men as Benito Mussolini and Adolf Hitler and was the main cause of the First and Second World War. In the United States the Great Depression of 1929 threatened the real bases and the intellectual support of the North American capitalism.
The economic crisis discredited the economics and the economists: the old political economy and the new modern economics of Marshall and his pupils.
The paper of Keynes
John Maynard Keynes rescued the prestige of the economics. With his General Theory, he demonstrated that the control of the inflation and the unemployment were possible. He evidenced that the holistic method of the political economy was indispensable for resolving the economics problems. He tackled the crisis with an integral vision and proved that the control of the state and their investments are essentials for the economic progress.
The Keynes’s theory was a practice success and was applied in the United States, in Europe an in the rest of the world since the decade of the forty years.
“Keynes was the most important economic thinker of the 20th century. His influence was of such magnitude that the thirty years of the world economy success between the years 1945 and 1975 were called the Age of Keynes.
But as none remedy to the economics problems is permanent, the years of the Keynes success began to experiment problems and the crisis reappeared again. The increase of the oil prices since 1970 was one of the causes of the new global situation.
The monetary system established in Breton Woods in 1945 started to present problems at the end of the fifty years, when some European countries doubted of the dollar strength as instrument of international reserves, generating the prelude of a new world economic crisis.
In the seventy years appeared a new trend that hardly criticized the Keynesian model. It was the famous School of Chicago, which principal figure was the professor Milton Friedman, who revived the Quantitative Theory of Money. He asserted that the inflation is a monetary problem and that reducing the amount of money and adopting a policy of freedom to establish prices, wages and interests rates the inflation may be dominated…”
(1) Pablo Rafael González. Apreciación Crítica de la Política Monetaria, el bolívar oro. Monte Ávila Editores Latinoamericana, 2007. Pages 33 and 34.
Effects of the Neo liberalism
The intellectual position of the professor Friedman and the School of Chicago ---Neo liberalism--- was adopted by the government of Margaret Thatcher in England since 1979 and by the government of Ronald Regan in the United States. This policy was assumed by the International Monetary Fund and the World Bank in those years and imposed to the rest of the world through the globalization.
The outcome of the globalization has been the enhance of the poverty and the environmental damage, the privatization of many of the public institutions of the undeveloped countries, the increase of the public services tariffs, the inflation and the augment of problems of balance of payments of the developed and underdeveloped countries.
For the industrial nations, one of the principal effects of the Neo liberalism and the globalization has been the financial crisis of the year 2008. The model affected and weakened the mechanisms of controls of the governments on the financial institutions.
The other great error of the model has been giving preeminence to the financial capitalism and to put the real economy in second place. These facts caused the explosion of the current crisis.
Conclusion
I think that the political economy is a method of analysis that take in account, holistically, the paper of the economics in the society. The political economy is not a doctrine but a system of thought for the global comprehension of the economics, politics, environmental and social relations.
The sin of the modern economy has been their partial approach, the micro vision of the economics. The modern economics has worked deep in the trees but has loosed the perspective of the forest.
The mistakes of the politicians and economists explain why does more of the three fourth parts of the world population remain in the poverty and the half live with less of $2 per day.
New challenges have arisen, among them the natural resources crisis as consequence of the overexploitation of the resources and the pollution. These phenomenons have created a new paradigm for the economy.
In the 21st century it is necessary to recover the method of analysis of the political economy and to build a new political conception for attacking the poverty, managing the problem of the natural resources and preserving the environment. With willpower it is possible to reach both objectives; God save the next generations.
jueves, 5 de noviembre de 2009
Theory of the political supremacy, on the economics subordination
The state is the main economic actor. It does not matter the economic model: in the capitalism of free market, in the moderate socialism and, obviously, in the communist regimes.
This reflection is very important because it let to be aware of the true reality. The free market is an illusion. It does not exist. The states adopt the principal economic decisions still in the most advanced capitalist societies.
The free market is an appearance. Who determine the economic model? Who determine the fiscal, the financial and the monetary policy? Who decide the commercial policy, the regime of imports and exports? Who decide the policy of prices, the minimum wage and the policy of employment? Who decide the agricultural, industrial and environment policy?
You know the answer. And this confirms the economics subordination thesis. The politicians have in his hands the most important economical decisions in all the countries.
The politicians are the lawmakers and the laws define the organization and the functioning of the society.
The entrepreneurs and the workers are essentials for the economic development but its actions are conditioned by the state; their freedom is relative and limited. One entrepreneur needs the permissions and the licenses of the state for developing its business. Without those permissions and licenses none entrepreneur can realize its activities.
The business climate is determined by the big official’s policies. The state must exert their authority, however, sometimes adopt an attitude of indifference toward the other actors of the economic process; when this happen the consequence is the economical disaster. The recent financial crisis is a good example of that indifference.
But when the state exerts their role of supervision and control of the economic activities the situation is different and the society receives the correspondent benefits.
The great mistake of the last years has been the lack of control on vital sectors as the financial system. The balance between control and freedom is the key of the economic development.
This reflection is very important because it let to be aware of the true reality. The free market is an illusion. It does not exist. The states adopt the principal economic decisions still in the most advanced capitalist societies.
The free market is an appearance. Who determine the economic model? Who determine the fiscal, the financial and the monetary policy? Who decide the commercial policy, the regime of imports and exports? Who decide the policy of prices, the minimum wage and the policy of employment? Who decide the agricultural, industrial and environment policy?
You know the answer. And this confirms the economics subordination thesis. The politicians have in his hands the most important economical decisions in all the countries.
The politicians are the lawmakers and the laws define the organization and the functioning of the society.
The entrepreneurs and the workers are essentials for the economic development but its actions are conditioned by the state; their freedom is relative and limited. One entrepreneur needs the permissions and the licenses of the state for developing its business. Without those permissions and licenses none entrepreneur can realize its activities.
The business climate is determined by the big official’s policies. The state must exert their authority, however, sometimes adopt an attitude of indifference toward the other actors of the economic process; when this happen the consequence is the economical disaster. The recent financial crisis is a good example of that indifference.
But when the state exerts their role of supervision and control of the economic activities the situation is different and the society receives the correspondent benefits.
The great mistake of the last years has been the lack of control on vital sectors as the financial system. The balance between control and freedom is the key of the economic development.
lunes, 2 de noviembre de 2009
Ecological reflection, the water crisis in the world
The world water resources are under pressure because of the high population growth, the climatic change and the pollution. Already it can be observed that the world run quickly toward the global water crisis.
The earth’s hydrological cycle is being modified by the climatic change. The consequences are the reduction of the surface water availability and the groundwater recharge.
The precipitations patterns are the main victims of the climatic change causing severe droughts, floods and hurricanes worldwide. About 40 per cent of the precipitation that falls on land comes from ocean-derived vapour. The remaining 60 per cent come from land-based sources.1 The global warming is changing the oceans temperatures transforming the weather. By mean of the hydrological cycle the oceans transfers water to the ground and to the plants and since them to the atmosphere. The problem is that this natural process is everyday affected because of the temperature increase.
Only 2.5 per cent of the world water is integrated by freshwater. This means that 97.5 per cent of the world’s water belongs to the seas and oceans. 68.7 per cent of the freshwater is located in the glaciers and 30.1 per cent in the groundwater. The surface and atmospheric water –that include freshwater lakes, soil moisture, atmosphere, wetlands, plants and animals-- represents 0.4 per cent of the total water but it provide 80 per cent of the annually renewable surface and groundwater.
By effect of the global warming, the main glaciers of the world –including the poles—are melting. The Himalaya Glaciers are a clear example; they nurture five of the most important rivers of Asia. The same happen in the Alps Glaciers that feed the regional European rivers. The Italy south and the south-eastern Europe territories are already affected by the water stress. The glaciers of the Andes regions in South America are also threatened and the evidence is clearly appreciated in Bolivia and Peru. As a consequence of this fact it does not exist water in some regions of those countries and the situation will be worse when the melting of the Andes Glaciers increase.
Thursday 27 of March 2008, the world was surprised by news disclosed by the international agencies: the information said that an enormous ice block with a surface four times superior to the city of Paris detached from the Antarctica.
The gigantic ice block was 41 kilometers of length and 2.5 kilometers of width and separated from the Antarctica Isthmus and continues moving. This ice block was part of the Wilkins platform, which is a floating ice mass of 16,000 square kilometers, that is to say, as large as Northern Ireland.
Scientists have expressed concern because they have discovered that the permanently frozen layer of ice on the colder regions, and including Canada, Alaska, Russia, Northern Europe and Antarctica has begun to thaw. This layer of ice, known as permafrost, contains a large amount of CO2 and methane, two of the worst gas greenhouse gas emissions (green house). To thaw the permafrost, these gases are released into the atmosphere accelerating global warming. So the situation is truly alarming.
The Centre for Defence Information, one of the most qualified international agencies in this matter explains the consequences of the global warming in the following terms:
“Led by CDI Senior Advisor Philip Coyle, our new project on the international security implications of global climate change aims to study and expand awareness of the many security concerns global warming will create in the near future. For example, if sea levels rise just six meters -- this will happen if the Greenland glaciers melt but nothing more -- 93 million Chinese will be displaced. Massive population displacements due to loss of land mass would be expected elsewhere around the world in India, Bangladesh, Myanmar, the Persian Gulf, Vietnam, Thailand, Indonesia, and the Philippines. Other impacts would include the availability of fresh water, changing growing seasons, and the reach and geographical range of infectious disease. Over the course of the next year, CDI analysts will uncover the many aspects to this issue: including the direct impact on nations; the economic and agricultural impacts; the effect on the U.S. military at home and overseas, and the effects on fuel consumption by the military; as well as mitigation and adaptation options.2
In the first years of the 21st century, the signs of water scarcity have appeared in diverse countries and regions, include in the most developed countries as the United States. A very important part of the United States territory --the west, south-west and south-east—is impacted by the water stress and emblematic rivers as the Colorado River is suffering the consequences of the overexploitation of their waters. Some signs reveal the magnitude of the problem. For example, in Georgia, in the year 2007, was declared the water emergency and the water price for the consumers increased 150%. Other states of the US southeast as Alabama, Tennessee, and South Carolina are in the same situation. In the west coast, in California, the water crisis leads to severe restrictions and also the states of the southwest are seriously affected.
Too few countries have increased their water resources available as may be appreciated in the following tables. For example, between the most important developed countries only Russia enhanced their water availability. The United States and Australia was the most affected in the period 2000-2005.
The water crisis in the most populated nations, China and India, is already a reality and, as a consequence of this fact, the food production is in danger in those countries. China diminished their water resources availability in -5.27 and India in -6.91 between the year 2000 and the year 2005.
The situation in other countries of the Middle East and Asia is very difficult. Saudi Arabia, the most important petroleum producer of the world have a crisis of water and in the same situation are the other petroleum countries like Bahrain, Iraq, Kuwait, Oman, Qatar and the United Arab Emirates.
The situation in the Palestinian Territories of Gaza and Israel are also complex. as may be verified in the next table.
Table 2
Water Availability Information. TARWR* Selected Countries of the Middle East and Asia
“Our water resources, irregularly distributed in space and time, are under pressure due to major population change and increased demand. Climate change is having a significant impact on weather patterns, precipitation and the hydrological cycle, affecting surface water availability, as well as soil moisture and groundwater recharge. The growing uncertainty of surface water availability and increasing levels of water pollution and water diversions threaten to disrupt social and economic development in many areas as the health of ecosystems.” 3
The situation is not different in America where may be appreciated that the most of the countries suffered an important reduction of their water availability as show the following table. In Caracas, the Venezuela’s capital, a severe program of water restrictions began since the first days of November 2009.
The forests raze worldwide reinforce the drought trend. The most important forest reserve that still survive, the Amazon region, everyday is devastated by miners and lumberjacks. There are regions in Asia and Africa where already do not exist forests because of the same cause.
“World Resources Institute WRI has estimated that 41 percent of the world's population, or 2.3 billion people, live in river basins under 'water stress,' meaning that per capita water supply is less than 1,700 m³/year (Revenga 2000). Water scarcity is partly due to the uneven geographic distribution of water, as determined by the Earth's climate system.
Water scarcity, whether due to physical, social, or infrastructural reasons, poses significant challenges. The 1.1 billion people without safe drinking water and 2.6 billion people who lack sanitation are particularly at risk for poor health. Globally, nearly 6000 children under the age of five die every day from diarrhoea-related diseases (UNICEF/WHO). Water scarcity issues also have relevance for food production, business, and livelihoods; globally, 70 percent of all water withdrawals are for agricultural purposes and 20 percent are for industrial purposes” 4
There are other facts that confirm the water crisis that affects the world: Egypt and Ethiopia, for example, are very close to have war conflicts because Egypt has increased its dependency of waters of the Nile River, whereas Ethiopia reduces the river’s volume.
The waters of the Panama Canal are losing depth and this puts in danger navigation.
The water-bearings of the border between the United States and Mexico are drying quickly, meanwhile the Ogallala, the most important aquifer of the United States, located between Colorado, Kansas, New Mexico and Texas is too suffering a quickly depletion.
The water-bearings of the western zone of Israel also undergo an intense and constant deterioration and this is one of the main sources of conflict with the Arab population ---the Palestinians--- that lives in those territories.
The water availability of freshwater is threatened by other circumstance: the pollution that contaminates the surface water, the rivers, the lakes and also the groundwater. The discharges of any kind of pollutants elements on the surface water reduce the drinking water availability. These contaminants elements pass to the groundwater and damage the aquifers. This phenomenon is common in the entire world. The contamination of the waters comes from the fertilizers and pesticides in the agriculture and from the industrial developments especially.
The facts presented reveal a trend: the diminishment of the water resources and their contamination worldwide. Without water the live is not possible. Man depends of water for drinking, for the agricultural and industrial use, for environment and sanitation proposals. The evidence show that every day there is less available water and the great challenge of the human being in the next years is what to do to survive in a world where the water and other essential natural resources every day are scarcer.
Meanwhile, the great military powers of the world prepare their strategies for scenarios of confrontation because of the water crisis.
1 AQUASTAT FAO 2005 2nd UN World Water Development Report 2006, “Water a shared responsibility”, page 123.
2 Centre for Defence Information, Washington, http://www.cdi.org/program/index.cfm?programid=1
3 2nd UN World Water Development Report 2006, “Water a shared responsibility,” page 120.
4 World Resources Institute. Earth Trends August 2006 Monthly Update: Water Scarcity. http://earthtrends.wri.org/updates/node/73 By Tom Damassa. Friday September 1 2006.
The earth’s hydrological cycle is being modified by the climatic change. The consequences are the reduction of the surface water availability and the groundwater recharge.
The precipitations patterns are the main victims of the climatic change causing severe droughts, floods and hurricanes worldwide. About 40 per cent of the precipitation that falls on land comes from ocean-derived vapour. The remaining 60 per cent come from land-based sources.1 The global warming is changing the oceans temperatures transforming the weather. By mean of the hydrological cycle the oceans transfers water to the ground and to the plants and since them to the atmosphere. The problem is that this natural process is everyday affected because of the temperature increase.
Only 2.5 per cent of the world water is integrated by freshwater. This means that 97.5 per cent of the world’s water belongs to the seas and oceans. 68.7 per cent of the freshwater is located in the glaciers and 30.1 per cent in the groundwater. The surface and atmospheric water –that include freshwater lakes, soil moisture, atmosphere, wetlands, plants and animals-- represents 0.4 per cent of the total water but it provide 80 per cent of the annually renewable surface and groundwater.
By effect of the global warming, the main glaciers of the world –including the poles—are melting. The Himalaya Glaciers are a clear example; they nurture five of the most important rivers of Asia. The same happen in the Alps Glaciers that feed the regional European rivers. The Italy south and the south-eastern Europe territories are already affected by the water stress. The glaciers of the Andes regions in South America are also threatened and the evidence is clearly appreciated in Bolivia and Peru. As a consequence of this fact it does not exist water in some regions of those countries and the situation will be worse when the melting of the Andes Glaciers increase.
Thursday 27 of March 2008, the world was surprised by news disclosed by the international agencies: the information said that an enormous ice block with a surface four times superior to the city of Paris detached from the Antarctica.
The gigantic ice block was 41 kilometers of length and 2.5 kilometers of width and separated from the Antarctica Isthmus and continues moving. This ice block was part of the Wilkins platform, which is a floating ice mass of 16,000 square kilometers, that is to say, as large as Northern Ireland.
Scientists have expressed concern because they have discovered that the permanently frozen layer of ice on the colder regions, and including Canada, Alaska, Russia, Northern Europe and Antarctica has begun to thaw. This layer of ice, known as permafrost, contains a large amount of CO2 and methane, two of the worst gas greenhouse gas emissions (green house). To thaw the permafrost, these gases are released into the atmosphere accelerating global warming. So the situation is truly alarming.
The Centre for Defence Information, one of the most qualified international agencies in this matter explains the consequences of the global warming in the following terms:
“Led by CDI Senior Advisor Philip Coyle, our new project on the international security implications of global climate change aims to study and expand awareness of the many security concerns global warming will create in the near future. For example, if sea levels rise just six meters -- this will happen if the Greenland glaciers melt but nothing more -- 93 million Chinese will be displaced. Massive population displacements due to loss of land mass would be expected elsewhere around the world in India, Bangladesh, Myanmar, the Persian Gulf, Vietnam, Thailand, Indonesia, and the Philippines. Other impacts would include the availability of fresh water, changing growing seasons, and the reach and geographical range of infectious disease. Over the course of the next year, CDI analysts will uncover the many aspects to this issue: including the direct impact on nations; the economic and agricultural impacts; the effect on the U.S. military at home and overseas, and the effects on fuel consumption by the military; as well as mitigation and adaptation options.2
In the first years of the 21st century, the signs of water scarcity have appeared in diverse countries and regions, include in the most developed countries as the United States. A very important part of the United States territory --the west, south-west and south-east—is impacted by the water stress and emblematic rivers as the Colorado River is suffering the consequences of the overexploitation of their waters. Some signs reveal the magnitude of the problem. For example, in Georgia, in the year 2007, was declared the water emergency and the water price for the consumers increased 150%. Other states of the US southeast as Alabama, Tennessee, and South Carolina are in the same situation. In the west coast, in California, the water crisis leads to severe restrictions and also the states of the southwest are seriously affected.
Too few countries have increased their water resources available as may be appreciated in the following tables. For example, between the most important developed countries only Russia enhanced their water availability. The United States and Australia was the most affected in the period 2000-2005.
The water crisis in the most populated nations, China and India, is already a reality and, as a consequence of this fact, the food production is in danger in those countries. China diminished their water resources availability in -5.27 and India in -6.91 between the year 2000 and the year 2005.
The situation in other countries of the Middle East and Asia is very difficult. Saudi Arabia, the most important petroleum producer of the world have a crisis of water and in the same situation are the other petroleum countries like Bahrain, Iraq, Kuwait, Oman, Qatar and the United Arab Emirates.
The situation in the Palestinian Territories of Gaza and Israel are also complex. as may be verified in the next table.
Table 2
Water Availability Information. TARWR* Selected Countries of the Middle East and Asia
“Our water resources, irregularly distributed in space and time, are under pressure due to major population change and increased demand. Climate change is having a significant impact on weather patterns, precipitation and the hydrological cycle, affecting surface water availability, as well as soil moisture and groundwater recharge. The growing uncertainty of surface water availability and increasing levels of water pollution and water diversions threaten to disrupt social and economic development in many areas as the health of ecosystems.” 3
The situation is not different in America where may be appreciated that the most of the countries suffered an important reduction of their water availability as show the following table. In Caracas, the Venezuela’s capital, a severe program of water restrictions began since the first days of November 2009.
The forests raze worldwide reinforce the drought trend. The most important forest reserve that still survive, the Amazon region, everyday is devastated by miners and lumberjacks. There are regions in Asia and Africa where already do not exist forests because of the same cause.
“World Resources Institute WRI has estimated that 41 percent of the world's population, or 2.3 billion people, live in river basins under 'water stress,' meaning that per capita water supply is less than 1,700 m³/year (Revenga 2000). Water scarcity is partly due to the uneven geographic distribution of water, as determined by the Earth's climate system.
Water scarcity, whether due to physical, social, or infrastructural reasons, poses significant challenges. The 1.1 billion people without safe drinking water and 2.6 billion people who lack sanitation are particularly at risk for poor health. Globally, nearly 6000 children under the age of five die every day from diarrhoea-related diseases (UNICEF/WHO). Water scarcity issues also have relevance for food production, business, and livelihoods; globally, 70 percent of all water withdrawals are for agricultural purposes and 20 percent are for industrial purposes” 4
There are other facts that confirm the water crisis that affects the world: Egypt and Ethiopia, for example, are very close to have war conflicts because Egypt has increased its dependency of waters of the Nile River, whereas Ethiopia reduces the river’s volume.
The waters of the Panama Canal are losing depth and this puts in danger navigation.
The water-bearings of the border between the United States and Mexico are drying quickly, meanwhile the Ogallala, the most important aquifer of the United States, located between Colorado, Kansas, New Mexico and Texas is too suffering a quickly depletion.
The water-bearings of the western zone of Israel also undergo an intense and constant deterioration and this is one of the main sources of conflict with the Arab population ---the Palestinians--- that lives in those territories.
The water availability of freshwater is threatened by other circumstance: the pollution that contaminates the surface water, the rivers, the lakes and also the groundwater. The discharges of any kind of pollutants elements on the surface water reduce the drinking water availability. These contaminants elements pass to the groundwater and damage the aquifers. This phenomenon is common in the entire world. The contamination of the waters comes from the fertilizers and pesticides in the agriculture and from the industrial developments especially.
The facts presented reveal a trend: the diminishment of the water resources and their contamination worldwide. Without water the live is not possible. Man depends of water for drinking, for the agricultural and industrial use, for environment and sanitation proposals. The evidence show that every day there is less available water and the great challenge of the human being in the next years is what to do to survive in a world where the water and other essential natural resources every day are scarcer.
Meanwhile, the great military powers of the world prepare their strategies for scenarios of confrontation because of the water crisis.
1 AQUASTAT FAO 2005 2nd UN World Water Development Report 2006, “Water a shared responsibility”, page 123.
2 Centre for Defence Information, Washington, http://www.cdi.org/program/index.cfm?programid=1
3 2nd UN World Water Development Report 2006, “Water a shared responsibility,” page 120.
4 World Resources Institute. Earth Trends August 2006 Monthly Update: Water Scarcity. http://earthtrends.wri.org/updates/node/73 By Tom Damassa. Friday September 1 2006.
Suscribirse a:
Entradas (Atom)
Entradas
