Most people think that money is the true wealth. The reason is very simple: because so far you can buy the majority of goods with money.
Too few things you can not acquire with money: the live, health neither true love. The problem is that those are the most important values of the life. You can not avoid the death. The billionaires die the same than the poor’s. There are illnesses that can not be treated with success. The true love is the other vital situation that the money can not buy.
Until now, in the developed nations, you can buy water, food, energy and other material elements if you have money. In the underdeveloped countries is different. There are regions where you can have money but that is not enough for getting the basic goods for live.
The first warning about the natural resources vulnerability was given by the Arab nations in the year 1974, when they decided to impose a petroleum seizure against the United States and Europe, because of the support of those countries to Israel during the Six Days War.
With the exception of that period of time, the developed nations, United States, Japan and the Western nations of Europe has enjoyed of the most natural resources in abundance. Some underdeveloped nations has not had the same luck. The African continent, some regions of Asia, Latin America and Oceania has been affected by the lack of resources, and this provoked the hunger of millions of people in those areas.
An important change in the economics concepts
The traditional economy has assured that oxygen and water are abundant goods; for that reason the first has not had a specific price and the price of the second has been reduced. But that trend started to change and already the oxygen is being appreciated in other dimension and the water price has reached an important increase in many countries.
In the 21st century the perception of the natural resources abundance is changing. Today are scarce the abundant goods of the recent past. Scarce goods are now oxygen, water, food and petroleum; all they are forms of energy. Without those goods the live is not possible. We can say that the modern evolution has affected the quantity and the quality of the energy sources.
The pattern of production and consumption followed until now and the pollution has become abundant resources in scarce resources. Vital goods are running out and this represents a deep change in the economic paradigm.
Wealth and happiness
There is a difference between wealth and happiness. Wealth is material abundance. In change, happiness is knowledge, health, love, employment and material satisfaction. You can be rich but unhappy.
A people or a country may be rich because possesses a great amount of material resources, but unhappy and underdeveloped, because do not have the most important things of the life: knowledge, health nor true love. The development is a combination of these values.
The knowledge is not only privilege of the scientists, the techniques nor the humanists. The modest people have a great knowledge. The farmers, the fishermen, the highlanders have a deep knowledge; they are in touch with nature and that contact give to them a special sensibility and vision of the life. It is the wisdom of the simple things. They know when the time of to sow, to sever and to harvest is. They know the essence of the trees, the behavior of the tides, the weather changes.
The first causes
The most advanced stage of the knowledge is tied to the comprehension of the first causes. Man only discovers the reality of nature. For example, the atomic energy has existed ever; but man discovered and employed it in the 20th century; not before. It is sure that other knowledge’s exists in nature that man still has not discovered but it is very likely that realize it in the future. The comprehension of a part of the true reality of the space and the time, the domain of the illnesses, for example, might be possible in the coming years.
The energy sources use
The Industrial Revolution may be considered as the Revolution of the Energy. Since the beginning of the civilization until the First Industrial Revolution (1769) ---when James Watt created the machine of vapor--- the world used the wood as the principal source of energy. But with the creation of the machine of vapor ---fed by coal--- the situation changed and a new scale of production was developed; this helped to the transformation of the handcraft scale into industrial production, one of the most important advances of the humankind.
The discovery of petroleum in the year 1869 and their later use as new source of energy for the most activities generated a modern scientist and technological development.
Man has overexploited the sources of energy; first he razed the forests for obtaining wood; the whales for getting oil; after it overexploited the coal and the petroleum and in the last decades of the 20th and 21st centuries began again to raze de forests that still survive in the planet.
But the most danger for humanity is the growing employment of atomic energy. In the last decades some nations has appealed to this form of energy because of the restrictions in the availability of other sources as the petroleum and the hydroelectricity. The construction of new atomics plants represents a peril for mankind. The effects of Chernobyl are still present and it constitutes a clear example of the things that human beings must avoid.
Still the science has not been able of creating a massive substitute for the fossil energy; this is one of the major challenges in the world future.
The issue is that none other element has the energetic intensity of the petroleum; for example, the energetic power of a liter of gasoline can not be compared with none other source.
The coal is the other form used in many countries. China has important reserves. The great problem is that coal is the most contaminant element.
Meanwhile, the climatic change, the global warming, is everyday more intense. The glaciers lose the snow worldwide, the oceans level grow and the forests disappear in many regions, specially in the Amazonia, the last natural reserve that still survive in the planet.
That is the reality, a fact linked to a basic conception: that the true wealth is money and other things do not matter. For that reason the countries has not made a real effort for preserving the environment.
The production is oriented to producing money and not to the satisfaction of the human beings necessities. The financial economy is in the first place and the real economy after.
In the year 2008 the bailout was for the financial economy and only a little part for the industry and the citizens that would loose its homes.
If the world does not change this manner of to see the life, the collapse will be unavoidable. In too few time the financial system will fall again; that is a cyclical process derivate of the system nature. The system receives money and spend money for to increase everyday the richness of their owners; very simple.
Monetary illusion
The monetary economy born as consequence of a necessity; the bartering was not able of responding to the increase of the volume of commercial transactions. For that reason, essentially, appeared the monetary economy.
In the money man found a manner of representing the value of the things, in the same form that in the writing he found a way for expressing its thoughts.
But money created a distortion: man think that the accumulation of money constitutes the real wealth of people and nations; and that is a mistake, a great lie.
In the current reality money is only paper and coins without a true value. In the past, when money was developed of gold and silver, the situation was different because the money had a proper value: the value of the gold and silver.
But now money is a simple instrument that let to change that paper or coin by goods or, sometimes, by other currencies more accepted in the market.
The unique base or support of money is the credibility that people have in the money as instrument of change.
So far, the currency for international commerce has been the dollar of the United Sates of America. The majority of the international transactions are realized in this currency. With the born of the Euro a part of those transactions began to be made in the new currency.
Some countries have begun to criticize the use of dollar as instrument of international exchange. In that sense, the news agencies has informed that Iran, Russia and China has considered the use of their national currencies for the petroleum transactions.
This reveals that nothing is definitive. The change is permanent. What will happen in the future? What do you think?
The new economic paradigm
The traditional economy has been supported in the idea of the abundance of natural resources and the scarcity of the resources of capital. But now, in the 21st century the situation is different. Now the scarce factor of production is the natural resources. The signs of water and petroleum shortage already are evident. The impact of these facts on the global production, consumption and the inflation will be more intense.
The value of money will be each day minor as consequence of inflation and the reduction of the natural resources availability. This process will put in evidence that money is really an illusion and that the most important is the knowledge, the environment, the natural resources and the material production.
God bless the world.
lunes, 14 de diciembre de 2009
lunes, 7 de diciembre de 2009
The ecological employments, an useful proposal for the Copenhagen’s Summit
The mankind has not options. If this generation does not adopt the measures for preserving the environment in too few years the majority of the world will be a desert. The climate change, the garbage, the destruction of the water sources, the industrial pollution, is a true threat for the present and the future.
In Copenhagen still there is a hope. The development of a Global Program of Ecological Employments, through the reforestation, is an effective road for diminishing the global warming, protecting the nature and to attack the poverty.
Sponsored by the United Nations and the World Bank, and with the cooperation of the governments worldwide, this program might be a hope for millions of people in the entire planet. The decision is in the hands of the leaders that in this moment are in Copenhagen. God bless the world.
In Copenhagen still there is a hope. The development of a Global Program of Ecological Employments, through the reforestation, is an effective road for diminishing the global warming, protecting the nature and to attack the poverty.
Sponsored by the United Nations and the World Bank, and with the cooperation of the governments worldwide, this program might be a hope for millions of people in the entire planet. The decision is in the hands of the leaders that in this moment are in Copenhagen. God bless the world.
jueves, 3 de diciembre de 2009
The natural resources future
In the developed world, North America, Western Europe and Japan, for the majority of the people are not yet perceivable, at first, the signs of a natural resources crisis, but it is a latent process, a developing process that very soon will be felt globally.
An inhabitant of New York, Washington, London or Paris, possibly does not know what not having water for one or two days per week or for a long period of time is. Probably he doesn’t know what electricity restrictions are like; but in other regions of the world these types of limitations are something common or frequent.
Nevertheless, the situation in the developed countries has begun to change and already it exist regions and states in the United States where has been declared the water emergency supply and where also there are problems with the electricity supply.
You, the reader of this essay, perhaps have a doubt and ask yourself if really there is a worldwide crisis of natural resources.
The answer is yes.
Which resources?
There is a crisis of oil, water, food and electricity.
How may be it demonstrated?
The best prove of the natural resources crisis is the price increase of these commodities.
The price of a good reflects its abundance or its scarcity.
In the years 2007 and 2008, the evidence of the natural resources crisis was clearer than in other years:
- The oil price surpassed US$ 90 in October 2007 and two month later, on February Tuesday 19 2008, the West Intermediate Texas reached US $ 100.10 in the New York market; on March Monday 3 the price touched US$ 103.95, passing the barrier of April 1980, that adjusted by inflation was for March 2008 US$ 103.76. The race of prices continued on March 2008 and on Monday 13 the West Texas Intermediate went to US$ 107.
On Friday May 16 2008, the Light Sweet Crude for June delivery reached US $ 126.20 in the New York Market Exchange. In July 2008 reached their maximum level, over $140. As a consequence of the financial crisis and the recession the oil price dropped during the first months of the year 2009 but already has begun to increase over $70 in the last months of the year 2009.
- The wheat price and the price of other cereals reached a record;
- The food price in general grew in an important percentage;
- “Over the past five years, municipal water rates have increased an average of 27% in the United States, 32% in the United Kingdom, 45% in Australia, 50% in South Africa and 58% in Canada.” - (1)
The electricity price registered the same trend; between the year 1990 and the year 2000 the electricity rates in the United States increased in an average of 5.23%but between the year 2000 and 2005 the enhance average was 26.25%, five hundred per cent more. (2)
Until now, first decade of the 21st century, the crisis due to water shortage has been limited to specific regions of Latin America, Africa and Asia and has not had a sufficiently important impact to have the attention of the big world-wide mass media nor of the governments of the developed countries. The same has happened with the oil crises, which only have generated increases in the prices of crude and its derivates but without affecting the availability or the supply of these products, except in the 1973 crisis, when the Arab countries decided to suspend their exports towards the United States and other nations of the West.
We can say then, that in spite of the oil crises which have lifted the prices, the inhabitants of the developed nations have always had abundance of derivatives of petroleum, gasoline, diesel, oil, lubricants and other products and this fact has contributed to create the illusion of the existence of infinite reserves, but this is not true.
But the situation of apparent abundance will change very soon as a result of two facts: the over-exploitation of the natural resources and the contamination. Water will be the most appreciated good and in second place will be petroleum, since these two resources are every day scarcer, as it can be verified when considering the evolution of the contamination processes, deforestation and blighting at world-wide level and analyzing the behavior of the oil reserves. The pollution increased by the emissions of carbon dioxide and other elements that contribute to the global warming, the extinction of numerous species, the contamination of waters of the seas, rivers and lagoons and the nuclear tests, among other elements, constitute a serious threat to life.
The aggression to the environment will have an immediate effect and it will be reflected in the reduction of natural resources availability and also in the diminishment of the food supply. At the same time it will also cause an increase of the conflicts among the countries and within the nations.
The intense fight for the natural resources hence will be the main characteristic of the international policy in the next years to come and this will not only generate important geo strategic and geopolitical changes, but also it will be a determinant factor for the War or the Peace in the 21st Century.
Other important nations, like China and India, the most populated countries in the world, have in front of them the perspective of a great burden due to the water crisis, while the United States, Mexico, the United Kingdom and Norway, among others countries, will see their petroleum reserves reduced drastically.
That, in general, is the international situation in the first decade of the 21st century. The territorial problems related to the problems of shortage of natural resources, constitute the main cause of the conflicts.
(1)Earth Policy Institute, March 7, 2007. “Water Prices Rising Worldwide,” by Edwin H. Clark II http://www.earth-policy.org/updates/2007/updated 64.htm
(2)Energy Information Administration Annual Energy Review 2006 table 8.10 page 257.
An inhabitant of New York, Washington, London or Paris, possibly does not know what not having water for one or two days per week or for a long period of time is. Probably he doesn’t know what electricity restrictions are like; but in other regions of the world these types of limitations are something common or frequent.
Nevertheless, the situation in the developed countries has begun to change and already it exist regions and states in the United States where has been declared the water emergency supply and where also there are problems with the electricity supply.
You, the reader of this essay, perhaps have a doubt and ask yourself if really there is a worldwide crisis of natural resources.
The answer is yes.
Which resources?
There is a crisis of oil, water, food and electricity.
How may be it demonstrated?
The best prove of the natural resources crisis is the price increase of these commodities.
The price of a good reflects its abundance or its scarcity.
In the years 2007 and 2008, the evidence of the natural resources crisis was clearer than in other years:
- The oil price surpassed US$ 90 in October 2007 and two month later, on February Tuesday 19 2008, the West Intermediate Texas reached US $ 100.10 in the New York market; on March Monday 3 the price touched US$ 103.95, passing the barrier of April 1980, that adjusted by inflation was for March 2008 US$ 103.76. The race of prices continued on March 2008 and on Monday 13 the West Texas Intermediate went to US$ 107.
On Friday May 16 2008, the Light Sweet Crude for June delivery reached US $ 126.20 in the New York Market Exchange. In July 2008 reached their maximum level, over $140. As a consequence of the financial crisis and the recession the oil price dropped during the first months of the year 2009 but already has begun to increase over $70 in the last months of the year 2009.
- The wheat price and the price of other cereals reached a record;
- The food price in general grew in an important percentage;
- “Over the past five years, municipal water rates have increased an average of 27% in the United States, 32% in the United Kingdom, 45% in Australia, 50% in South Africa and 58% in Canada.” - (1)
The electricity price registered the same trend; between the year 1990 and the year 2000 the electricity rates in the United States increased in an average of 5.23%but between the year 2000 and 2005 the enhance average was 26.25%, five hundred per cent more. (2)
Until now, first decade of the 21st century, the crisis due to water shortage has been limited to specific regions of Latin America, Africa and Asia and has not had a sufficiently important impact to have the attention of the big world-wide mass media nor of the governments of the developed countries. The same has happened with the oil crises, which only have generated increases in the prices of crude and its derivates but without affecting the availability or the supply of these products, except in the 1973 crisis, when the Arab countries decided to suspend their exports towards the United States and other nations of the West.
We can say then, that in spite of the oil crises which have lifted the prices, the inhabitants of the developed nations have always had abundance of derivatives of petroleum, gasoline, diesel, oil, lubricants and other products and this fact has contributed to create the illusion of the existence of infinite reserves, but this is not true.
But the situation of apparent abundance will change very soon as a result of two facts: the over-exploitation of the natural resources and the contamination. Water will be the most appreciated good and in second place will be petroleum, since these two resources are every day scarcer, as it can be verified when considering the evolution of the contamination processes, deforestation and blighting at world-wide level and analyzing the behavior of the oil reserves. The pollution increased by the emissions of carbon dioxide and other elements that contribute to the global warming, the extinction of numerous species, the contamination of waters of the seas, rivers and lagoons and the nuclear tests, among other elements, constitute a serious threat to life.
The aggression to the environment will have an immediate effect and it will be reflected in the reduction of natural resources availability and also in the diminishment of the food supply. At the same time it will also cause an increase of the conflicts among the countries and within the nations.
The intense fight for the natural resources hence will be the main characteristic of the international policy in the next years to come and this will not only generate important geo strategic and geopolitical changes, but also it will be a determinant factor for the War or the Peace in the 21st Century.
Other important nations, like China and India, the most populated countries in the world, have in front of them the perspective of a great burden due to the water crisis, while the United States, Mexico, the United Kingdom and Norway, among others countries, will see their petroleum reserves reduced drastically.
That, in general, is the international situation in the first decade of the 21st century. The territorial problems related to the problems of shortage of natural resources, constitute the main cause of the conflicts.
(1)Earth Policy Institute, March 7, 2007. “Water Prices Rising Worldwide,” by Edwin H. Clark II http://www.earth-policy.org/updates/2007/updated 64.htm
(2)Energy Information Administration Annual Energy Review 2006 table 8.10 page 257.
The natural resources will be the cause of the peace or the war in the 21st century
The most important politics and economic issue of the 21st century is the problem of the natural resources availability. This will be the cause of the peace or the war, the cause of the economic progress or of the recession in the coming years.
In the last years the world has seen diverse politics and economics problems in the first place of the scenario but in the heart of those problems the natural resources were the main cause.
The weakness of the dollar front the Euro and other currencies, the real state crisis in the United States, the financial fallout and the recession in the United States, the confrontation between Iran and the western countries, the agreement between North Korea and its neighbours on the nuclear program, the civil war in Iraq, the confrontation between the United States and Russia by the missiles base in Yugoslavia, the climatic change and the global warming, they are different situations but with a common origin: the natural resources crisis.
The weakness of the dollar front the Euro and other currencies born in the balance of payment deficit of the United States as consequence, among other causes, of the growing imports of oil. The recession in the US was a consequence too of two important facts: a) the banker’s avarice and b) the oil price rise in the year 2008, vital commodity that impacts the rest of the prices in the productive chain.
The confrontation between the Western countries and Iran is also an energetic confrontation because Iran is the owner of one of the most important petroleum reserves and everyday move away from the western countries. This fact put in danger the oil supply to the rest of the world. On October 17 2007, the President of The United States, George Bush, declared that if Iran develops a nuclear weapon the humanity will face the Third World War.
The North Korea nuclear threat had as main cause the lack of petroleum and food in that country and the cessation of hostilities between the United States, South Korea, Japan, China, Russia and North Korea, were supported in an agreement signed on February 2007 for given petroleum and food to this last country.
The civil war in Iraq was a consequence too of a problem of natural resources. The United States invaded Iraq for to assure the petroleum reserves of this country. That is the true.
The confrontation between Russia and the United States by the missiles base in Yugoslavia had as principal cause the struggle by the influence in the Middle East, and since the practice point of view this mean the influence over the oil sources of the region. Russia is diminishing in an accelerated form their petroleum.
The other international key issues, the climatic change and the global warming, is too a problem of natural resources, because of the effects of these phenomenon on the global environment and the global production of goods and services.
In the last years the world has seen diverse politics and economics problems in the first place of the scenario but in the heart of those problems the natural resources were the main cause.
The weakness of the dollar front the Euro and other currencies, the real state crisis in the United States, the financial fallout and the recession in the United States, the confrontation between Iran and the western countries, the agreement between North Korea and its neighbours on the nuclear program, the civil war in Iraq, the confrontation between the United States and Russia by the missiles base in Yugoslavia, the climatic change and the global warming, they are different situations but with a common origin: the natural resources crisis.
The weakness of the dollar front the Euro and other currencies born in the balance of payment deficit of the United States as consequence, among other causes, of the growing imports of oil. The recession in the US was a consequence too of two important facts: a) the banker’s avarice and b) the oil price rise in the year 2008, vital commodity that impacts the rest of the prices in the productive chain.
The confrontation between the Western countries and Iran is also an energetic confrontation because Iran is the owner of one of the most important petroleum reserves and everyday move away from the western countries. This fact put in danger the oil supply to the rest of the world. On October 17 2007, the President of The United States, George Bush, declared that if Iran develops a nuclear weapon the humanity will face the Third World War.
The North Korea nuclear threat had as main cause the lack of petroleum and food in that country and the cessation of hostilities between the United States, South Korea, Japan, China, Russia and North Korea, were supported in an agreement signed on February 2007 for given petroleum and food to this last country.
The civil war in Iraq was a consequence too of a problem of natural resources. The United States invaded Iraq for to assure the petroleum reserves of this country. That is the true.
The confrontation between Russia and the United States by the missiles base in Yugoslavia had as principal cause the struggle by the influence in the Middle East, and since the practice point of view this mean the influence over the oil sources of the region. Russia is diminishing in an accelerated form their petroleum.
The other international key issues, the climatic change and the global warming, is too a problem of natural resources, because of the effects of these phenomenon on the global environment and the global production of goods and services.
miércoles, 2 de diciembre de 2009
The essence of Capitalism might change, political economy theory
The financial system is the core of the Capitalism. Money is the God of the system.
The wealth is the money and not the material resources that stay in second place. This is the cause of the crisis and also the cause of the solution of the crisis.
The Capitalism fixes all its problems through a formula: the creation of money. With money you can buy anything. Everybody accepts money. But ---the evolution of the facts during the last years--- are demonstrating that perhaps those concepts ---that are the essence of Capitalism--- might change at mid term because of a new reality: the natural resources crisis.
Water, food and petroleum have begun to be scarce goods and during the year 2008 signs that confirmed those trends emerged.
By the year 2008 the price of those vital goods reached unbelievable averages and this contributed to accelerate the global recession. There is, then, a direct relation between the commodities price increase and the recession as was demonstrated during 2008.
The availability or the scarcity of natural resources will have an expression in their prices. Nevertheless, a moment might arrive when the money would not be enough for buying the scarce goods. In history there have been moments like these before. For example, during the Second World War, for people in Europe a small amount of salt, a potato, or a piece of bread had no price. Money had no value. True wealth was the food and the peasant was the richest. I know it because I had the testimony of European persons that lived that reality.
Will these situations repeat again?
If the financial system continues their failure and the economies continue their disdain for the real economy, the radicalization of the economic crisis might be a reality in the future, changing the essence of the capitalism.
The capitalism will survive, because its leaders resort to socialism measures when the system is in peril. The best examples are the policies applied by the governments of the United States and Western Europe to attack the financial crisis of the years 2008 and 2009.
But, it is possible that in the future the consequences for the capitalist regime would be different: the participation of the State in the rescued companies perhaps will remain ---creating a new form of Capitalism of State--- and a more effective system of the benefit distributions.
The crisis of 2008-2009 has demonstrated a new reality: that at long term, the private sector can not survive alone without the help of the State.
Other important lesson is that the State has the duty of exert a severe control over the private sector, especially over the financial system.
In the future a free capitalism without the participation and control of the State will not be possible. This fact will represent a total change of the political and economic concepts that have survived until now.
So far, the lovers of the free market can not explain and justify their thesis.
The reality ---the economic failures of the 20 century and the 21st century--- has proven that the free market has an insurmountable difficulty: the human being avidity for wealth; and that the participation and control of the State is necessary for guarantee the economic development of the society.
In practice, the financial system of the main developed countries is in the hands of the States that have given the necessary money for their survival. This reveals once more the failure of the free market policy.
Many leaders do not want recognize that failure and insist in maintaining the free market policy. But the reality is above all wishes and the truth is evident: the free market concepts can not be sustained without the support and the help of the States.
The free market is utopian. Even Adam Smith recognized that from a meeting of merchandisers can not result anything different than a conspiracy to enhance the prices.
The avarice does not have limits. The avarice is in contradiction with the global wellbeing of the society. For this reason the capitalism system must be reformed and must establish limits to the unlimited accumulation of wealth of some few groups in detrimental of the majority.
The leaders of the twenty most developed countries have recognized this reality and in the Summit of April 2, 2009 they expressed the necessity of adopting measures to exert a most severe control over the financial system in their countries, among other actions.
The wealth is the money and not the material resources that stay in second place. This is the cause of the crisis and also the cause of the solution of the crisis.
The Capitalism fixes all its problems through a formula: the creation of money. With money you can buy anything. Everybody accepts money. But ---the evolution of the facts during the last years--- are demonstrating that perhaps those concepts ---that are the essence of Capitalism--- might change at mid term because of a new reality: the natural resources crisis.
Water, food and petroleum have begun to be scarce goods and during the year 2008 signs that confirmed those trends emerged.
By the year 2008 the price of those vital goods reached unbelievable averages and this contributed to accelerate the global recession. There is, then, a direct relation between the commodities price increase and the recession as was demonstrated during 2008.
The availability or the scarcity of natural resources will have an expression in their prices. Nevertheless, a moment might arrive when the money would not be enough for buying the scarce goods. In history there have been moments like these before. For example, during the Second World War, for people in Europe a small amount of salt, a potato, or a piece of bread had no price. Money had no value. True wealth was the food and the peasant was the richest. I know it because I had the testimony of European persons that lived that reality.
Will these situations repeat again?
If the financial system continues their failure and the economies continue their disdain for the real economy, the radicalization of the economic crisis might be a reality in the future, changing the essence of the capitalism.
The capitalism will survive, because its leaders resort to socialism measures when the system is in peril. The best examples are the policies applied by the governments of the United States and Western Europe to attack the financial crisis of the years 2008 and 2009.
But, it is possible that in the future the consequences for the capitalist regime would be different: the participation of the State in the rescued companies perhaps will remain ---creating a new form of Capitalism of State--- and a more effective system of the benefit distributions.
The crisis of 2008-2009 has demonstrated a new reality: that at long term, the private sector can not survive alone without the help of the State.
Other important lesson is that the State has the duty of exert a severe control over the private sector, especially over the financial system.
In the future a free capitalism without the participation and control of the State will not be possible. This fact will represent a total change of the political and economic concepts that have survived until now.
So far, the lovers of the free market can not explain and justify their thesis.
The reality ---the economic failures of the 20 century and the 21st century--- has proven that the free market has an insurmountable difficulty: the human being avidity for wealth; and that the participation and control of the State is necessary for guarantee the economic development of the society.
In practice, the financial system of the main developed countries is in the hands of the States that have given the necessary money for their survival. This reveals once more the failure of the free market policy.
Many leaders do not want recognize that failure and insist in maintaining the free market policy. But the reality is above all wishes and the truth is evident: the free market concepts can not be sustained without the support and the help of the States.
The free market is utopian. Even Adam Smith recognized that from a meeting of merchandisers can not result anything different than a conspiracy to enhance the prices.
The avarice does not have limits. The avarice is in contradiction with the global wellbeing of the society. For this reason the capitalism system must be reformed and must establish limits to the unlimited accumulation of wealth of some few groups in detrimental of the majority.
The leaders of the twenty most developed countries have recognized this reality and in the Summit of April 2, 2009 they expressed the necessity of adopting measures to exert a most severe control over the financial system in their countries, among other actions.
Why the Communism did not survive, political economy theory
Capitalism survived because it was able of adopting radical measures taken from its ideological antagonism: Socialism; a contradiction itself.
It can not be denied that the New Deal of President Franklyn D. Roosevelt during the thirties and forties years of the twentieth century was a combination of liberal and socialism measures that promoted the intervention of the state in the most important social and economic activities of North America. This intervention of the state made possible for Capitalism to survive in this country. If you analyze each one of the policies of the New Deal you will verify that most of them were interventionist policies.
The intervention of the state was the vaccine that saved the Capitalism in the thirties and in the other crisis that this system has suffered since then. And what is a vaccine?
A vaccine is a product obtained from the same virus which eventually destroys.
Well, the Capitalism obtained the vaccine that saved itself from the virus of the Socialism, applying Socialist measures in the economy and in the society.
Orthodox Soviets leaders were not able to understand this reality and for that reason the Soviet Union collapsed in the eighties. If the Soviet leaders would had applied the same principle and had used Capitalism measures, perhaps the Soviet Union would had survived. But, on the contrary, they radicalized the Communism and the system could not resist. Chinese leaders understood this reality many years ago, and after Mao Tse Tung die in the seventies they applied a new method to guarantee the survival of their communist system. The Chinese leaders have applied the contradictory method that their Soviet colleagues were not able to accomplish. China is formally a Communist country but with liberal economic institutions open to the global economy and this has preserved the Chinese regime. How is this contradiction possible?
Theoretically it is not possible but in the reality it works. This demonstrates that sometimes there is a great difference between the theory and the reality.
The effect of this contradiction that occurs in the reality deserves to be deeply studied by politicians and economists worldwide.
It can not be denied that the New Deal of President Franklyn D. Roosevelt during the thirties and forties years of the twentieth century was a combination of liberal and socialism measures that promoted the intervention of the state in the most important social and economic activities of North America. This intervention of the state made possible for Capitalism to survive in this country. If you analyze each one of the policies of the New Deal you will verify that most of them were interventionist policies.
The intervention of the state was the vaccine that saved the Capitalism in the thirties and in the other crisis that this system has suffered since then. And what is a vaccine?
A vaccine is a product obtained from the same virus which eventually destroys.
Well, the Capitalism obtained the vaccine that saved itself from the virus of the Socialism, applying Socialist measures in the economy and in the society.
Orthodox Soviets leaders were not able to understand this reality and for that reason the Soviet Union collapsed in the eighties. If the Soviet leaders would had applied the same principle and had used Capitalism measures, perhaps the Soviet Union would had survived. But, on the contrary, they radicalized the Communism and the system could not resist. Chinese leaders understood this reality many years ago, and after Mao Tse Tung die in the seventies they applied a new method to guarantee the survival of their communist system. The Chinese leaders have applied the contradictory method that their Soviet colleagues were not able to accomplish. China is formally a Communist country but with liberal economic institutions open to the global economy and this has preserved the Chinese regime. How is this contradiction possible?
Theoretically it is not possible but in the reality it works. This demonstrates that sometimes there is a great difference between the theory and the reality.
The effect of this contradiction that occurs in the reality deserves to be deeply studied by politicians and economists worldwide.
lunes, 30 de noviembre de 2009
Effects of the economic crisis on the world stability
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.
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.
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