Colbert Good, Keynes Not So Smart

THE STATE IS THE PEOPLE, AND THE PEOPLE SHALL PROGRESS.

“It will perhaps not be inappropriate to say a few words about the advantages of trade. I believe everyone will easily agree to this principle, that only the abundance of money in a State makes the difference in its greatness and power.” (Jean Baptiste Colbert, circa 1660.)

[Since the monetary system was based on precious metals, what Colbert meant by “abundance of money”, as will be made clear below, was the product of manufacturing and selling, through trade, added value goods.]

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Abstract: Obama is well on his way to become one of the most unaccomplished presidents of the USA, ever. This is made worse, because we are at a crucial juncture of history, and the USA is in leadership position. When the car is travelling fast, and the leader is asleep at the wheel, it will not just end in the ditch.

The little smoke and mirrors Obama threw up, will be easily reversed by the republicans, as planned. So, in the end, Obama will turn up as just an extension of Bush, without the smirk… nor the originality. By choosing the same ideological, Goldman Sachs team, that implemented plutocracy under Clinton, Obama asked those who put the car in the ditch, to get it out, not understanding that they were still drunk in their quest to selfish profit.

This story presently unfolding has been seen before; it was Great Depression II, the great depression of the 1930s. It was the stall after the deliberately engineered bubble of the 1920s.

The West got out of it by massive state enforced job programs, started under president Hoover (Hoover dam, Empire State building, etc,) and pursued by FD Roosevelt (Grand Coulee dam, etc.) and Hitler (Autobahn system, copied by Eisenhower in the 1950s, and everybody else since).

Something one tends not to talk about is the gigantic military efforts that the Fiat Money paid for. Most notable was the decision of FDR to build a two oceans, 18 large carriers Navy. Meanwhile, Britain Hitler and Imperial Japan armed themselves using massive deficits to do so.

Millions got employed directly by the government and the massive mobilization of WWII did the rest, followed by the GI Bill in 1945. Europe had massive state organized and financed economic activity, led by the US Marshall plan (Marshall was the US chief of staff during WWII, and Secretary of State of Truman). Europe, traumatized by what had happened also made important institutional changes, oriented towards welfare, such as free health care. Sully’s plan of circa 1600 for a “Very Christian Council of Europe” was also implemented.

(Labeling used on aid packages.)

The Marshall Plan (officially the European Recovery Program, ERP) was the primary program of the USA for rebuilding and creating a stronger economic foundation for the countries of Europe (1947–51). Efforts focused on modernizing European industrial and business practices using high-efficiency American models (themselves learned from French industrialists to implement American production of the 75mm gun, the mainstay of French artillery in WWI).

All this help and investment, in the USA and Europe, was paid by marginal tax rates on income as high as 90% in the USA (under US president Ike).

Right, now, instead, the richest Americans pay the lowest tax rate (15%), and wealth has not been so concentrated in a century (a century ago, great spaces and freedom were another form of wealth, at least in the USA, which have now disappeared).

Starting in 1996, a succession of ever larger bubbles, following part of Keynes’s ideas, has injected more and more money in the economy, money which came neither from savings nor production, but mostly borrowed from aliens, and, increasingly, the Chinese.

Robert Reich (UC Berkeley), who lost to Robert Rubin (Goldman Sachs) the debate on the economic strategy to pursue in the Clinton administration, wrote an essay in the New York Times, “How to End The Great Recession”, reflecting the approach that wealth needs to be redistributed. Reich mentioned what I have long observed: the real (inflation adjusted) median income has been going down for thirty years now. This is worse than what happened during Great Depression II. So this is Great Depression III, not just another recession.

I approve of Reich’s anti plutocratic approach, of course. As he says: “The Great Depression and its aftermath demonstrate that there is only one way back to full recovery: through more widely shared prosperity.”… However, this is not the whole story. Redistribution is good, however production is necessary. Keynes, as we will see, is about throwing money to the people, as the Roman emperors invented. That is not about meaningful employment.

Obama’s ineptitude is not all his fault. The economic advice he got, even from his opponents, has been terrible. For example, Krugman, whom I approve a lot of, wanted, like Romer (the ex-chair of economic advisers) a bigger stimulus. And so did I.

But stimulating what? How? To which aim? Most of Obama’s stimulus was wasted on short term alleviation of long term structural defects, exactly the sort of trap one does not want to fall into (French socialists fell into that very trap in the recent past, with the result that the income tax started to fully go to paying the interest on the French national debt).

The USA stimulus ought to have targeted to jump start a big energy infrastructure first, followed by a massively innovative scientific industry, modeled after the military industrial complex (the only thing the USA does really well nowadays, besides plenty of hot air). Instead, the debate in economic theory has been pretty much Keynes (somewhat of a neo-stupid, see below) versus Hayek (a pro-plutocratic neo-fascist who influenced the Chicago school’s meta principle that GREED, AND ONLY GREED, MAKES GOOD).

However, the military-industrial complex of the USA, by now, by far, the most competitive part of its economy, is not run according to Hayek, or Keynes. It is run along the lines defined by Jean Baptiste Colbert. That ought to be a hint, but no main stream American economist has picked it up.

American economists in good standing do not know who Colbert was, perhaps because he thrived when Indians were outnumbering European colonists in North America, and studying history is not as important than learning sports, and to learn to agree with one’s peers, in American schools.

Colbert started his career, and this is overlooked, overlooking the military, at the grand old age of 21. Colbert branched off into economy and finance much later, after helping to send the hyper rich “superintendent of finances”, Fouquet, to jail, for life.

The American economist Paul Kennedy, in a book about The Rise And Fall Of The Great Powers, basically expounded, as his theory, what was pretty much Colbert’s theory and practice (unsurprisingly, Kennedy does not talk about Colbert too much, and got rewarded with a prize for his depth and originality).

Colbert had perfectly understood that Great Power status necessitated a Great Economy. Thus Colbertism could be viewed as the highest form of militarism. Just like the USA is itself the highest form of militarism which ever was. Notice the rapprochement. Not to make fun of it: the position of Europe and the USA is unstable, just as the entire world economy, society and military situations are all simultaneously unstable, and military superiority is what keeps thing together, right now (unfortunately it is courting defeat in Afghanistan).

Colbert was actually following the model implemented, with spectacular success, by Henri IV and his economy and finance minister, Sully, a protestant military engineer, around 1600 CE, with state financed canals, silk factories and free markets.

Why are great powers great powers? Because they have achieved a technological superiority gradient, and have enough numbers to sit on top of it. Numbers are not everything: the Mongols carved the world’s largest empire in a few years, and with 200,000 warriors. “Technology” here is meant in the full etymological sense: any specialized discourse.

If we want to keep a superior lifestyle in the empire of the West, and a stable planet, it is high time to recover such a gradient, which is, basically, an intelligence gradient. Thus it is high time to redistribute the sort of economy which makes the military industrial complex of the USA so superior, namely COLBERTISM MODERNIZED.

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POWER LOOKS LIKE EVERYTHING, UNTIL INTELLIGENCE OVERCOMES IT:

No matter what you do, no matter what you say, no matter how right you are, if you do not have power, you do not matter. Except in those rare cases. Those rare cases when history turns the other way, and power goes to others, big time. This is why power needs to be constrained by the state of law, and its principles, exactly what the Roman plutocracy shredded, and what the American plutocracy is shredding, as we watch.

On the biggest historical scale, those cases, invasions, revolutions, when history was turned on its head, have mostly happened when the technological gradient, in the widest sense, disappeared, or even, inverted to the detriment of the most advanced ciilization. This is exactly what is happening now. This is also what happened when Rome was submerged by the Goths.

The defeat of the Romans by the Goths under Valens was an accident waiting to happen. The obsession with Jesus and his coming apocalypse had made Rome even more stupid than four centuries of unrelenting fascism had already accomplished.

Thus emperor Valens did not wait to engage in battle for his legions to be rested, or for his nephew, co-emperor Gratian, to show up with his own legions (he had nearly arrived). Why? Because Valens was arrogant, stupid, and his advisers were anxious for Gratian (and his own advisers!) to get no glory, for the unavoidable victory over the Goths. (The Goths had taken refuge, inside the Roman empire, from the Huns, their high tech composite bows, and their wild terrorizing methods.)

This is how, at Adrianople, the Goths became masters of (most of) the Roman empire (until the Franks bottled them down in Iberia, where Muslims adventurers would smash them by surprise).

But an invasion of the Roman empire would have happened anyway, because the Greco-Roman world had lost technological superiority on the barbarians (because the plutocrats hate thinking, and they controlled everything for 400 years). By technology here I mean not just technological superiority in the material sense, but also in the spiritual sense. The later because the Greco-Roman world had lost democracy: emperors, at that stage, were mostly elected by the army, although a plutocratic dynastic principle was also imposing itself.

Something similar happened in China: the technological gap with the Mongols had disappeared. China, like Rome, was ruled by a similar oligarchy whose relative power depended upon making the people stupid. Whereas, united by Genghis Khan, the power of the Mongols depended upon being as smart as possible. When Mongol intelligence overcame the intelligence of that of all the oligarchies which surrounded them, all the way from Vietnam to Hungary and Poland, they conquered all. (Until they rubbed shoulders with the Franks!)

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WORLD INSTABILITY:

Nowadays, the world technological gradient has been quickly disappearing, both in the material and spiritual sense. Whereas Europe and its colonies was centuries, if not millennia ahead, even a century ago, most of the world (except Africa!) has been making spectacular progress (at least in appearance).

Meanwhile the increasing rule of the mega rich has discouraged higher thinking in general and higher technology in particular, in the West (the abandonment of the Super Collider in the USA, after its construction was started, was symptomatic of this degeneracy; now just as much is spent in 2 weeks terrorizing Afghans and Iraqis, as the total cost of the Super Collider would have been, and American scientists have to go to CERN, the Centre Europeen de Recherche Nucleaire, in Geneva, under France and Suisse). China and India have been doing well scientifically, with huge efforts. The USA has been doing badly, losing all sorts of technological edges, including in the democratic domain. But not in military matters.

Obama knows all too well that those who do not have power do not matter. Still, at first sight curiously, he behaved as if the republicans had all the power, and he needed their approval to do anything. And also as if Wall Street had all the power (as he proved by reappointing the (Rubin)-Summers-Geithner-(Greenspan)-Bernanke deregulatory, bubble team that gave Wall Street so much power to start with.)

Then, more recently, Obama gave some little signs of rebellion, like the zebra pursued by the lion, kicking back, here and there. Maybe Obama wanted to ingratiate himself to those who voted for him.

If Obama goes big economically, he has to go big with Colbert, not Keynes. This is what China is doing, and also Russia. Both are building massive new infrastructure, including very high speed train networks. Both are using state enterprises, some existing, some recently created, all of them huge. Chinese (state) banks, the largest in the world, functions as banks are supposed to function: not to impoverish the people, but to finance the economy.

Of course, Europe is very aware of the necessity of directing progress from the heights of the state. That was already the central doctrine of the Franks, symbolized with the aftermath of the Vase de Soissons incident. (Look for the “cached page”, since Gregory of Tours’ Histories are huge.) Clovis wanted to make nice with the bishops, so he had decided the state would restitute the vase, and it was a capital crime to get in the way of this nation building.

What the world needs more of is Colbert, rather than Keynes. Let me explain. Keynes believed that one put the people to work by all and any means, by just throwing money at them. That worked in 1945, because the USA dominated the world. But, in 1666 CE France, exhausted by generations of war (100 years of war with Spain, seven religious wars, the Fronde, the 30 year war, etc.), thrift was necessary. Colbert solved the problem was axing the state’s effort towards producing an EFFICIENT, SCIENCE FICTION economy.

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KEYNES AS NOT TOO BRIGHT A DITCH DIGGER:

Keynes argued that the private sector sometimes leads to inefficiency and therefore advocated an active public sector, including money creation by the central bank and appropriate fiscality. So far, so good. It’s like saying roads are useful to walk on.

This sort of theory is nothing new. The Roman empire already had an enormous public sector in major construction (Roman canals, Roman roads, mines) and weapons manufacturing. Centuries earlier the massive trireme fleet of Athens was a government program voted by the National Assembly, and a public-private effort. It was coincident with the two centuries’ of Athens’ intellectual, civilizational supremacy.

It is so natural to have the state rule the economy that the highly successful Inca state had an enormous infrastructure, also with a road network (the Incas collapsed because of a civil war inducing smallpox, plus the crazy methods of Pizarro, not because of its roads).

Keynes advocated a mixed economy. Good.  But not new: Athens practiced it in 483 BCE. And destroyed Achaemenid Persia that way, saving civilization from the rabid, freedom devouring fascist imperial plutocrats based in Persepolis. Here is what fascism is all about, the reign of the plutocrats, what Athens crushed. As Xerxes himself put it, in a surviving inscription:

   “A great God is Ahuramazda, who created this earth, who created yonder sky, who created man, who created happiness for man, who made Xerxes king, one king of many, one lord of many.
     I am Xerxes, the Great King, King of Kings, King of countries containing many kinds (of men), King in this great earth far and wide, son of King Darius, an Achaemenian.
     Proclaims Xerxes the King: By the favor of Ahuramazda I built this Gateway of All Nations. I built many other beautiful things in Persia. I built them and my father built them. All beautiful things we built, we have built by the favor of Ahuramazda.
    Proclaims Xerxes the King: May Ahuramazda protect me from harm, and this land, and whatever was built by me as well as what has been built by my father.”

This is worth remembering: that is what the plutocrats all want, and that is what the high tech democratic enterprise of Athens’ state capitalism blocked, and, ultimately, destroyed.

Too bad the classics have been forgotten, because, fundamentally, philosophically, there is nothing new about Keynes. And those who campaign against Keynes are fundamentally campaigning against Athens, freedom, civilization. They are with Xerxes, and they cling to their god in the same malevolent way. Notice in passing that Ahuramazda was a much more advanced kinder and smarter god than the cunning, jealous and malevolent biblical god of the Hebrews, who started his career by asking a father to kill his son, just because he could (all Muslims celebrate that with happiness every year, and then some are surprised by their propensity to sacrifice sons…)

It is all the more silly, to have forgotten that what Keynes advocated was at the heart of the Greek and Roman success, because the model advocated by Keynes was also highly successful during the later part of the Great Depression II, World War II, and the post war economic expansion, in Western Europe and the USA. Let alone 17C France.

So Keynes said nothing really deep which was really new. So why did it feel new to some? Only because several generations of economists just preceding him had gone very wrong, Keynes sounded refreshing. A key idea was that insufficient buying-power caused the Depression. Keynes believed that by inundating the economy with money, things would grow again. Keynes, naively, thought that buying power could be created whichever way:

If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again… the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is.

(Chapter 10, Keynes’ General Theory)

“To dig holes in the ground,” paid for out of savings, will increase, not only employment, but the real national dividend of useful goods and services. (Chapter 16, General Theory)

Even Stalin was not that dumb. The Man Of Steel got millions of slaves to dig holes in the ground, to make canals, which turned out to be very profitable (too bad they died in the process). In any case, no wonder that the neo-fascist economist Hayek could paint Keynes with the broad brush of incompetent collectivism.

In any case, the FDR job plan, the GI Bill, the Marshall plan can all be viewed as forms of modernized Colbertism. People were not digging holes in the ground for no good reason. instead the economic effort was all well thought after, and fostered progress, efficiency, quality, education, science, and investments in new technology.

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COLBERTISM, OR HOW TO ADVANCE THE ECONOMY DELIBERATELY:

Jean-Baptiste Colbert served as the French finance minister from 1665 to his death in 1683.He improved an economic situation rendered extremely difficult by several enormous wars, including several civil wars. In 1640, at the age of 21, Colbert was “commissaire ordinaire des guerres” in the war office.

Colbert’s plan was to use all it took to advance technology and innovation to create economic advantage, or improvement. Since the people were not doing it, he would have the state organize it.

To do this, Colbert created venture companies funded by state capital and various legal tricks, such as monopolies (which is what a patent is). For example he created the Manufacture royale de glaces de miroirs in 1665 to supplant the importation of Venetian glass. Said Manufacture then invented drastically new technology. The company still exists, as one of the world’s largest, most advanced corporations. Colbert also founded the royal tapestry of the Gobelins to produce state of the art cloth manufacturing. In 1666 alone, Colbert founded 35 new such venture companies (as they would be called today). Colbert had invented venture capital, and was running the world’s largest venture capital firm (certainly the largest which ever was, in constant monetary units). The idea was to fight unemployment:

“Aside from the advantages that the entry of a greater quantity of cash into the kingdom will produce, it is certain that, thanks to the manufactures, a million people who now languish in idleness will be able to earn a living. An equally considerable number will earn their living by navigation and in the seaports.

The almost infinite increase in the number of [French] ships will multiply to the same degree the greatness and power of the State.

These, in my opinion, are the goals that should be the aim of the King’s efforts and of his goodness and love for his people.”

Colbert protected inventors, invented gifted foreign workers, created the academy of sciences in 1666. He used tariffs to protect nascent industries, and founded a merchant marine (differently from England, which needed a marine, just to survive, France could do without, just as China under the Ming, and it would have had the same result; stagnation).

Colbert found that France had a problem with the Netherlands reminiscent of the problem the EU and the USA are increasingly having with China and company:

“The manufacture of cloths and serges and other textiles of this kind, paper goods, ironware, silks, linens, soaps, and generally all other manufactures were and are almost entirely ruined.

The Dutch have inhibited them all and bring us these same manufactures, drawing from us in exchange the commodities they want for their own consumption and re-export. If these manufactures were well re-established, not only would we have enough for our own needs, so that the Dutch would have to pay us in cash for the commodities they desire, but we would even have enough to send abroad, which would also bring us returns in money-and that, in one word, is the only aim of trade and the sole means of increasing the greatness and power of this State.

As for trade by sea, whether among French ports or with foreign countries, it is certain that, even for the former, since in all French ports together only two hundred to three hundred ships belong to the subjects of the King, the Dutch draw from the kingdom every year, according to an exact accounting that has been made, four million Livres for this carrying trade, which they take away in commodities. Since they absolutely need these commodities, they would be obliged to pay us this money in cash if we had enough ships for our own carrying trade.”

Replace “Dutch” by “Chinese & Global Plutocracy”, and the analogy carries on. The supremacy of the Netherlands, from the French point of view, was like unpaid debt, as France carried most of the trouble of waging war against the giant Spanish empire.

Nowadays it is pretty obvious that a worldwide carbon tax ought to be used, as it would act as a protection for the nascent sustainable industries and energy sources. Too bad for those who pollute too much, such as China (poisoning the Arctic with mercury from its coal, among other things).

As Paul Kennedy puts it, in a partial picture of what was going on: “Jean Baptiste Colbert, French Naval Secretary of State and Finance Minister… duplicated Britain’s industrial development efforts. France purchased the latest technology, encouraged skilled workers, protected the home markets, eliminated internal tariffs, and constructed canals and roads. France developed flourishing industries, a profitable shipping industry, and a powerful navy.”

Colbert believed in labor, quality, and being on the technological edge. He is often classified as a mercantilist, but this is not correct, as mercantilism believed in the accumulation of precious metals primarily. Colbert valued instead SUPERIOR PRODUCTION, through innovation, and harnessed the state to produce the superior production. We are very far from Keynes, and his holes to nowhere. However, Colbertism is very close to what the Pentagon has been doing all those years (at least since before WWII; the US Army was small, hence weak, but the quality of its armaments was superior, as the Japanese found soon enough.)

Colbert issued more than 150 executive orders to regulate the guilds. An example: to improve the quality of cloth, if a merchant’s cloth was found unsatisfactory on three separate occasions, he would be tied to a post with the cloth attached to him.

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COLBERTISM NOW:

Even under Reagan the bad bankers of the Saving and Loans collapse, and of the junk bond and LBO scandals got arrested, dragged to court, punished. But nowadays, for the mega rich, it’s all carrot, no stick. when asked, officials lamely claim that “everybody did it, so it cannot be viewed as crime.” by comparison, Wall Street in the widest sense has 120,000 employees, the USA, 310 millions, and, after the Second World War, the French republic prosecuted 200,000 Nazi collaborators.

Punishing the bad actors is what needs to be done now with bankers, or many American executives, who have turned into executors of the American economy. Many CEOs leading many a car company, or even now Boeing have abandoned quality of their products for the shallowness of greed … And they should be dragged in front of Congress to explain themselves, and their vision of the USA first, and civilization, next. In a similar example of greed over patriotic sense, Hewlett Packard is also closing its research center in Cupertino, which probably means that HP intends to outsource know-how overseas. A similar desertion, should it occur in France would be viewed as unacceptable.

The USA is quickly turning into a nation of hyper wealthy share holders and money manipulators overlording the increasingly destitute commons. This happened before. It is exactly what happened to Italy under the Roman empire. (Real trouble started in the Third Century, when barely Roman generals were elected emperors by the all too barbarian “Roman” army.)

The state needs to rejuvenate and reorganize the effort in maintaining the scientific and technological edge. In particular public universities ought to be free, and all children who are doing particularly well at school ought to be supported by (federal) state fellowships (the French republic had such a program, and that is what probably allowed France to ultimately defeat German based fascism in the period 1870-1945, since Germany was twice the size, and the strongest military on earth, by far).

The USA already knows how to maintain, and even increase the scientific and technology edge. In defense. The Defense Department runs DARPA. The Defense Advanced Research Projects Agency has been periodically called ARPA, some of the ideas above are not new, even in the recent USA. This is one of the reason of the success of the military industrial complex in the USA: nothing succeeds as success.

As Colbert would be the first to point out, this military spending has got out of hand. Instead of getting all its money from… China, and Chinese slaves, with the help of global plutocrats, the USA (and the EU!) should work at replenishing their manufacturing, and recovering its technological edge. It’s not just a question of keeping comfortable lives, and employment, more fundamentally, it is a question of keeping the world militarily stable.

Time to go back to the future. Having the central bank “drop money from helicopters” has not worked. Showering the plutocrats with money has not worked either. Nor has stimulating the moribund. The jobs are still disappearing, especially the superior value jobs.

What is needed now is digging deep into the understanding of the world, and to adjust the economy accordingly, the way Colbert advocated, not digging for digging’s sake, deep for fool’s gold, as Keynes advocated.

Deducting research costs in technology and science from taxes is a good way to start.

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Patrice Ayme

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Notes: 0) Some with a superficial knowledge of history may point out that Louis XIV’s France got into so many wars that the situation did not really improve. True. But, inasmuch as I dislike Louis XIV, many of these wars and strife were not really of his own making (except for the Revocation of the Edict Of Nantes, which was a disaster for France, and that Louis came to attribute to “bad advice”; Sully and Henri IV, Colbert’s predecessors in many ways, were Hugenot (protestants)).

1) Some of Colbert’s orders: “To revive all the regulations in the kingdom for the re-establishment of manufactures.

To examine all import and export duties, and exempt raw materials and [domestic] manufacture….

Annually to spend a considerable sum for the re-establishment of manufactures and for the good of trade, according to resolutions that will be taken in Council.

Similarly for navigation, to pay rewards to all those persons who buy or build new ships or who undertake long-distance voyages.”

2) If France Was So Much At The Edge Of Smarts, HOW COME ENGLAND & NETHERLANDS DID BETTER?

Well, this is an extremely complicated subject, because it involves a close comparison between (at the time) giant France, Germany, Italy, and the small Netherlands and Britain. Basically, France had done the heavy lift against Spanish-Habsburg fascism, ending in fascism’s destruction. At great cost.

England and France were fundamentally different, because one is an island, and the other firmly planted at the crossroads of Europe (and even Africa!). England and France were fundamentally the same polity (at least from 1066 until 1415, or more), and they competed French lords to French lords, for centuries. Smaller and less endowed England had naturally to opt for more innovation, and many came from the Greco-Roman world through southern France (that England tended to control).

Just before Colbert’s rise to chief of finance and economy, France has successfully concluded a war with Spain which lasted roughly a century. Finally the French army destroyed in battle the precedingly undefeated Spanish infantry and its “squares”. England never had to fight a single battle with Spanish infantry (the Great Armada’s destruction was more of a great miracle, than a great feat of arms!)

Several of the English problems, such as the rule of unscrupulous plutocrats, and overpopulation of the destitute, were mixed, and turned to advantage by settling mighty colonies. The disadvantage of losing the war with the Dutch republic was also turned to advantage because Dutch finance and democracy had become the most advanced from fighting the Hapsburg (and the rescuing French), and it got successfully grafted. More plutocrats, such as the Rothschild, provided enormous financial leverage, by inventing the privately managed fractional reserve system, and financing war against France that way (more Rothschilds came to finance the other side too).

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3) MORE COLBERTIST EFFECTS:

Ever since Colbert, the French state has been partial to public-private innovation. EADS, Airbus, Arianespace, Areva, Alstom, are more of the same. The first cars, under king Louis XV, were such a military program, paid by the state (to make steam propelled tanks). Same with the first planes (the state was paying a company headed by Ader, inventor of the “avion” in name and flying fact). This approach was copied by Germany, and even nowadays Britain’s Cameron has embarked on state of the art Colbertism (singing the praises of Airbus being part of it).

The French republic under the revolution, and the dictator Napoleon resurrected Colbert’s innovative and protective system. For example schools of excellence, such as Polytechnique, were was created, and immediately churned out new explosives that allowed the French rabble to defeat the superb, invading Prussian army at Valmy (1792 CE).

This accelerated the industrialization of Europe. The large trading bloc, initially created by the armies of the French revolution, about as big as the present Eurozone, would have led to the end of Britain’s dominance of world trade. Britain, the European monarchies, and the Church (fearful of a revolution) entered into a “Holy Alliance”, renewed several times, which activated the fascist reflex in French society, leading to Napoleon’s highjacking of the revolutionary force, until his final defeat at Waterloo.

4) COLBERTISM IN REVERSE: BRITISH SCHEME AFTER 1815:

The markets of Europe were deliberately fragmented and industry throughout the continent collapsed as a result in 1815 CE. This collapse, with attending unequal trading systems imposed, even upon the fledgling United States, alerted the later to the necessity of protecting its industries and markets. It also made, as anticipated, the glorious ascent of Britain. Germany, especially, and France, not as much, would use forceful Colbertism to catch up with Britain later. Even so did the USA (to this day, amazingly, when a film crew from an alien land comes to shoot a movie in the USA, it has to employ as many Americans, who just hang around; no other countries has such an eulogy to Colbertism gone mad; when an American crew comes to shoot a movie in France, it does not have to employ the French!)

As Paul Kennedy puts it: “One cannot miss the similarity between the industrial collapse on the Continent [in 1815 CE]and its dependency upon Britain after the French defeat and the 1991-to-1999 collapse of the Russian economy and its dependency on the West.” What Kennedy does not say is that the same happened in 1945, on an even larger scale, as the USA took control of the West and its dependencies.

At its peak Britain was manufacturing 54% of the finished products in world trade. To Gandhi’s future great rage, Indian cotton was sent to Britain to be manufactured there into cloth. As the economist Jevons put it in 1865: The world was Britain’s “countryside,” a huge plantation system feeding its empire:

“The plains of North America and Russia are our corn fields; Chicago and Odessa our granaries; Canada and the Baltic our timber forests; Australia contains our sheep farms, and in Argentina and on the Western prairies of North America are our herds of oxen; Peru sends her silver, and the gold of South Africa and Australia flows to London; the Hindus and the Chinese grow our tea for us, and our coffee, sugar and spice plantations are all in the Indies. Spain and France are our vineyards and the Mediterranean our fruit garden; and our cotton grounds, which for long have occupied the Southern United States, are being extended everywhere in the warm regions of the earth.”

As Paul Kennedy puts it: “To funnel this wealth to the mother countries, exclusive trading companies—East India Company (English, Dutch, and French), Africa Company, Hudson Bay Company, et al., were established.

Forcing the natives to work for nothing while providing their own subsistence created enormous profits.” Something similar is set-up nowadays, except that the wealth, and know-how is flowing the other way, streaming out of the West.

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Neofascist, neoconservative metaprinciple: “There is no economy but greed, and greed is its prophet.” Unfortunately for us all, greed does not make a man good.

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Research Tax Credit, USA, 2005: 6 billion dollars. Less than three days of the military spending of the USA in the Middle East. Obviously insufficient.

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Tags: Manufacturing, Technological progress