This is a somewhat revised letter to Brent McClintock which may also be
of interest to to this list. Brent among other things said to me that
based on his New Zealand experience, national sovereignity for small
countries in today's world is well-nigh impossible due to free
transnational capital flows and currency speculation. He among other
things said:
The exchange rate was fixed, of course, under Bretton Woods and
then pegged afterwards
..
in the early 1980s this economic policy collapsed because it ..
could not by itself counter the speculation of corporate
finance against the currency.
...
Pegging exchange rates invites speculation against the currency
for instance by financiers who usually have deeper pockets than
the government.
Yes I agree. But a Norw. additional instrument when fixed exchange
rates were abandoned was administrative control of capital flows. Until
as late as June 1990, no one could move more than a million NOK (1NOK =
0.133 USD) out of Norway without a license from the Central Bank. This
eliminated currency speculation, large cash movements were allowed
mostly only for trade payments. If this sounds bureaucratic and
inefficent to you, remember that in the 15 years _before_ 1990, Norway
underwent what is possibly the largest industrial build-up per
inhabitant in the world in that period, i.e. the rise of the oil and
gas industry on the continental shelf, with very substantial equipment
imports and very substantial domestic and foreign investment.
"Partners" in this process were oil companies like Shell and Phillips,
not exactly known for their naivete when cooperating with small gvts.
In spite of the ensuing growth in cross-border cash flows, and all
sorts of ensuing international influence on Norway, it is only fair to
say today that this build-up went very smoothly and efficiently EVEN if
cash flows were administratively regulated as described above. And this
happened on top of an economy which has always been extremely open. My
point is that it is quite feasible to administratively steer the
largest (and therefore not to frequent) cross-border cash movements.
In fact, computer technology makes it _easier_ to do this than before.
What makes my proposition "unrealistic" is therefore not objective
facts, but political "choice" engendered by the propaganda of the
MNC's, which portrays everything that counters their interests as
impossible and unrealistic. The change in Norway to free movements of
capital in 1990 has resulted in no economic improvement, only in net
capital flight from Norway, and a new mighty class-struggle weapon for
the rich: If they don't have their ways, they will send their cash out
of the country. Before 1990 they simply did not have that weapon in
Norway!
The importance of administratively curbing cross-border capital
movements can not be exaggerated. Freedom of transnational capital
movement is the single most important reason for capital having the
definite upper hand in the struggle against the poor, working class and
trade union movements in today's world.
Additionally, the progressive efforts within a country such as
New Zealand are hostage to the fluctuations of export markets
largely beyond the control of NZ. A bad export market means
curbing those elements of the fiscal budget that are
"expendable" -- policies supporting labor and the wider
community.
I agree. The way to counter this is to insist on upholding a minimum of
diversified production in own countries, and the right to use some
means to achieve this. I enclose below a proposal for an alternative
and just world trade regime which should make this possible. Note that
this trade regime is fundamentally a free trade regime, but with
damping mechanisms built in to counter instabilities/runaway
situations. It is also balanced in the sense that it gives the same
rights to all countries, except for special advantages for poor
countries.
I know that this is contrary to the GATT agreement, but I see no other
choice than fighting nationally to minimize the damages due to GATT in
each country, and at the same time work for international solidarity
and coordinated action for trade reform proposals.
Additonally and actually, there are a lot of possibilities for
maneuvering for better economic policies in each country without
formally contradicting GATT rules, or at least exploiting the large
grey areas that any such complicated world regime opens up. But when
you have governments that are spineless and psychologically impregnated
with market liberalism (as we presently have in Norway), they are of
course not willing even to consider maneuvering for national
independence. They are in fact more catholic than the Pope, and excel
in demonstrating their faith in the Liberalist Gospel. In Norway we
have seen this by the Brundtland gvt. letting MNC's buy up and then
terminate Norwegian competing industry, even when (at the time)
existing Norwegian legislation made it perfectly possible to stop such
operations. Of course they now have watered out that legislation to
comply with EU law. But they were so eager to give up national
legislation that they refused to practise it long before they had
changed it!
Forgive me you guys who have heard this before. I know I am
monomaniac on these issues. But so are the MNC's and their
megaphones in politics and the media.
Cheers,
Trond Andresen ([EMAIL PROTECTED])
Department of Engineering Cybernetics
The Norwegian Institute of Technology
N-7034 Trondheim, NORWAY
phone +47 73 59 43 58
fax +47 73 59 43 99
-----------------------------------------------------------------------------
Some proposed points for a progressive and non-chauvinist trade policy:
- subsidies and trade barriers for domestically consumed
agricultural products allowed.
- trade restrictions allowed against imports of a specific product when
own production of the same good for domestic use is near extinction.
(this must be quantified, of course)
- no export subsidies allowed for ag or industrial products.
(technically the problem with subsidized ag products can be
solved by subsidizing agriculture regardless of domestic consumption
or export purpose, but levying an export tax canceling out the
subsidies if the products are exported)
- trade restrictions against import from a country which has a chronic
and significant trade surplus vs your own country are allowed, and
may be used until some approximate trade balance is reached.
- national control on capital flows, national legislation against foreign
takeovers
- international cooperation in production and research encouraged,
but the fundamental control is at all times kept in the participating
firms and/or countries.
- trade barriers allowed against exporters
who do not adhere to elementary rights concerning unions, health
regulations, minimum wages etc.
- bilateral agreements on imports favoring selected developing
countries, trying to ensure in the agreements that the income
benefits the prodicers, and not the elite in said countries.
(I am aware that such conditions to some degree condradicts
my national sovereignity principle. So be it.)
- Gifts and support freely given, not loans and investments to
developing countries. Forgiveness on most debt and interest on
earlier loans.
