Welcome to Part 3 of the discussion. Bernie Sanders' ideas for an ethical economics are perfectly suited to our times of inequality and oligarchic corporatist government. This diary series (four) explores the outlines of Bernie's type of economic philosophy.
Link to Parts 1 & 2 can be found at the bottom of the diary, if you'd like to catch up with the series.
We're using a book from the 1960s. It is by the post-WWII British economist E.F. Schumacher, the perennially popular Small Is Beautiful (1973). We follow the four parts of the book very closely in summary form. It is subtitled Economics As If People Mattered. Have no fear, there's no technical language, or math, or any Marx. Well, it's a tad long (this Part 3 is shorter!) and the language is from the 60s, but so am I :-)
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Here's a link to Abebooks, where I buy all my books used. I try not to support Amazon if I can help it.
http://www.abebooks.com/....
Overview
Why is democratic socialist economics so important today?
It is clear to progressives that corporate capitalism has failed the people of the developed world since the 1970s, and, more importantly, is destroying the environment and driving climate change into the sixth great extinction.
However, capitalist liberals and capitalist conservatives are not persuaded.
Capitalist conservatives deny climate change itself and still think that capitalism will provide solutions to all of society's ills. Capitalist liberals - such as the DNC and the "centrist" Democratic Party members - accept climate change, while still thinking that capitalism itself could be reformed to serve human needs and curb climate change.
I think Bernie's rapturous reception will force the Democratic Party in 2016 to choose it's primary loyalty. Folks will have to choose between democratic socialism and corporate capitalism - with a smiley face under a Democratic administration or with an angry face under a GOP one.
For now, welcome to the only economics fit for human sustainability.
A note on terminology. If the word "socialist" is too burdensome in your context, just use "ethical" economics instead. That's precisely what it is - ethical economics.
Forty years of Cold War ideological brainwashing has poisoned the word "Marx" for North Americans. That's all right, because democratic socialism has nothing to do with totalitarian communism. Nothing. Do not go down that rabbit hole!
Democratic socialism is the model followed by the Nordic countries, i.e. Scandinavia - Denmark, Norway, and Sweden.
Location Map of Scandinavia from Wikipedia
The Nordic countries outside of the Scandinavian peninsula are Finland, Iceland, Greenland, and some smaller islands. Please point out to folks you talk to that these countries are not in Eastern Europe or in Russia. After this series, I'd like to create an info graph thingy on the Nordic model of ethical economics.
On to the goodness.
Small Is Beautiful is comprised of four parts:
1. The Modern World (same now as the 60s - the sh*tstorm only flies faster now)
2. Resources (last diary's topic)
3. The Third World (now called the "emerging" or the "developing" world.)
4. Organization & Ownership
This diary summarizes part three, which contains four chapters. They are summarized fairly briefly, as his discussion pertained mostly to the developing world of the 1960s. However, his basic principles are as applicable today as then. Not only in the emerging world, but equally so for North America's poverty stricken areas.
PART THREE: THE THIRD WORLD
Eleven - Development
Schumacher notes the great failures of the engagement of the rich world with the emerging world. (We've covered ourselves with glory there since then, of course.) And naturally he looks to first principles for the reasons.
He notes that our scientists have shown that evolution is how the world has developed; massive amounts of minute adaptations over long periods of time. Yet with development we still tend towards central planning:
Could it be that the relative failure of aid, or at least our disappointment with the effectiveness of aid, has something to do with our materialist philosophy which makes us liable to overlook the most important preconditions of success, which are generally invisible?
Or if we do not entirely overlook them, we tend to treat them just as we treat material things - things that can be planned and scheduled and purchased with money according to some all- comprehensive development plan.
In other words, we tend to think of development, not in terms of evolution, but in terms of creation.
When developers try to tackle poverty, they tend to look first to the material factors - lack of natural wealth, capital, infrastructure, etc. But the immaterial factors are vastly more important.
Schumacher highlights 3 such factors: deficiencies in education, organization, and discipline.
After the devastation of the Second World War, the countries with a high level of these three factors all produced economic miracles. So development in the undeveloped parts of the world is a matter of the removal of these obstacles. But this is why development cannot be an act of creation. Education requires evolutionary growth, so does organization and discipline, none of them are able to "jump" forward. Development work must be aimed at speeding this evolution.
To focus on the material factors is simply to enrich those already rich. He notes that if new economic development is introduced which depends on special education, special organization, special discipline, it will remain a foreign body in a society incapable of assimilating it.
Twelve - The Development of Intermediate (Appropriate) Technology
Nowadays we speak of "appropriate" and "sustainable" technology.
Schumacher summarized his thoughts on the technology aspect of development as follows :
1. The "dual economy" in the developing countries will remain for the foreseeable future. The modern sector will not be able to absorb the whole of the undeveloped economy.
Not much has changed since then. Most developing economies still have huge disparities between their developed and developing sectors.
2. If the non-modern sector is not made the object of special development efforts, it will continue to disintegrate. This disintegration will continue to manifest itself in mass unemployment and mass migration into the metropolitan areas; and this will poison economic life in the modern sector as well.
Schumacher would be unsurprised by the disastrous acceleration of these trends over the decades since.
3. The poor can be helped to help themselves, but only by making available to them a technology that recognises the economic boundaries and limitations of poverty. The poor need appropriate, sustainable technologies.
4. Action programmes on a national and supranational basis are needed to develop appropriate, sustainable technologies suitable for the promotion of full employment in developing countries.
Neo-liberal developmental programmes - such as those of the western countries, IMF, World Bank, etc. - tend to create projects that favour the local elites rather than the poor. How this surprises anyone is a mystery. Corporate capitalism is by and for western elites. Of course they'll just replicate their model in development projects.
Thirteen - Two Million Villages
Schumacher begins this chapter with a prescient statement. He says that:
Development requires a conscious and determined shift of emphasis from goods to people. Indeed, without such a shift the results of aid will become increasingly destructive. (It is much easier to deal with goods - it has no mind and raises no communication problems.)
There are three communication gulfs between development workers and the rural poor:
1. the gulf between rich and poor;
2. the gulf between educated and uneducated; and,
3. the gulf between city-people and country-folk, which includes that between industry and agriculture.
Poor people cannot suddenly adapt to the ways and methods of rich city people.
Plus there are many features of the rich world that are questionable in themselves.
The life, work, and happiness of all societies depend on certain psychological structures, which are infinitely precious and highly vulnerable.
Social cohesion, co-operation, mutual respect and above all self-respect, courage in the face of adversity, and the ability to bear hardship - all this and much else disintegrates and disappears when these 'psychological structures' are gravely damaged.
That means that the methods of development must be adapted to the local people.
For Schumacher, the heart of world poverty lies in what he calls the developmental model of two million villages.
Development only in the cities lures great migrations from rural areas to the cities, where economic development occurs, but the accompanying social ills dwarfs the economic gains.
Instead, development must make rural life feasible within a developing economy.
The problem presents an enormous intellectual challenge. The aid-givers - rich, educated, town-based - know how to do things in their own way: but do they know how to assist self-help among 'two million villages', among two thousand million villagers - poor, uneducated, country-based?
They know how to do a few big things in big towns; but do they know how to do thousands of small things in rural areas?
They know how to do things with lots of capital: but do they know how to do them with lots of labour - initially untrained labour at that?
Schumacher says the best gift is intellectual - the gift of useful (!) knowledge.
He notes that without some genuine effort and sacrifice among the recipients, there is no gift. Receiving material things requires no intellectual effort and helps minimally. Give a person a fish goes the saying, and you help him a little bit. Teach him how to fish and you help him for a lifetime. But then he is still dependent on you for replacement parts. Teach him how to repair and make rods and make fishing tackle and you've made him self-reliant.
We have to be careful to understand clearly the nature of the problem and where our own knowledge is too long and too short. Schumacher says this:
If the job is, for instance, to assemble an effective guide to methods and materials for low-cost building in tropical countries, and, with the aid of such a guide, to train local builders in developing countries in the appropriate technologies and methodologies, there is no doubt we can do this, or - to say the least - that we can immediately take the steps which will enable us to do this in two or three years' time.
Similarly, if we clearly understand that one of the basic needs in many developing countries is water, and that millions of villagers would benefit enormously from the availability of systematic knowledge on low-cost, self-help methods of water-storage, protection, transport, and so on - if this is clearly understood and brought into focus, there is no doubt that we have the ability and resources to assemble, organise and communicate the required information.
Fourteen - The Problem of Unemployment in India
A talk to the India Development Group in London
This chapter is an application to the rural poor of 1970s India of appropriate technology as described above. The details of the 1960s India need not detain us here.
This then is Schumacher's take in brief on the problems of capitalist models of development. These, naturally, have dominated economic development programmes since colonial times. The results have been disastrous. The emerging world first suffered colonialism, then have endured decades of capitalist-colonialist development programmes that primarily benefit western and local elites.
I would love to hear your take and/or experiences of capitalist developmental programmes in the emerging world.
Part four of the series addresses the little matter of ownership in an ethical economics. The best for last :-) I hope to see you then.
Here are links (hopefully :-) to the first two diaries in the series:
Democratic socialist Economics for us Beginners Part 1/4
Democratic Socialist Economics for us Beginners Part 2/4