Continued from : Evolution of Wars, Politics & Society

The industrial revolution in Europe resulted in increased productivity and excess production of goods. It became necessary to ensure a reliable supply of raw materials at a reasonable price and a captive market to export the goods. Many ideas were propounded as gospel, starting with mercantilism and then the humbug of David Ricardo’s Theory of Comparative Advantage, to prevent Portugal from industrializing and continue providing wine to England at low cost in exchange for expensive wool textiles. India was de-industrialized and became a mere supplier of raw cotton and an importer of textiles. This was a 180 degree turn as Britain started the trade with India to import its cotton textiles. In fact there were laws passed earlier by British vested interests to ban the wearing of cotton textiles, to reduce the loss of silver as export payments to India and prevent loss of British wool workers’ jobs. When a similar trade deficit occurred with China from buying its silks, tea and porcelain, Britain which by that time had taken over a lot of India, forcibly occupied Hong Kong and sold opium produced in its Indian territories to China to balance its trade deficit. It forced Indian farmers to produce opium and bought it an extremely low price from them, to starve the Indian peasants and to make the Chinese opium addicts.

Robert Clive who had masterminded the British victories in South India and Bengal made a huge fortune by skullduggery and falsifying agreement documents. He became an opium addict himself and thus could not be sent to America as a general to fight the rebellious colonists in 1776, Cornwallis was sent instead, and lost at Yorktown, but redeemed himself in India by his victories there and by promulgating laws and agreements which solidified British rule in India. Clive at the height of his crooked career might have defeated Washington and America would still be a British neo-colony like Australia and New Zealand.  The foolish and greedy Indian Nagar Seth (Financier of the City) who had financed the British trade with credit and bribery was eventually hanged by the British to eliminate anyone who could reveal the truth. Friedrich List, the German economist had studied the David Ricardo British-Portugal trade issue and was familiar with the ideas and strategy of Alexander Hamilton, who favored high tariffs to protect nascent industry till it had acquired enough technology and finances to compete with other nations. This is the policy that Britain and the US initially followed. The proselytizing of free trade began only when initially the British Pound and subsequently the American dollar had become the main international reserve currencies. List’s own words are -

“Any nation which by means of protective duties and restrictions on navigation has raised her manufacturing power and her navigation to such a degree of development that no other nation can sustain free competition with her, can do nothing wiser than to throw away these ladders of her greatness, to preach to other nations the benefits of free trade, and to declare in penitent tones that she has hitherto wandered in the paths of error, and has now for the first time succeeded in discovering the truth”.

Interested readers may wish to read Cambridge Professor  Ha-Joon Chang’s books–

a) The Bad Samaritans and
b) 23 Things They Don’t Tell You About Capitalism.

The Berlin Conference of 1884-5 decided which European country should own what part of Africa. Interested readers should read Thomas Pakenham’s book “Scramble For Africa”. The US earlier had taken control of the whole western hemisphere by the Monroe Doctrine and soon after took over the Philippines, Guam and Hawaii. By the mid-1900s, the colonies were claiming independence and had been milked dry and now needed investments by the European colonizers (Gandhi came along at the right time and because of his obsession with non-violence, sexual abstinence, bowel fixation and zealous religiosity wasted nearly 25 years by stopping and dithering the campaign against British rule.)  Britain was a fading power and FDR insisted on liquidating the British Empire as his price for saving Britain and keeping Germany down during WW2. Russia which had only colonized contiguous territories and ceased being a major naval power after losing its navy in the 1905 war with Japan, had morphed into the USSR and had been an ally during WW2 instead of an enemy which US troops tried to occupy around WW1. It was still not trusted and made to bear the major burden of the war against Germany by purposeful delay in opening an American front in Europe. It lost 10% of its population and was the main force which beat the German army.

With the advent of Thatcher in UK and Reagan in the US, both of whom were probably already in the earlier stage of Alzheimer’s when they took office, developed the Washington consensus and the neoliberal economic policies, though Nixon and Milton Friedman had already preached and written the gospel earlier. (Read Naomi Klein’s “The Shock Doctrine”)

Germany commits unforgivable follies but seems to rise every time like the proverbial Phoenix. It has become the dominant economic  power in Europe and one of the top ones in the world. It offered subsidies and financial aid to France and now to a lesser extent to all aboard the EU bandwagon, but its motives like America’s foreign aid and the Marshall Plan are not purely altruistic. It facilitates the ability of the other EU countries to import German manufactured high value added goods and export French wine, cheese, etc. and sundry raw materials and less engineered goods. It cannot retain its high trade surpluses without the subsidies and assistance, as unlike China and Japan it does not manipulate its currency to keep it undervalued. But even Germany cannot match the Chinese prices and runs a trade deficit with China.

Thus banks in Germany and to a lesser extent those in France and Britain have loaned huge sums of Euros to Portuguese, Italian, Irish, Greek and Spanish banks. Thus it supports their partial and initial bailout just as the US under Clinton, Rubin and Greenspan bailed out Mexico to save the US banks all at the cost of the American taxpayer. The same thing was done by W, Paulson and Bernanke and even Obama since 2008. The stupid former Irish prime minister took over the debts of the Irish banks and similar hardships were foisted on to Greece , Portugal, The Baltic countries (Latvia, Lithuania, Estonia). This is why Merkel of Germany recently lost elections in the German State it has ruled for six decades (also for stance on nuclear power after Japan’s catastrophe) and Slovakia refused to go along with bailing out the PIIGS and the True Finns party of Finland will do well in the coming elections. Britain and the Netherlands are trying to put Iceland into a straitjacket like Greece and Portugal by forcing its government and people to suffer the hardships of Ireland, Greece, Portugal and the  Baltic States and assume the debts of its crooked banksters, who fleeced British and Dutch depositors by going belly up and burdening the British and Dutch Central Banks to make the depositors whole. 

The Icelanders refused once but they are having a second referendum today, April 9th, 2011 whose results will be known tomorrow. The so called liberal Lesbian president who had initially taken over from the Icelandic government which was thrown out after the initial debacle, now is advising Icelanders to vote to assume the debt while the newest president who succeeded after she was thrown out is recommending a no vote. If Iceland votes yes it will have a national debt of 260% of its GDP and a whole generation or two will live in penury like those of the Baltic States, Portugal, Greece and Ireland. The last time this happened Ireland lost nearly 20% of its population by migration to America. It is happening in the Baltic States as well. The sensible option is to do what Argentina did by reneging on the debt and thus have a speedier recovery without worrying about being treated as a pariah. This is why Britain has changed its laws to exclude and severely restrict its non-European immigration and hopes to take in European labor, fleeing from these countries facing a meltdown, which will be easier to assimilate. 
 
Continued to Evolution of Society