TFF Associates & Themes Blog

By Johan Galtung

Two closely related points, as a starter.

This column has argued Lifting the Bottom Up as economic approach in all weathers, bad, fair, good, to mitigate any suffering, and for them to enter the economy as producers and consumers, not as “cases”.

This column has also argued judging Trump not by his poisoning words, nor by commentators’ words, but by his deeds. White-male-workers-no college is not the US bottom, but they were heading down. Now lifted up the Trump way, by keeping/bringing back industry to the “Rust Belt”. Ford Motor Company just did that, GM may be next.

If outsourcing to Mexico – under the euphemism “trade” served poor Mexican workers, maybe–but it serves rich elites in both countries.

45 percent tariff on Chinese goods: a non-starter. US homes are filled with affordable “Made in China”. To de-industrialize was US stupidity; to re-industrialize will take time. Keep what is, bring back what was. Other countries may learn from Trump and not trade themselves away.

The general 2017 world economic outlook is bad. Key problem for the West: industry is now also in the hands of other countries to meet their demands and for exports (Chindia). How could that happen? Because:

Economists have a Theory I of diachronic stages, from primary via secondary to tertiary sectors, agriculture->industry->services. Time for services has come, domestically, and as export to import food and manufactures. TI promotes trade; but makes societies vulnerable if trade fails, and may cause huge primary-secondary sector unemployment.

Hence, alternative Theory II: synchronic co-existence of sectors, at state-provincial-local levels. Each sector is a way of life that appeals to different persons or to the same person at different stages. TII promotes self-reliance–not self-sufficiency, filling gaps with trade–high employment if automation is controlled and not seen as a law of nature, personal enrichment, and protection of nature.

How about that pathology, speculation in derivatives? Can happen in both; more in TI as “service”. If there are laws against child pornography, there could also be laws against speculation, right away.

How about inequality? Can be high in both; under TII through ownership of land and other means of production. More theory needed.

USA forced TI on Japan; Switzerland successfully practices TII.

The European Union is a victim of Theory I, whereas Trump-US economics comes closer to Theory II. In Germany, the Deutsche Bank turned to speculation and is now collapsing. Iconic Volkswagen destroyed “Made in Germany” as quality guarantee. Add the Völkerwanderung of victims of wars by “US-led coalitions” into EU. But EU and the euro may still survive, maybe as two-speed Europe learning from Trump.

These two parts of the West are a minor part of the whole world; the basic problem is contagion West-Rest. China must have seen that for a long time, shifting its focus from USA-Walmart to promoting OBOR, One Belt, One Road, bypassing the USA. India is now China’s major trade partner, and President Xi is traveling the world.

Russia may also have seen this, and with China promotes Eurasia. Russia can draw on being both European and Asian, China cannot.

China’s Silk Lane is Fidel Castro’s OSPAALA, Organization of Solidarity for the Peoples of Asia, Africa and Latin America, exploited by the North, Europe-USA. The Rest is prepared; but with China dominating.

West is isolated, Rest is insulated. The shock is intra-West.

Does this also apply to Africa and Latin America? Africa is to a large extent in the Chinese orbit. In Latin America, USA tries with coups, hacking elections, threats, military presence, to be in power. But that costs money that the USA has to print at considerable risk.

TI is better at weaving the world together, even if in a very vulnerable way. TII is better at reducing the vulnerability, at the risk of mutual isolation. A good case for a meta-theory, with both.

Where do economists stand on this issue? Nowhere, TII is not theirs. Where do they stand, socially-politically, in general?

“What Economists Think” (“American Economic Association”, 1979, pp. 28-37): a random sample of 600 US economists, 30 propositions, and agree-agree but-disagree. Conclusion (p. 36): “Consensus tends to center on micro-economic issues involving the price mechanism while the major areas of disagreement involve macro-economic and normative issues”. As to the latter: along a traditional left-right dimension.

Bruno Frey et al., “Consensus, Dissension and Ideology Among Economists in Various European Countries and in the United States” (“European Economic Review”, 1983, pp. 59-69) added Belgium, France, Germany, Switzerland. Conclusion (p. 68): “American economists seem to have the highest degree of consensus, followed by the Germans and the Swiss. More dissension is found for the French and the Belgians.–it is somehow disappointing to see that economists are not willing to distinguish the ‘technical’ from the ‘political’ aspect of an issue”.

Maybe because they are human more than economists? However, if they as a group do not agree on economics, why should the rest of us?

Arjo Klammer, Conversations With Economists (Totowa NJ: Rowman & Allanheld, 1984): “–theoretical arguments are uncertain and their acceptability relies on a judgment made plausible with a variety of other arguments (p. 243); “an important point–is the uncertain and controversial nature of empirical research in economics (p. 244).

Economics is faith, dogma? Gary Becker, in The Economic Way of Looking at Life? Or pragmatic search, S. E. Rhoads, The Economists’ view of the World (Cambridge University Press, 1985, p.221)? Both.

And a parade of brilliant thinkers illuminate the problems, such as John Kenneth Galbraith, Hazel Henderson, Barrington Moore, Gunnar Myrdal, Joseph Stiglitz, Paul Streeten, to mention some recent ones.

We are on the way. But we are far from the way’s end.

Originally published at Transcend Media Service, TMS, here