Free Trade's Not Free, Bring Back the Tariff

Hi viewers,

I had this article published on Online Opinion. Not many responses which I was disappointed about asI thought I thought it was a good one.


Free Trade's not Free, Bring Back the Tariff!
Gilbert Holmes


Following on from the recent announcement at the APEC Summit of yet another major push for free trade, I was disappointed to note that the Australian public has once again been largely let down if they were hoping for some critical discussion around this issue.

Both Labor and the coalition are apparently united in the depth of their belief about free trade, pursuing it with an almost religious zeal. While the Greens have expressed some concerns about wanting to see definite outcomes, they can hardly be seen to be challenging the juggernaut. Adding to this, there is also something of a tendency within the media to report on free trade with the assumption that it is entirely positive.

But is free trade really all that good? Apparently not all of us think so.

The Courier Mail recently reported (16th Nov) that Bob Katter's Australian Party, which actively advocates protectionist policies, may do as well in the upcoming Qld election as One Nation did in 1998 when they secured 11 seats. “That is just parochialism and xenophobia!” I hear you say, “North Queenslanders are famous for it.”

Here is where I warn you not to be too quick to judge. I am certain that there is at least some genuine, well thought out concern amongst these voters; concern that somehow government and big business have been steadily pulling the rug out from under the little person.

The idea of free trade is of course based primarily on David Ricardo's 1817 theory of 'comparative advantage'. Comparative advantage is a lovely little mathematical proof that even if one party is better at producing everything, the greatest efficiency in production can be attained, and all parties can benefit, if each trading party focusses on producing what they are relatively best at, and they trade freely with one another for the rest of what they need.

With a little teasing out, however, we can discern some serious problems with this theory:

While the maths is correct, the equation does not take into account all factors. Specifically, comparative advantage does not take into account the costs associated with shifting a regions productive infrastructure from where it is now to producing what it is relatively best at producing. Is getting a cheaper banana worth reinventing a whole region's economy? You might recover the cost over time but in a shifting global economy, economic restructuring will be a continual process.

Neither does comparative advantage take into account the costs of trade; the ports, the ships, the rail lines, the petrol. As well as the economic costs, we can also look at social and environmental costs in relation to both this and the above point.

David Ricardo himself recognised that the theory only works if capital is immobile. In other words, if foreign investors are able to purchase a region's productive assets, whatever benefits may be due to that region through comparative advantage will be reduced or potentially eliminated.

Free trade encourages large scale, export-oriented production processes. This means that it tends to concentrate wealth, with an increasingly high percentage of any benefits from free trade accruing to the already wealthy.

Free trade will in some circumstances trigger the so-called 'race to the bottom', where in their efforts to compete successfully with one another, various nations go on a cycle of lowering wages as well as workplace and environmental standards etc.

Considering these problems, I think it is fair to say that all that the mathematical proof of comparative advantage tells us is that it is possible for all parties to benefit from free trade, not that they necessarily will.

Personally I think that Bob Katter, at least in broad principles, has got this one right. I think that we, economically as well as socially, along with our environment, would be better off encouraging diversity and some degree of self-reliance within our domestic economy through economic protectionism than we would be in pursuing free trade.

In saying this, it is important that we do not set our tariffs so high that they support profiteering or gross inefficiency within domestic markets; moderation is the way forward.

Perhaps it is worth remembering here that Australia's first and second Prime ministers were members of the Protectionist Party. Who will claim these votes in the modern Australia? Labor and the coalition are locked into the free trade agenda, at least for the foreseeable future. While they may effect Qld politics, I do not believe that the Australian Party has got what it takes to make a march on the southern states.

The Greens on the other hand could be big winners here. With their established national presence, in advocating moderate protectionism, the Greens could potentially increase their country vote, chew further into the Labor Party vote across the nation, and start driving wedges into the coalition, some elements of which recognize the value of economic protectionism.

G'day everyone. I did a little interview on 4zzz radio (Brisbane) the other day. All about polarity and its implications especially for political philosophy. Unfortunately the confirmation for the interview came pretty late and I didn't get around to promoting my appearance to any of my 'friends'. Those of you who were lucky enough to hear it, however, will remember that I promised to put the poem that I recited up here on the blog so that you could have a read.

For those of you who didn't hear the intro on the radio, the poem is about the dual nature to economics; cooperation and competition, and I wrote it in 1998 because I was sick of trying to explain the concept to people logically. The poem is therefore heavy on symbolism.

By the way, sorry I've been out of touch a bit. Little Freya is just gone two months old.


The Saviour Explodes into West End


They met at a West End bus-stop,
Just outside a flashy cafe,
She off to work with a purpose,
And he just enjoying the day.

They'd seen one another before then,
Out shopping or crossing the street,
But their lives had appeared so different.
That neither had chosen to speak.

She always dressed up so primly,
With high heels and a neat business suit,
While he with his long hair flowing,
Thought rainbow colours were beaut'.

She was an executive working in sales,
Though young to be so advanced,
She was cool and sharp and hard working,
The competition had no chance.

She was prudent, cagey and thrifty,
Her parents were richer than most,
She ate meat and drank wine with her friends,
At the posh dinner parties she'd host.

He was a hippie who lived on the dole,
He had no career in sight,
He liked natural medicine and philosophy,
And spent half the day smoking a pipe.

He grew up in a commune near Nimbin,
Vegetarians in a tumbledown shack,
When his mates came around they got really stoned,
And played music and sometimes blackjack.

And then came that day at the bus stop,
That neither would ever forget,
It was etched in their minds like a carving in stone,
The day the two of them met.

She had an important deal to clinch,
And was focussed on work to come,
While he was off on a surfing trip,
And was smiling at everyone.

Then their eyes met just like an explosion,
That rocked each of them to their souls,
They found their hands clinched in each other's,
As around them West End dissolved.

Then taking their eyes off each other,
Like coming out of a dream,
They found themselves in the Garden of Eden,
It was a fantastically beautiful scene.

There were flowers and trees and fruit,
And animals all around,
The crickets and birds and frogs,
Were like a stereo with surround sound.

And up a dirt path toward them,
There walked a magnificent couple,
It was Mother Earth and God,
Or I'm a monkey's uncle.

God was dressed up for occasion,
He'd combed his jet black hair,
When they looked at his face they both smiled,
At the powerful empathy there.

Mother Earth was resplendent,
In beautiful iridescent blue,
The smile in her beautiful eyes,
Brought on waves of love in those two,

God spoke and he made them both welcome,
He waved both his hands in the air,
He said, 'Today is the day of your wedding,
The two of you are now a pair!'

They were suddenly bathed in white light,
That was warm and loving and splendid,
And when they returned to the garden,
They found themselves suddenly naked.

As Mother Earth stooped down to kiss them,
The pair were still holding hands,
And as Mother Earth and God departed,
The pair had a lay in the sand.

They were laying there, real close together,
Feeling waves of love wash them through,
When they felt something hard underneath them,
And West End swam back into view.

He missed his lift to the ocean,
And she missed out on clinching her deal,
Because the two of them ran back to her place,
And the sex that they had was unreal.

Three years went by that young couple,
But certainly not without pain,
A child was born of that day's fateful union,
But the couple were nearly insane.

They’d quickly established a routine,
Like a married couple can,
She went out and worked like a horse,
While he stayed at home and got stoned.

And they'd fight like a hurricane at dinner time,
But neither could win the battle,
Neither could see the other one's view,
And they'd shout 'till the whole house would rattle.

She's scream at him, 'Go get a haircut,
And get off your arse for a change,
What's wrong with work for a living?
My friends all think that you're deranged.'

But he'd come back saying, 'You're such a tight-arse!
You have got to learn to relax,
Open your heart to some sharing,
My mates think you're a bloody battle-axe.'

And the poor kid was caught in the middle,
But this was no ordinary child,
It was as calm as a dead-flat ocean,
And had a strongly independent style.

The kid had been born with a purpose,
To teach the whole world how to live,
That kid had an edge on its parents,
And their actions just brightened that gift.

So the wife would be thinking, 'Jacuzzi',
As she prayed for her man to come 'round,
She wants an executive townhouse,
With a swimming pool in-ground.

Meanwhile the husband thinks, 'Commune',
And he meditates on his wife's understanding,
He thinks, 'We'd all be friends and we'd share the sun's rays,
In a commune we'd really be living.'

So one night at the table they're having a doozie,
A fight that would make a ghost quail,
With frying pans flying and plates smashing,
And as usual the kid in the middle.

That kid was sitting in its high-chair,
Halfway through what was a pretty nice meal,
When a knife went whizzing past its nose,
Just brushing the tip with cold steel.

'Right', thought the kid, 'my time has come,
That pair must be put in their place!
How can I wait for my coming of age,
When this place is simply not safe?'

The kid made a sign that was given at birth,
By God in his heavenly home,
Although it was banned for the power it had,
Wasn't safe for someone not grown.

And as that two year old felt power grow,
It called on Mother Earth too,
The power was growing and that little toddler,
Knew now what it had to do.

The kid stood on the table bolt upright,
And the fight that was raging ceased,
The parents were amazed as their dear little kid,
Had grown by at least two feet.

Now that kid was wisdom incarnate,
And it fixed them with a powerful gaze,
But something was snapping as the kid's little body,
Couldn't handle the power engaged.

It suddenly dawned on the toddler,
that it had made a fatal mistake,
Its brain and body were quickly expanding,
It was more than the kid could take.

So with just a few seconds to fulfill its purpose,
Before it would surely be dead,
'It's a paradox!' the kid yelled out,
As the pain was exploding in its head.

'It's about cooperation and competition,
There's a dual nature to economics',
And with those words that kid exploded,
Into a billion tiny little bits.

The parents were killed in the explosion,
The house was a hole in the ground,
But the words had been spoken, the seed was planted,
And West End was fertile ground.

The shock-waves from that kid's utterance,
Reverberated out through West End,
Like waves that will quickly spread outward,
After a rock gets plopped in a pond.

So now all through West End and beyond,
They're being touched by inspiration,
There's a dual nature to economics,
It's about cooperation and competition.

Global Solutions to Economic Growth

The following article is not specifically related to polarity but is rather an exploration of some of the issues that flow from by broader polar analysis of society, which can be found elsewhere. Partly because if it's length (3,750 words) it was rejected by online-opinion where I submitted it and where the previous articles here were published, so if you don't read it here there's a good chane that you'll never read it. Be warned, however, that having been working hard as a carpenter, and seeing the birth of my first child over the last few months, my writing style may be a little rusty. (I've been told it's not my best.) Let me know what you think.


Global Solutions to the Challenge of Economic Growth

It is some decades now since concerns about economic growth have come to light. There is now a wealth of literature to read, Youtube videos to watch etc, on the subject. Most specifically a couple of problems stand out.

The first of these problems relates to the way that we measure economic activity with the assumption that all activity is good. Activity within a nation’s economy is measured in terms of the gross domestic product or GDP, (sometimes known as GNP or gross national product), which adds up everything that is bought and sold within the nation. It is this GDP that apparently needs to grow in order for our society to thrive.

GDP, however, is only a measure of activity within the economy. It is not indicative of welfare outcomes resulting from that activity. It is actually quite possible for the economy to grow while the society itself is going backwards. As a simple example of this, let’s say that I go on a drunken rampage, smashing the fences, cars and other property belonging to my neighbours. As a result of my criminal behaviour, my victims will have to spend money repairing their property, installing security systems etc, thus increasing the GDP.

As another example, we could look at recent reports which suggest that the tsunami and nuclear disaster in Japan could boost that nation’s economy. ‘Great news everyone, there’s going to heaps of jobs relocating towns, burying people and rethinking our whole energy strategy!’ This sentiment actually seems quite politically incorrect to me, but in our GDP focused society, the incongruence seems to have slipped by under the radar.

Looking at the other side of the coin, welfare may be increasing while the economy is slowing down. Let us say that you and I become close friends and we start sharing the use of household resources. We only need one computer, one fridge, one tv. Because each of us is spending less, our harmonious lifestyle is causing a decline in the GDP.

Every time we use more than we need of something or use it inefficiently, it is good for the GDP. When we use resources efficiently, however, either through sharing or personal ingenuity, it is bad for the GDP. There is obviously a fundamental problem here. In short, while it is often used as such, GDP is simply not a measure of progress with our society.

The second main problem associated with economic growth is that it is not ecologically sustainable.

In principle it is possible for the economy to grow without it impacting adversely on the environment. We could for example employ people to go around planting lots of trees. In reality however, most economic activity does have some ecological impact. A growing economy therefore generally involves a growing impact on the natural environment.

The well respected ‘ecological footprint’ method of determining ecological impact tells us that in 1961 humankind were using approximately one half of what the Earth was capable of supplying on an ongoing basis. We were “…..living off the planet’s annual ecological interest, not drawing down on its principle”. (www.footprintnetwork.org) Fifty years later and we are using 1.3 times what is sustainable.

To make matters worse, economic growth is exponential. At 2.5% per annum, the economy will double in size every 29 years. At 8% per annum, it will double in 10 years. This means that even if we were to reduce the ecological impact of our economic activity to a small percentage of what it is today, with constant growth, it will only be a matter of decades before we are once again exceeding the Earth’s carrying capacity.

The renowned ecological economist, Herman Daly, has pointed out the absurdity apparent when we combine the above two problems. “Growth in GNP should cease when decreasing marginal benefits becomes equal to increasing marginal costs. But there is no statistical series that attempts to measure the cost of GNP. This is growth mania, literally not counting the costs of growth. But the situation is even worse. We take the real costs of increasing GNP as measured by the defensive expenditures incurred to protect ourselves from the unwanted side effects of production and add these expenditures to GNP rather than subtract them. We count real costs as benefits. This is hypergrowthmania.” (‘A Steady State Economy’ 2008 – Herman Daly)

In other words, in our pursuit of economic growth, we cause unwanted side effects such as air, water, and noise pollution, rising sea levels, social dissolution etc. As our economy grows, so do these side effects. We then have to work to protect ourselves against these undesirable side effects, but because this work also counts toward economic growth, it is considered as positive. It is no wonder that Daly has to invent words to describe this foolishness.


So why the focus on economic growth? Why, when it has these obvious problems have the powerbrokers of the world been so consistently focused on economic growth?

The answer is that we are addicts. We have allowed our economic institutions and processes to become dependent on growth and now we cannot do without it. Economic growth is like a nasty drug that, while it might be killing us in the longer term, is keeping us sane in the short term. If we don’t get our hit, we get a big headache, get depressed, fall down and start shaking uncontrollably.

Within our compromised, growth addicted economic system, declining economic growth means decreasing profit margins and business confidence, investment slowing down, unemployment increasing, and people becoming scared so they stop buying stuff. It is a nasty, self-perpetuating cycle.

These are genuinely painful outcomes and our politicians are right to be wary of them. We cannot simply stop growing and hope for a positive outcome. We do need to break our addiction, but in doing so, we also need to make sure that we have the systems in place that enable us to live in a post-growth economy. It is constitutional or structural flaws within our economic system that have led to our addiction to economic growth, and in order to reduce this dependency, it is on fixing these structural weaknesses that we need to concentrate.

I do not want you to lose hope, and I myself believe that we are quite capable of the undertaking, but please do not think that dealing with these structural problems within our economic system will be a small issue.

The problems that we are talking about here are quite multifaceted, involving a number of the mechanisms and patterns that we take for granted in the modern capitalist economy. As well as being responsible for our addiction to economic growth and contributing to our thoughtless rush toward ecological devastation, these same structural flaws can also be understood to be responsible for the ever increasing gap between the rich and the poor, as well as the fickle, boom/bust nature of our economy among other things.

Just as the problem is multifaceted, likewise is the solution, involving significant change throughout both our economic system as well as the broader patterns of our global society. Let’s take a look at some of the changes that we might want to be making. As you will see, some of these changes are more mundane while others will involve deep structural shifts within the economic system.


Measuring our progress – I mentioned above the absurdity of using GDP as a measure of progress within our society. Perhaps the Holy Grail therefore of ecological economics, (or whatever it is that we want to call post-growth economics), is the creation, with wide acceptance, of what has come to be know as a ‘genuine progress indicator’ or GPI, that can be used instead of the GDP.

The development of such a GPI is a complex problem. It will have to be useful for analyzing our activities on the small scale and the large, and will involve qualitative judgements as well as quantitative measurements. In its application, the GPI will need to look at a range of issues and weight them for their relative importance in each circumstance. These issues include:

• Is the gap between the rich and poor reducing or increasing?
• Is ecological sustainability being reinforced or compromised?
• Is the cohesiveness of our communities being adversely or positively affected?
• Are our activities supporting or eroding democracy within our social institutions?
• Are we or are we not supporting a healthy work/life balance?
• Are we gaining or losing efficiency in our processes of production?
• Are we wasting or conserving resources?


Consumerism – Without doubt, one of the drivers behind our continually growing economy is our continually expanding appetite for ‘stuff’. We all want to live in large houses filled with fancy fittings, drive flash cars, take luxury holidays, etc. Not only is this a drain on natural resources, in order to pay for it all, we are going into more debt and working harder than our parents or grandparents ever did, thereby sacrificing our family and social lives.

In trying to reverse this consumerism, while it is true that many of us could learn to relax, and make do with a little less, we do need to recognize that as well as being a driver within the system, consumerism is a product of the flawed economic system just as surely as are environmental damage and a big rich/poor divide.

The structure of the modern economy, with its free-trade and high levels of private ownership, combined with the onset of the ‘age of oil’, which has allowed us to travel and transport goods great distances, mechanize food production etc, has led to the situation whereby as individuals or small families, we have become very independent.

We drive to work to earn money, and drive to the supermarket when we need something. There is little interaction of any kind between neighbours, let alone any common ownership of assets, sharing of resources or working together for common goals. If we want something, we buy it ourselves.

The isolated individual simply needs more stuff than does an individual living within an interactive community. Added to this we have the psychology. Clive Hamilton and Richard Denniss allude to some part of that: “It is necessary to judge someone by the type of car in their driveway only if you have never actually met them.” (Affluenza 2005)


Privatization, centralized production, free-trade, true value and profit taking – Competition between self-interested parties is the engine of a healthy economy! That’s right isn’t it? That is what Adam Smith told us in 1776, and it is certainly the direction that our regulators have been pushing us. The modern economy is heavily privatized, and cooperation is pretty much forgotten in economic analysis and modeling.

Having forgotten cooperation, we have allowed our neighbourhoods to become economic (and social) vacuums. Likewise our governments are reduced to administering roads, schools, hospitals, pensions, the military etc. The vast majority of the productive aspect of our economy is performed by the private sector, and productive assets are held in private hands.

Part of the problem here lies in the continuing concentration of wealth in already wealthy hands. Small farms either sell out to larger ones or work like slaves for ‘megacorp distributions’, smaller shops are undercut by larger ones and forced out of business, etc. The steadily increasing gap between the haves and the have-nots is the result.

In terms of growth, we have the ubiquitous drive for profit, with each company trying to make more money through whatever legal means. With the widespread taking of profit, we also have a situation whereby each of us is paying a little bit more for each thing we buy than it costs to produce it. This means that we have to work a little bit harder or make more profit ourselves, in order to keep up. We are in effect chasing our tail, with the growing economy as the side effect.

Cooperatively produced items on the other hand, are produced and distributed at cost.
Having a strong cooperative aspect to the economy could therefore provide price signals against which items sold in the competitive aspect of the economy could be measured. This would mean that profit taking would tend to be restricted to those that can bring something new to the market or provide genuine improvements in efficiency. A functional cooperative aspect to the economy would therefore both positively restrict economic growth, and through providing price benchmarks, provide a strong disincentive against inflation.

Our systems of production have also become very specialized and centralized. For example, one region may grow wheat, and that is pretty much all that that region will produce. Most of the farms in the region will be either owned or controlled by one distribution company which then ships the wheat all around the world. Eggs are produced in huge factories, as are the pens we write with and the fans that blow wind at us.

Ever heard of putting all your eggs in one basket? What happens to that wheat growing region if the bottom drops out of the market or to the construction industry if the housing market collapses? What’s more, disruption in one sector of the economy can have implications far beyond a particular region or industry. The global economic system is deeply interconnected, and if one sector of the economy suffers, say the housing bubble bursts or the oil price spikes, the rest of the economic dominoes begin to fall: The share markets fall, consumer confidence drops, unemployment rises etc.

Having much more decentralized processes of production, whereby economic diversity and relatively high levels of local and regional self-reliance are the norm, on the other hand, would provide the system with much more resilience. In this context we find that free-trade has become our enemy: The most obvious and effective mechanism that we could look at to stimulate change toward economic diversity and local self-reliance is to provide financial incentives for people to source the goods and services that they buy from as close to home as possible.

Along with this decentralization, promoting a much stronger cooperative aspect to the economy than exists currently would also provide an important buffer against economic hardship, enabling people to shuffle from one job to another within government or neighbourhood businesses, thereby spreading the burden of any economic downturn.


Banking, Money, interest, inflation and land ownership – The widespread existence of interest bearing loans is another part of the pattern that has led us to ‘hypergrowthmania’. Interest works in a similar way to profit in the way that it makes us chase our tail. Not only do we pay interest on our own debts, businesses often finance their operations through borrowing, so the cost of this borrowing – the interest – becomes built into the price of much of what we buy.

So here we are once again paying more than what things are really worth, each year needing that little bit extra to cover the interest on last years loans. The economy grows as we expand our own businesses and work a little bit harder in order to pay for it.

Linked to the interest that is payable on money, we also see the constant growth in the value of other assets such as property and shares. People expect their assets to grow in value. Unfortunately, under this scenario of constantly increasing asset value, it is those with the most assets that benefit the most while those without assets find their lifestyles increasingly unaffordable. Poor people work harder, rich people get richer, whoops there goes the environment!

The problem is also compounded by our system of currency. Some of you may be surprised to learn that all of the money within our economic system comes to us via interest bearing loans. With the ‘fractional reserve’ banking system, banks only have to hold in deposit a small percentage of the money that they are able to loan out.

What happens in effect is that when a bank wishes to loan us money, they borrow that money themselves at a relatively low interest rate from the Reserve Bank. This money has not previously existed. The bank then loans it to us at a higher interest rate. The difference between what we repay to the bank and what the bank repays to the Reserve Bank represents new money that has entered our system. In other words, all of the money that banks receive in income from making loans is money that is added permanently to the currency supply.

This new money that is constantly added to the system is of course the primary driver behind inflation: With more money in the system, each dollar becomes worth a little bit less. Inflation, reducing the value of cash while other assets continue to grow, affects the poor to a greater degree than the rich. Along with profit and interest therefore, inflation also has us chasing our tails, effectively transferring more real wealth into the hands of the already rich, while the rest of us have to work ever harder to keep up.

Ongoing inflation also means that wage earners are forced into a continuing struggle, both against regulators (the more conservative of which believe that the labour market should be entirely ‘flexible’ and that things like minimum wage legislation should be removed) and the owners of productive capital, (who wish to minimize costs/maximize profits), in order to keep their wages rising in line with the cost of living.

So we can see that a complex, tangled web has been created, with a flawed currency system, interest, asset growth and inflation all tied in together. How do we fix this mess? The answer lies with major changes to our systems of banking and currency.

Perhaps we could begin with ending the fractional reserve system, and force banks to lend out only as much as they are able to back with hard assets. This may be a step in the right direction, but personally I do not think that it goes far enough. We would still be chasing our tails in several directions. What’s more, at the risk of employing an overused metaphor, a partial backtracking from the mess we are currently in may turn out to be a bit like rearranging deckchairs on the Titanic. While remembering to remain calm, what is needed is a more radical change of direction.

In my view, the ideal solution would be to move toward an interest free, global credit/debit system, whereby the sum of all credits and debits always adds up to zero. If one account is positive, another account will be equally negative. (This is like a steroid infused version of the LETSystem - Local Exchange Trading System - developed by Michael Linton as an alternative local currency in the 1980’s.)

For such a system to work most effectively and democratically, accounts for the system would be administered centrally on a global level, but each account within this system, whether a government, a community, an individual or a business, would have a credit and debit limit that would be determined locally. This would mean that communities down to the most local levels of society would have to be organized within themselves, and would have some kind of supervisory role over businesses operating within their bounds.

Running parallel with this global credit/debit system, localized cash currencies would simplify transactions close to home. Continuing with the concept of decentralization and encouraging local economic diversity, these cash currencies would in my view be best restricted in their circulation to about the level of the small city (so that a city the size of Brisbane would have 4, 5 or more of such currencies). These cash currencies could be administered at the local level and backed by a store of debit points in the local ‘bank’.

Such system would be non-inflationary, would not be subtly transferring wealth into the hands of the already wealthy, would be able to grow or shrink without disruption depending on people’s requirements, and would support the democratic institutions of society from the most local to the global level.

Along with these changes to banking and currency, substantial changes to the system of land ownership would also be important. In short, the concept of using property as an investment needs to be abandoned. Owning a home as part of our asset base? Great, but constantly increasing land value!? What bozo thought of that? The increasing unaffordability of land, and along with it the price of rent, is perhaps the least egalitarian aspect of the current growth economy.

Instead of this, mechanisms need to be found whereby the price of land can be stabilized in relation to the (hopefully non-inflating) value of the currency, and everyone is enabled to own a home.

This could be achieved quite readily if governments were to simply set a price at which they will guarantee basic access to land for everyone. Just as cooperative production processes have the ability to set relatively stable price benchmarks within the productive processes of the society, this would provide a benchmark against which the price of other land that is bought and sold could be measured.

Taking things a step further, perhaps we could also look at some sort of ongoing cost associated with the private control of large areas of valuable land. Such a circumstance would mean that rather than being a pathway to further wealth, control of such assets would instead represent an ongoing financial burden. Such a mechanism would therefore be working to reduce the rich/poor divide, and over time would result in land being more and more fairly distributed.

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Herman Daly has suggested that rather than pursue endless economic growth, we should move toward something that he calls a ‘steady state economy’. I couldn’t agree more, but the devil is definitely in the detail. A vague direction is not enough. The questions to be answered are: ‘What does a post-growth economy look like?’ and ‘How do we get there?’

Also, it is not enough for any one individual to have strong opinions on the matter. Neither Barack Obama nor Julia Gillard would be able to drive dramatic change on their own. What is needed before serious change will take place is not far short of a global consensus. Let us therefore bring on the public debate and discussion.

Warnings against unfettered economic growth have been growing in intensity for at least the last thirty years. It is a complex problem, but not one that we can afford to ignore. What do you think?

Forging a Genuine Third Way

G'day to you all. Been a little busy with working as a carpenter, but managed to produce the following article. Online Opinion once again said that they would run it. I also submitted it to the Westender (Brisbane's West End - an independent newspaper) and to the Australian, although that would be a pretty big step up for me if they publish it.



Forging a Genuine Third Way

Gilbert Holmes 2/12/10


The concept of a ‘third way’, which lies between the extremes of the left and right but is somehow qualitatively different from both, is essentially a great idea.

From Machiavelli to Marx, Hobbs to Rousseau, Smith and Ricardo to Kropotkin, history is peppered with important thinkers from both ends of the political spectrum, so what could be wrong with our taking a mix of good ideas from the left and the right and blending them together in a way that enables us to meet the challenges of our newly globalized, highly technological and ecologically threatening human society?

The third way somehow recalls to us the middle way of the Buddha, and the words moderate and inclusive spring to mind. A great idea! In practice however, unfortunately the third way has made a bit of a false start.

Based on the political strategy of ‘triangulation’, where one party attempts to take the middle ground by claiming their opponent’s policies as their own, the third way as defined by Bill Clinton in the USA and Tony Blair in the UK appears to have meant little more than an embrace by the centre-left political parties of the world of the neo-liberal economic agenda, with its policies of privatization, deregulation, trade liberalization and economic growth.

To date therefore, the third way could perhaps best be understood as such: In their efforts to counter the previous dominance of the conservatives, (especially Reagan and Bush Snr in the USA, Thatcher and Major in the UK), the centre-left made a shift to the right in an otherwise ideologically vacuous rebranding.

Surely we deserve better than this! Indeed, looking at the broader historical context of left/right politics, a genuine, much more interesting third way can be understood to exist than the one offered by Clinton and Blair.

Broadly speaking, left wing economic policies are focussed on the collective. Lefties believe that the role of government is to facilitate people to cooperate and share together, to manage the commonly owned productive assets of the society and to redistribute wealth so that all people have a relatively equal standard of living.

Right wing economic policies on the other hand focus on the individual. Righties believe that government’s role is to free up individuals to pursue their own interests, to promote private as compared to common wealth, and to encourage people to look after themselves.

It is the nature of our society that it tends to swing back and forth between these archetypal opposites. If either side dominates for a time, then the other side will rise up to challenge that dominance. But there is an alternative to this. We can find a balance: this is the third way.

Over the last century or so, a major conflict between the forces of the left and right has played itself out, with our global society negatively polarized between socialist and capitalist ideologies. Following the collapse of the USSR and China’s embrace of capitalism with the end of the cold war, the advocates of right wing economic policies began to claim the moral high ground.

We saw the rise of neo-liberalism, and as mentioned above, neo-liberal policies became embraced by both centre-left and centre-right political parties around the world. Far from being the third way as Clinton and Blair claimed however, neo-liberalism actually meant a shift to the right for the already right-winged global capitalism. A more genuine third way actually lies significantly to the left of here.

What this shift to the right has meant for democratic nations of the world is that political opportunity is beginning to open up on the left-hand end of existing mainstream parties. This can be witnessed by the rise of Barack Obama, the Liberal Democrats in the UK, the left-leaning Julia Gillard in Australia, and the increasing importance of the Greens in political discussions around the world.

A genuine third way however, will involve much more than just a shift to the left in global politics, and we will need to be informed by much more than just a vague discontent with the excesses of neo-liberalism. What we are looking for is something qualitatively different from the existing left/right dynamic.

Considering the challenges with which our global society is faced - a rapidly shrinking world due to an increasing population and technological capacity, and the necessity of transitioning to a post-carbon future to name a couple – advocates of a qualitatively different approach are indeed finding an increasingly receptive audience.

Economic growth for example, may still be spoken about as the panacea of all ills by the treasurers of the world, but the list of authors and other thinkers is already long who are asking the apparently simple question: How can we have continuing growth on a finite planet? Aren’t we already using 1.4 times the Earth’s regenerative capacity?

And then there is the growing focus on localization, embodied in the permaculture and transition movements among others. These are driven in part by concerns about global warming and peak oil, as well as a belief in the importance of community. The focus here is away from globalization and toward creating diverse, interactive and interdependent local economies.

In short, in the aftermath of the cold war, with the battle between capitalism and communism melting into history, a great reassessment is taking place concerning the institutions of governance and economics, and the appropriate shape and direction that they should take.

With this reassessment, outside of the capitalist/communist dichotomy, a number of difficult questions will need to be answered: How do we use fewer resources/pollute less? How do we maintain employment without economic growth? To what extent should we protect local economies and to what extent should we be open to trade? How do we assert local democracy and maintain control of local assets? What are the appropriate forums/democratic mechanisms for working out issues of global and geo-regional politics?

The traditional answers will no longer suffice. While there are those among us who would continue to rock the boat one way or the other, most of us are oriented toward stability and balance. We are moderates, and we do not wish to see ongoing conflict between the left and the right.

For this reason, it is those political parties that can remove themselves from the left/right splice, and look for genuine, structural solutions to the upcoming challenges to our socio-economic system, that will be best positioned to lead us into the future.

Diversity and Self-Reliance vs Specialization and Free-Trade

Just had this article published on Online Opinion. Was really proud of it when I wrote it but yet to receive a lot of response.

Diversity and Self-Reliance vs. Specialization and Trade

Gilbert Holmes Nov. 2010

I was saddened to note that a new political party, the Australian Protectionist Party, has begun to raise its head in Australian politics over the last few years. This new party has taken its name from the Protectionist Party of Sir Edmund Barton and Alfred Deakin, the first and second Prime Ministers of Australia.

Advocating in favour of protectionist economic policies, Barton tells us:

“The tariff will not (be) in any sense prohibitive. It will be a moderate tariff. … I am a protectionist and I will endeavour to protect as far as possible the productions of our own soil. … Our industries have grown up under protection and the Government will not be a party to a policy that would be their destruction. It will be a tariff that will product sufficient revenue without discouraging industries. It will be a tariff calculated to maintain employment”. (Taken from the Australian Protectionist Party website)

100 years later, while the small farm is practically a thing of the past, and Australia doesn’t really have a manufacturing industry anymore, we find that unrestrained free trade is consistently championed by the smiling faces of the media, as well as by leading politicians from both the left and the right.

Call me old-school, but I actually think that there could be a lot of votes in protectionism; and this is why the emergence of this new party is making me sad. It turns out that the first Australian political party in living memory to actively advocate in the broad sense for economic protectionism is a small band of right wing extremists who’s overriding concern is to protect us from an invasion of non-Anglo-Saxon migrants and refugees.

I can only hope that they will once again fail to register their party for the next election. If they do succeed however, as much as you would like to see us move toward having more diversity, interdependence and local self-reliance within our domestic economy, please don’t vote for them!

The idea of free trade is based primarily on David Ricardo’s theory of comparative advantage, which tells us that even if one region is better at producing everything, the greatest efficiency in production can be obtained, and all parties will benefit, if each region focuses on specializing in producing what they are relatively best at, and trades with one another for everything else.

The simple beauty of the mathematics of comparative advantage has delighted economists for nearly 200 years now, beguiling them and apparently blinding them to any other possibility. For the modern day economist, the mantra, ‘comparative advantage is right, free trade is good’ is central to their identity.

But there are actually some serious and quite obvious flaws in the theory. It turns out that our organic lives do not mesh so well with the mathematics. To begin with, comparative advantage does not take into account the costs (economic or social) of restructuring the productive infrastructure of a region so that it is producing what it is relatively best at.

Let us say that one region has a long history of growing bananas, but another region has begun growing bananas more cheaply (perhaps due to lower labour costs, better soils or more water). Comparative advantage tells us that the first region should accept the unrestricted import of the cheaper bananas, which will of course put the local banana farms out of business. The local population will therefore need to retrain, build new productive infrastructure etc.

Under such a circumstance, we can see that it is quite possible that the costs associated with this restructuring will outweigh the benefits of getting a cheaper banana. This is actually exactly the reason that WTO sponsored free trade talks have repeatedly failed: because developed nations can see that the cheaper banana available from poorer countries is not worth the economic costs –not to mention the political- of undermining their farming communities.

A number of thinkers, including David Ricardo himself and Herman Daly more recently, have also pointed out that the theory only works if capital is immobile. In other words, if one region is able to purchase the productive assets of another region, (through foreign investment, which is widely encouraged and practiced in the modern interpretation of free trade), the mutually beneficial aspects of comparative advantage quickly go out the window.

Our newly unemployed banana farmers for example, may soon find themselves working as under-skilled workers for a foreign owned business that has also bought up most of the newly unproductive former farmland in the area. “Jobs, jobs, jobs!” we would be told by a happy politician, and “Yes to free trade and foreign investment!” forgetting that it was free market policies that cost us our farms and old jobs in the first place. Adding insult to injury, we can also note that all of the profits generated by this new business will be taken out of the region.

In short, considering these shortcomings, I would have to say that free trade is best considered as an extreme, with no trade its opposing extreme. The middle, balanced way, which both the Buddha and Sir Edmund Barton would recommend, is to implement moderate protectionism.

Protectionism is about providing incentives that encourage people to invest their capital locally, as well as to purchase the goods and services that they require from locally owned and operated businesses. This will promote the development of diverse, locally focused businesses within a region, therefore encouraging local interdependence and self-reliance.

Economic policies that promote moderate protectionism, as compared to the current focus on free trade, would significantly alter outcomes within our socio-economic system.

Considering development aid for example, the current focus is to create export oriented businesses, with the hope that this will generate enough income for a region that it will be able to purchase its requirements. While it may stimulate economic growth however, this will encourage top-down management, tend to concentrate wealth in the hands of a few business owners, continue the drift from the country to the city as people look for jobs, etc.

If instead of this we support the development of locally focused businesses, and provide some protections for these businesses against competition from external sources, this will encourage a locally driven, steady build up of management capacity and other skills, as well as a productive asset base for a region. It would build community where people live.

We could also consider the role that protecting our domestic economies down to the more local levels of society could play in helping us transition to a ‘post-carbon’ future.

Short of some unknown ‘technofix’ coming to our rescue, moving away from a carbon economy will involve shifting away from an agricultural system that is heavily dependent on oil for its production and distribution, reducing our transport requirements generally by promoting the local production of the goods and services that we require, getting people out of their cars and into gainful employment within walking distance of their homes, etc.

In short, a post carbon future will involve a shift toward economic diversity, interdependence and self-reliance within our neighbourhoods, villages and cities.

It seems to me that the most simple method of supporting this transformation of our society is through providing a system of trade tariffs and other mechanisms that encourage people to buy goods and services that are produced as close to home as possible. This will provide a significant contrast to the economic and cultural vacuums that free trade policies have helped to create within our communities.

In concurrence with Sir Edmund Barton, I believe that these tariffs and other protections should be set at moderate levels so that, while they support the continued existence of diverse, locally focused businesses, they do not support ongoing inefficiency or profiteering.

Lessons for a New Paradigm - The Dual Drivers of Evolution

The below article has just been published on Online Opinion.

By the way the last post that I put on that site, (the previous article that I put on here) is still going great guns. It has been close to the top of 'this week's most discussed' for three weeks now, with more than 250 comments.



Lessons for a New Paradigm – The Dual Drivers of Evolution
Gilbert Holmes 12/10/2010

Initiating a profound shift in the way that we understand the natural world and our place in it, Charles Darwin is perhaps the most distinguished scientist of the last few hundred years.

Continuing the rise of science and the corresponding decline in the power of the ‘church’, Darwin’s theory of natural selection told us that the diversity and complexity of life result not from divine intervention as was previously thought, but from natural processes associated with how organisms interact with each other and with their surrounds.

As with most great ideas, at its core, Darwin’s theory is very simple, and once grasped, appears obvious and logical. Essentially, the theory is that as a population of organisms progresses from generation to generation, chance variations or mutations occur. Some of these variations will be advantageous to the individual carrying them, and this will mean that the individual is more likely to breed than its companions and therefore pass on the variation to subsequent generations.

In this way we can see that as time progresses, a population of organisms will continue to evolve. We can also see that because of the chance nature of variations, two isolated populations of the same species will invariably change in different ways, and will eventually become different species.

While there is I believe an essential truth in the concept of natural selection, we can also recognize a significant error in Darwin’s thought, and this error has had important implications for how we conceptualize ourselves and the natural world.

To understand this error, we need to take a look at the broader belief systems of the post-enlightenment era in which Darwin postulated his theory. In short, Darwin can be understood to fit within a pattern of popular theorists who across a range of subjects stressed the separateness of the individual entity.

Rene Descartes, beginning his analysis with “I think therefore I am”, told us that human consciousness is forever separate from the surrounding nature, and that our goal (through reductionist science) is to conquer that nature. Continuing this theme, Isaac Newton describing the material universe as a machine made up of separate atoms that move around bumping into one another.

Hobbes described a war with “each against all others” as the starting point for the compromise which results in civilized society. Adam Smith described competition between (separate) self-interested parties as the engine of a healthy economy. Freud described the emotions of isolation, the drive toward physical pleasure and away from fear, as central to the human condition. Etc.

Into this pattern popped Charles Darwin, and with the tide swimming strongly in favour of this ‘separatism’ (my term), it is little wonder that Darwin would stress competition between individual organisms as the driver behind the processes of natural selection. This competition came to be known as ‘survival of the fittest’.

I am fully aware that many of you will be protesting to yourself right now that survival of the fittest is not about competition. Instead, it is about whatever is best suited to the situation. This may involve traits that enable an organism to dominate its environment, but it can also involve the capacity to engage in symbiotic and cooperative relationships. If an organism will benefit most by acting cooperatively, it is variations that help enable that cooperation that will facilitate the best chance of survival.

I agree with you. Darwin saw that as well as fighting with one another, organisms will also work together for mutual benefit. For Darwin however, any cooperation between organisms was just a junior player; a subcategory of the all-important competition for survival. Darwin saw cooperation within the biological realm in a similar way to how Hobbes viewed human society; as a compromise between essentially self-interested individuals.

Darwin even expressed some sadness that he should conceive of nature in such a brutal light. In the Origin of Species, he wrote, “Nothing is easier to admit in words the truth of the universal struggle for life, or more difficult – at least I have found it so – than to constantly bear this conclusion in mind.”

The most famous critique of Darwin on this front was provided by Peter Kropotkin with his 1902 book, ‘Mutual Aid’, in which he claims that cooperation is in fact far more important than competition in the processes of natural selection. Building on this claim, he then goes on to suggest that the desire to cooperate is the principle motivation of the human organism, and that we should therefore immediately reestablish our society as an anarchist paradise.

So what is the answer? I suggest that we can look for it as part of a new paradigm that can be seen emerging within our current society.

This new paradigm can be understood to be emerging from between the extremes of the separatism described above and the ‘collectivism’, espoused by theorists such as Marx, Engels and Kropotkin, which rose up to oppose it.

The new ‘balanced’ paradigm has been steadily growing over the last couple of hundred years until now it has arguably come to dominate our way of thinking. This new paradigm finds its roots in the increasing influence that Eastern philosophy, which recognizes paradox and polarity as central to nature, is having on the West.

We can also look to Rousseau, who asserted that humans are paradoxically motivated by both self interest and moral virtue, and that our social institutions should reflect this, with both high levels of social organization and high levels of freedom. We can understand the increasing levels of democracy within our systems of government over the last few centuries in this context.

Hegel gave us the dialectic, with progressions in nature swinging between the polar extremes of the ‘thesis’ and the ‘anti-thesis’, as well as tending to find balance with the ‘synthesis’. We have seen the emergence of modern physics, which tells us that the stuff of the universe is paradoxically composed of both matter and energy at the same time.

We can also see the growing influence of Karl Jung’s theories of psychology, which have polarity built into their structure: anima/animus, extrovert/introvert etc. We can look at systems theorists, with their concept of nature being composed of holons; distinct entities which can be both broken down into smaller holons and which simultaneously form a part of larger holons.

We can also understand the emergence of the human and civil rights movements, feminism, environmentalism etc, as having grown up within the cradle of this emerging new paradigm.

In short, the new paradigm tells us that we are both matter and energy, feminine and masculine, separate individuals and a connected community, self-interested and benevolent, competitive and cooperative.

Applying this new mind-set to evolution theory, we can look at dual drivers behind the processes of natural selection; parallel streams, each of which is equally important.

On the one hand we can view evolution from the perspective of the individual as was Darwin’s focus, with the individual organism competing with it’s surrounds and passing on (what came to be understood as) its genetic heritage. At the same time, we can look from the perspective of the collective, with the evolution of eco-systems and communities, interdependent and cooperative relationships and the passing on of cultural heritage.

In 1976, Richard Dawkins gave us the concept of memes, units of cultural heritage (such as music or language), passed on within the larger brained organisms from generation to generation, but Dawkins is still focused on the individual. Simply through shifting our perspective, we can readily see that the passing on of cultural heritage has been going on throughout the entire evolutionary process.

Cultural heritage can be understood quite simply as the evolving forms and relationships within our ecosystems, and this cultural heritage is equally important to genetic heritage in determining evolutionary outcomes.

As much as it is the characteristics of a specific organism that will enable it to prosper or not, it is the shape of the ecosystem within which that organism lives. Ecosystems and communities, with their continuing and evolving relationships, will squeeze the direction of evolution, destroying that which does not fit and promoting that which does, just as surely as will variations within particular individuals.

So there we have the dual drivers behind natural selection:
• The individual/self-interest/survival of the fittest/genetic heritage
• The community/benevolence/mutual aid/cultural heritage.

These two drivers feed into and overlap one another, with the individual and the community each effecting outcomes for the other. We can see dual motivations within the individual organism: to commune with and to control its surrounds. We can also see both competitive and cooperative relationships existing side by side within a community.

I just submitted this article hopefully to be published at onlineopinion.com.au


Marxism Destroyed the Dialectic
Gilbert Holmes September 2010

GWF Hegel was not a good writer. Subsequently, it is easy to become lost in the complexity of the philosophical system that he developed, rather than to gain insight into the simple concept that underlies that system.

Hegel gave us the dialectic, and while the man has failed to gain popular recognition, the dialectic itself is a particularly beautiful philosophical concept.

To properly understand this concept, we need to take a look at Hegel's influences. While much has been written about the place that Hegel's ideas have within the history of Western philosophy, it is actually the influence from Eastern philosophy that is much more apparent. Most specifically, Hegel was inspired by the concept of yin/yang polarity.

The dialectic is a simple idea. Essentially, when we look at any progression within nature, we can discern a tendency to swing from side to side between archetypal, polar extremes, as well as to sometimes to find a balance between those extremes. In a nutshell, that is it, with the three parts to the dialectic progression often called the thesis, the antithesis and the synthesis.

Looking at some examples:

Consider a young person trying to deal with their emotions. We can imagine that they will be angry and aggressive at times, (the thesis), and weak and lost at other times (the antithesis). As they mature, they will take something good from each of the extremes and blend them into a positive balance, becoming both strong and gentle (the synthesis).

Or we could look at a population of rabbits introduced to an island. At first spreading out and expanding in numbers, the rabbits eventually eat all the food. Their numbers decline again. If uninterrupted, this cycle will continue, with swings between a high and a low population until eventually a stable population is reached.

We could also look at the tension between law and crime. If there is high levels of crime, the law will become tighter in response. If the law is too restrictive, however, the people will fight against it. Hopefully at some stage we will come to a happy balance whereby the law is sufficient to constrain destructive elements, yet relaxed enough to enable us to go about our diverse lives.

We have looked above at examples from the fields of psychology, biology and sociology. Actually, the dialectic can be used to understand any progression within nature, on the large scale and the small. Whilst it is widely applicable however, to date the dialectic has been most extensively applied in relation to understanding a single subject; the progression of human history.

And this is where we have run into a problem.

Being a member of the 'Young Hegelians' in his early years, the most famous exponent of dialectics is Karl Marx. Because of this the dialectic is generally considered in relation to Marxism.

Marx's version of history, which has come be known as dialectical materialism, provides the cornerstone for his political and economic theories. It was dialectic thinking that led Marx to divide society into the opposing proletariat and bourgeoisie, inspiring the opening line to 'The Communist Manifesto': 'The history of all hitherto existing society is the history of class struggles.'

While we do have to credit Marx with some wisdom for being able to recognize the importance of the dialectic, there are unfortunately some serious errors in his interpretation of the concept.

With the addition of 'materialism' to the dialectic for example, Marx and friends essentially told us that the way that we think is determined by the structure of our society. In other words, we will be selfish and greedy if we live in a capitalist society, and kind-hearted and benevolent if we live in a communist society.

Believing that our minds are currently corrupted by capitalism, therefore, and that as soon as capitalism is destroyed we will all want to move into mutually supportive communes together, this has led to the unfortunate tendency within socialist/communist circles to focus on revolution rather than on designing better systems of governance and economics.

Marxist thought has also largely lost Hegel's concept of the 'synthesis', whereby a resolution between two opposing conditions is found through taking something good from either condition and blending these good things together. Instead of looking for a synthesis, Marx believed that communism would rise up and destroy capitalism.

Even with these serious flaws in the Marxist interpretation, Marxism has managed to maintain something of a monopoly over the concept of the dialectic, with the controversial nature of Marxist philosophy tending to inhibit exploration of the dialectic in non-Marxist contexts, either for the purpose of analyzing human history or in other areas.

Looking toward the future therefore, while remembering not to throw the lovely dialectic baby out with the bathwater, let us try to move beyond the Marxist interpretation of the dialectic.

Aiming for a more appropriate understanding; taking a look back over our global society over the last few centuries, I suggest that we can recognize two principle dialectic tensions playing themselves out.

The first is the tension between spirituality and materialism. Beginning perhaps in the early1600's, we saw the dominance of religiosity being undermined by the rise of science and the 'enlightenment'. In more recent times, with modern physics aiding our understanding, and with the increasing influence of Eastern spirituality on the West, a synthesis of spirituality and materialism can be seen to be emerging in the form of a nature based spirituality.

The second of these dialectic tensions is between what I like to call separatism and collectivism. Separatism tell us that we are essentially separate from one another, that we are self-interested and that interactions between us are ultimately competitive. Collectivism on the other hand, tells us that we exist as a community, and that we are benevolent, loving and cooperative. The conflict between capitalism and communism can of course be understood to have occurred within this context.

A more balanced worldview, a synthesis of separatism and collectivism, will tend to tell us that we are paradoxically both separate and connected; both individuals and a community, both self-interested and benevolent, both competitive and cooperative. I believe that this balanced worldview is emerging within current times.

We can see that following the long struggle between capitalism and communism, and with the subsequent decline of communism, that our economic institutions remain skewed toward competition and capitalism. Strong forces have been emerging however, that are advocates of a more balanced approach. As testimony to this, we can witness for example the emergence of the human rights, civil rights and peace movements, the advances of feminism and environmentalism, and the increasing democracy within our systems of government over the last century.