Jun 2, 2015

June 2, 2015: A Question of Balance, Risks of Monoculture, Every Man's Nation

Al Gore, in his book “Earth in the Balance”, talks about the risks of ‘monoculture’.   What he was referring to was the trend in the last century, within the agricultural industry, of reducing the number of strains of grain seeds as well as dedicating ever more acreage to the cultivation of the same species of plant.  As the former Vice President correctly points out, this leads to an ever greater vulnerability of the world’s food supply to pests and disease as insects and microorganisms mutate and adapt creating immunities to the world’s use of pesticides, herbicides, and fungicides.  The less diversity the more unstable the food supply as, for instance, the Irish Potato Famine demonstrated in the mid 19th century. Lest we assume that this was an isolated instance, the former vice president pointed to a situation in the late 20th century in which the corn crops of the world were threatened and crisis narrowly averted by reverting to a strain of seed still in existence in Mexico that was introduced to stave off crop failure.  

Mr. Gore is right of course, demonstrating the ongoing process of evolution and change in which organisms mutate as they deal with civilization’s ongoing war on the ravages of nature.   Similarly the same process is at work as microorganisms mutate to deal with the ‘miracle drugs’ of the last century—antibiotics for instance—developing immunities to human efforts to hold various diseases at bay.

I bring this up because I suspect that the same principle is applicable to politics and economics.  That is the greater the ‘monoculture’ the more fragile and vulnerable it is to disruptions and change.  That the greater ‘integrated’ the global economy, the more vulnerable humanity becomes to economic crises, the less pliable and resistant our ‘new world order’ to challenge and change.   

I submit the example of the so-called ‘Asian Fever’ of the late 1980’s when the failure of markets, particularly in Singapore, Indonesia and Japan, created a regional recession, one in which it took Japan a decade to recover.  China, then far less integrated into the regional and world economy, survived the crisis emerging in a much stronger position precisely because it was then much more insulated from the contagion.  Both Peking and Washington, affected much less by the economic downturn were in a position to come to the aid of the region and help them recover.  The existence of ‘firewalls’ in the form of trade barriers, helps insulate economies from regional or, perhaps, global economic catastrophe; for the more dependent a country becomes on foreign trade the more vulnerable it is to the failures of foreign markets or decisions made by foreign governments and, increasingly, foreign financial institutions which may or may not heed sound economic or regulatory policies. 

Until recently foreign trade was seen as a good thing except, perhaps, among certain ‘mossbacks’ of the Republican party dedicated as they were to the Smoot-Hawley Tariff.  But as with anything else when it becomes a mantra of the Republican Party it is perhaps time to re-assess the wisdom of pursuing a particular course of action.  So it is with ‘free trade’: when the Republicans adopt it as their own, it is time to stop and reconsider; for Republicanism has become a veritable criterion of value, whatever they propose is wrong, whatever they enact is deleterious to the body politic. 

For this reason one must see the emerging  “New World Order” famously heralded by G.W. “Pappy” Bush as a signature act of mendacity threatening not only the sovereignty of the nation-states, and therefore the ability of our elected representatives to function, but the very stability of the national economy making it increasingly vulnerable to the vicitudes of foreign actors. From currency manipulations, and failures to enforce environmental and labor standards and regulations, to the vicitudes of the impact of foreign investments and speculations, the world becomes ever more vulnerable to maladies originating in far-off lands over which each nation has little or no effective remedy or control.  The impact on global markets of the real-estate speculations in the United States in the first decade of this century is a notable example.  Where previously a major collapse, as in the ‘tulip mania’ in the 17th century Netherlands produced hardship, it was by and large a regional phenomenon. (1)  Increasingly in the last century the threat has become global as the events of the 1930’s demonstrated.  We learned some lessons back then, foremost that it was wise to erect some firewalls.  Separating investment from commercial banks under the law known as the Glass-Steagall Act was one, as were laws reducing volatility in the markets by requiring that stocks and bonds be held for a period of time before they could be re-sold.  One by one we have been tearing down these firewalls in a headlong quest to free capital not understanding the lessons of history, having a notoriously short memory and no current experience with the awfulness of the consequences. 

While a certain level of foreign trade is necessary and even laudable, there comes a point at which it is counterproductive, creating huge global dislocations.  China, for instance, must generate enough money in foreign markets in order to purchase the energy and raw materials to drive its economic engine.  The same is true of the United States.  But it is one thing to engage in trade in order to generate enough foreign exchange in order to fuel the economy and quite another to make a fetish of producing for foreign markets.  With a billion and a quarter people it is unnecessary, for instance, for the Chinese to be producing automobiles for foreign markets.  If a company cannot reach economy of scale with a domestic market of this size, it has no justification for being in business.  The same holds true for most of the world’s corporations.  The countries of origin are usually large enough to provide adequate markets and these corporations should be limited to these markets; or at least regional markets.

What I am suggesting is that perhaps the ‘world economy’ would be much more secure if we were move to further restrict economic activity to national and regional frontiers, to adopt a more vigorous tariff regime, raising tariffs, at least marginally in order to slow down the headlong global expansions.  This, of course, would have to be considered industry by industry, as nations short of certain resources would have by necessity to import and export regionally and, perhaps, globally.  Today over a third of the 100 largest economies are not nation-states but corporations, answerable to no one except corporate management and the investment class. Nothing has replaced the nation-state as a regulator of these entities and the further integration of the world economy threatens to remove all environmental and regulatory controls creating a new order in which the multi-national corporations will be able to deal with the several nations the way that British Petroleum dealt with the United States during the oil spill in the Gulf of Mexico; that is every man’s country will simply become a ‘colony’ to the great global economic combinations in the way that India was once the property of the East India Company. (2)  

There comes a point at which further integration of the world’s economy becomes counterproductive.  There comes a point at which further integration creates only greater vulnerability and the potential for a truly global economic catastrophe. There comes a point at which further integration creates only a greater threat of global colonization.   I suspect that we have reached that point and the fact that the modern Republican Party has adopted it as an article of faith tells me that it is so.

These too, Mr. President, are reason why we should resist the headlong mantra of globalization and opt instead to proceed with caution.


1.See post dated March 8, 2008: Tulip Time, When Hands Outrun the Wisdom of the Mind,

             Castles in the Sand.




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