Economics and the Earth Constitution

A Brief Summary

Glen T. Martin

27 May 2004


Insofar as capitalist economics pretend to be an “objective” science without a moral dimension that takes into account the human consequences of their economic principles, capitalism cannot and does not have a human face.   Perhaps the most gigantic lie of capitalist economics, as Karl Marx pointed out, is that it pretends that economics is an investigation of objective natural scientific laws rather than a set of human social decisions with human moral consequences. 

 Some forms of socialist theory have also fallen victim to this lie of “natural economic laws,”  but most socialism throughout history has emphasized that moral principles cannot be separated from economic principles.   A decent economy is one created and regulated by laws that take into account the human consequences of economic interactions.    I believe socialism is most correctly defined as any economic system premised on the moral principle that every human being is a uniquely valuable end in herself or himself, and the attempt to cooperatively construct a system that maximizes the common good on the basis of this principle.

In this summary, there is no space to go into the many reasons why capitalism (without a moral human face) is inseparable from the other dominant institution of the modern world of the past five centuries – the systemof sovereign nation-states.   I must refer the audience to my earlier writings as well as to my forthcoming book Millennium Dawn: The Philosophy of Planetary Crisis and Human Liberation.

Suffice it to say that no economic proposals for change in the global economy in the direction of peace, justice, and prosperity can possibly succeed without democratic world government.  For only democratic world government can embody the fundamental principle of morality: all.  Moral principles are based on the principle that every human being is an end in himself or herself.   No economic system can embody the principle of morality unless it includes every human being in its scope.

Only the rule of enforceable law can control human individual or collective self-interestto the point where the common good is actually promoted.   Only the enforceable rule of law can give us political and economic rights for every person on Earth.   We need an economics of sustainability, justice, and planetary prosperity.   In today’s world, with globalized communications, economics, technologies, and trade, only federal democratic world governmentcan give us a decent economics and a decent future for our planet because there is no other way to embody both the common good of the whole and the unique value of each.

The overwhelming majority of human beings, disenfranchised by today’s economic system, have nothing to lose and everything to gain from democratic world government where their rights (that is, their dignity as human beings) are constitutionally recognized. . A federal world government under the Constitution for the Federation of Earth would not provide a panacea or magical solution to the problem of exploitative institutional relationships, but it would make success possible through the ability to use the World Courts, the World Ombudsmus, the World Parliament, the World Executive branch, and the World District Attorneys in the struggle for the protection and progressive implementation of a just world order.    Under the gigantic lie of capitalism – that we are stuck with immutable, natural economic laws –  success hardly appears possible.

A.  An Overview of the Constitution for the Federation of Earth

Article I of the Constitution for the Federation of Earth lists the six most basic primary functions of the Federation.  Let us review them in turn.  (1)  “To prevent war, secure disarmament, and resolve territorial and other disputes which endanger peace and human rights.”  No longer could the “cycle of violence” exist where rebellions because of the structural violence of extreme poverty meet with repression from third-world governments financed and supported by first-world governments or with “interventions” by first world military to prevent progressive social change from occurring.  Nation-states, like the federal government,  would be disarmed by law, and the process of changing the structural violence of poverty would be open to non-violent methods of conflict resolution such as the courts, demonstrations, social organizing, and so on.  Secondly, no longer could a large portion of the economics of Earth be devoted to insane, environmentally destructive, and ultimately self-defeating militarism.

(2)  The second primary function of the federation  would be “To protect universal human rights, including life, liberty, security, democracy, and equal opportunities in life.”   Again, the very foundations of the world federal government would allow the progressive transformation of institutionalized violence and exploitation, protecting the “security” of those who militate for change, and allowing them to legally base their claim for just economic and social institutions on the right to “equal opportunities in life” (an idea that is a bold-faced lie under the present capitalist system).

(3) “To obtain for all people on Earth the conditions required for equitable economic and social development and for diminishing social differences.” The constitution specifies its affirmation of cultural diversity and local autonomy in other places (for example, Article XIII-16), but here we see concern to diminish the “social differences” of the present system of wealth and power versus the poor and exploited.  The mandate of the world government, stated repeatedly in the constitution, is “equal opportunity for useful employment for everyone, with wages or remuneration sufficient to assure human dignity” (Article XIII-1), in other words, to end the extremes of poverty and wealth worldwide as we know them.

The remaining three “broad functions” of the Federation would again work in favor of the democratic socialist struggle for a fully realized human community:  (4) “To regulate world trade,”  (5) “To protect the environment and the ecological fabric of life from all damage,”  (6) “To devise and implement solutions to all problems which are beyond the capability of national governments, or which are now or may become of global or international concern or consequence.”  World trade would no longer easily interfere with the rights of every person to a life of dignity with a home, security, health care, and opportunity (Article XIII, numbers 4-7 and 11-13).  The exploitation of the poor by multinational corporations would be brought to a rapid end with the regulation of world trade, and the destruction of the global environment though multinational exploitation of resources would be quickly ended (and can only be quickly ended) through the power of the Earth Federation.            For the first time, a consistent set of worldwide laws regarding the environment, enforced by the world police armed only with weapons sufficient to apprehend individuals, could be enacted.  (“World Police shall be armed only with weapons appropriate for the apprehension of individuals responsible for the violation of world law” (Article 10-C-5).)  No longer would the poor nations have to sacrifice their environmental standards to attract rapacious corporations to their resources.   International debt will be assumed by the federation and rapidly paid off, and a government concerned with global prosperity within the framework of environmental sustainability would be initiated for the first time in history.

On the planetary level, the idea of the “common good” has taken on a deeper meaning than within nation-states where it rarely has the seriousness of survival itself. Many global problems, including global wealth and poverty, global militarism and lawlessness, and global environmental destruction, and global population explosion are “beyond the capacity of national governments” to address.  The World Constitution provides the only viable hope for humanity to promote a true common good.   On the nation-state level, integrated as it is with global monopoly capitalism, the common good of any particular nation will always mean the sacrifice of the common good of the planet and humanity as a whole.   No government in the world can promote the common good unless that government is democratic world government.

Study of the Constitution for the Federation of Earth shows the proposed democratic world government would specifically possess or actively work for many features we associate with a cooperative society based with an economics premised on moral principles.   Article IV, number 12, and article XIII, numbers 4, 5, 6, and 11, give it the goal and authority to provide free and adequate education, health care, housing, food, water, and social security to everyone on the planet.  Individual nations, no matter what their economic system, would be required to tax the rich and/or legally appropriate enough of their resources to provide, probably with the help of the global federal government, adequate education, health care, housing, food, water, and social security to all their citizens.   Profits will no longer be funneled to off-shore bank accounts to avoid the taxes that contribute to the common good.

Article IV, number 14, of the Constitution gives the world federal government the power to regulate all transnational corporations, finances, and industry.   Just as territorial nation-states now have the legal power to regulate corporations, finances, and industry, so would the world government.  But currently transnational corporations hold their governments hostage with the threat to move their resources and productive facilities to other nations if they are not given favorable tax breaks or environmental liberties.  In addition, given the inadequate forms of democracy in territorial nations, large corporations at present buy, control, and manipulate politicians and other people with the authority to regulate them.  

Under democratic world government, their ability to use these tactics would be seriously limited.  The Earth Constitution is designed with multifaceted checks, balances, and institutional mechanisms to deter the corruption of those in power and ensure the realization of the common good.   Even private corporations, finance, and industry would be required to be more responsible to the public domain and less secret and totalitarian in their operations and methods.  Individuals would regain their right to privacy (today destroyed in the so-called war on terrorism).  Corporations would have to assume public accountability.

Article IV, numbers 23, 27, 28, and 30, effectively mundialize the Earth’s oceans and sea beds, all transnational power systems, all essential natural resources, and all fossil fuel production in the world.  These actions are necessary if the constitutional goal of a decent life for all planetary citizens is ever to be realized, along with the constitutional goal of preserving the planetary environment.   The ecological and human harm done by the big oil corporations and the imperial nation-states in their service during the twentieth century defies imagination, including the extensive destruction of rain forests, ecosystems, and the lives of people living in these regions, including substantial complicity with murderers and torturers in places such as Nigeria, Brazil, or Indonesia. 

B.  Six Basic Economic Principles of An Economics With a Human Face under the Earth Federation

 The central principle of the transitional economics will be to begin the process of restoring and protecting the global commonsin land, technology, money creation, and information (Smith, 2003).  The economics of absolute property rights that now dominates the world through monopolies on land, technology, money creation, and informationwill be transformed over time to an economics of conditional property rights in which the common good and prosperity of the diverse peoples of the Earth will be ensured. The first steps in this process (the initial economics of the Earth Federation) will involve only a few, simple, common-sense changesin current economic practices.

There are at least six simple economic principles that must be adopted by the Federation to rapidly create universal prosperity.    As I have explained elsewhere, these six principles oppose six mythologies (sets of lies) perpetuated by the wealthy nations and financial institutions in today’s world.   Because of time limits, I will list these principles, in order to simply summarize what a truly human, alternative economics looks like.

 (1) The Earth Federation would instantly create vast lines of credit available for development on the basis of people’s ability to work and produce goods and services.   (2) It would eliminate the bizarre legal fiction of corporations having the rights of persons, and restore to democratic government the power to regulate them for the common good.  (3) The Federation would eliminate the absolute right of corporations over so-called “intellectual property,” so technology and productive techniques can spread rapidly throughout the world.  

(4)   It would necessarily eliminate the corporate monopoly on media (radio, televison, news publications, and so on), thereby effectively ending the propaganda system controlled by the wealthy.  This will make many of the airwaves available for public health and development education.  This will also activate real democratic dialogue and debate within the Earth Federation.  (5) The Federation would write into law the principle of equal pay for equally productive work for all people.  This will immediately end much of corporate domination over governments and regions while providing workers with the cash to buy goods and services.   (6) Finally the Federation would break the present global monopoly over land and resources through restoring a multiplicity of local land-owners and converting land ownership rights to conditional rather than absolute rights.  All of these steps together will activate the famous “multiplier factor” at the heart of any prosperous economy.

In concluding, I will discuss briefly here only the first of these principles.  The power of government to create money by law sufficient to activate universal prosperity for the Earth.  The central myth is the grand lie of money and loan-creation.  On this lie the entire system of global economic domination and exploitation is predicated.   This lie is exposed in Immediate Economic Benefits of World Government (2000)by Philip Isely and in Economic Democracy: The Political Struggle of the Twenty-first Century (2002a) by J. W. Smithand in my own Century Twenty-One: the Manifesto of the Earth Federation.   The lie states that only banks or wealthy governments that sponsor them that already possess wealth can create or print money, and only financial institutions with wealth can lend money.   The lie asserts that accumulated capital is necessary for creating or lending money.

Under this system, when poor governments try to print money to activate their economies, their money is devalued by world financial institutions until practically worthless.  In Ghana, in the summer of 2002, my colleagues and I had to haul money to pay our modest hotel bill in plastic shopping bags because the national money of that country was so substantially worthless. Simultaneously, these poor governments are offered loans inconvertible first-world currencies from already wealthy financial institutions with interest rates making a profit on the loan for the wealthy lenders.   Those who have stolen the world’s wealth for five centuries, now use the wealth they stole from the world’s poor to increase their own wealth by offering to lend what they have stolen back to their third world victims.

All genuine wealth is created through a productive combination of capital, labor, and natural resources (Smith, 2002a).   Wealth is created from resources through human productivity.   A government does not need preexisting funds to create money or lines of credit.  It can create these (for loans as capital investment) on the basis of the ability of people to use this credit, along with labor and natural resources, to produce goods and services.  This is the true wealth that can then ensure the value of the created money.  These loans can be repaid to the government from the wealth produced at a nominal additional cost for the administration of the loan.  The Earth Federation does not have to bow to the Lords of the Earth to achieve rapid prosperity.  All that is required is the political will of the initial group of ratifying nations.

When twenty-five or so nations simultaneously ratify the Constitution for the Federation of Earth, they will simultaneously create a common currency (call it “Earth Currency”) and will immediately be able to receive ample lines of credit for rapid development based on their productive capability, resources, and labor supply.   Twenty-five or so nations combined together as the initial Earth Federation will have plenty of all three and will be able to eliminate money scarcity and devalued currency immediately. Their economies will be regional, emphasizing local, autonomous development and activating the economic multiplier factor that is the key to every healthy economy. And their economy within the Earth Federation as a whole will be large enough to function independently of the financial centers of control of the present world-system.

This is exactly what is prevented by the globalized so-called “free trade” economy.  In this economy, the already poor are in debt to the already rich and are forced to sell off their natural resources and cheap labor to wealthy foreign corporations (through structural adjustment programs) who then drain the profits (and resources) from the poor regions into the coffers of the already wealthy.  Barriers are maintained between nations and regions protecting accumulated wealth in certain nations and regions who do business in the exploited nations.  There is no one to tax or regulate the process of exploitation.  The nation-state system makes a decent economic world-order impossible.

It is imperative for the initial Earth Federation assume the international debt of all joining nations immediately, to be paid off at a reasonable rate of interest by the Federation.  The Federation will be careful not to throw the non-ratifying nations into economic turmoil, only to show them by example how much they would benefit from joining the Federation. The principle behind the Earth Constitution is the good of all humanity, not the initiation of a new competition between the Federation and non-Federation nations in the early stages of world government.

Simultaneously with the assumption of the international debt of member nations, the Federation will issue ample lines of credit to activate the economies of its members.  Trade outside the Federation would have to be done in Earth Currency, the value of which would not be regulated by present global financial institutions.  Trade outside the Federation would not depend on offering concessions to exploitative corporations, since the Federation would be self-sufficient and economically independent.   Investment within the Federation from outside would have to be done in Earth Currency and follow Federation laws.  The global system of exploitation would immediately be transformed.  Other poor nations would begin joining the Federation in great numbers upon seeing the freedom and prosperity activated by the Federation.

C.  Conclusion

The Earth Federation will have no trouble fulfilling these guaranteed economic and social rights (Article XIII), since it will activate a prosperous economy while eliminating all costs formerly dedicated to war and militarism.   Under the present system of domination and exploitation (nation-state-monopoly-capitalism), there is no intention of creating a prosperous world economy.   Trade, like militarism and everything else, is directed toward preserving the system of domination (see Chomsky,1996a, pp. 7-28).  Twenty percent of the world population benefit while the other eighty percent remain in perpetual poverty as the exploited source of wealth for the few.

Under the Earth Federation, personal private property is protected by law, and, within limits imposed by preserving the environment and the good of all, the quest for private accumulation within reasonable bounds is retained.  The government does not own all business and industry, nor are decisions made in a “command economy” fashion.  The goal of government is to activate regional and local economies and coordinate use of resources and development so no nation or group benefits at the expense of others.  Only a planetary government can achieve this, since individual nations under the present system are subject to economic forces over which their governments have little or no control.  And under the present system, nation-states promote their own economic interests at the expense of all others.

The transition to an economics with a human face, therefore, will not mean transition to government ownership but to economic systems where the least labor and least waste is expended so all may live reasonably well (sustainably) and get on with valuable and meaningful living.   Our planet is extremely rich in resources (even after half a century of diminishing resources under monopoly capitalism). And the technology for conversion to renewable or alternative resources already exists (Daly, 1996, chs. 5-9).  We can create reasonable prosperity for everyone if we begin to democratically and self-consciously organize the economy under a democratic world government mandated for this goal.

The Earth Federation, predicated for the first time in history on the welfare of all rather than the benefit of particular nations or classes, will also found its economic and political system free of the other lies or mythologies now serving global domination. The global economy must be democratized.  The power of exploitation and domination must be taken from the transnational corporations and imperialist governments protecting them.  There is no force in the world capable of this other than the legitimate sovereignty of the people of Earth expressed in federal world government.

These practical steps are nearly impossible to implement under the current world-order.  No amount of  “world social forums,” international people’s movements, or guerrilla insurgencies can overcome the power of those who now control the world-order.  On the other hand, these common sense changes would be easy for the Earth Federation to implement and enforce.  Under the Earth Federation, people would no longer be trapped within a global economy beyond the power of individual governments.  The corporations could no longer prevent government from enacting simple laws to democratize economics and ensure sustainability.

For the first time in history, the Earth would have a federal government representing all people, directed toward creating universal prosperity as well as ensuring the sustainability of the Earth for future generations.   A human face for economics is inseparable from ratification of the Constitution for the Federation of Earth.