One of my favorite movies has long been Casablanca. I am, of course, hardly alone in that,
but at least part of that fascination probably arises from an identification with Rick Blaine,
Ilsa Lund, and Victor Lazlo in their fight against the Nazis. It has been a regular
contemplation of mine as to what I would do were I faced with such a regime. Would I
have the fortitude to stand against it? Would I even realize what the problem was, or that
a problem even was existent? And yet, it is true that we are and have been for some time
faced with such an enemy. We have been at war -- or more precisely, we have had a war
waged against us -- for decades now. In a very real sense, I am, in fact, Victor Lazlo!
I am not speaking of the Cold War, although that may in reality have been a major battle
in this larger aggression. Nor has the war been fought on our turf, the battleground being
the underdeveloped world. It has not always been a shooting war, although firefights have
not been uncommon. It is difficult to put a date on its beginning, and it is far from having
concluded now as we approach the end of the century. Much of the third world is sharply
aware of the struggle it has been locked in, although often it has not recognized the
enemy, and on some occassions has misidentified or misunderstood it. What many in the
'South' will be quick to tell you is that this third world has been under attack for some
time, and hence, the notion of the Third World War -- a war against the third world. A
reasonable place to fix the advent of this third world conflict is probably in the wake of the
Second World War with the structuring of the International Monetary Fund. While it isn't
really necessary to set such a mark, it does serve some purpose, and that event marks the
creation of an hallmark of the protracted conflict throughout its course.
Let me be clear, however. This is not an assertion out of either Marxian or dependency
type analysis. The third world war has not been a capitalist exploitation imperialism. Quite
to the contrary, it has been a war against capitalism. Collectivists of various stripes have
played important roles in the conflict -- more often than not, they have been the agents,
witting or unwitting, of grander collectivists whose agenda merely is suited by utilizing
these petty tyrants toward their much wider schemes. Nor is it inappropriate to view that
set of collectivists as engaged in a grand conspiracy. They know what they are about, even
if at all junctures those who serve their ends may not be so aware of their roles.
Conspiracy, after all, merely indicates that those set upon a particular course work in
concert toward their perceived interests.
One may be reminded of Frederich Hayek's work, The Road to Serfdom, as a premonition
in principle of the course of this agenda. One should also be reminded of a song by
Jamaican rap singer Sista Cool Breeze entitled Aid Trabels Wit Da Bomb to precisely
articulate just how the IMF can be held to be a definitive starting point for at least an
examination of the third world war.
"Aid Trabels Wit Da Bomb"
The International Monetary Fund was created as part and parcel of the Bretton Woods
fixed currency exchange rate system established in the wake of World War II. It has
served as an important agent in many respects, functioning as a sort of 'overdraft
protection' in terms of international currency accounts for nations engaged in international
trade. Without membership, countries are severely handicapped in their pursuit of
international trade. Nations are anxious about achieving membership in the organization,
their economic vibrancy in great measure resting upon their ability to engage in the sort of
transactions it guarantees. The loans the IMF extends are generally relatively small, but
they are absolutely requisite, and the agency therefore has tremendous power over
countries which rely on its services.
The problem rises where the IMF establishes 'conditionalities' for nations to adhere to in
order to be eligible for its services. Not all of these conditionalities are dilatory. The IMF,
for example, has regularly promoted freer markets. But it also sets out requirements which
are not so innocuous. Among these have been currency devaluations (which are
sometimes necessary and appropriate), mandated tax increases, restrictions of foreign
trade with certain nations, population control (which has extended to the promotion of
enforced abortion and population growth restrictions), reductions in the rate of economic
growth and development, and, perhaps most harmful of all, what is termed 'appropriate
technology.'
Appropriate technology restricts developing nations from access to cutting edge
technologies because the country is deemed not prepared for such tranfers. Governments
are limited to technology that is appropriate to the level of technological acheivement
fitting their current levels of operation. The result of this is that these countries are tied up
in debt with technology inadequate for them to produce the wealth to generate
development, and inadequate for them to meet the debt service requirements they are
saddled with. They end up rushing headlong into escalating indebtedness. Loans have been
extended, with stiffer conditionalities, to enable them to meet debt service requirements.
They are locked into a condition of poverty that is self perpetuating and self fueling.
Countries have had requirements imposed upon them to redistribute land and wealth that
feeds further this cycle of poverty. For instance, such nations as Tanzania and Egypt
followed the 'agrarian reform' mandates, and as a result produced less food than they had
previously been able to harvest. Both of these turned from grain exporters to being faced
with importing grain to meet nutritional requirements of their people. Countries not
willing to bow to the dictates were cut off from loans and suffered tremendous hardship,
relegated as they were to what has been called 'fourth world' status. Such land reform has
some popular appeal, of course, but the consequences are unconscionable.
The relatively small nature of the loans extended by the IMF have larger ramifications,
too. Countries not qualifying for IMF credit extension are also denied access to World
Bank loans, and to credit from other financial institutions. The 'South' has grown to resent
such policies impositions. Their perception of the matter involves their awareness of the
institutional control that marks both the IMF and World Bank agencies. They are
controlled by the nations which, because they have the largest economies, contribute the
most to the funding of the organizations. Voting privileges in both rest upon such
contributions. Thus, effectively, the agencies are controlled by the G-7, or to be more
explicit, in large measure, by the United States, which is the largest contributor by far.
Some lesser developed countries have, without success, contended that IMF and BID
voting should also be based on liabilities of their debtor status. Their contention is that
their choices in conditionalities would be quite different from those imposed on them by
the developed sector. This has created a great deal of resentment among LDCs.
At points, the conditionalities imposed by the IMF have been of a nature that some in the
developing sector have considered virtually 'criminal.' When the US provided a bail out of
the IMF in the mid eighties, the roughly $12 billion contribution from the US allowed for
loans to Brazil which carried with them restrictions of trade from the US, mandated cuts
in living standards, and more. New York Senator D'Amato suggested that the money be
dyed so that the next day the pockets of New York bankers could be examined to find the
traces of the dye, as the loans were used to meet debt service requirements to them. Brazil
was thus saddled with a larger debt it was less able to meet the payment of. Faced with a
potential default which could have had an explosive effect throughout the world's financial
sector, it was argued that the US had no alternative. But it is the US that in great measure
sets the parameters of IMF conditionalities.
Another consequence of IMF type requirements has been the widespread slash and burn
agriculture such countries as Brazil have encouraged in order to be able to meet their debt
service requirements. The hue and cry about the detrimental impact of the destruction of
rain forests in, therefore, a result of IMF conditionalities. Former Jamaican Prime Minister
Manley has said that he was told by the IMF that Jamaica should undertake the cultivation
of cash crops as a requirement for obtaining the IMF credit extension it needed. He was
told that Jamaica should promote the cultivation of marijuana as such a cash crop. His
recalitrance in this matter, he says, brought the IMF's ire. In the next election, massive
funding of the campaign of his opponent, coupled with campaign rhetoric about his ties to
Castro, brought his defeat. He lays this squarely at the feet of the IMF and its cohorts. The
new Prime Minister, Seaga, as one of his first acts in office, issued orders that if Jamaican
banks found depositors coming to them, they should take the deposits and say nothing.
This was clear invitation to drug dealers to 'invest' in Jamaica.
With the currency crises of 1997 in Asia, the IMF acted to set up bail-out arrangements
for the countries involved. In many instances, the crises were not dissimilar to that faced in
the US with the S and L bail-out of 1993. The bail-outs of Malasia, Indonesia, and South
Korea totalled in the realm of $100 billion, much higher than normal IMF transactions. In
the case of South Korea, one of the conditionalities imposed by the IMF was that it would
have to act to limit the regular rate of economic growth the country had long enjoyed to a
level in the neighborhood of 3 %. The consequences for South Korea, which has
experienced some degree of internal unrest, will undoubtedly be increased unrest as
unemployment inevitably rises as a result. Another such bail-out of recent vintage was that
of Mexico.
The Kyoto Treaty
It would be very easy to conclude that the agreements, such as they were, reached by the
delegates at the Kyoto Conference on global warming were meaningless. They could
easily be seen as DOA. Not only did the Third World reject the standards sought, but they
will not be approved by the US Congress. They may get very few votes in the Senate.
Clinton may even opt not to have the treaty voted on as a treaty. He may decide to begin
to implement what he can, administratively and through executive fiat, and build the policy
incrementally. They have been at it a long time, and they will continue at it for some time
more, adding what they can when they can, and waiting patiently for the next opportunity
to add more. The next such thrust will come next year in Buenos Aires. It will be no better
received then.
There is, in fact, no such thing as global warming. Or, if the earth is warming up, it is
because we are still emerging from the last ice age. The reality is that there is no science to
support what is merely a postulation. Indeed, there is some considerable evidence to
repute the idea. Of course, liberals themselves were taking a different view twentyfive
years ago, when they were worrying about the cooling of the earth.
Neither is there a hole in the ozone layer, put there by our overconsumption and greed, or
anything else. Actually, science has not known about the ozone layer very long, and has
not been observing it long enough to know what is going on with it. But there is no
evidence that CO2, air conditioning, flurocarbons, or cow flagellation is having a
deteriorating impact on it. We do know that it does filter out UV rays and that fewer of
them are getting through to the earth than were doing so a century ago -- so, it must be
getting thicker, on that evidence. What this always comes down to, though, is that
humans are pollution. Either we consume too much, or there are too many of us, or some
combination of both. If you scratch a liberal, you will find Malthus. Al Gore was saying
earlier this year that there were too many people in the Third World. I recall hearing a
speaker some thirty years ago who was associated with a Ralph Nader group argue that
anyone who owned more than two ties or suits was destroying the earth. But then, Al
Gore thinks we are destroying the earth with the automobile and the associated most
horrific invention of human history, the internal combustion engine -- which he wants to
ban (Earth in the Balance).
It is really not surprising that the Clinton White House pretended to seek reduced
standards in comparison to what was initially proposed. Neither set of standards was
going to wash, and it allowed Clinton to pose as seeking 'responsible compromise,' but
neither should LDC opposition to another proposal to limit their growth be startling to
anyone. That does not alter the basic aim of the original standards, nor those ultmately
'approved' by the conference. This is but another attempt to limit the economic
development of the Third World.
But the world is not overpopulated. It is underdeveloped. The continent generally offered
as the prime example of overpopulation is Africa, but Africa is the least populated of the
continental land masses. Until the age of imperialism and the slave trade, all the continents
were roughly equivalent in population. Now, Africa trails well behind the rest, having been
subjected to some 300 years of pillaging. Africa is also rich in undeveloped resources, and
in unutilized potential productive capacity. That it has frequently been the stage for famine
is no surprise. Such things do not occur in a vacuum. They are caused by policy initiatives,
either imposed directly from without, or implemented at the behest -- often the indirect
coercion -- of puppets or satrapy regimes.
Battlegrounds of the Third World War
A characterization of the struggle that is the third world war has already been indicated in
some of the commentary entered above. This would include the 'ujama' type mandates of
agrarian reform which resulted in the reversal of self sufficient grain production by such
countries as Tanzania and Egypt. But in these two instances, while the costs were
unacceptably high, there did not result the armed struggle which has developed as a result
of the intervention of non-area players in third world countries. Ethiopia constitutes quite
an alternative situation. That country was racked by civil conflict which came about as a
direct result of such intervention. It also resulted in the deaths of hundreds of thousands of
individuals.
The entire horn of Africa, in fact, has found itself steeped in the blood of its citizenry. It,
like Zaire, found itself virtually cut off from development related loans and classified as a
virtual 'fourth world.' But similar situations have occured throughout the African continent
in particular, and their impact has been the massive loss of human life in the countries
involved. Among those thus effected would be:
the Eritrea/Ethiopia/Somalia set of wars
the wars that took place in Angola, Mozambique, and Namibia
the Katanga secession
the Biafran secession
the Libyan invasion into Chad
the Idi Amin chapter in Uganda, concluded following Tanzania's response
to attacks from Uganda which brought about Amin's demise
the Liberian civil war
the Algerian civil war
the conflict in Guinea around its movement toward independence
the conflict over control over western Sahara
the Tutsi/Hutu conflict in Rwanda
the Sudanese civil war.
Nor has the rest of the world been immune from such conflict. A partial cataloguing of
such conflict would extend to:
the Philippine civil war
the civil war in Indonesia ending with Suharto replacing Sukarno
the Shiite/Khomani seizure of power in Iran
the India/Pakistani/Bangla Desh wars
the Indochina conflicts
the Korean war
the Balkan conflicts
the Timor separatist conflict
the civil wars in Bolivia, Peru, Ecuador, and vicinity
the disruptions in Chile, Argentina, and Brazil
the El Salvador civil war
the Nicaraguan civil war
the Iraqi conflicts with Iran and Kuwait
the Azerbijani conflicts
the Kurd rebellion
the Greek civil war
the Irish civil war
These thirty or so bloody conflicts have not been limited in many cases to short episodes.
Some have spanned decades. They reach from even before the post World War II period
to the present.
It is not suggested that there has been a monolithic character of any kind involved in any
or all of these wars. It is, however, sobering to consider the loss of life that has stemmed
from these wars. Without a general war over the past fifty years, there have nevertheless
been a long series of deadly conflicts that has beset the world. There are some common
denominators, and those enumerated here have meant the deaths of millions of human
beings over the last fifty years. And whatever the catalyzing forces involved, one common
trait has been the stymying of economic development not only in the countries immediately
involved, but through the entire neighboring regions as well as direct or indirect
consequence. Even where they became embroiled in the contest of the Cold War, the wars
have possessed character which transcend that. They have been fueled by the lack of
economic development in the areas, and have had a great deal to do with the repressive
collectivisms of the regimes involved. In nearly every case, the culprit has been excessive
government.
Third World, America
That regime tyranny has not been excluded from the events that have unfolded in even the
United States. Over-extension of governmental power has been the major factor in the
course that has turned large sections of America's great urban centers into virtual third
world economies. We have witnessed the extension of poverty and dependency as a direct
result. As the nineteen sixties came, the US was witnessing a stark diminuition of poverty,
but with the onset of the Great Society and War on Poverty that trend was dramatically
reversed. In fact, there is a direct negative correlation between governmental largess and
largeness to the level of poverty. With it, came a diminishing level of economic growth
and development. Beyond dependency, it has also meant stampeding rates of taxation. At
the end of World War II, it would have been difficult to convince Americans that their
approximate 20 % tax rate would reach beyond 40 % by the end of the century. There
have been projections found in no less an auspicious source as the 1993 Clinton budget
proposal of an 80 % + level of taxation some quarter of a century hence.
It has not been due to any burden of military expenditure that the US proceeded along this
course. In fact, quite the opposite is the case. Not only did the defense measures stimulate
economic development and growth, but as the expected 'peace dividends' with the
conclusion of Vietnam and the Cold War were 'realized,' the trend actually accelerated.
Despite the designs of the social engineers of the Carter and Clinton years, largely
unrealized, and even given the relative resistance entered to such policy under the Reagan
administration, the steady development of the course proceeded. Now, as we approach the
close of the twentieth century of 'progressivism,' there are signs that economic vibrancy
lies just beneath the surface of collectivist extension.
Such problems have been multiplied by a host of social ills ranging from the drug epidemic
to a desire to turn to redistributive schemes, whether those be taxation or gaming. This
drug epidemic may, in fact, be little different from that which prompted Chinese resistance
in the Opium Wars and Boxer Rebellion in the last century. We are faced with regime
planning schemes which span the gauntlet from Kyoto type agenda to political mutterings
about 'sustainable growth' under assumptions that expansion beyond the range of 3 to 4 %
are not only impossible, but undesirable and dangerous.
Primitive Accumulation and Autocannibalization
There are specific terminologies which describe the direction and design of such policy
initiatives that produce these results, whether what is examined is appropriate technology
or overpopulation and population control, and whether the object of analysis is an
underdeveloped or developed population.
The key to economic growth and development is the production of wealth, too often
taken, in a virtual mercantilist outlook, as of a fixed and finite character. But not only does
the conceptualization of wealth as a produced expansive character elude such neo-
mercantislists, the sort of redistributive collectivist controlled policy outgrowths which
result of such flawed notions of the universe have meant the subjugation of wealth and its
redirection away from dedication to economically productive market approaches to
alternative routes of planned wealth manipulation.
The dimunition of that proportion of produced wealth from the consumption based living
standards of the productive layers of society to the funding of nonproductive bureaucratic
layers, social control or manipulation, and debt service has been termed the primitive
accumulation of capital. This is accomplished by a variety of mechanisms, ranging from
excessive real interest rates, higher rates of taxation, diminished or stagnant living
standards, and inflation to general nonproduction redistribution schemes.
Besides such attacks on the expansion of variable capital is the erosion of not only
expansionary capital investment but away from the maintainence of fixed capital. Without
the provision of adequately sustaining constant capital, an economy faces the breakdown
of its existing capital base. It becomes less possible to support even existing capital levels.
The same demons of high marginal tax rates, inflation, excessive real interest rates, and the
like to support of bureaucracy, social control, and debt service devour existing levels of
capital investment in autocannibalization.
The conditionalities imposed by the IMF and related institutions run in exactly this
direction. To meet them, countries must impose such policies on their populations. This
often entails greater degrees of social control in addition to austerity or outright looting of
living standards to meet debt service requirements as conditionalities. That was the
impact on Tanzania in its agrarian reforms, resulting in diminished grain production and
the need for it to become a grain importing economy, as it is with sustainable growth and
the Kyoto objectives. The conditions which have beset Ethiopia, for example, are primarily
the result of policy pursuits. Famine and drought in such situations do not occur
exclusively in a vacuum.
The Iron Law of Growth and the Accumulation of Social Surplus
Countries confronted with such 'options' must forego the prospect of development. To too
many Americans, even, profit often seems to be a dirty word, with some suspicion that
anyone who achieves substantive wealth must be able to do so out of some inherent
unfairness on the basis that such gains must somehow be ill gotten. It comes down to a
matter, often, of a rather bleak jealousy, but the impact is that the sacrifice of higher levels
of growth as an alternative to wealth accumulation.
The basis for growth is precisely such wealth accumulation. The reduction of the
accumulation of wealth requires the sacrifice of some level of development. The rationale
behind the entire progressive or graduated tax system is grounded in such misconceptions.
It is crucial to realize that the cost of higher marginal tax rates is greater development. It is
the wealth subjected to higher marginal tax rates which is the most generative of wealth, in
as much as it is those on whom such gradations are imposed who otherwise possess the
most discretionary wealth which would be devoted to such wealth generation.
Business does not effectively pay taxes in any event. Where they are able, the additional
cost of the higher marginal tax rates are merely passed along to consumers in the form of
higher prices or higher real interest rates, resulting in a diminishing living standard by
them. Where they are unable to pass the cost along, the impact may well be less
productive acitivity, which also has the same impact. The best policy in terms of
generating development would be the lowest possible level of marginal tax rates, for it is
from the profits of these individuals or firms that the social surplus profit arises that fuels
economic expansion.
Marx even recognized the process. What Marxian and socialist perspectives seem unable
to comprehend is what Marx was actually posing in his theory of the falling rate of profit.
At the simplest level, the 'profit' he was considering was the aggregate profit of the
society. Profit in such terms is rather the social surplus of an economy. What Marx was
articulating was in actuality the falling rate of social surplus as a problem. This is by no
means an inherent contradiction of capitalism. It is a matter of policy and agenda choice.
Societies face the choice that they must either grow or die, but this volition is an individual
one anchored in the market activities of self interest pursuit by the participants in the
process. This iron law of growth can be posed in the formula:
S' / C + V.
The greater this ratio, the more development will be genearated. Conversely, the reduction
of this ratio results in lowered levels of both growth and living levels. The only way in
which incomes can be raised is for the ratio to rise. Any government fiat to attempt to
effect this otherwise has the opposite impact, such as with the minimum wage law.
Coerced efforts to increase living standards will result in real wages being adjusted by the
forces of the market back to previous levels or below, without their development out of an
increase of this ratio. At the same time, a high enough such ratio can produce an almost
automatic cycle of raising living levels. Economists have referred to this conceptualization
as expanded reproduction -- a self perpetuating level of development.
Autocannibalization and primitive accumulation of capital are merely variations on a
falling rate of social surplus. This, too, is a self fulfilling cycle process. But it is such policy
which is the real substance of the third world war. It is, in the end, really a war against
development.
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