summit for the future                                                                        [more texts in english language at Brainworker's]

Trade - Asian Leadership: Global Trade in Open Source as well as Public Goods and Services

From "Economy of Power" to a sustainable "Wise Economy"

[See as well the final report with the additional question: Think Clubs: Show, awareness-raising or propaganda? 14.05.2005]

The summit for the future report - Summary  of all thinkstreams and sessions, pdf, 10p.m free, Full report, 246 p, 3 MB, 100 Euro

Martin Herzog

The major problem in most of Asia, be it developed or not, is unemployment and the very unequal distribution of income and wealth. Instead of thinking about creating new items that can be sold on big markets with big profits, one might, for a change, as well try an economic approach from the other side:

Creating economic circles that allow to do the things that are really needed, that need an enormous amount of work – but are most often out of that, what we use to call “economy”.

1. Definitions

1.1 Globalization (deutscher Originaltext)

Size of countries in relation to income, after Vladimir Tikunow.  From:: Richard Diethelm: Mehr handeln, weniger deklamieren. Tagesanzeiger 31.3.06. p. 8.

Globalization is in fact not a new phenomenon. For Teilhard de Jardin it was even a positive speculation, leading to the worldwide integration of mankind and spirit in the Noosphere. Very important is here the work of Immanuel Wallerstein who showed before quite some time, that the capitalist society is never restricted to and by a nation, but agitates worldwide, arranging a worldwide specialisation, and uses the periphery out the the centres of control and command, the world-cities. (Saskia Sassen). The only thing that really changed in the last 15 years is, that now economy openly dominates over politics.

Harald Schuhmann (Die Globalisierungsfalle. 1996) sees globalization as transnational, border crossing integration of  firms, markets, information flows, even of cultures.

Joachim Hirsch (political sciences, Univ. Vienna)  sees as major effect of globalization especially the radical liberalisation of capital markets, a worldwide mobility of the working forces, a condensation and acceleration of communication, a unification of cultural patterns and consumption standards,  growing importance of transnational corporations and an increasing internationalization of production.

James Rosenau sees an increasingly polycentric world in which politics is not made anymore by nation states, but by transnational global corporations and internationally agitating organizations.

Zygmunt Bauman emphasizes the connection between globalisation and localisation (glocalisation), enhancing the polarisation between the globally agitating rich and the locally bound poor. That is as well the result of Saskia Sassens analysis of global cities as New York, London, Tokyo, Paris, Frankfurt, Zurich, Amsterdam, Los Angeles, Sydney, Sao Paulo, Mexico City and Hong Kong. Those are the command centres of capital accumulation, of the organization of the global economy, market places of the leading industries and production sites for innovations in those industries. Global cities are, opposed to underdeveloped areas, rich in infrastructure.

THE WORLD IN NUMBERS: The World Is Spiky. Globalization has changed the economic playing field, but hasn’t leveled it. Richard Florida. Tim Mason Univ.  http://www.creativeclass.org/acrobat/TheWorldIsSpiky.pdf
population	light emission

The form of presentation Richard Florida has choosen shows the same story, but illustrates an other problem. The high peaks are difficult or mostly impssible to reach for those living in "the valleys". But very easily those peaks tumble down into the valleys, if situations change, if the economic base is lost.

1.1.1 The first major problem of global economy is, that it is not really "global".

If you look at the map on the right side up, you understand immediately what is meant by the "north-south-divide". The economic power of the north blows it up to balloons, while the south almost disappears. But we see an other problem ... exactly in between. We have the economic powers of Europe, on the same level the one of Japan and Korea. We have two large blocks, China and India, but have to take into consideration, that those are mainly large because each one consists of over a billion people! But in between, at the borders of Europe, we have the squeezed periphery not only in Africa, but as well in Western and Central Asia.

An other periphery found in every country is the rural area. Models of modern economy base on large-city-lifestyle.

Those areas do not really participate in the global economy, but are mainly connected through consumption, what leads step for step for the loss of their assets through dept. Media and migrants make western consumption and lifestyles look attractive and create new "needs" of consumption, new stiles, new behaviours. But - this western lifestyle is not everywhere welcome with enthusiasm, it raises resistance, especially in the Islamic community. Do not forget, that most of West- and Central Asia is Islamic.

The right method, not to forget what is excluded, is e.g. the form-calculus of Spencer-Brown:

 (s. Definition der Freiheit als Entwicklungsfähigkeit, n. Spencer-Brown).

One can do form analysis in much more sophisticated ways, but already this basic form helps to remind, what troubles might be hidden behind a praised word as e.g. "competition": It's the exclusion not only of the loosers, but of the majority. Why is that so? Well, that is so because of the basic law of capitalism, the pareto distribution and pareto efficiency.

1.1.2.2 The major economic law of exclusion: The Pareto-efficiency

Vilfredo Pareto was born 1848 (-1923) in Paris as son of a wealthy Genoese, who lost his fortune during the revolution. He studied engineering and taught from 1891 at the university of Lausanne in Switzerland. Thanks to a heritage, he was able to live in a villa at the lake of Geneva and to work as a free publisher. End of the 19th century he studies the distribution of wealth in Italy and found, that 80% of the fortunes are concentrated in only 20% of the families. This distribution is not so just, but economically very efficient. Private bankers do not need to be really popular and care for majorities, they are in the lucky condition that they only have to deal with 20% of the population (or even less. s. distribution of wealth in Switzerland). The same law makes dealing with complaints on quality of goods or services (20% of the customers cause 80% of all fuss), with quality problems in stored goods, where 20% of the items represent a value of 80% of the total and so forth. That is the base of the famous 80/20-distribution, and unluckily as well of the targeted 20/80 society.

Pareto was moreover the right person to propose the widespread use of that principle. As genius as his findings might be for science and for practical economy, as disastrous they are in their consequences. Pareto was in this respect typical for the guild of asocial economists. He even refused democracy, for exactly the same reason: Don't waste time with the fiction of popular representation. A sterile seed does not produce flowers.

In spite of the fact, that he was rich, he slept on an iron-grid bed and wore always the same shabby dress. His first wife, a Russian countess, did not appreciate that too much and run away with a cook. His second wife, half his age, burned all his papers and manuscripts after his death, being worried about getting the inheritance. So at the end he had found the fitting partner.

In spite of many business philosophers seeing not much of a problem with the distribution of wealth, income and happyness in societies, the problem of  distributive justice seems so far not solved:

1. Strict Egalitarianism

There are a number of direct moral criticisms made of strict equality principles: that they unduly restrict freedom, that they do not give best effect to equal respect for persons, that they conflict with what people deserve, etc. But the most common criticism is a welfare-based one: that everyone can be materially better off if incomes are not strictly equal. (s. up) It is this fact which partly inspired the

2. Difference Principle

The most widely discussed theory of distributive justice in the past three decades has been that proposed by John Rawls in A Theory of Justice, (Rawls 1971), and Political Liberalism, (Rawls 1993). Rawls proposes the following two principles of justice:

1. Each person has an equal claim to a fully adequate scheme of equal basic rights and liberties, which scheme is compatible with the same scheme for all; and in this scheme the equal political liberties, and only those liberties, are to be guaranteed their fair value.

2. Social and economic inequalities are to satisfy two conditions:

• They are to be attached to positions and offices open to all under conditions of fair equality of opportunity; and
• they are to be to the greatest benefit of the least advantaged members of society.

Libertarians object that the Difference Principle involves unacceptable infringements on liberty. For instance, the Difference Principle may require redistributive taxation to the poor, and Libertarians commonly object that such taxation involves the immoral taking of just holdings.

3. Resource-Based Principles

Resource-theorists claim that the Difference Principle is insufficiently ‘ambition-sensitive’ and that provided people have equal resources they should live with the consequences of their choices. They argue, for instance, that people who choose to work hard to earn more income should not be required to subsidize those choosing more leisure and hence less income. The problem is, that people do not know their own natural endowments. However, they are able to buy insurance against being disadvantaged in the natural distribution of talents and they know that their payments will provide an insurance pool to compensate those people who are unlucky in the ‘natural lottery’. The theory looks, even for theorists, rather unpractical.

4. Welfare-Based Principles / Utilitarianism

Resources, equality, desert-claims, or liberty are only valuable in so far as they increase welfare, so that all distributive questions should be settled according to which distribution maximizes welfare. Historically, Utilitarians have used the term ‘utility’ rather than ‘welfare’ and utility has been defined variously as pleasure, happiness, or preference-satisfaction. Critics have argued that such interpersonal utility comparisons are impossible, even in theory, due to one or both of the following: (1) It is not possible to combine all the diverse goods into a single index of ‘utility’ which can measured for an individual; (2) Even if you could do the necessary weighing and combining of the goods to construct such an index for an individual, there is no conceptually adequate way of calibrating such a measure between individuals.

5. Desert-Based Principles

Another complaint against welfarism is that it ignores, and in fact cannot even make sense of, claims that people deserve certain economic benefits in light of their actions. The complaint is often motivated by the concern that various forms of welfarism treat people as mere containers for well-being, rather than purposeful beings, responsible for their actions and creative in their environments.

1. Contribution: People should be rewarded for their work activity according to the value of their contribution to the social product.
2. Effort: People should be rewarded according to the effort they expend in their work activity.
3. Compensation: People should be rewarded according to the costs they incur in their work activity.

Desert-based principles are rarely complete distributive principles. They usually are only designed to cover distribution among working adults, leaving basic welfare needs to be met by other principles.

It is interesting to note that under most welfare-based principles, it is also the case that people's level of economic benefits depend on factors beyond their control. However, for people's benefits to depend on factors beyond their control is a more awkward result for desert theorists who emphasize the responsibility of people in choosing to engage in more or less productive activities.

6. Libertarian Principles

Advocates of Libertarian distributive principles rarely see the market as a means to some desired pattern, since the principle(s) they advocate do not ostensibly propose a ‘pattern’ at all, but instead describe the sorts of acquisitions or exchanges which are themselves just. The market will be just, not as a means to some pattern, but insofar as the exchanges permitted in the market satisfy the conditions of just exchange described by the principles. For Libertarians, just outcomes are those arrived at by the separate just actions of individuals; a particular distributive pattern is not required for justice.

If the world were wholly just, the following inductive definition would exhaustively cover the subject of justice in holdings:

1. A person who acquires a holding in accordance with the principle of justice in acquisition is entitled to that holding.
2. A person who acquires a holding in accordance with the principle of justice in transfer, from someone else entitled to the holding, is entitled to the holding.
3. No one is entitled to a holding except by (repeated) applications of (a) and (b).

The complete principle of distributive justice would say simply that a distribution is just if everyone is entitled to the holdings they possess under the distribution.

The most common other route for trying to justify exclusive property rights has been to argue that they are required for the maximization of freedom and/or liberty or the minimization of violations of these. (Hayek) As an empirical claim though, this appears to be false. If we compare countries with less exclusionary property rights (e.g. more taxation) with countries with more exclusionary property regimes, we see no systematic advantage in freedoms/liberties enjoyed by people in the latter countries.

The challenge for these Libertarians is to show why only their favored liberties and freedoms are valuable, and not those which are weakened by a system of exclusive property rights.

7. Feminist Principles

1.1.3 The third major problem of global economy for the people is the neglect of political economy

"Productivity" e.g., the lighthouse of modern economy, represents a purely production oriented scale, hails the loss of working places and neglects its effect on political economy. In the traditional economy, especially in the field of agriculture, people produced what they needed to survive. The post-modern economy produces for the survival of its accumulation-oriented (capitalist) system. While in the first case people new what they produced and why, in the second case nobody really knows what has some value and what will remain of those strange products. The highest "values" are created by banks and the pharmaceutical industry. Restructuring means to create more of such - but forgets, that those are so highly productive exactly because they move mountains of gold with machines, not with people. In the graph: Top branches and top employers! on the right side, you see an analysis of the situation in Switzerland (2002). The hailed businesses as banking, chemicals and pharma seize a substantially higher part of profits, than their part is in employing people. Those fighting for jobs get mainly stuck in branches with a very low productivity as tourism (restaurants, service),  petty trade, construction work, textile manufactories and the like.

Those business leaders do not create jobs. They are running a very special economy, that does produce enough profits, to finance large efforts in PR (1/3 of the revenues of pharma industry) to explain to the people why they need those products. Here economy changed its duty from "supplying needed goods and services in an efficient way" to "needed sales of unneeded goods"

This world-machine is built by financial experts, without asking the people, if they want to live in this machine, without respect to the 80% that are no longer needed in that 20/80 society, in which 4 out of 5 persons just get the role of the 5th wheel at the cart ... quite often even without asking the stockholders. (s.  moderne Wirtschaft. > wise economy & Die Weltmaschine)

Globalization is the continuation of colonisation - by means of business administration.

1.1.4 The second major problem of globalization, a problem for the economy itself, is the loss of the right measure.

Where the world is the decisive scale, only monopolies remain at the local level. The sheer size of those companies makes sunk costs an insurmountable barrier for most smaller companies, a barrier that is most probably more difficult to overcome than taxes.

The loss of the right scale through globalization is enhanced by the potential it gives to companies, to rule the market through:

1.1.4.2 Economy of scale

With growing size, a company has a better chance to buy cheaper and sell at higher prices - and especially to organise its workflows more efficiently than a smaller company. Fixed costs can be distributed over more items produced and risks can be better distributed.

Moreover, the law of the economy of scale is not alone in favouring size. It is helped by the verdoorn law, stipulating a positive connection between the productivity level already reached and growth of productivity. This one as well works perfectly. The larger companies are able to attract larger parts of the production - what offers them additional potentials for rationalisation. And here we got precisely the reason, why the so called free market tends to monopolies - if not submitted to some political control.

1.1.4.2.Sunk costs

Definition SUNK COSTS:  Expenses that can't be recovered, based on a decision that caused them and can't be reversed, as e.g. expenses for PR or product research. Those may pose an entrance barrier to the market. Market participants have to draw level with their competitors. If their competitors are to big and too much in advance, such high costs of market entrance may occur - as sunk costs - that often this risk is enough to fend of competitors. 

Economics from A to Z

1.2 Futurology

Definition of Futurology: The study or prediction of future developments on the basis of existing conditions.

This approach is from my point of view rather queer and should not be run as any kind of .. ology (knowledge) because:

1. there are conditions that are the way they are and have to bee accepted - with an honest "inshallah"

2. there are conditions, especially all socio-economic and political conditions, that we are able to change.

3. Is the future determined? Are we able to detect it by means of science (…ology) – or are we free to decide upon our own future?

That means we have an interaction of:

• Politics: The art to make that what is needed and wanted possible. This is especially valid in what concerns public goods and services.

• Economics: Deliver it with the lowest possible effort and costs – for the needed quality.

• Science: Determine the hard rules of cause and effect relations and simple systems, the conditions that can't be changed as well as the conditions of how to change conditions.

• Art: Use imagination and creativity to create representations of the present state and problems – and potential solutions, future developments, ideas and phantasies.

• Philosophy: Integrate dispersed knowledge into a system of useful orientation.

Today futurology seems often determined by the capital markets needs: Did it deliver profits, will it deliver profits, how can the profits be enlarged. What might create more profits. The question here is most often: How to do business without interference of “other” interests, mostly the interest of the excluded, that means with the exclusion of politics.

1.3 Global Trade in Open Source as well as Public Goods and Services
 

The title is most probably a bit messed up. Open source is by definition free, so nobody would trade it. Meant is probably the influence of open source on trade, and the development of open source to commercial products. Public goods and services may be dealt with by trade, for the public, but as soon as they are public, there is no trade with them.

Basically we have to deal here with the problem of privatization (other would say: the chance of privatization) and private appropriation of benefits. In traditional societies many things were common, especially land, water, forests, rangeland, meadows, but in some societies even houses. Common properties do have some advantages, especially the one that no one can be excluded from its use, but some disadvantages as well, mainly that often nobody cares to take care of it. That is a serious dilemma, but there are luckily other solutions as well, not only privatization. 

The shari'a says that water, fire and land are free for all Muslims. Or: People share three things: water, pasture and fire. Hardin's well known concept of the tragedy of the commons is purely game-theoretical. The assumption is, that the different users do not communicate and do not know each other's intentions. That's wrong. It is obvious that each one wishes to use the maximum he can of "the commons". But each one knows as well that his neighbor has the same intention, and all know that the effects are destructive. As they are communicative, (sometimes) reasonable, they can get to a "convention" - if they want, if they agree.

http://www.brainworker.ch/reports/yemen/345PPLA.html

Ownership of forests is in most cases common. Privatization does not work at all as solution, as private forests are quickly converted into more productive farmland. The forests of South Yemen e.g. were under strong protection during the PDRY-time. The redistribution (privatization) of land after the unification lead to clearing (conversion into agriculture). The lack of government authority, combined with the lack of tribal rights for protection, was favoring the plundering of common lands.

Fazit:

Common use of common lands needs common care!

The privatization of the other traditionally common resources: land and range, had some advantage: An economically more efficient use. But parallel with it went the disadvantage, the use of a kind of form-calculus would have shown: The excluded landless are excluded from earning their bread.

At present even the privatization of water is on the run. Peter Brabeck of Nestlé said: It's an extreme position to claim, that each human being has automatically the right to water. Well, that says everything. If people might be denied their right on water, that means, they can be denied their right of existence. With this "extreme position" capitalism crossed definitely the last border between economy and war between the haves and havenots..

Nowadays most people earn bread without any dependency on landownership, but nowadays nobody is able to earn his bread, if he or she does not have sufficient credentials in training, means knowledge: no knowledge (or worse: not the demanded knowledge) - no job!

The production of public goods (or its trade) have to be done by institutions that work for the community, in the interest of the community. Political deals are not to be replaced by trade, precisely because private business and trade have to be done efficiently, and politics have to be done convincingly, what means, they have to be done wit the due speed, what means: slowly, because:

• Politics is a process, not a consumer good
• Politics means steering
• Politics means respecting and setting values
• Politics is balance of power
• Politics produces norms, not consumer goods
• Politics distributes resources ... in an other way than economics, in a democratic way, that looks more and more opposed to the economy of power.
• Politics is no self service

2 The periphery in the center - the periphery at the border of Europe

Especially in the Middle East we encounter top and bottom in close neighbourhood:

There are 3 ways to deal with the western influence:

1. assimilation: adaptation to external influence, seen as exemplary, as model to be followed

2. antagonism: fight foreign influence with own ideology

3. transformation: adaptation of external ideas to own social, cultural, political and economic conditions with own dynamic. Development of an own system that is able to develop freely, instead of giving in to external pressures (market pressures as well as political or financial pressures).

http://www.economist.com/displaystory.cfm?story_id=1213392 [GEM: Gender empowerment measure]

Global market offers and demands, spreading fast through new communication- and information systems, confronted the often closed national systems and the local local and regional cultures with new "values", tastes and desires for consumption (later on to be called "needs"). The hegemonial power USA and many international organizations, quite often as well under the (financial) control of the USA, get engaged with their local bureaucracies in local regional systems, controlling their finances, adapting their economic structures, controlling their arms, and trying to democratize their political system. The old canon boat diplomacy continues. Globalization is the new canon boat diplomacy that rules since centuries, starting with the christianisation of pagans, continuing with the cultivation of "uncivilized" nations and bombing to dust "rogue states" at present, even considering the use of nuclear bombs.

This approach leads only to one result, to resistance: Almost all regimes in the Orient react defensively on globalization.  In all political systems the resistance is rising. Its not only based on fundamentalists, but embraces the well trained middle class, academics, tradesmen, people that migrated from the countryside to towns and expect an improvement of their economic and social conditions. In short: All people that see their chances for a socioeconomic upward movement blocked. The resistance gets all the harder, the harder the hegemons try to impose the rule of global economic, political and cultural structures. The only strata developing an own new culture are the Islamists. e.g. Islamic banking and investment. This development will only get a chance, when hegemonial transfer of culture is stopped.

On the other side, imperial spirit is flourishing as well in many of those nations. Panarabism, Bathism, Nasserism imposed provincial, paternalistic, patrimonial regimes and eliminated parliamentary structures, middle class and private business connections (with the exception of the favored "friends", from where stems the expression heard in Iraq: amigo-economy. [While that expression seems to fit as well to the environment of Bush ...]). Political elites in many parts of Asia think rather in terms of power than of economy. The best example is Saddam. From the first year he came to power, he tried to make himself a hero, leader of heroes, and neglected, not totally but, especially what concerns research and education and the economic development. All those regimes stabilize their grip on the power by distribution of "favors", be it material resources, jobs, or even freedom (to publish, to travel, to criticize ...). Those complex settings make it difficult for business to develop, if not included in the amigo-system (s. former Shah of Iran).

s. DER BÜRGER IM STAAT 53. Jahrgang Heft 2/3 2003: http://www.lpb.bwue.de/aktuell/bis/2_3_03/IslamundGlobalisierung.pdf

3 The new "far-away centers"

http://www.fco.gov.uk/Files/kfile/European_Cities_Monitor_2005_FINAL.pdf

The favourites of industrialized nations are China, India and the "Tiger States", while most Islamic countries get labelled as terrorist harbours, too risky, or even as "rogue states", while rural areas in most countries are just left out or kept as quiet workforce reserve.

In the table: Leading exporters and importers in world merchandise trade (excluding intra-EU trade), 2003 (Billion dollars and percentage) we see the reason for such differing interests. The perspective of a threatening, as well of an "all the problems of overproduction-solving"  China is slightly queer. Its not China, that produces most exports, its EU, USA and Japan, each with about a fifth of Chinas population! If we look a exports of single countries the thing gets even more strange. Germany on place 1 exported in 2004 for  915 Billion $, followed by the USA (819), China (593), Japan (566), France (451), Netherlands (359), Italy (346), GB (346), Canada (322) and Belgium (309).

But the most important fact is, that China is not only exporting large masses of goods, but imports for the same amount, while Switzerland and Europe export much more than they import - an imbalance only corrected by the USA, that overtake the "cumbersome" consumption for Europe.

http://www.wto.org/english/news_e/pres04_e/pr373_e.htm

Suffering from China's success is so primarily Germany, being obviously the strongest competitor of China on the world market. Seeing that fact, we should ask ourselves, if competition is really the right way, or even the right word, to solve present problems. Competition tries to beat others, to produce cheaper, faster, better things; to be bigger, richer, stronger, more respected. Is it reasonable, that a country with a population of some 80 millions exports more than a country with 1.1 billion people? That makes it doubtful, that exports may save any national economy. The conclusions to be taken might rather be:

1. Economy has to be developed from inside, from the bottom, out of the local market's needs.
2. Germany and the other export-minded economies would do well to check, what is really needed in China, what demands are really the demands of the Chinese people, what development aims does China have. This would rather call for some cooperation with China, not for a destructive competition on markets for the highest export quote, but for mutually beneficial cooperation. The right question would rather be: What can Germany, or Switzerland, or Holland or whoever do to help China in a sustainable and social development, instead of: how can we beat China and get a profit out of it, forcing our workers to work harder than the Chinese and probably sooner or later for even less money and social rights.
3. Even the world market can't swallow it, if everyone just produces as much as he can.

4.    Crisis or problem = (sometimes) a chance. But each unsolved problem a lurking risk.

Lots of problems do not only in Chinese language mean lots of chances as well. Most problems tend to impose themselves in such a stubborn way, that solutions will have to be found sooner or later. That means for economy: Each problem will not only need a political, but sooner or later as well a (more or less) economic solution.

The fast development of Asia, everywhere, be it the booming exports in China, the revival of the tiger states – or the creation of free markets (after some time, inshallah) in Russia, be it the democratization of central Asia, be it the move to a knowledge economy, all that creates enormous problems, problems that have to be solved. Most solutions will have to be solved economically, that means, all those problems are chances at the same time:

While the first 5 points are easy to understand and can be implemented by business deals without much comments of philosophers, the next 3 points might need some explanation. The table in the table [from http://rael.berkeley.edu/eolss.pdf gives you a hint from an other perspective, that the "green business" might not be us much outdated, as one might expect]:

4.1 Wood imports to China

The first problem is the price, the famous so called "world market price". Let's explain why with an example:

• Only 10% of world grain is sold on world markets, but this price determined by the world market determines the price local farmers get for their local sales.

• The world-market-price of wheat e.g. and other grains is largely determined by US-supplies, even as those only raise to 5.1% of the total.

• The problem is not only, that this grain is subsidized, but as well that US-Producers have most advantageous conditions in what concerns size of farms and potential for mechanization.

So their low price lowers the margin for all producers worldwide. Swiss farmers, many of them in mountaineous areas that renders mechanization difficult, are, due to natural conditions, not able to mechanize to the same degree - why those farms since long time are much smaller, what poses additional problems, problems we might call the "un-economy of low scale".

Now, a similar problem, slightly worse, happens with the forests, that means their main product: wood. The world market prize is set by New Sealand and Scandinavia. Countries that never sell to those and do not have the slightest relation with them still have to sell at the same low price, independent of conditions of production and costs - or they have to halt the management of their forests. Even worse is the influence of illegal, semilegal and even legal, but just destructive harvests, as done on a very large scale e.g. in Tasmania. Old growth forests are loved by harvesting companies, as they only have to pay the price for harvest, nothing for the efforts to bring the forest up to that stage to be harvestable, often even nothing or a minimum for replantation. The costs of 12 to 15 $ for a ton of wood chips (often even less) represents nothing but costs of plundering, but is set as "world market price". Whoever needs to take care his forest, what consists some money, is driven out of the market. This world market price ruins the so called "cost truth".

At the time being, China is still profiting from those plundering prices, even more so what concerns smuggled wood from illegal cuts in Siberia's natural forests. The exports from Russia to China rose for 40% between 1973 and 1993, and are still on the rise. The imports from Russia increased from 1995 with 360'000 to 5.0 Million m³.This all the more as China restricts wood cuts in watershed zones, as the heavy inundations of 1998 are largely an effect of forest clearings. So China rose imports from Malaysia, Papua New Guinea, Gaboon, and Burma from 4 to 15 Million m³ - and expects a wood deficit of 200 Million m³ in 2020

Percentage of Russian Logs to Total Logs Import into China [By Professor Wenming Lu, the Chinese Academy of Forestry]

The border between China and Russia extends approximately 4,000 kilometres, from the south western Primorski Region in the Russian Far East to the Chita and Altai Regions in eastern Siberia. Along this expanse, dozens of border crossings allow the export of logs to China by rail and truck (please see map). According to local observers, there is little monitoring or legal overview of this timber trade. Indeed, some Chinese companies have moved beyond merely trading to investing directly in logging operations in the S-RFE regions. Such pressure is not limited to areas bordering directly on China, but extends westward along the Mongolian border through Southern Siberia and even to Kazakhstan. Over the last years, the Russian-Mongolian gateway Naushki - Suche-Baatar in the Buryat Republic has become one of three major points for timber flows from S-RFE to China, crossing Mongolia and finally entering China in Erlianhot in the province of Inner Mongolia. Officials in Siberia’s Altai Republic recently concluded a deal with China to barter Russian timber for Chinese cotton, and they are considering leasing additional forests to Chinese logging operations. A proposed road to facilitate this exchange would open huge areas of pristine wilderness to timber operations and other forms of resource extraction. With China’s growing hunger for timber and Russia’s lack of effective control over logging practices, such investment will lead to large-scale forest degradation.

http://www.forestsmonitor.org/reports/russia/twe3.htm

Even what concerns agricultural goods, the own supplies are not sufficient, even what concerns rice. While 20% of the world-population is Chinese, only 7% of the worldwide arable land is in China. Moreover the local prices for agricultural goods are well above the international market prices. That means, that with the inclusion of China in the wto the prices for agricultural goods will rise.

Pollution of the agricultural environment is becoming increasingly serious. Over 20 million hectares of cultivated lands, or about 1/5 of the total farmland, have been contaminated to some extent. Land degradation is a serious problem and severe natural disasters are common. Moreover, do not forget, that China is a) continental and b) situated in the subtropical high pression zone of the capricorn. Well, more simply: Half of China, its West and Northwest,  is desert or  dry prarie.

4.2 Unemployment and Education

In spite of large flows of petro-dollars, the shape of many societies in the "central periphery" is dire (especially for those not making part of the "amigo-system"). Population-growth is still booming with some 3.5% (Yemen 7%) - but proper education is lacking. Often schools are lacking, if schools are there teachers are lacking, if teachers are there, schoolbooks are lacking, if schoolbooks are there, they are either out of time, useless and/or their content is just learned by heart, but rarely understood (a problem not really limited to Islamic countries ....). The investment in those fields is with 0.4% of the BIP very much lower than the 3% of industrialised nations. The question is probably a hen and eg one, but it is for shure, that without qualifying education the enormously high unemployment rate of Arab states (15-40%) has no chance of disappearing. A special problem poses here the education of girls and women.

One major reason is seen in the free distribution of rents. Money is made by the government without much effort (sell petrol), so many citicens may think: Why do I have to get tired? The idea, hailed by the west in many conventions, that each human being has the right to exist, independent of the fact, if he is lucky to be economically productive or not, is much more widespread in the heads of the Arabs than in the West. That what happens here every day, every hour, every minute, that people are declared useless, dismissed, and loose their income and existence, is straight away not acceptable for the arab mentality. Economists see that as a problem - but who knows, may be the future will see our economists as the problem.

The example "unemployment" allows to demonstrate the sometimes cynical meaning of “risk=chance”. Unemployment is a risk for the financing governments and the hit people, but a chance for business, as it drives wages down and keeps mobility high. Moreover it is always a chance for job-consultants and social workers.

The example shows as well, that often we are much better in solving the problems of others than in solving our own problems. In spite the slightly cynical undertone, that is true and most probably one of the driving factors of specialization and so of markets.

Into the same field belongs probably copyright. The idea in most Arab countries nowadays is: What's free, take it! There is not the slightest respect for copyright. That will change automatically, when Arabs themselves develop programmes  or try to live from abstract products that are easily copied. The same is true for Russia and China. From our point of view it may look disastrous, but remember: Many international corporations, today at the top, started by using exactly this chance, to copy, without respecting "foreign" patent laws  (s. history of Ciba and Geigy, today Novartis), to grow and usurp the power. Can we honestly deny the same chance today for 3.rd world nations?

5. A wiser economy will be needed, if the world is to survive

If you like it or not, Marx was right in an other aspect of his analysis. The kind of economy we are running produces excess quantities, not only in money, but especially in goods and services. That drives prices down, until only those survive, that are able to survive with the remaining marginal profits. China pays us now back in hard currency, what we did to developing nations before.

The national average GDP/head (excluding Hong Kong and Macau) was $735 at 1998 prices, which makes China somewhat poorer than Indonesia. That average, though, conceals great regional inequalities. The poorest province, Guizhou, has a GDP per head of $280, on a par with Bangladesh or Yemen. Sichuan, with a figure of $525, is level with Pakistan. Meanwhile, Shanghai’s residents, at $3,400, are up there with Turkey or South Africa. Now bring in Hong Kong, which at $22,990 has a higher per-head income than Britain, its former master. The dozing commuter on the Star Ferry is likely to be 90 times wealthier than the vegetable-seller in Guizhou.

The solutions presented nowadays are all solutions that make business and trade more a discipline of  warfare than of constructive development. Europe and the USA use up large parts of existing resources, especially petrol resources. If you look again at the graph used for the introduction ... now imagine, that China is not only relatively big there as it is already because of its enormeous population, but imagine, that the average income doubles or triples, what makes that balloon double or triple - and you can imagine what that means in economic power as well as in use of natural resources, energy, pollution, global warming etc. Then take India, multiply its "economic size" six times ... and the disaster is a total one.

India and China do not only have the potential to dwarf the US + the European + the Japanese economy, they do have at first hand the potential, to dwarf any problems, our growth-dependend economy created so far.

http://www.economist.com/surveys/displayStory.cfm?story_id=299588

Average income (gdp) in China 2005: 6300 $, but raising very fast, even if not in all provinces and all economic branches ....

1 Chinese yuan (Renminbi, Rmb) US$ = 0.124733 U.S. Dollars

GDP/head in India 2005: 3400.- $

Now if we compare Chinas GDP/Head with those reached in other parts of the world, especially in the "leading" countries, we see that an adaptation of China to that level does not only ask for doubling or tripling Chinas economic output, but  even for a quadrupling.

That means that China is not only an economic problem for us, China is a problem for the health of the globe, if we do not succeed to find a more sustainable way of doing business, a way adapted to the carrying capacity of the globe.

2005 the peoples congress formulated as law that China, until 2020, has to produce 15% of its energy as clean energy (water, solar, termal, wind etc.) Allready for this endeavour some 185 billion $ have to be invested. For all those business people constantly opposing laws it has to be clear: Without such laws - no such business!

From donkey-economics to a wise economy

We have seen now, from different perspectives, that globalization is not as global as it sounds, but leaves many problems unsolved, tries to solve many problems in ways that only raise resistance. Indifferent if global or local economy, an economy deserving that name can't be based on exclusive systems, be it exclusion by Pareto or by the economic power of size and financial hurdles. Economy is derived from the Greek and means literally: "the order of the house, the norms of the house". In the last decades many queer economies came up, from economies that kick the people out of the house (restructuring) to economies that sell the house (stock markets) and economies that tell others, how their house should look like (IMF).

The problem is, that a lot of money can be made even with that kind of donkey-economics. But that kind of donkey-economics excludes people, that means it denies many people the right of existence.

For a working economy, with international exchange, but without exclusion and without colonialism through economic power, we would need something as System Serving Economy or a Constructive Economy with a tripple-r-rating:

Revenues gained with Respect and Responsibility

Respect towards nature and society and individual human beings,

Responsibility for intended and not intended influence of economic activities on joined systems (job market, housing market, health, …).

If you want to do business with Asia, be it India, China, Japan, be it the Near and Middle East, you need a good background knowledge on how things work, how things are seen, there where you are going to.

If you develop your system until it fits those customers, you get lost - if  you don't, they are lost. That’s the reason, why economy, as well as culture and politics, consists of an incredible variety of subsystems, that interact, but don’t converge. And each loss in variability, imposed through the economy of power and size ("Mc Donald Economy",  might be a gain for one supplier, but a loss for the whole economy.

Some critical questions to economists:

Why is business always thinking about buying cheap and selling expensive (rhetorical question ...).

Would it be too idealistic to imagine an economy that tries to keep the world running, to integrate all people and to maintain the natural environment?

What about thinking of a "product", whose focus is interesting jobs and incomes ... and a useful output - instead of only maximising revenues?

What about understanding leadership not as "beating" those with lower profit margins and ruining them, but to see economic leadership as understanding and fulfillment of necessary functions?

The neoliberal drive of the last 15 years leaves more and more ruined infrastructure, bleak future outlook for lower IQs (as well as for the higher ones ...), devastated landscapes and politics without funds to guarantee a minimum of redistributive justice behind.

Any company that would deliver models for a wise economy to stricken areas would be more than welcome by the whole population - and not just by the profiteers and corrupt politicians you have been able to convince (or to bribe), that the investment is positive for their carreer.

A wise economy needs, additional to the economically well organised production and marketing cycles, to care for the structures it depends upon. Leadership in sustainable development would have to be based not on biased global market prices, but on global integration of local  local knowledge, local needs and local decisions (politics). That means that:

a wise economy has to be an integration of differing local auto-poetic development strings, not the imposition of a global model, any global model.

Here resides an other the major problem of globalization, besides of its imposition of the wrong scale of economic enterprises: Global actors may choose which probems they want to solve and where they want to do that - communities have to solve all social, economic and polititical problems on the spot where they are, unable of selecting wanted (profitable) problems and deselect unwanted problems (unemployment resulting from restructuring).

Global trade leadership will have to be a culture. That means: It has to take care of its effects, it needs systemic knowledge, focused on the maintenance of primarily local (sociocultural) systems.

The main target of a wise economy would be:

Use as little natural resources, create as much social and cultural resources as possible.

And (Herzog's postulates on the surplus economy):

1. If at any rate we (have to) produce and consume too much, then:

1. We should not spoil limited and ireplaceable resources.
2. Production should be as interesting and entertaining and educative as consumption, because work is (still) much better distributed than the potential for consumption. (= Axiom of the priority of GOOD WORK. s. german original)
3. Humans working in production should enjoy at least the same range of freedom as companies, corporations, trade in goods, service and especially money.

1. Axiom of freedom in the surplus society:

The first foundation of freedom is a secured existence.

Herzog's 2. Postulate on surplus economy:

If it does not matter, which kind of "overproduction" we deliver, we might as well produce meaningful surplus, especially the care for and cultivation of nature, family and society.

Herzog's 3. Postulate on surplus economy:

As our current way of doing business, our current understanding of economy, produces superfluity and superfluous values, we might do better and spend some efforts in cultivating ethical values, so, that economy will deserve its name again and create "order in and of the house" instead of gambling with destinies of people, regions and countries.

[s. (post-)modern economics (german original)]

Martin Herzog, Basel, 14 April 2006

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p.s: My final comments at the meeting:

My advice in dealing with uncertainty and unpredictability (= risk)  is:

Don't take any advice ... that sounds like:

• You have to!

• You should not!

If you need advice, don't accept more than: you might try, there is some potential in ..

think yourself

What concerns advisors, don't take philosophers more serious than scientists, scientist not  more serious than politicians and economists - as none of them is specialist for YOUR business and YOUR destiny.

But - take the first recommendation of systems research serious:

Each subsystem should enjoy as many degrees of freedom as possible.

Security, avoidance of risks, asks for the opposite, for security, clear lines of development. But life is always a bit chaotic and the future has always been unpredictable and still is. So we have to be ready for unforeseen developments, and we need sufficient space/freedom to be able to change the current directions.

It does not help at all, if you blame others, the government e.g. Without binding governmental rules the whole business of environmental protection would not be possible, health care would be disastrous for most, the turnaround most probably a very small part of what it is today. To put all the blame for any lack of freedom on the government is totally ignoring the fact, that this is by far not anymore true, since the 19th century stopped most dictatorial rules of governments and developed democratic approaches (with some tough fascist resistance ...). But fact is, that from Monday to Friday, from 8 to 17, from January to December, each employee has to follow the rules of his company. Taxes you pay once a year - your reference to the lords of your company you have to pay it every day. They tell you how you have to behave, what your should think, what you are allowed to say. They pay you the minimal wage they can get you for - and blame the others, the government, for taking it away from them and you through taxes.

The first question, in presence of a perceived lack of freedom, is: Do I really have to?

Don't loose your dreams because of a dire economic or political reality, but put your dreams from time to time up for a check. The only thing you risk that way is to loose is an illusion - the other way round would be worse, as you risk to loose your relation with reality. Especially important, and mostly forgotten in discussions, is not really the question, who takes the risk, but: who creates risk, who sacks in the profits, who pays for the damages.

Take your own risks - not the risks imposed on you by others!

The meeting brought a lot of interesting input, many contradictions and little synthesis. So was the main insight of the group: trade - Asian leadership on Wednesday:

India and China are not only risks, the will not only export cheap goods and services - but they are at the same time huge news markets for our exports.

While on Thursday it got clear, that:

•  Ships from China to Europe and USA are full, the opposite way empty. The costs for a container from China is between 800 and 1400 $, to China half of that. And still there are large areas excluded from those lucrative potential.

  As example Soeren Jacobsen mentioned the apple producers of Georgia. The price they have to pay to bring their apples, or apple juice, to the port, is almost higher than the world market price for those "commodities". That means that all land-regions are heavily discriminated in the world trade.

Not only here, but in the whole discussion about Chinas influence on the world market, the complementary and in each economy necessary second part of trade, the flow of money, has been totally neglected. It is well known, that China buys a lot of dollars and has enormous stocks of foreign currency, a) not to have to Dollar dropping too low, what would make exports more difficult, b) to secure its own rather shaky banking system. That means that Chinese workers paid so far, by credit, for the war in Iraq, as well as for over consumption in the USA.

But this was only half the truth. In the meantime I found out, thanks to the great works of Sheffield University's world mapper [http://www.sasi.group.shef.ac.uk/worldmapper/index.html[, that there is an important flow of money from China to the USA, but for "immaterial goods".

Royalties and fees exports: USA 22.5 billions - the same amount, China exports in the form of toys.	Royalties and fees imports: East Asia 6.6 billions (China 3) / Ireland 10 billions

We see that the bulk of royalties and fees goes to the USA, much smaller shares to Europe, petrol-rich states in the Near and Middle East and Japan. We see as well, that Europe, especially Ireland, is paying most of those US-profits -but also the country famous for intense copying.. So, given the still very low income levels in China and Korea - compared with the enormeous costs of licences and fees ... it gets more understandable, why cunning strategies (german text)  is sometimes used to save some money ...

Recommendation for the presentation of results:

To really get a clear overview, we should not be content with the few glimpses we got here in those few days. All participants just got a partial, so lopsided  insight, as there have been 5 knowledge streams and 5 interdisciplinary streams, and I did not meet one, who really had an overview. To really use all that knowledge presented in such a meeting efficiently, I think that my proposal on web-philosophy would be a valid solution: present all contributions in a multilevel-multicompartment - but one world - design.