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2.3-4: Sociology & Politics

next chapter: 3 Orientation & Steering

 

2.5 Specific Principles at the Economic Level.

 

2.5.0 Definitions

Def. Political Economy: The totality of the economic cooperation of all private and public economic subjects inside the economic area [being identical with the state's area]. Political Economy is not only the sum of its parts (economic subjects and single economies), but gets its peculiar feature, that differentiates it from other P.E. through the governmental economic policy and the given systems of law- and society as well as the natural endowment of the economic sphere and more. [Meyers grosses Taschenlexikon].

On those basic principles economics builds its theoretical frame: "The oldest and most commonly held argument is that economics must necessarily be a theoretical science because every economic phenomenon follows logically from a handful of elementary principles. The idea goes back to the classical school, which taught that all economic phenomena are grounded in "the desire for wealth" which characterizes any "sane individual" and are governed by only two general laws. The first is that "a great gain is preferred to a smaller"; the second is the propensity to obtain "the greatest quantity of wealth with the least labour and self-denial." [Georgescu-Roegen p. 323: uba]

That the generalisation of such principles leads to problems is expressed by the term "economism": [Greek] The term for social scientific theories and a political practical orientation, after which the economic causal factors alone or above all determine the development of society and the construction of social systems of order and personal motivation. [Meyers grosses Taschenlexikon].

After Schumpeter a theory is just "a box of analytical tools" [Piper p. 322:].

After Keynes [ibid fn 89:] "the objective of [economic] analysis is not to provide a machine, or method of blind manipulation, ... but to provide ourselves with an organized and orderly method of thinking our particular problems."

For Georgescu-Roegen himself, "... theory means a logical filing of all extant knowledge in some particular domain such that every known proposition be either contained in the logical foundation or deducible from it." And "... the scope of economics is confined to the study of how given means are applied to satisfy given ends." [ibid p. 318:] After him there are two additional aims of economics, namely to to improve qualitatively the existing means, and to increase the personal share. The second one is definitely a political one, as it contains the problem of equal and just distribution, a problem economics prefers to avoid. The difficult dialogue between politics and economics is not a result of the newest development of world trade and world market, but as old as the terms themselves.

For Aristotle (384-322 bC) oikonomia was, in an embracing sense, a social, even a moral science. [ibid p. 320:] [No wonder that the father of the modern ecological concept of "internalisation of external costs", Arthur Cecil Pigou (1877-1959), studied history and moral sciences - of what economy was a part that time!]

For Adam Smith (1723-1790) [ibid p. 29:] economics is a theory of ethical feelings. For him the source of wealth was productive human work, neither trade [mercantilists], nor nature, [physiocrats]. The national wealth is a product of the diligence and the skills of the workers. While he deplored their fate, having to share the product of their work with the landlords and the capitalists, he still saw "no need for a mighty institution that rules and controls with an iron fist the human passions." "If all systems of favorisation and limitation are removed, a clear and simple system of natural freedom will establish itself. As long as the individual does not infringe against the laws of justice, he is being given complete freedom, to follow his interest in a way appropriate for him." [ibid p. 30:] The sovereign has to dispose of all duties "for whose appropriate fulfilment no human wisdom and now knowledge would ever be sufficient" - the planning and steering of production. The market solves that much better, and competition is at the same time a mean to limit individual power." [after ibid p. 34:]

But even Smith's opinion on the aspiring class of the money, trade and industrial capitalists is ambivalent. On one side he sees them as the driving forces of progress. On the other side he is warning of their selfishness. The legislator should not listen too much to them. Their proposals are coming from a group of people, whose interest never coincides completely with the public interest and that, in general, are trying to disappoint the general public. [ibid p. 31]

Critical are his remarks on human behaviour as well for planning. "People are in his eyes absolutely incapable to act rationally. Instincts and institutions are guiding the human action, create persistent conflicts, that logically the stronger decides in his favour." [ibid p. 220:]

Sombart detects the cultural base of capitalism not in the Calvinistic moral of work-save-and-invest, but in the development of the courteous love. The need to maintain a second wife (courtesan), to represent a high living standard (villas, furniture, clothes, exotic food/spices ...), was for him the cradle of capitalism. "In such a way luxury, itself ... a legitimate child of illegitimate love, created capitalism." [ibid p. 194:]

In fact we see already two possible foundations of capitalism, either greed and envy (the curtailment of love and social relations), leading to accumulation of goods; or the free love and the wish for splendour. Bot, after Veblen, raise the elementary competition, the drive to outdo the others. ibid p. 86: ]

Gunnar Myrdal (1898-1987) proofed that the laisser-faire principle leads to an unstable order, to cumulative growth or decay. In spite of this, the "stable equilibrium" has become something like a general thought form. Instead of staying an arbitrary theoretical tool, it is loaded with teleological orientation and hidden values. It is dictating national policies! While "economic theory is only a segment of the total culture." [Myrdal (1957) p. 159:].] "Concrete problems are never simply economical, sociological, psychological, or political. A theory of under-development and development which works only with "economic" variables is for logical reasons doomed to be unrealistic and thus irrelevant." [ibid p. 162:]

Paul Anthony Samuelson (1915 -) developed the neoclassical tools at the Chicago School: the maximum of welfare is generated on free markets without governmental regulations. His description of economics show the limits of science: "Economics is as well art as science, as the behaviour of people and institutions are constantly changing - our theories have to change with them." [Piper p. 253: ].

John Kenneth Galbraith (1908-) accepted, that the functionality of the market is limited and said that "one cannot squeeze economy into a single theory." [ibid p. 274:]

Kalecki (1899-1970) found, that capitalism is based on demand, that demand (= spending) creates income. For him the theoretical system was as well difficult to formulate and he exclaimed, that "the development of the theory of science looks like a fashion show". [ibid p. 168:]

For modern economists, especially those concerned with environment and the limits of growth (Hawken e.g.), the "base" and the whole system of economics "does not work". Competition, the pleasure to win, to beat the opponent, to prove ourselves - is an endless strive. The meaning and the objective of life is not only to earn money, it is not only a system of producing and selling. Hawken, as many other before, is very critical in what concerns distribution of wealth, as it "agglutinates" there, where stocks of it are already present, in rich families, towns, large (international) enterprises. International competition favours those companies that are best in avoiding to pay for environmental and social costs. For him, as for most environmentalists and ethically oriented people, not only the present, the social, distribution of wealth is a problem, but the fact that we are using up the wealth of future generations: "The explosion of trade made metropolis, ruling families, mighty governments and an elite of joint-stock companies rich. That resulted almost automatically in a culture, dominated by economy, that is ruled by the conviction, that all social and material injustice can be overcome by development, inventions, large finances and growth, always more growth." [Hawken p. 21:] "No empire - not the Greek, the Roman, the Byzantine, the British or any other - ever had that reach of the modern, globally acting joint-stock company, that can, searching for export markets, finances and profits, transgress borders, cultures and governments without difficulty." "I got to the conviction, that we Americans and the other industrialised western world do not know, what economy means and what it could be. Our knowledge ... concerning the question, what will lead to a healthy economy and what role economy should have in the whole of the society - is on a primitive level." [ibid p. 15:]

The toughest critics of "sustainable growth" (not sustainable development!) and the mechanistic concepts of economics have been published by the economist Georgescu-Roegen (1906-1994): "No other science illustrates better than economics the impact of the enthusiasm for mechanistic epistemology upon its evolution. Does the transforming of economics into "physico-mathematical science" require a measure of utility which escapes us? "Eh bien!" - exclaimed Walras characteristically- "this difficulty is not insurmountable. Let us suppose that this measure exists, and we shall be able to give an exact and mathematical account" of the influence of utility on prices, etc. ... [Georgescu-Roegen p. 40:].

Trials to develop economy in an orderly, reliable manner, have not been limited to socialism. Planning for the future, one's own, one's children's future, is surely quite a common human wish. Wesley C. Mitchell (1874-1948), an American economist (!), said that "In the life of a nation planning plays the role that thinking plays in individual life." [ibid p. 188:]

His thesis is, that a value-free economical theory is not possible! But to reach aims as equality and justice, topics evicted by "escapism in economic theory", economics can't do without politics: "In the sphere of production natural laws reigned, and policy interferences would only hamper production; distribution of incomes and wealth, on the other hand, was the sphere for policy where the equality doctrine had its legitimate space of validity." [ibid p. 114-5:] For him the existing economic theories have not been "found" or "developed" for the good of mankind - but for the good of specific economies:" ... it would be difficult to find a single case where English classical economists actually recommended that Britain should make a sacrifice for the welfare of the rest of the world. When, for instance, they recommended free trade as a general policy, it was not on the ground that free trade would be to the good of the world but because it would be in the interest of their own country.

The important point I want to stress is that the English classical economist, when tackling international economic problems, did not set as their highest moral and political notion directing their analysis the welfare of mankind, but rather the welfare of the British nation." [ibid p. 146:].

Marshall had put forward a similar critique towards economists, for having worked out their "theories on the tacit supposition tat the world was made up of city men". [Georgescu-Roegen p. 325:]

As communism and socialism failed, capitalism and world trade are nowadays the dominant ideologies. The idea, that a competitive, profit-oriented economy without limits and rules will be the best for development, had to establish itself over the time. What is easily forgotten by its prophets, is the fact, that it did not proof successful under all circumstances, for all cultures and nations. It is the ideology of developed countries. Even here it was often criticised, as it excludes more much more than it contains and explains, when made a world-system, a world view, an ideology: "Modern bourgeoisie grew up with the imagination of a true arrangement of the world with unlimited progress." [Karl Jaspers p. 480:] This ideology excludes first of all the fact, that nature is setting limits to development, that nothing like "sustainable growth" is possible. Eder sees the origin of that problem in the Protestant ethics: "Starting point of those considerations is the assumption, that the culture, determining our dealing with nature, is molded by the spirit of Protestantism. The rationality of this Protestant spirit determines as well our ecological reason. What counts for this spirit is the usefulness of nature. The symbolic meanings that we associate with nature lose their magic." [Eder p. 10:]

In the developed countries economy has taken the whelm from politics. "Integrated production processes account for the largest percentage of social action" [Wilkinson ] - that is what makes it the dominant factor of holosocial evolution, and that's what should make it the major target of science and development. To make the strive for personal profits and welfare the base of social development ... can't work, what most economists, even the most crooked neoliberals, new and admitted. As well it was known to most of them, that economics do not care for natural, geographical, historical and socio-cultural limits - that market economy is not oriented towards justice or equality. On the following pages the historical conditions that led to the development of the market-economy in the west will be compared with the facts, that hindered the same development in the east, especially in Yemen.

For the analysis and characterisation of world-systems there are mainly two approaches [At present the best database and discussion forum on the historical development of economic systems can be found on the internet ("http://csf.colorado.edu/wsystems/)]:

Wallerstein uses a dialectical-historical approach. For him there are mainly two types of world-empires, either they are political and under central rule, or they are world-economies, without central rule. World-Empires were Persia, Egypt, Byzantium, Rome, China, the Turco-Muslim World, the Ottoman and Russian. "A world economy is an economy with many cultures, but without an encompassing state. Therefore the economy's processes are linked through a "market", rather than through a redistributive state [ibid. p. 35: (PWE 13, 15; TMWS1 15)]. "There have been world-economies prior to the modern capitalist global world-economy. They were however highly unstable structures, very fragile, with life spans probably less than a century." [:Indian Ocean, small city states in northern Italy, Flanders and North Germany - the predecessors of the world empires of Egypt, China, Persia, Rome, Byzantium]. [ibid p. 37 & (TMWS1 348, CWE 160. Wallerstein's analytical tool is the differentiation into core states and periphery. Core states have complex political structures, superior technology and are able to control production, transportation and communication, while periphery states have weak political organisations and an economy largely based on natural resources. Core states are so exploiting labour and material resources at the periphery and receive a disproportionally large share of surplus. The system develops into a hegemony - and their would be a political need to reduce polarization. The role of policy can't be replaced by economics. Wallerstein sees an end of capitalism through structural crisis and the creation of a (socialist) world government (what by some critics call "wishful thinking").

What has occurred in each historic instance of hegemony was that "enterprises domiciled in the given power in question achieved their edge first in agro-industrial production, then in commerce, and then in finance. ... Marked superiority in agro-industrial productive efficiency leads to dominance of the spheres of commercial distribution of world trade ... Commercial primacy leads in turn to control of the financial sectors of banking ... and of investment ... [Wilkinson p. 54:]

If we look back in history, each of the following new instruments in dealing with the environment, each new skill was a major step in development. Stone knives, pottery (allowing storage and cooking - especially important in combination with the domestication of cereals, animals, and fruits), metallurgy (copper, bronze, iron), the wheel .... Each of those early inventions brought with it a large increase of instrumental powers, and each of those innovations demanded new skills. Here we find, already in ancient times, the origin of specialisation. A second step was the development of techniques that make other energies than human work-force available. Georgescu-Roegen called this development of instrumental powers "exosomatic evolution". But for him this evolution was never independent from its natural and socio-cultural environment: "exosomatic evolution worked its way through the cultural tradition, not only through technological knowledge." [Georgescu-Roegen p. 19]. Or, with the words of Rodinson: "Ideologies don't fall from the sky, they have their social roots." [Rodinson p. XV:]

For that reason "technical development" is conditioned - and it is conditioning the cultural environment. It is inducing changes. That the cultural traditions might be hampering economic development, has been evident for most orientalists. Rodinson said: "The Europeans complain (quite hypocritically) about the lack of initiative of the capital owners of those countries, into which they came and colonised in cases. But they did not see, or did not want to see, that all the driving forces of capitalist dash had to fail due to the conditions of those countries, ..." [Rodinson, p. 280:] "We know, that the domination of capitalist production only comes into being, when there are real industries, factories, where machines rule, and not handicraft with little market production, as well not manufactures. So a superficial check of the facts is sufficient to recognise, that in Islamic countries the industrial development has only started recently" [ibid p. 175:] and "... in spite of the fragmentary character of the mentioned facts, it gets clear, that industrial capitalism in the Islamic orient was an imitation of the west." Al Tibi criticises the aspirations towards modernisation from the point of view of socio-cultural integration: "The westernized and secularly oriented intellectuals want to introduce modern structures, for which the social base is lacking. A scientific-technically oriented culture cannot thrive in an agrarian or only periphery-capitalistic society." [Al Tibi, p. 199-200:]

Willkinson claims that even for the development of capitalism in Europe, the existence of towns and their new bourgeois strata was not sufficient. The process was enhanced by aristocratic landlords: "Contrary to the idea that a progressive bourgeoisie overthrew a backward aristocracy, "historic capitalism was brought into existence by a landed aristocracy which transformed itself into a bourgeoisie" by radical structural surgery that significantly expanded its "ability to exploit the direct producers". [Wilkinson p. 44:]

The spread of "the open market ideology" in the orient was clearly assisted by imperialism: "Egypt has been forced 1840 by Palmerstone and the British fleet to accept the contract of 1838 and Muhammed Ali had to bend under the religion of free trade. "I recognise the advantages of free trade, fixed in the existing contracts; radiating testimonies announce its achievements, and I can no longer deny, what looks now evident for me. Imperative conditions forced me to introduce the monopoly and to maintain it." [Rodinson p. 168:] (uba)

The basic social conditions for a free development towards capitalism are not given - not because the people are lazy or fatalistic, but because God, the nature or however you want to call the origin of existing conditions, have not been and are not (with the exception of a few petrol producing states) in favour of that. Even if the farmers of the Islamic countries are real fatalists, there is no irrational behaviour, but a precise valuation of the enormous (and discouraging) aleatory factors, that condition the success of their efforts. "Naturally one is fatalistic", exclaims the author rightly, and ads, that each traditional rural culture, taken those that have not been influenced by technical progress, is swimming in fatalism." [Destanne de Bernis. In Schluchter p. 156:].

The problem has an other facet too. The development of the rational type of administration had certain advantages - but there are disadvantages as well, that are constantly overlooked. Disadvantages that are especially outspoken, if this type of "thinking and acting" is used for economical purposes: "Bureaucratic organisation requires a >disinterested< impersonal devotion to a specialised task and a readiness to fit into the rational requirements of a complicated scheme of coordinated specialised activities regardless of tradition. This equally involves a rigid submission to discipline within the limit of the task. (uba) The spirit of capitalism is for Weber a special case of the >professional spirit< (Berufsgeist) which is the specific attitude required for the efficient functioning of bureaucracy. It is the special case where the impersonal task, to which disinterested ethical devotion is directed, contains the unlimited acquisition of money as a basic component."" [Talcott Parson. In: Schluchter p. 88:]

"The modern world is not to a higher degree rational, rule-bound, arithmetical or aim-oriented (and rather less reasonable) than each other, but the aim is only determined out of single action, not out of a higher ranking human aim: It turns cold, heartless, bureaucratic and meaningless." [Schluchter p. 310:] uba

Bureaucratic rule as formal rationalisation of administrative staff is for Weber a key-factor of a cultural tradition, aiming at an empire. [Schluchter p. 89:] With this view Weber is in line with the above outlined theory of Wallerstein's world-system. Moreover there is the lack of corporate institutions, mentioned by Weber and Schluchter.

It is not contestable, that development can't be done disregarding economic rules, but it is as sure that economy alone is not sufficient to develop society - again an optimisation, and so most probably a political problem: "One can only rule society, as well as nature, while obeying it. To change societies, one has to exercise an influence on the social forces they carry in themselves, one has to create institutions, that give certain of those forces the power to act, place the elements of new ways of action, and with all that to bow to the natural and social conditions, in order to be better able to rule them. The rest is empty talk or, at best, fine literature." [Rodinson p. 251:]

At the political level, we call for a tolerant multi-party political system which is based on the virtues of the modern civilisation." [Yemen Times July 18th 1993:]

Development, left to the driving forces of technical progress, is devoid of all non-technical reason and values, is devoid of justice. Those are left for the subjective and non-scientific sphere. [see Schluchter p. 267-69:] Especially in the case of Yemen, but not only here, the religious domain can't be neglected: ""If we bring to our mind, following Bloch, that the economical is not the exclusive motive of the human soul" and that "inclinations, dreams, serious pure emotions, aim oriented enthusiasm", that ever come back in religious texts, are nourished from other than pure need and still never insignificant ideologies", then we can recognise, that a simple socio-economic dealing with the third world is not sufficient. The study of the religious-cultural gets a central value." (uba). Rodinson explained, that "it is of no use to look for economic instructions in the holy texts, as the can't be found or would be unfit. But one should take the moral teachings and make an organic synthesis of traditional and humanitarian values to further the economic development - the only mean, to guarantee members of the society a dignified life." [Tibi (1991) p. 120:]

Politologists might answer by identifying the political institutions. But institutions are always to a certain extent centralised, conservative, and can only establish generally valid but rather minimal standards (s. e.g. GAT and environment). How can the locals make their voice heard, solve their own problems, if they do not participate in local politics? "One must not misjudge, that the human being, as important he may be, acts in a given frame, that his ideas are - sometimes surely important - variations on ideas about his surroundings and his time, that the problems he tries to solve are set up by the conditions of his time. But he can only act, if he finds more or less larger groups, that accept his ideas and directions, that means that they recognise a value in it that is in line with their own interests." [Rodinson p. 254:] If politics on the local level do not exist, if policies are just being implemented by administrators and the locals can't participate in their making - the result is most probable that they won't participate in their execution. Administrators are bound to their oath, it is by no means their duty to develop policies - and most often they are no good at that: "The politician has to formulate his own cause, and to advocate it in a public struggle for proper power, the administrator has to subordinate his convictions to the duty of loyalty to his office and to stay out of the fight for his own power. Faithfulness towards his own cause or faithfulness towards the institution - that leads to completely different stereotypes of conduct, that make the politician unfit for the profession of an administrator, the administrator for the profession of a politician. Where administrators decide on the guidelines of politics, preservation of the system, conformity will be the content of politics."

"It should be clear now, that the described type of intellectual can't be brought up by a traditional education that is uncreative and exhausts itself in memorizing and reproducing." [Tibi (1991) p. 134 / 136:] (uba).

The Yemenis are surely running after money - as much as anybody else they value a big profit higher than a small one, a fast one higher than one needing time and investment. But - There are certain culturally established patterns that are strictly anti-capitalistic. That are the tribal values of equality and generosity. Kopp mentioned very rightly [in Gerholm p. 70-71:] that there are "two major aspects of social inequality, i.e. wealth and status". Tribal norms try all to avoid social inequality due to wealth. Unluckily that often just transfers to an other form of power, to status.

The priority of equality is not only tribal, but even fixed in the Quran: [53:39] "Has he not been informed of what is in the pages of Moses and Abraham who fulfilled his word? - that no burdened soul shall bear the burden of another? And that man shall have only that for which he strives; and that his striving shall at length be seen?" Other traditional means to ensure equality and submission to the community were ceremonies at the transition to adulthood: "The law they learn in their pain, is the law of the primitive society, telling to each one: You don't value less than another, you don't value more than another. The law, written on the body, expresses the refusal of the primitive society to run the risk of a detached power, a power that would escape it. The primitive law, cruelly taught, is a suppression of inequality each one will remember." [Clastres p. 158:] "The mark on the body, the same on all bodies, spells as: You won't have the desire for power, you won't have the desire for submission." [ibid p. 160:]

While nowadays the tribal organisation seems to be hindering rational organisation and economic development, it guaranteed a majority of people a decent and free existence over almost two thousand years [A. Korotayev: 6-7 / Foss, Gills and the 6th century ad world system crisis. Internet:" http://csf.colorado.edu/wsystems/]: "On the other hand, in the area where most of the population acquired the tribal organization it often permitted the existence of complex systems of non-oppressed agriculturalists (which is very difficult to find otherwise in the preindustrial world)." "... (most plough agriculturalists being armed honourable tribesmen), at the meantime securing the existence of an intense network of markets, towns, centres of learning ...."

Islamisation did not only create a religious, political and economic empire, but it helped as well proliferating the tribal ethos (al-qabaliyyah) over almost all the Islamic area, removing some supra-tribal political structures (i.e. all those kings, chiefs and their retainers) which started posing a real threat to their very survival." [Koratayev 5.11.96:]

The tribal refusal of surplus production is beautifully described by Geertz' description of the division of the world (heaven and earth) as seen by the Dinkas: "The first man and the first woman lived of one corn of millet a day, they didn't need more, and more was not allowed for them. Out of greed the woman (naturally) one day decided to grow more than the allowed amount of millet, and in her greedy haste and working zeal, unluckily she hit the god with the handle of the hoe. Offended that one loosened the rope (the connection between heaven and earth. The auth.) and retreated to the far away heaven as it exists nowadays, while the people from now on had to work for their food, to suffer illness and death and to live separated from the origin of being, from their creator." [Geertz, p. 70 (retranslated from German)]

In Yemen we have different ways of preventing capital accumulation. The standard ways as state and religious (zakat) taxes, its advantages and disadvantages, are not discussed here, as such discussions can be followed in any newspaper all over the world. But Yemen has two "redistribution" channels, that are rather peculiar:

Camel raiding was until recently rather common (s. Thesiger). In the north-eastern parts of Yemen it still is, but the booty consists nowadays in cars and not in livestock: "The institutionalization of raiding other Beduin tribes for camels, with its elaboration of tactics, etiquette, division of spoils, celebration in sacrifice and poetry and songs, strikes one as an elaborate "take-away" ceremony comparable to the "give-away" feasts of the northwest coast Indians of North America. Raiding, too, results in the reciprocal distribution of economic goods between societies" [Sweet (1965) in Vayda, p 165:]. The major objective of raiding was to capture adult, female camels. The raided group was not completely wiped out or pillaged. Women and children had to be left with sufficient camels to get them to their nearest kinsmen.

Islamic economy, besides subsistence, consists of local and regional markets and, last not least, since over 6000 years, trade. The pre-Islamic system of sacred enclaves, regular pilgrimages to them with the regular fairs (mawa:sim) connected to it - resulted in "rather effective intersocietal networks, of which best known is the Western Arabian religious-political area ... guaranteeing ... "manifold contacts, the exchange of the religious and cultural ideas, as well as the barter of products with only use-value. Furthermore, the various legal problems (armistice, debts, benefits, payment of blood-money, bailing out of prisoners, finding of clients, looking of disappeared persons, questions of heritage, etc.) of the participants were also settled there. This exchange of ideas and goods, as well as the spreading of legal customs and cults common to several tribes, that is, regular social contact in general, played no negligible role in the extension of particular tribal consciousness. (Simon, 1989, 90, also see especially Wellhausen 1927, 88-91). ... "Arabia, but also considerable parts of the other Arabian regions) cultural-political entity, which in the absence of any significant political centralization secured the existence of a huge cultural network within which a very intensive (and very productive) exchange of information, energy and matter took place." (uba)

It shall not be denied, that the predominance of social relations over rational, price-oriented dealings, can have negative consequences as well. "Looking rather attractive from inside they often looked entirely unattractive for their on-tribal neighbours, who often had to deal with rather destructive side-effects of their functioning." [after Koratayev 5.11.96] (see up e.g.) Those intertribal social relations, combined with an other redistributive mean of tribal societies, generosity, are other specialties that make understanding of and dealing with "tribal economy and politics" difficult.

Economy is an extremely complex science, as it deals with any things and processes that can be labelled with a price. This complexity makes classification systems diffuse and unreliable. This is true since the very beginning of economy: "In the 5th century. B.C., to take an apparently extreme example of variety, but a binding one, what was the Athenian economy? A slave economy (there was a very large slave population)? A peasant economy (most citizens were country-born and bred, and landowners, producing sheep, cattle, grapes, olives, grain)? A merchant capitalist economy (exporting wine and oil, providing coinage and a carrying trade)? An industrial economy (based on silver, lead, zinc and iron mines, importing grain)? With an industrial proletariat (slaves included skilled workers, free worker's wagers hoovered at subsistence)? A world-empire (Athens imposed tribute on other states)? A welfare state (much of the population was on the public payroll via the mass-jury system)? A socialist state (massive expenditures on public works--harbors, fortifications, temples, naval expeditions)? Clearly something of all: a very mixed economy. And all this in a tiny fraction of the total area of Central Civilisation! [Cardulias p. 81:].

Luca Pacioli understood already in the fifteenth century, that: "In trade it is not possible to indicate rules and precepts point for point, as more points are needed to teach a merchant, than a doctor of law." [Piper p. 14:]

Use, processing and trade of natural resources was at the origin of economical development and from the beginning a critical factor for inequality of development. They facilitate or hinder economic development - and they are most probably the factor that will bring economic growth to a standstill. In Georgescu-Roegen's [Georgescu-Roegen p. 14:] words: "Economists still do not seem to realize that, since the product of the economic process is waste, waste is an inevitable result of that process and ceteris paribus increases in greater proportion than the intensity of economic activity. ... that "bigger and better" washing machines, automobiles, and superjets must lead to "bigger and better" pollution."

Or as Willke formulated it [Willke p. 257:]: "What is really new under environmental aspects at the industrial system is not, that it has negative impacts on the natural environment, but that those impacts are so massive and global. When in a pre-industrial society a farmer (or a whole agrarian society) made mistakes in agriculture, this affected only a limited space and was often reversible, if agriculture was given up. In the worst case such a population had to emigrate or died out. But both did not have global effects." His conclusion is: "Yes, it can't be denied totally, that the infinitely difficult integration of the world to a world society might be forced through the ... overwhelming environmental problems." [ibid p. 156:].

The situation of human resources is different, as they are increasing rather than shrinking, but not less critical. In most countries there is too much work offered and the demand is insufficient, even decreasing. After Robertson [in Lederer, fn 12: D.H. Robertson "Wage Grumbles", in Economic Fragments, London 1931, S.42 ff, esp. p. 50/1] "the demand curve for work is, in a rationalised world, he says, of a very discomforting shape; "nearly flat for part of its length, and then suddenly dropping almost vertically ". Therefore a totally rationalised world may offer a market situation for work in which a certain part of the workforce may find work for very high salaries, "while the remainder could hardly find it on any terms at all."" "If the number of workers surpasses a certain limit, with given equipment in soils and material means of production, the remuneration of work will in cases drop under the existential minimum and the excess will be expelled without pity." [Lederer p. 86: ].

The socio-cultural environment manifests itself in different forms. The main one of importance for economy is the formal one, state and administration. Mancur Olson's research [Piper p. 305] e.g. showed, that "differences in the speed of development are not retractable to the size of population, the religion or even race. Olson analysed, that the "institutions and the political regulations and rules in a country are the main determinants for the level of the per-head income." (uba) Gustav von Schmoller had already treated state and administration as an integral part of economy and stressed the relation between the system of law and what occurs on the market.

The second manifestation of "local culture", the non-formal, non-institutionalised one, is neglected by economists as well as by developers. Georgescu-Roegen [Georgescu-Roegen p. 346:] uses the example of South-East-Asian feasts, where huge amounts of animals are slaughtered: "This is precisely why to an American farmer the behaviour of a Filipino peasant seems irrational. But so does the behaviour of the former appear to the latter. The two live in different ecological niches and each has a different Weltanschaung." Georgescu-Roegen worked out the importance of culture and cultural education for development: "And since he needs a code for guiding his complex social activity in a tolerable manner, man has had to produce it himself. This product is what we call tradition. By tradition man compensates for his "birth defect," for his deficiency of innate social instincts. So, man is born with an endosomatic (biological) code but within an exosomatic (social) one." [ibid, chapter "6. Man and His Tradition p. 359:] (uba). He and Veblen warn of economic innovations that are not well integrated into the local culture or world-view (Weltanschauung) [ibid p. 361: ]: "Anthropologists and historians have long since thought that the introduction of any economic innovation in a community is successful only if the community can adapt itself culturally to it, i.e., only if the innovation becomes socially approved and understood. Among the Anglo-American economists at one time only a rebel such as Veblen argued that it is dangerous to place modern machines in the hands of people still having a feudal economic Anschauung."

The opposite idea (termed "constructivism"), a bit the base of social engineering (s. social forestry, chapter 1.2.1) that social institutions have been created intentionally and can be changed willingly is considered as erroneous by Hayek. On the other hand even he had often emphasized the cultural preconditions for a capitalist market society. [Piper p. 107 & 111:]

That the effect of economy on society is not only positive, has been noticed by Burckhardt before over 100 [Burckhardt p. 50]: "Already more doubtful is the profit of the "acquirers "that are the progressive element and do, with elementary passion strive for: 1. an even much bigger acceleration of traffic, 2. on a complete removal of still existing barriers, that means towards the universal state. The punishment for that is the enormous competition from the biggest to the smallest and the restlessness. The acquiring cultural being would like to learn and enjoy quickly a lot of things, but with pain he has to leave the best for others; others have to be educated for him, as others had to pray and sing for the big patrons of the middle age."

A similar critique has in present times been formulated by Nicholas Georgescu-Roegen [Nicholas Georgescu-Roegen p. 264-5]: "The economy would be an absurd process, if the aim of production would really be the "products". Bread, newspapers and cars are not the main thing, but just helpers. The real "product" of the production is an "immaterial stream", that is to say "joy of life". It can origin from the goods themselves, but as well from the leisure time. The gross national product is after Georgescu-Roegen in fact the gross national costs of the zest of life." (uba)

The market is using those existing forces: "There is an asymmetry of economy. The market is dependent on extra-market conditions. To those belong laws and rules, but as well the cultural and moral preconditions. "Market, competition and the game of offer and demand do not produce those moral reserves. They presuppose them and use them up." Röpke reckons among the norms of a market economy's ethic self-discipline, a sense for justice and community, honesty, fairness, respect for the human dignity of others. ... Family, church, true community and tradition." [s. Piper p. 206:].

The social values of a tribal society, representing a real community where each one depends on the other, is heavily differing from the type of society the competitive market needs and forms. Veblen characterised the "pre-rapacious savages" as skilled "good-for-nothing", weak, with insufficient efficiency, lack of initiative and inventive spirit, easygoing and idle gentleness." [after Veblen p.216-7:]. Those traits are important for the collective life, as important as truth-loving, peacefulness, good temper, interest in people and things that is not tainted from competition nor envy. "At the beginning of the rapacious phase, of competition, violence, selfishness, clique-spirit and dishonesty opens the door for cunning and trickery. The modern societies focus of interest is the industrial efficiency. The individual serves the society the better, the higher - to use a vulgar expression - its productive efficiency is."

That one needs an impersonal interest in the respective work, not determined by envy. Without this interest the complicated work-processes would not be executable, well, might never have been invented. The interest in the work discriminates the worker from the criminal on one side and from the "industry captain" on the other." ) [ibid p. 232:]

So the financial professions, concentrating on ownership and acquisition came to dominate the industrial sector of handicraft and production. The rise to the idle class ensued from financial professions. [That has changed nowadays a bit to marketing]. For Veblen the financial man resembles the criminal in his temper. Both have a preference for sport and gamble, pleasure with competition for its own sake, superstitious trust in luck and fate (or a servile devoutness. [ibid p. 229:]

This type influences the economic life of the society in two ways, once what concerns the speed of economic development, and then, what concerns the results of this development. "The sly human has no economic value for society - except for the purpose of a deceitful behaviour towards other societies. His existence has no advantage for the life of the generation. ... Both barbarian traits, namely cruelty and cunning, determine the late-rapacious attitude or spiritual posture; they are the expression of a narrow, selfish habit of thinking. Both are of a high value for a life, that strifes exclusively for a success tainted by envy, both have a high aesthetic value and both are enhanced by a culture based on ownership of money. And both are not of the slightest use for the purposes of the collective life." [ibid p. 263:]. This idle class is obstructing the cultural development 1. directly by its own immobility, 2. by its binding and generally valuable demonstrative extravagance and a conservative attitude, and 3. indirectly by this system of unequal distribution of wealth and ownership, that in fact forms its existential base." [ibid p. 200:]. "Since over hundred years witty commentators quivered in the face of the certainty that the industry will always do whatever is in its power, to earn money - even overstepping the limits of property and right[Hawken p. 250:]. This negative picture is not only literature but shows at present real effects. Hawken reports e.g. that "115 out of the "fortune 500" companies have been sentenced in the eightieth because of heavy crimes [ibid p. 157:] and that nine out of ten Americans believe, that companies are willing to lye, to deceit, to harm, to endanger or to cheat in order to make profit." [ibid p. 159:]

A major problem of the efficiency oriented society is the time. As "time is money" nobody wants to waste it and logically social relations are suffering: "One can't read a newspaper without hitting a description of a man or a woman "that made it", that works sixty hours a week, is member of several boards, dedicates himself to social welfare, is active in the local chamber of commerce, goes to the fitness club, has his own sailing boat, brings up three children and then probably applies for a public office." [ibid p. 166:] People using their time with utmost efficiency for activism loose many other aspects of life out of sight: ... but I had left a part of myself, and it was that one, that is shy, quiet and contemplative." So - time is lacking for social dealings, for politics, for the reinterpretation of aims. "The speed and the lack of time remove people from the nature and enhance a philosophy o life, that mankind can create its own world, removed from the rhythms and pulse of nature. We live in a commercialised culture. Industries have overcome traditions, often thousands of years old, that relied human well-being with Gods and the big law of nature. At their place they put a management system, showing how mankind can overcome and even replace natural laws by engineers' art, mechanics, technique and systems. The growing power of the large industrial capital companies is not founded in any embracing philosophy, nor ethical orientation. The creation of ever bigger wealth is valued as purpose for itself." [ibid p. 175:]

When trade moved from bartering, the exchange of goods, to a new medium, money, this brought with it the possibility of increased accumulation of wealth and - to use its power. "... money (the money-related and symbolic system) was developed very early as a medium to facilitate and steer economic dealings. The peculiarity of the different steering media is, that as symbolic system little by little they separate from the level of real, touchable objects and develop a specific proper dynamic. This dynamic turns relevant for steering, changes the quality of human relations in the related areas by abstraction, generalisation and the evolution of new systems connections. If not person-bound economic action but money, and at the end capital is the steering form of economic processes, then the criteria for decision and relevance separate from concrete persons and obey to different laws." [Willke p. 137:]

It was and is the monetarists who focus exclusively on this system, it was Keynes who showed to the economists that money is not a neutral medium, it can be the source of heavy and long-lasting disturbances. Gesell found already, that "The superiority of money on the market, in compared to goods and manpower, causes, that the money-sector can refuse at each time to fulfill the duty it is meant for." [Gesell p. 224:]

The duty it is meant for might be the critical point. For the capital owner the "duty" of invested money is to increase - from the point of view of other markets, mainly the labour market, the capital market is disruptive. For the steering of this sub-market, and of the export market, the exchange rate has been a useful tool. With the separation of money markets from the national (before long from regional) playground, an independent money policy of nations has become difficult. To restrict foreign currency speculations Tobin proposed a duty, the Tobin-Tax. [after Tobin, in Piper, p. 303:]

An other major problem is the concentration of the capital. Hawken reports that the major part of financial capital on today's world markets serves to finance the growth of multinational companies and that one percent of the American companies own sixty percent of the shares of capital societies and some forty percent of the total national wealth. [after Hawken p. 130:] Similar facts have been reported for Germany: "It is getting clear here, that rationalisation investments are strongly concentrated on large companies with over 1000 employees. Moreover, during the crisis a restructuring of single capitals through centralisation of capitals happens, having an effect on employment." [Altvater E., Hoffmann J., Semmler W. p. 296:]

This factor has been extensively discussed in the preceding chapters and is the base of Myrdal's critique of unequal development chances [Tobin, in Piper p 34]: "... the higher the level of economic development that a country has already attained, the stronger the spread effects will usually be. For a high average level of development is accompanied by improved transportation and communications, higher levels of education, and a more dynamic communication of ideas and values ... While criticising unequal offsets, even Myrdal never put into question the basic principle, the need for accumulation of capital [Myrdal II p. 82]: "There is no other road to economic development than a compulsory rise in the share of the national income which is withheld from consumption and devoted to investment. This implies a policy of the utmost austerity- quite independently of whether the increased savings are engendered by high levels of profits to be ploughed back in industrial expansion or by increased taxation."

That capitalism is a demand-driven system has been worked out by Michael Kalecki (1899-1970): "The capitalists earn what the spend and the workers spend what they earn." Robinson described the same dilemma. A behaviour that is completely rational for an isolated firm can be wrong, considering the whole economy. The enhancement of demand, on the other hand, is not easy as well, as a higher demand can easily shift to foreign markets and create a deficit in foreign trade. [after Piper p. 168]

While during an economic slump the employers demand an adaptation of labour costs, what means they call for lower wages, the effect can be counterproductive, as the present situation in Switzerland shows. Lederer [Lederer p. 117:] showed this already in the Thirtieth: "The salaries of workers as an average have to diminish in comparison with the other social strata. Would all or most incomes sink, what is the case in an extended and deep depression, would the fixed incomes of civil servants, pensioners, etc. be included in the process of decrease, the buying power, expressed in terms of money, would shrink. ... With that the elasticity of the demand is diminished and the decrease of the salaries will not show its full effect."

Moreover he claimed, rightly as the past years showed, that decreasing salaries will have a very negative psychological effects on all consumers. The same is valuable for the masses of unemployed people. "Now the static theory assumes, that the superfluous workers disappear by dying out and never resurging again, while in reality the superfluous workers are pulled along and stay on the market as a living argument against the optimistic and harmonistic conception of the equilibrium term." [ibid p. 116:]

Innovation is unrenounciable, as otherwise the competition drives the profit down to zero, what would make accumulation impossible and lead to stagnation in investment and so to the standstill of the whole system. [after Lederer p. 92:] Innovation is (unluckily) not a steady process. Kondratjew traces back the economic cycles, called after him, to that cause [Piper p. 240:]: For Kondratjew the long waves are not the result of external factors as wars, new markets, discovery of new goldfields, but the result of revolutionary changes of the productive forces and new social institutions. At the beginning stands in each case a new technological-economic paradigm with a bunch of basic innovations that turn into carriers of a new economic boom." (uba)

Only a few economists asked the questions, if always more and new products are really needed. The most prominent of them, Galbraith, says [ibid p. 287: ] in "The affluent society": "In spite of the fact that the modern industrial society is able to satisfy all true needs of the population without problem ... it is hunting after growth and creates for that new; so far never foreseen, needs. Expensive marketing is heating up the private consumption, while no comparable mechanism assists the public goods - especially the social costs. For that the "social symmetry" succumbs ... "

An other way to drive up demand is to expand economic activities to other countries - or to import products that can't be produced in the own country (the origin of trade in Europe: colonial goods as pepper, coffee, tea ...) To be able to import, the importing country has to produce goods it can sell with a higher value (comparative advantage) on the international market. Lederer: "theoretically the export goods produce the imports." [Lederer p. 47:]

Developing countries have the "advantage" of rising populations and there is no scarcity of unskilled labour. But technological improvement will transfer the advantages from the cheapening of production to the importing countries. Since the demand is often inelastic the market will not be greatly enlarged. The advice- and assistance - which the poorer countries receive from the richer is, even nowadays, often directed towards increasing their production of primary goods for export." "A widening of markets often strengthens in the first instance the rich and progressive countries whose manufacturing industries have the lead and are already fortified by the surrounding external economies, while the under-developed countries are in continuous danger of seeing even what they have of industry and, in particular, small-scale industry and handicrafts, priced out by cheap imports from the industrial countries, if they do not protect them." [after Myrdal p. 51/2:]

The steering of economic development has been left by the "father of economy", Adam Smith, to the "invisible hand". Mancur Olson's central topic was that the result of economy, being human action, corresponds rarely to the original plans and intentions of the people. [after Piper p. 303:] The major reason behind this might be, that the strive for economic aims, for profit, does by no means include the strive for other, namely social and cultural aims, rather the opposite: "This particular formula - as I argued elsewhere - reflects an institutional trait proper ... to the large urban communities of industrialised societies. The same is true of another cornerstone of standard theory, namely, the proposition that, for a seller, "gain" is measured solely by money-profit. But - to recall Marx's protest - "the bourgeois reason is [not] the normal human reason." As Marshall carefully pointed out, it is not the general reason even in the bourgeois society. Still less can we expect it to be valid in all institutional settings. Actually, in peasant communities the happiness of the individual depends not only on the quantities of goods and services at his disposal but also on other social variables, and gain depends on other factors besides money-profit.

The statement that the fundamental principles of economics are universally valid, therefore, may be true only as their form is concerned. Their content, however, is determined by the institutional settings. And without this institutional content, the principles are nothing but "empty boxes," from which we can obtain only empty generalities." [Georgescu-Roegen p. 324:] (uba)

To fill those "empty boxes" with meaningful content, with "culture", a careful analysis of the environment - as well as a participatory (say "democratic") approach to decision making impose themselves. While Keynes' aim was to create jobs for all, the question, what should be produced, was and is still open. During the thirties it was answered by the upcoming war and the need for arms production. Seen from the point of corporate interest, a certain amount of unemployment is highly desirable, as it " ... is disciplining" - says Robinson - "It is the fear of unemployment that leads the workers to submit to the authority of their employers." [Piper p. 179-180:]

On the other side - arguments speaking against a planned economy are legion! Von Mises already recognised, that a planned economy must fail because of the absence of a free market and with it the lack of objective information on prices. As well there are no objective criteria to determine, how a social process should evolve. [after ibid p. 89:] Already Leon Walras (1834-1910), being highly convinced of the scientific (and so predictable?) nature of economy, admitted that "the free game of offer and demand guarantees a maximum of social welfare ... but the just distribution is as important and is not delivered automatically with this process". (uba) In his "ideal society" there are no taxes, the people can use freely the fruits of their knowledge and talents. Land is socialised, the state finances itself by the rent. Its most noble duty is it, to maintain schools and universities; ... [after ibid p. 63:] That is tough, from one of the most important theoreticians of economy, isn't it - to demand socialisation of the land property! That will give the state an important voice in development! But even with a strong political influence - discussions are endless, as the process of development is endless. In Germany e.g., where the effects of Schmollers thoughts are present up to now, the compromise between market, competition and efficiency on the one; state, regulation and redistribution on the other side has to be remodelled ever and ever again. [after ibid p. 137:]

And he showed how this "ignorance" has been and will be overcome: "The spread of embarrassing knowledge is one of the consequences of the greater articulateness of the poorer classes themselves, and of their organisation, under the shield of democracy, into pressure groups of various types for pleading their cause and fighting for it." [Myrdal p. 123:]

The social aspects of economy are not included in the scientific system of economy - but the social and cultural aspects are the base and, in fact, the ends of economic development. Luckily even some economists came to the same conclusion: "That is why an increasing number of economists share the view that macroanalysis, though it is only vaguely clear, is far more productive than the traditional microeconomics with its Ockham's razor. But, perhaps, the real reason is, that they have ultimately come to realize that the more significant variables pertain to society, not to the individual." [Georgescu-Roegen p. 339: ]

Economic development in the past decades results in an ever increasing difference between rich and poor, be it between countries, be it between citizens of one country. This is especially outspoken in countries with a liberal economy, as the USA. There the poorer half of the employed people had to accept a cut of 10% in salaries since 1979, a 20% cut for the poorest tenth, that have been replaced by more qualified people! No other country is in such a bad situation. In Germany the poorest 10% could profit from a real salary rise of 30% since 1983. [CASH 49, 6. Dezember 1996:]

Business at present follows the Darwinian principle - survival of the fittest [ibid p. 56:], but on the long run profit-orientation and competition will leave such inequality and destruction behind, that new orientations and perspectives for society will have to be put into use. Freedom is nowadays equalled with size and power - but not with responsibility. [ibid p. 110:] To get closer to that aim we need a market economy, where business is flourishing when it assumes its responsibility towards society and environment. "In a preserving economy there will be a business practice that is developing in harmony with the natural and human societies it serves. That makes a high degree of cooperation necessary." [ibid p. 207: ] (ubo)

Cooperation can't be reduced to common logistics and accounting procedures. Cooperation depends on common values, on a common culture. As we have seen in chapter 3.5.2 on "world systems" variability, differing cultures, even different economic systems do exist and they are prerequisites for economic growth: "Indeed, if man's economic actions were independent of his cultural propensities, there would be no way to account for the immense variability of the economic pattern with time and locality." [Myrdal p 342:]

At different places in the preceding text the importance of the interaction between the local culture and economic development has been stressed. Given the (almost) general understanding of its importance, it is all the more astonishing, how little respect economy and the economists pay to that factor: "Nothing is more natural than the inability of the standard economists to understand their German colleagues who insisted on bringing such "obscurantist" ideas as Geist or Weltanschauung into the economic science. On the other hand, it was equally normal for the German school to reject an idea which reduces the economic process to a mechanical analogue." [ibid p. 342:] "Leonard Doob, for instance, insisted that no planning can succeed unless it is based on a knowledge of the social environment, that is, of the tradition of the people who will be affected by it. An even stronger thesis is put forward by J.J. Spengler, who argues that the rate of economic growth depends upon the degree of compatibility between the economic and non-economic components of the respective culture. These observations should not be dismissed easily, for all analyses of why the results of our economic foreign aid often have not been proportional to its substance converge on one explanation: local mores.

Actually, there are a few facts which suggest that the influence of the economic Anschauung upon the economic process is far more profound than the authors quoted above suspected." [ibid p. 362-3:]

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