Proutist Economic Development
Trade
Dr. Michael Towsey
revised by
Dieter Dambiec
 2004 Proutist Universal
1
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.
Dr. Michael Towsey
Proutist Universal
2
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
Dr. Michael Towsey
Proutist Universal
3
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.
Dr. Michael Towsey
Proutist Universal
4
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.
Dr. Michael Towsey
Proutist Universal
5
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.
Dr. Michael Towsey
Proutist Universal
6
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.
Dr. Michael Towsey
Proutist Universal
7
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.
Dr. Michael Towsey
Proutist Universal
8
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.
Dr. Michael Towsey
Proutist Universal
9
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
another‘s inflation.
– If country has inflation, its currency depreciates.
• Floating exchange rates: defective in that it opens up possibility
for speculation in currency values.
Dr. Michael Towsey
Proutist Universal
10
Speculation in currency
Dr. Michael Towsey
Proutist Universal
11
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.
Dr. Michael Towsey
Proutist Universal
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