Timmy Elsewhere

Petey Mandelson writes a reasonable piece on trade and globalisation. I add something in the comments. Wonder how many will get the point?

The mind boggles at some of these responses (and yes, it also boggles at reading a sensible piece from Mandy but that\’s another matter).

We know what it is that creates wealth: voluntary exchange. When an asset moves from a lower value use to a higher this is the very definition of wealth creation. This is true whether it is you and I swapping my surplus apples for your surplus pears over the back fence or whether it\’s swapping the banking services of the City of London for the manufacturing products of Shenzen.

Along with such voluntary exchange which itself creates wealth come two further things: the division of labour and the specialisation of labour. Think Adam Smith and his pin factory here. These two together create further wealth as because of them labour becomes more productive.

It\’s possible to dislike those latter (there\’s a Marxist argument about the alienation of labour for example) but it\’s not possible to argue that they don\’t create wealth.

Now this logic, these processes, work whether we talk at the level of the household, the town, city, county, region, country, continent or globe. Once we\’ve accepted (which I assume everyone does) the wealth creating possibilities of voluntary exchange then there\’s no reason in logic at all to limit it to one area or another. The natural size of the market in which we exchange is the global one.

Note that so far there\’s been no mention of capitalism: for the logic above is about methods of exchange. Capitalism (and the various other possible different methods of ownership of assets) is a different matter. The logic of trade holds whether assets are owned by individuals, collectively, by the State, by the workers themselves…..it doesn\’t matter a damn for the purposes of this argument whether we are a capitalist, socialist, communist, fascist or whatever else economy….it is still true that voluntary exchange, the division of labour and its specialisation create wealth.

That\’s the bit that boggles the mind. Those who confuse the two….the structure of ownership with the simple realities of trade. The globalisation of trade we definitely want: the other stuff we can still argue about.

Hmm, not sure if that comment actually went through or not.

2 thoughts on “Timmy Elsewhere”

  1. It isn’t rocket science to appreciate that voluntary exchange increases the satisfaction-state of both parties and that increasing levels of exchange and of areas engaging in such exchange increase the wealth of all who so engage. But it would be seriously mistaken to assume that such intensification of productive relationships can and will occur without regard to political and social relationships.

    The unlimited access to all that they desire in order to maximize their own satisfactions and
    “quality of life”–characteristic of nearly everyone on Earth, regardless of limitations and qualifications trumpeted by special-interest advocates and collectivist dictators–is NOT possible, moreover, is specifically IMPOSSIBLE under any other than a system embracing individual freedom, widespread respect for and political protection of private property, and a highly-developed system of indirect exchange involving widely-accepted media in which to effect such exchange.

    To put it another way, what we recognize as “the capitalist system” (especially including institutions devoted to trading both the assets and liabilities of productive entities) is the ONLY method for the attainment of the enunciated goals. Not only has every other system conjectured been tried and found (woefully and painfully) wanting but each can be
    shown, by rational analysis–by IRREFUTABLE theory–without resort to the “empirical” trial and error method (the errors of which method have claimed hundreds of millions of lives in very recent history).

    A wealthy individual (or nation) will have accumulated a reserve of sufficient size that individual instances of mistaken judgment, expenditure on otherwise unnecessary luxury, inefficiency, and waste, unless become habitual, cause only minor diminution–scarcely a ripple–in well-being and no cause whatever for alarm.
    But the situation of “Western Civilization,” including its most advanced proponents and practitioners, is different. Capital reserves, especially when displayed in relation to increasing populations, are in decline, as are easily exploited resources. Simultaneously, most of the increasing population which would be the principal beneficiaries of improvement and intensification of capital structure are themselves massively and vociferously opposed to such improvement and intensification and trends in important spheres such as politics and education do not augur well.

    At a time when–everywhere one looks–the performance of the socialistically-hampered economy shows exactly those failures and shortcomings against which the more “orthodox” economists (especially of the Austrian School) have warned (for over a hundred years!) and where the most vigorous national proponents of socialism have all but disappeared, those nations one would expect to be the standard-bearers of capitalism–the system of freedom–fall over one another in a scramble to extract more and more from some to spend in ever more ill-conceived programs for some others, all the while enacting policies to assure fewer of the former and more of the latter.

    Some very popular pundits assure that there are “laws” (immanent laws of the universe, they would have us believe) decreeeing inevitable and irreversible technologic progress, based especially on the rates at which electronic components and functions have been miniaturized. Those who subscribe to such notions are truly and collossally ignorant of the degree to which such advancement, as well as all others separating us from primitivism and barbarity, rest on an attenuating social system of production of the stuff permitting that separation. We decry Lenin, Stalin, &Co., Mao, Hitler, and laugh at their primitive counterparts in places like Africa. But these are merely the more thoroughgoing, consistent applicators of systems and practices which claim the approval of about half the voting populations in the “advanced” nations–and greater numbers elsewhere.

    Some wonder whether the future is one of decline. They can quit wondering.

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