BELIZE CITY, Oct. 24, 2020– For some time I have been writing articles to try to educate Belizeans on the reason why first the United States of America, and later Germany, Japan, South Korea, Taiwan and today’s China have been able to provide a high standard of living for their citizens. The reason is that every one of them followed versions of Capitalism that were similar to what was known during the nineteenth century as the American School/System of Political Economy. In Belize we’ve known it as George Price’s Mixed Economy. George Price and I were educated in the United States before 1971, so we were taught the American System/School of economics.
The major concepts of the American School that distinguish that version of Capitalism from the British School are:
a. Exploiting nature rather than men. All our schools teach both in business and economics classes that it’s okay to exploit your fellow man. Yet most citizens of Belize cry that they are Christians, even though they know that it is wrong to cheat, to steal, to exploit their fellow humankind. Slavery was/is the institutional, organized exploitation of men by other men. Belize as a British colony/neo-colony has always exploited men rather than nature. This concept has been at the heart of the difference between Hamilton’s American system, and the British and older systems of exploitation of slavery for over ten thousand years. Make no mistake, the United States of America was the first nation-state formed specifically to make the phrase “man made in the image of his Creator” a reality. After the murder of Alexander Hamilton, it took another 50+ years before Abe Lincoln, with the advice of America’s greatest economist, Henry Charles Carey, revived Hamilton’s American System and made the United States the greatest industrial nation-state on Earth. Take a look at the sugar belt in the north of Belize. The local cane farmer is paid about $42/ton for sugar cane. The cost under normal conditions to produce that ton of cane is about $ 41.00. So, the cane farmer is being cheated by the giant foreign multi-national company. If instead, nature was exploited through the use of technology (e, below) and (f, below) agricultural productivity, a high income would be paid to the cane farmers.
b. Tariff protection of local agriculture and manufacturing because free trade has always benefited the strong at the expense of the weak. Every single country in today’s world that has become an industrial nation-state and provided a high standard of living to their citizens has done it by practicing trade protection of infant industries and agriculture. In fact, the Covid-19 crisis is showing that nearly every country is practicing protection of their local production to protect the workers of their respective countries, because of the massive dislocation of their economies. The British version of Capitalism has failed. A few years ago a local Mennonite farmer decided to manufacture disc plows in Shipyard, Belize. He imported steel from the United States. He paid an average of 22% in duties and taxes on the steel imports. But the same disc plow imported from Brazil was selling about 18% cheaper. Why? The importer of the Brazilian plow paid no duty or taxes. Our oligarchy stopped that farmer from becoming a local manufacturer and keeping our money at home for the benefit of Belizeans. Take, as another example, vitamins/supplements for medical use. If a person/company imports vitamins/supplements, the importer pays the Ministry of Health $250 per year for a license. But if that person or company chooses to manufacture the vitamins/supplements here in Belize, the Ministry charges $ 5,000 for a license. The policy of the oligarchy in Belize, as in colonial times, is to prohibit local manufacturing.
c. High wages to workers, because as E. Peshine Smith, wrote: “In order to make labour-cheap, the labourer must be well-fed, well-clothed, well-lodged, well-instructed.” Over the last 150 years, political-economists have known that the cheapest worker in money-terms is not necessarily the cheapest in economic terms. At the end of the day, money-wages are paid for knowledge, and knowledge is expensive, because while the worker is learning, he has to be fed, clothed, and given shelter. In fact, higher money-wages usually tend to increase productivity in the economy, such that unit-prices tend to decrease — leading to higher standards of living.
d. Money creation is a public utility and should be under the control of elected representatives of the people, not controlled by private individuals for private gain and control. For thousands of years the act of money creation was an act of the sovereign. It was only in the last 200 + years that private individuals were given the authority to create new money. The power to create new money from the air is an omnipotent power to be given to individuals. It is tantamount to the power of life and death. Humans make other humans their enemies, and to give your enemy the power of life and death over you is just ludicrous. This is why the National Bank of Belize is absolutely necessary. Prime Minister Dean Oliver Barrow gave Belize financial Independence. We can use the National Bank to create new money to invest in our farms, factories, fishing coops and other useful ventures necessary for our development, especially today when Covid-19 has destroyed our national economy.
e. Technology and innovation always cause new methods to enter production, and thus profits and wages don’t diminish, but instead the result is higher productivity and thus higher wages to workers. Therefore the theory of Diminishing Returns is not valid to physical reality. Young people taking their first classes in economics must be at a loss to understand what their teachers are saying: in a capitalist society, no matter what you do, capitalism has built-in the process that profits must fall as capitalism increases. This stupid theory has been repeated by all the British economists from as far back as Rev. Thomas Malthus, David Ricardo, Marshall, and John Keynes. In fact, Keynes said that the best way to postpone this dreadful day is not to invest in productive activities such as building two railway lines from York to London, but instead to build two pyramids – two tombs for the dead. Technology is the invention of something new, especially the application of scientific knowledge to develop new machinery and equipment. Technology doesn’t solely mean the use of computers, as is presumed today. Originally, it referred to the branch of knowledge dealing with engineering or applied science. Now there is a concept called the “Machine-tool Principle,” which is the key to applied engineering/technology. This is where the theory and practical fuse and become one. Therefore, technology and innovation lead to higher productivity, thus increasing both profits and wages, leading to a harmony of interests – not class warfare.
f. A view of soil fertility and agricultural productivity as a product of capital investment – not nature. Science is the way to solve the problem of “mining the soil”. This concept goes back to the opposition of the Americans to both Ricardo and Malthus. Those British economists preach that man, when he first settles the soil, goes first to the best soil, then eventually to the worst. After the better soil is settled and your country runs out of good soils, then your country must take up arms – guns — and conquer other countries – create colonies to exploit. The greatest economist, the American, Henry C. Carey, in his many books and articles concluded that the early settler did not settle first on the best soil, but instead on the inferior, because he physically could not work the best soils. He didn’t have the machinery. This was easy to prove in the early American settlements, and more importantly, the soil as given by nature will become depleted after time. The crops will extract the minerals, vitamins, etc. from the soil. Science has shown that these minerals, especially phosphorus, nitrogen, calcium, and sulphur, can be replaced so that with the use of capital, minerals (fertilizers) are replaced in the exact quantities and qualities required by nature to grow a nutrient-dense product, leading to healthy citizens.
g. Public infrastructure as a means to lower costs in an industrial society by introducing new methods of production and communications, and the public support of research and development. Agriculture and manufacturing industries need a glue to hold them together. That glue is infrastructure. There is both soft and hard infrastructure. Education and health are examples of soft industries. Both are absolutely necessary in our society. Then there is the need for hard infrastructure: roads, bridges, canals, dams, buildings, and so forth. The problem for Belize is that we listen to our foreign instructors too much. We need to stop importing materials such as cement and steel for our infrastructure projects and start making them ourselves. In September 2019, China opened the Hong Kong-Zhuhai-Macau bridge and tunnel. Most Western engineers said this modern wonder could not be done; it was an impossible task. After 7 years, USD $20 billion, and the issuance of 1,600 patents, the impossible was done. New types of steel, including stainless steel, new heavy-duty cranes, and new welding methods made the impossible possible. Those new methods will now be part of the Chinese economy, which means their productivity will increase tremendously, leading to lower unit prices and higher wages to workers. This is how infrastructure causes a nation-state to create happiness among its citizens.
h. Government intervention in an economy. Government as the “brain” must put a bridle on corporate bodies, and must establish the pursuit of happiness as a natural right of citizens. In Belize this principle is enshrined in the PUP’s Constitution as a sacred duty of government to create full employment and end poverty. The propaganda we hear every day goes something like this — the private sector is the engine of growth. The government does nothing, just steals from the productive private sector that produces wealth. Belize got its political Independence on September 21, 1981. Before we were a colony of Great Britain, so we had certain restrictions to follow. But for the last 38 years the Belize private sector has been able to do whatever it wishes. What manufacturing industries have been created? How has the standard of living increased by the investment of the private sector in the local economy? How many new jobs were created by the private sector? The truth is that Belize’s private sector created no new jobs. They created no manufacturing industries. When Belize got political independence, the rate of poverty was about 23%. By the year 1998 it climbed to about 33%, by 2009 it was at 43%, and by 2016 it was at 58%. Today, with Covid-19, it is estimated to be some 65%. That is the legacy of the private sector. And in March this year it was revealed that 5% of Belizeans owned some 75% of all the cash on deposits in the banks. Young people, the less-educated and people of colour in Belize don’t own stocks, bonds, or real estate. They sell their time by the hour, and the real hourly rate has scarcely changed since 1981. The rich get richer. The poor and middle classes get poorer. With a poverty rate of 65%, expect more corruption, more dependence, more depression, more poverty, and more unfairness. This is why George Cadle Price wrote that it is a sacred duty of government to intervene in the economy because only government, as the “brains” of economy, can put a bridle on corporate bodies to create full employment and the eradication of poverty.
The above is a short description of the different versions of Capitalism. Now the irony today is that the United States no longer practices the version of Capitalism that they invented. President Trump says he will bring back the American System and make America great again. And we all know how he is hated by the lovers of empire. China is not Communist. China says they practice Socialism with Chinese characteristics. But the truth is, they practice the American version of Capitalism, and the result of 40 years of that policy is clear for all to see. The neoliberal policies of the west create serious problems for our country. These days we hear a lot about Public-Private Partnerships (PPP). The plain truth is that it’s socialism for the rich. The big boys use the power of government to create monopolies for themselves, thus forcing the middle-class, workers, and the poor to buy from a few. The rich get richer and the poor get babies.
I hope this short introduction explains why the people of Belize (British Honduras) live in misery and have no hope for their children’s future.
Is it not time to dream?