Proutist Economic Development Trade

1
Proutist Economic Development Trade

• Dr. Michael Towsey
• revised by
• Dieter Dambiec

2
The logic of neo-liberalism

• Concentrate on producing a few special goods most
  cheaply for export.
• Use the foreign exchange to import whatever you
  need.
• BUT ...
• Locks poor countries into poverty, environmental
  destruction and dependence because of the
  tendency for downward pressure on prices of raw
  materials and agricultural produce in poor
  countries that are not able to take the benefits
  of advances in technology and extract the raw
  materials themselves.
• Better to extract raw materials for local
  production of goods.

3
No country has ever developed using free markets
and free trade

• Joseph Stiglitz, 2001 Nobel Prize, Economics,
  author of "Globlisation and its Discontents".
• "I have always been struck by the divergence
  between the policies that America pushes on
  developing countries and those practised in the
  US itself."
• "Those in Mexico, Brazil, India and other
  emerging markets should be told a different
  message do not strive for a mythical free-market
  economy which has never existed. Do not follow
  the encomiums of US special interests ..."
• "The Guardian" London, 29/10/2003

4
The New Zealand experience

• Prof. Tim Hazeldine, Auckland University, New
  Zealand.
• Book "Taking New Zealand Seriously".
• We import so much because we export so much.
• Tourism "all the foreign exchange earned from
  tourism is required to pay for the imports to
  replace local goods that are no longer produced
  because the people who could produce them have
  been sucked into tourism."
• Strategy of export-led GDP growth has failed.

5
Prout promotes economic self-sufficiency for
socio-economic units

1. Prout promotes self-sufficiency in the essentials
   of life.
2. Trade in raw materials is a sign of a weak
   economy.
3. Minimise imports of essentials food, medicines,
   clothes, housing requirements, educational needs.
4. Avoid dependence on tourism fickle and
   destructive.
5. Avoid export of raw materials - value add before
   export.
6. Export surplus and specialty goods mainly.
7. Barter trade wherever possible on an
   international level.
8. Establish trade blocs between equally developed
   countries.

6
Barter trade

• Two types of trade - bilateral barter (not so
  efficient) and multilateral barter (can be very
  efficient).
• Barter not so efficient in domestic economies,
  but efficient in international / global economy.
• Prout favours barter on the international level
  wherever possible.
• TNC barter trade already amounts to 1 trillion
  per year (Hazel Henderson).
• Not subject to currency exchange fluctuations.
• Disadvantages of barter no longer apply due to
  modern communications.

7
Fundamentals of barter trade

• Ordinary two-way barter is less flexible than
  money.
• "But I don't want 10 dental checkups! I want my
  roof repaired.
• Simultaneous barter means that all parties agree
  to the deal at the same moment, even if the goods
  may be delivered later.
• The decision to trade the various items is made
  at a single time.
• Ordinary two-way trading is usually simultaneous
  and goods/services may be delivered at the same
  time or a different time.
• Example of a simultaneous two-way trade
  (different time)
• A says "I'll walk with your kids to school today
  if you'll walk with mine tomorrow." B says, "OK."
  
• At that moment, the deal is struck and the
  decision to do both actions is determined, though
  the actual carrying out of the actions is at a
  different time.

8
Multilateral barter trade

• Multilateral barter is more flexible and useful
  at the international level.
• Multilateral barter is barter among 3 or more
  people.
• For example A, B and C can make a deal where A
  provides coal for B, B provides trains for C, and
  C gives A numerous used motorcycles.
• Non-simultaneous multilateral barter
• A gives something to B, A doesn't know what A
  will get in return, or when. A might get
  something from C six months later.
• Simultaneous multilateral barter
• Allows the parties to check things out first, ask
  questions and find out what products they will be
  getting before they agree to a deal.
• Similarities of what people do when buying
  something with money, but in barter no cash
  changes hands.
• If B wants something from A, B doesn't have to
  wait until A wants something from B, which might
  never happen. A can get what is required from C.
• The chances of a 3 to 5 person loop (or more)
  joining A and B are much higher than the chance
  that A will want something directly from B.
• Barter is not subject to inflation or economic
  recessions, and is especially useful when
  unemployment is high, or in economically
  depressed regions.

9
Multilateral trade using currencies

• Old system fixed exchange rates and gold
  standard.
• Broke down, eg because UK financed WW1, USA
  financed Vietnam war and through inflation tax.
• Importing from them became more expensive.
• An inflation tax is the economic disadvantage
  suffered by holders of cash and cash equivalents
  in one denomination of currency due to the
  effects of inflation, which acts as a hidden tax
  that subtracts value from assets.

10
Multilateral trade using currencies

• Current system floating exchange rates with USA
  dollar as fiat currency.
• Benefits the USA.
• USA can import commodities and export debt.
• Other countries must hold US dollars as reserve
  or government bonds.
• Floating exchange rates benefit countries
  insulated from one anothers inflation.
• If country has inflation, its currency
  depreciates.
• Floating exchange rates defective in that it
  opens up possibility for speculation in currency
  values.

11
Speculation in currency
12
Multilateral trade -an alternative system

• Mutual credit trading.
• Zero sum accounting system with maximum credit
  and debit.
• Unit of account
• the Terra (a proposal of Bernard Lietaer).
• The Keynes Plan was similar to a mutual credit
  system
• money unit was bancor tied to gold.
• A commodity backed currency
• tied to a representative basket of traded
  commodities.
• Demurrage fee to discourage surpluses.
• Could be used by South American trade bloc
  MERCASUR.