Collision Course

Human, all too human: The course notes of the University of Auckland's new paper "Colonialism to Globalisation" notwithstanding, the West has not always led the pack when it comes to human barbarity. The first example of mass genocide in the 20th Century, for example, was provided by the Ottoman Empire. In 1915 more than a million ethnic Armenian Christians were systematically murdered by the Islamic Turkish authorities.

"AN INTERESTING COURSE" was how Kiwiblog’s, David Farrar, described Colonialism to Globalisation – an academic paper offered by the University of Auckland’s Faculty of Law.

Knowing Mr Farrar’s political leanings, it was with some trepidation that I activated the hyperlink embedded in his posting. My strong suspicion (instantly confirmed) was that my Kiwiblog host was not drawing his visitors’ attention to this course purely on account of its academic merits.

A swift perusal of the course description told me all I needed to know. Here, as I feared, was a particularly stark example of what I call "Self-loathing Leftism" – that self-critical mode of left-wing analysis which takes "the politics of victimhood" out of its more familiar context in the anti-racist, feminist and gay rights movements, and extends it to the whole world.

The result is as predictable as it’s banal: an Avatar world of Goodies versus Baddies and Nature versus Technology, in which the holistic philosophy of innocent and virtuous indigenes crashes into the murderously exploitative intentions of malignant and rapacious colonisers.

Just take a look at the opening sentences of Colonialism to Globalisation’s course description:

"In the late 15th century, imperialist Europe emerged intent on exploring and possessing the New World. Fast forward through five hundred years of colonialism, capitalism, slavery, industrialisation, genocide, and international law and greet the 21st century in all its paradoxical glory."

There’s so much wrong with this statement that it’s difficult to know where to begin.

For a start, there was no such thing as "imperialist Europe" in the late-15th century. The only entity worthy of such a description at that time was the empire of the Ottoman Turks – whose steady expansion into southern and central Europe was only halted at the gates of Vienna in 1529.

Indeed, it was the Ottomans’ interruption of the trade flows between Europe and Asia that prompted the monarchs of Portugal and Spain to sponsor voyages of exploration westward, into the Atlantic Ocean. Their hope was to access the silks and spices of the "Indies" from the sea. Nobody knew the "New World" was there!

As for Course Co-ordinator, Moshen Al Attar’s, "fast-forwarding" of the next five hundred years: what can one say?

Let’s start by listing the things he left out: the Renaissance; the Reformation; the Enlightenment; the American and French Revolutions; the exponential growth of scientific knowledge and technological expertise; the expansion of democracy; the abolition of slavery; the emancipation of women; the defeat of totalitarianism; the birth of the United Nations; the Universal Declaration of Human Rights. (And this list barely scratches the surface.)

We can only assume that Mr Attar’s justification for bracketing "capitalism" with "colonialism" and "slavery" is because he sees it as being emblematic of the Western World’s lust for conquest and its colonists’ pathological need to demonstrate racial and cultural superiority.

But, to hold up capitalism as a purely Western construct is to engage in precisely the same ethno-centrism his course condemns. For most of human history it was the manufacturers and merchants of East and South Asia who controlled the global economy. And they projected their reach and protected their profits no less ruthlessly than their Western counterparts.

For a brief historical era – a period spanning less than 250 years – the West’s weapons, and its more dynamic mode of economic organisation, permitted it to expand its influence across the globe. But the same could easily be said of those emphatically non-Western expansionists, the Mongols.

Europe’s "imperialists" were not the first to practice slavery and genocide.

They were, however, the first to make both practices illegal – not only in their own jurisdictions, but by the steady development and extension of international law, across the whole planet.

Mr Attar will be tasking his students with the "gripping" question: "is international law intended to challenge or preserve the divisions of wealth and power that pervade contemporary society?"

Given that his course content outline highlights the role of international law in "facilitating the subordination of native inhabitants in favour of European settlers", I suspect his students would be wise, to answer: "Preserve".

But I hope at least some of them will add (if only to please Mr Farrar): "But that’s only because those who frame unjust laws are human-beings – exactly the same reason why (ethnicity, culture and ideology notwithstanding) unjust laws will always be challenged."

This essay was originally published in The Dominion Post, The Timaru Herald, The Taranaki Daily News, The Otago Daily Times and The Greymouth Evening Star of Friday, 19 February 2010.

Prime Suspects

A disaster without consequences? Can so much damage be inflicted on the global economy without leaving a trace?

THERE’S SOMETHING not quite right about this so-called "economic recovery". Something that simply doesn’t add up.

Apparently, it’s possible to inject trillions of dollars into the world’s major economies without setting off an inflationary firestorm. Supposedly, it’s possible for the world’s taxpayers to rescue a teetering financial system without their governments erecting even the flimsiest of safeguards to prevent the poor dupes from being forced to rescue it all over again. Theoretically, the restoration of consumer confidence will be enough to get business back on its feet – even though the endless supply of credit that kept consumers spending before the financial crisis shows little sign of being restored along with it.

What the economic experts seem to be saying is that all of the arguments that were rolled out against governments and families spending more money than they received simply cease to apply when the world’s largest banks, investment houses and insurance companies stand in need of a bail-out. These institutions, we’re told, are "too big to fail".

Sadly, the obverse contention: that the debts of low-income mortgage-holders and borrowers are "too small to worry about" doesn’t seem to carry the same weight. Indeed, there are many economists who argue that it was the big money-lenders’ disinclination to worry about the credit-worthiness of their small, "sub-prime" debtors that precipitated the whole sorry saga.

But why, you might well ask, would a banker lend money to someone who could never hope to pay it back? Whatever happened to the level-headed, no-nonsense manager of your trusty neighbourhood bank? The chap who, after many years spent weighing-up the ability of his customers to honour their obligations, knew, to a high degree of certainty, who he could take a punt on – and who he should refuse?

Gone – along with the sort of bank he used to manage.

Your mortgage may stretch out ahead of you for the next 15 to 20 years, but the financial institution which signed you up doesn’t measure its business in terms of years or decades, but in quarters.

No longer are bankers rewarded for their sober judgement and dependability, but according to how much debt they have sold in the last three months. The more they sell, the more they make. Not, as used to be the case, through steady increments in their annual salary, but by way of huge bonus payments.

At the upper levels of the world’s biggest banks, these bonus payments now far outstrip their recipients’ base salaries and, not surprisingly, such bonuses have become the prime focus of their careers.

But, where is the incentive to be cautious, or even sensible, when you are paid according to your contribution to an institution’s profits, and have no responsibility for its losses?

The world’s financial institutions are like the motorist so obsessed with increasing his speed that he devotes more and more of his attention to the speedometer, and less and less of it to steering the car.

Small wonder the global economy crashed.

The last time global capitalism got itself into such a parlous state was 80 years ago, and the financial institutions responsible paid for it politically. Indeed, the staid neighbourhood banker invoked earlier was the product of their democratic chastisement. A strict regulatory framework was thrown up around the finance sector, and for nearly 50 years capitalism kept its eyes on the road and its foot off the accelerator. As a result, the 30 years following World War II were the most prosperous in human history.

Sadly, while the leaves of human memory are prone to fall, human greed is evergreen. By the 1980s a toxic combination of inflationary war expenditures, reactionary politics and technological innovation had contrived to free finance from the restrictions imposed upon it by the Wall Street Crash.

Like a corrosive acid, the ethos of finance capital dissolved not only the regulatory chains that bound it fast, but also practically every other restraining device created by the democratic state for its own defence.

Which is why, though no one disputes their guilt, the international financial institutions responsible for the Crash of 2008 have proved more than a match for those who have, once again, attempted to chain them down.

Hence my scepticism concerning all this talk of "recovery".

The only "green shoots" I can see are in the bankers’ garden.

This essay was originally published in The Timaru Herald, The Taranaki Daily News, The Otago Daily Times and The Greymouth Evening Star of Friday, 25 September 2009.

Kondratiev Comes Full-Cycle

TO hear the business reporters tell it, this "credit crunch", while serious, is not beyond the wit of the world’s economists to fix. With just a few billion – or trillion – more dollars, the financial markets will begin to free-up, and then, quite quickly, life will return to normal.

Our own Treasury officials confidently predict that New Zealand’s current recession will be shallow and short.

By 2010 – 2011 at the latest – we should all be out of the woods.

Let’s hope so.

Personally, I’m not quite so optimistic.

Why? Because earlier today I was reading about an economist who discovered the secret to predicting the economic future. And I’m not referring here to the immediate future – what’s going to happen to the stockmarket next week, or next month. No. I’m referencing a guy who was able to accurately predict what the global economy would look like ten, fifty, even a hundred years into the future.

His name was Nikolai Kondratiev.

In a saner, less bloodthirsty 20th Century, Kondratiev would have been celebrated as one of the Soviet Union’s greatest economists, and hailed throughout the world as the scholar who first discerned the long waves of economic expansion and contraction that periodicize the history of capitalism.

In the 20th century that actually happened, Kondratiev enjoyed only a few years of productive endeavour before falling victim to the political pathologies of Stalinism, dying in 1938, at the age of just 46, in front of an NKVD firing-squad.

His immediate offence was being too closely associated with the "New Economic Policy" (NEP) – an essentially social-democratic response to the abject failure of Lenin’s "war communism", which had brought the Soviet economy to its knees. Kondratiev believed that the development of heavy industry in the Soviet Union should only be attempted after the successful modernisation of its agriculture. Only when all Russians had enough to eat, and only upon the base of a thriving light industrial sector, producing agricultural equipment and consumer goods, should the growth of heavy industries be encouraged. Such thinking was anathema to Stalin and his henchmen, and Kondratiev was driven from his post as head of the Institute of Conjuncture and hauled off to the gulag.

His real crime, however, was to call into question the whole notion that economies could be made to perform according to the conscious interventions of human planners.

In his studies of capitalism he had discerned patterns of development that contradicted the linear notions of economic growth then favoured by his Soviet colleagues. Rather than progressing in a straight line, the evolution of the global capitalist economy appeared to describe a regular wave pattern, with a cycle of approximately fifty years.

For a detailed description of Kondratiev’s theories, follow the links here and here. Suffice to say that he and his followers, which included the great Czech-American economist Joseph Schumpeter, broke down the development of the global capitalist economy into five distinct waves of development.

The first wave, beginning in the late 18th Century was generated by the invention of the steam engine and the growth of factory-spun textiles.

The second wave commenced in the 1830s with the worldwide expansion of steam-powered transportation – especially railways.

The third wave got underway in the 1880s, driven by the growth of the steel, electricity, chemical and heavy-engineering industries.

The fourth wave witnessed the rise of the petrochemical, automobile manufacturing, and other mass production industries, which gathered momentum in the years immediately prior to World War I.

The fifth wave (our present) began in the 1970s with the revolution in telecommunications and information technology – giving birth to the age of the personal computer, cellphones, and the Internet.

Kondratiev’s waves have four distinct phases: Improvement – when the new inventions revolutionise the way people work and live. Prosperity – when the new technology has had time to bed-in and the wealth it is generating flows in all directions. Recession – when innovation slows and growth begins to falter. Depression – when wealth generation ceases and the economy collapses.

Kondratiev’s seminal work, The Major Economic Cycles, was published in 1925 – at the height of the Roaring Twenties – but working from his basic premises he was able to predict the Great Depression a full five years before it happened.

And Kondratiev’s foresight didn’t end with his prediction of the Slump. By plotting his fifty-year cycles along an axis divided into years, his disciples were confident of another steep slide into recession and depression in the late-1970s and 80s, and yet another big crash, timed for, yes, you guessed it, the start of the second decade of the 21st Century.

Historically, the contractionary phase of the Kondratiev Cycle tends to last not just for one or two years, but for anything from ten to fifteen years.

Kondratiev’s theory would suggest that times are about to get a whole lot worse before they get better.

Hence my pessimism.