Common Sense Economics

Glen T. Martin

Published in Chapter Three, section 7 of World Revolution through World Law

7. Common sense economics under democratic world

government

The economics of a decent world order under the Earth Federation can be

summarized in seven simple, yet fundamental principles. Once the official

World Parliament is elected, it will have the authority to implement a

global economic policy based on these principles.

7.1. First, extensive lines of credit in Earth Currency and nonexploitative

loans will be made immediately available to individuals, businesses, and

governments for purposes of sustainable development. The great lie of the

present world order is that only those who possess wealth can loan money

or create lines of credit. But real wealth is a product of natural resources,

capital, and human labor. The world government can create immense lines

of credit in Earth Currency to be used for rapid, sustainable economic development

wherever this is needed within the Federation.

7.1.1. With the creation of real wealth from development, these lines of

credit can be repaid for only an additional small accounting fee. There will

be no exploitative interest rates. And the value of Earth Currency will not

be predicated on the global financial institutions that now devalue currencies

of poor countries and manipulate the “convertible currencies” to

continue to enrich themselves.

7.1.2. The first twenty-five nations to ratify the Constitution (comprising

a large portion of the Earth’s population, resources, and collective technological

know-how) will form a substantially autonomous economic unit.

The Federal government will immediately begin extending lines of credit

for development, not merely to the already wealthy elites within these

countries but to the poor or whoever has a sustainable, nonmilitary project

in mind that would create wealth as well as benefit society. Individuals,

businesses, and governments will have ample lines of credit available to

them for only the cost of an accounting fee. Governments could reasonably

focus on rapid development of infrastructure (roads, schools, hospitals,

sanitation, communications), while businesses focused on goods and

services.

7.1.3. Every poor nation knows that it is watched carefully by the imperial

powers to ensure that it does not deviate from its subordinate role

within the global system of domination and exploitation. Every nation

knows that if it ratified the Constitution for the Federation of Earth alone,

it would be economically punished for this by withdrawal of investments,

recall of loans, or economic sanctions. Witness the forty-three years of

suffering that has been imposed on the Cuban people because their government

attempted to take an independent course that cared about its own

poor and dispossessed citizens.

7.1.4. For this reason, a number of governments in the developing world

must coordinate their efforts and plan to simultaneously ratify the Constitution.

World government can easily begin with perhaps twenty-five

nations simultaneously joining together to create the initial Earth Federation.

Immediately such a group of nations ratifying the Constitution would

become a substantially autonomous economic unit, using Earth Currency

and receiving extensive lines of credit for development from the newly

created federal government. Withdrawal of investments, recall of loans,

or threat of sanctions would not matter. The federal government would assume

all international debt of these nations to be paid back in a reasonable

manner at nonexploitative interest rates.

7.1.5. Approximately twenty-five nations would immediately enter into

dynamic cooperation in the use of their resources, technologies, educated

leaders, and development initiatives. Their debts would be removed under

the current world order and they would receive extensive lines of credit for

sustainable development based on the ability of their people to produce real

wealth using finance capital, labor, and natural resources. Corporations or

industries within these nations that refuse to cooperate in the conversion to

Earth Currency would be nationalized or mundialized, whichever is most

appropriate. The simple but liberating economic principles outlined in

this manifesto would immediately take effect. The increase in prosperity,

creative energy, and hope would be immediately evident and contagious.

7.1.6. There is no mystery about how to create prosperity. Place a great

deal of money in the hands of people who wish to develop projects, employ

workers, procure the necessary natural resources, and buy and sell locally

and regionally. Money gets into the hands of ordinary people who then

recirculate it through increased consumption and the purchase of services.

There is no reason to take anything away from the already rich or oppose the policies

of the World Bank or corporations operating outside the initial Federation.

7.1.7. Those who are rich may retain their wealth. What is eliminated is

their ability to exploit others to make themselves richer. The World Bank

may continue to offer its development loans to poor countries of the world.

But who will want these loans when immense lines of credit are available

to individuals, nations, and businesses at the cost of only an accounting

fee? Exploitative interest rates are eliminated and with it the ability of

those already rich to exploit and dominate the poor who need money for

development purposes.

7.2. Second, large scale technology transfer and infusion of fertile ideas

and techniques for sustainable development can be activated through

common sense revisions of current intellectual property rights laws. As

the writings of economists Michael Chossudovsky, David Korton, Vandana

Siva, J.W. Smith and others have shown, one of the ways the wealthy

world retains neo-colonial monopoly control on the global economy is

through intellectual property rights, which have become a fundamental

tenant in WTO regulations. The simple device of allowing any patented

idea to be used for the payment of a reasonable royalty fee would make all

ideas and techniques available to humankind for sustainable development

purposes.

7.2.1. Through its system of absolute intellectual property rights, the current

world system keeps the developing world in a low tech condition,

forcing them to sell their natural resources to the wealthy world to be

there manufactured and sold back to the developing countries at a profit.

It keeps monopoly control over marketable ideas and innovations, thereby

belying its ideology of “free trade.” Versions of this policy have been

going on since the advent of colonialism. They keep life saving drugs

from reaching the AIDS stricken countries of Africa. They keep seeds and

key agricultural necessities profitably expensive while poor farmers starve

worldwide.

7.2.2. The simple change of allowing any idea to be used if a reasonable

royalty is paid, eradicates these intellectual property rights monopolies

and liberates the poor of the world for efficient, rapid development. This

modified system of intellectual property rights would also activate the regional

economies of the world with a tremendous influx of new techniques

and ideas. Scarcity would be ended and prosperity rapidly created.

7.3. The third simple principle for rapidly creating global equity and

prosperity involves massive programs of education and empowerment of

populations throughout the world through use of airwaves and other forms

of communication for free global education on behalf of rapid sustainable

development. Just as the present world system involves a monopoly on

money creation and lending, and a monopoly on advanced technologies

and techniques, so the present world order involves a monopoly on media

and communications. The governments of the world have given away the

airways and media for communication to private, profit-making interests.

The electromagnetic spectrum from TV to radio to satellite communications

is largely used for commercial purposes, for enrichment of private,

profit making corporations, and for propaganda on behalf of the current

world system. These should be used for sustainable development and

global free education that this requires.

7.3.1. We have seen that a massive worldwide educational effort is essential

to rapid sustainable development and the elimination of poverty

and unsupportable population growth. The technologies and means of

communication are available to achieve this. All that is required is government

that serves the needs and interests of all the world’s citizens and

not government, as in the United States, that serves the needs and interests

of the big corporations.

7.3.2. Use of the available technologies and means of communication

for rapid sustainable development would activate regional and local

economies. People would learn sanitation techniques, family planning

techniques, literacy, foreign languages, water purification techniques,

techniques for generating nonpolluting forms of energy, techniques for

increasing their income and quality of life. This simple change in the use

of the world’s airways and means of communication would serve as a third

major step for creating universal prosperity and sustainable development.

7.4. Fourth, simple legal steps would be taken fostering the empowerment

of regional and local economies where money is retained within the locality

and not siphoned off to foreign banks or corporations. Regions would

produce as many goods and services for themselves as reasonably possible

and economically feasible, and import only what is necessary to complement

the local economies. The amazing waste of energy and resources

that now occurs in transporting goods around the world that could just as

well be produced locally would cease. Regions would employ many at

good wages creating a population capable of buying good and services and

businesses would develop in response to these demands.

7.4.1. In the United States, when a multinational “superstore” moves into

a town, many local businesses begin to fold. They cannot compete with

the ability of the superstore to procure cheap clothing, food, drugs, shoes,

housewares, furniture, sporting goods, hardware and nearly everything

else. The superstore may employ a few people at low wage jobs, but its

profits do not remain in the community. They are sent back to corporate

headquarters and to distant investors. The economy of the local community

begins to die. Small businesses close up and unemployment increases.

7.4.2. This same phenomena also happens on a global scale. A soft drink

or medical drug from a multinational corporation in a developing country

may be able to undersell a domestically produced soft drink or drug.

But the profits from the multinational soft drink or medical drug return to

wealthy first world investors and are not recirculated within the local or

regional economy. Very often, the developing country is even prevented

from producing its own drink or medical drug by intellectual property

rights regulations. These global monopolies strangle regional economies.

7.4.3. The principle of health for economies, and for sustainable development

of prosperity in developing countries, is to activate regional and local

markets. This includes raising wages, producing locally whatever can

be produced to supply the needs of the population, and creating a healthy

interchange of supply and demand that keeps money circulating within the

region.

7.4.4. The Earth Federation is not opposed in principle to “globalization.”

Converting the world system to democratic federal world government is

maximal globalization. But globalization of economics without the globalization

of democratic world law has simply extended the current system

of chaos and violence worldwide. Without world law, imperial nations

and gigantic corporations exploit and dominate the poor of the world

in their own self-interest. We need global planning for the future, global

monitoring of the environment, and global trade where appropriate for the

benefit of everyone involved. Globalization without democratic planning,

regulation, or concern for the common good will necessarily result in the

viciousness and corruption that we see everywhere in today’s “globalized”

economy.

7.4.5. Today, the “anti-globalization movement” is providing vital resistance

to this world system of economic domination and exploitation.

Many of the individuals and organizations that participate in this movement

are committed to democracy, justice, the ending of poverty, environmental

protection, and human rights. They play a vital role in exposing

the terrible legacy of economic globalization with respect to all these

issues. However, the central focus of this movement is that it is against

globalization.

7.4.6. To be against all “globalization” is to be against planning for the future

of the Earth. It is to be against the universal rule of law on Earth. They

are “anti,” without having a clear vision of how the world can be transformed

into a civilized world order. Vague notions of justice, democracy,

or protecting human rights without a global, democratic, legal mechanism

for achieving these are futile. The Earth Constitution gives humanity the

specific political and economic means to achieve these goals.

7.5. Fifth, the market may be an efficient way of determining prices for

many things, but certainly not for wages. There must be equal pay for

equal work at good wages throughout the Earth Federation. Economist J.

W. Smith points out that the rate of advantage of equally productive but

unequally paid workers doing the same work is exponential, not arithmetical.

Take the example of a worker in the developing world paid one U.S.

dollar an hour for producing an item that is identical to the item produced

by a first world worker making ten dollars per hour. Since the cost of labor

largely determines the prices of these items, the developing world item

sells for one dollar while the first world item for ten dollars. How many of

the developing world items can the first world worker buy after working

ten hours? How many items of the first world worker can the developing

world worker buy after working ten hours? The rate of advantage in this

simple example is 100 to 1 (Smith 2005a, Chapter One).

7.5.1. Under this rate of advantage there is no possibility of the developing

world ever catching up with the first world through activation of its

economies or sale of natural resources. The exponential rate of advantage

ensures what has in fact been the case for decades: billions of dollars in

wealth are transferred annually from the poorest segment of humanity to

the wealthiest segment of humanity. The poor under our current world

order are getting poorer and the rich are getting richer.

7.5.2. Markets have a useful but limited role in human economies. They

are not and cannot be the solution to all problems as the imperial economic

ideology has it. Markets can produce many (not all) goods and services

efficiently. But essential services like water, electricity, and health care

are much better served by good government. Nor can markets ensure just

or equitable distribution of services or wealth. And they cannot ensure

sustainable development that involves conceptions of the common good

and the welfare of future generations.

7.5.3. Markets are blind to all noncommercial values such as community,

human rights, sustainability, equity, justice, and peace. Markets, as we

know so well, will produce weapons of war if there is a profit to be made

from this, or weapons of mass destruction. Markets (like big business)

are morally blind and must be tempered by democratic, non-commercial

values that are necessarily built into good government. Markets are not

based on the moral principle of unity-in-diversity.

7.5.4. The principle of equal pay for equal work at decent, living wages

will place cash in the hands of the poor in the developing counties and

will produce an activated local economy while at the same time increasing

global equity. As we said earlier, there is no need to appropriate the

accumulated wealth of the rich to solve the global crises facing humanity.

All that is necessary is to eliminate the means for the rich to continue to

accumulate more wealth through exploiting those already poor. The exploitative,

monopoly features of the current system listed here perpetuate

both the wealth of the rich and the poverty of the poor and make global

equity and sustainable development an impossibility.

7.6. Sixth, economically stable and equitable laws will be enacted to promote

worldwide land reform so that the land and its wealth can be returned

to the people of Earth. The exploitation of the poor by the few who now

control the quality land and resources of the world will rapidly come to an

end. In general, land and resources will be recognized as belonging to the

people of the Earth and need to be legally protected for the common good.

Land and resources will be seen as the global commons and private property

will be recognized for land use by individuals, governments, and businesses.

That is, property rights will be converted from “absolute rights” to

“conditional rights.”

7.6.1. Land is provided by nature, not built by labor, thus all natural

resources are nature’s heritage for all. Applying Henry George’s concept of

exclusive title to nature’s wealth restructured to conditional title

(society collecting the landrent) instantly collapses those exclusive

(monopoly) values to zero. The price of homes are the cost of building a

house and the price of businesses will be the facilities themselves. Monopoly

values have been converted to use-values owned by true producers.

Just as with land, today’s technology, money, and communications monopolies are

subject to the same efficiency gains. [This paragraph, not submitted at the

7th Session of Parliament, will be expanded and submitted to the 9th Session.]

7.6.2. The effectiveness of careful organic farming, with composting, crop

rotation, and ecologically sound planting and harvesting has been repeatedly

demonstrated. These farming methods produce many times the food per acre now

produced by commercial agribusiness while conserving the soil and eliminating

the pollution cased by chemical fertilizers. They are best done by small farmers

who own and care about their own land and have a stake in its preservation. Even

with the diminished quality farm land in the world today, a global program of

population reduction, effective farming methods, and activated local economies

can easily end hunger and create a world sufficient for all.

7.6.3. Such programs of land reform have been attempted in individual

countries such as Guatemala in the early 1950s, Chile in the early 1970s,

Nicaragua in the 1980s, Cuba in the 1970s, 80s, and 90s, and Venezuela at

the beginning of this century. In every case the United States has destroyed

or attempted to destroy the government promoting the land reform. This

has been a global policy of the imperial center since the Second World

War.

7.6.4. All good examples of economic health and common sense must

be destroyed so that the world believes there is no alternative to global

economic monopolies dominated by multi-billion dollar corporations and

protected by the military might of First World nations. The lethal combination

of the our present world system of sovereign nation-states (dominated

as always by the imperial centers) and ruthless global corporations

cannot but act to enforce a regime of global domination and exploitation.

These consequences are built into these global institutions of the past five

centuries.

7.6.5. Only democratically legislated law, enacted by a World Parliament

representing all the people and nations of Earth, can formulate and effectively

carry out a planetary policy of land reform. Such reform is badly

needed not only to activate the local and regional economies of the world,

but to end exploitation of the poor by the rich, to conserve the soil while

reducing erosion and pollution, and to increase food production, rapidly

ending hunger on Earth.

7.7. Seventh, the federal world government will engage in large-scale

employment of the unemployed or underemployed millions in developing

counties in a multitude of projects directed toward sustainable development

and the activating of regional and local economies. These projects

will certainly include replanting the depleted forests of the Earth, restoring

the soil and grazing lands to integrity, building schools and health care

centers, creating efficient, low cost sanitation and water systems, converting

military installations and weapons factories to the production of peace-

ful goods and services, and converting the energy sources of the world

to sustainable, non-polluting forms of water, wind, solar, and hydrogen

energy.

7.7.1. The condition of the developing world today is similar to that of the

United States during the great depression of the 1930s. There is massive

unemployment and hence no money to circulate within economies. The

U.S. government had the vision to create vast public works projects and put

hungry people back to work.

7.7.2. The Earth Federation will undertake similar initiatives, thereby not

only putting people to work and activating their economies, but creating

the infrastructure necessary to a prosperous sustainable development. The

nexus of global crises are too advanced and the threat to the future of the

world too extreme to sit passively by and hope for private development

efforts alone to succeed. The world needs sanitation and water systems

now. It needs to restore the damaged environment now. It needs to deal

with the crisis of sickness and disease now. It needs to restore soil, grazing

land, fisheries, and forests now. It needs family planning and population

reduction efforts now. It needs education for the masses now. It needs to

employ the unemployed millions now.

7.7.3. As one of the great speeches before the 1992 Rio Environmental

Summit expressed this principle: “tomorrow is too late.” The global crises

outlined here are upon us and action must be taken immediately to create

a decent, prosperous, and equitable world order. We are at the crossroads

of human existence. One road leads to certain disaster. The other to an

equitable, free, just, and peaceful world order.