Review of a Book by Robert G. Good

Economic Terrorism or Adam Smith Revisited

The author, the late Bob Good, one of the founders of COMER and younger brother of our cartoonist, came from a family farming on the outskirts of Brantford. The communities of that portion of Southern Ontario were deeply community-minded, and book-learning was sufficiently esteemed though not necessarily confined to university halls. The Goods, like the family of J.K. Galbraith, were at least as productive as the cities in identifying what would make the world a better place to live in than it was in the 1930s. It would not be stretching the point to describe the area as John Kenneth Galbraith country. That setting gave rise to not dissimilar curiosities about the way in which the world might be structured. Bob’s father sat as a federal member in Ottawa as a leader the United Farmers’ Party. And though Bob fitted into no particular groove, he did his own heavy thinking feeding on a whole series of citizen activities that he engaged in over the years. The conclusions he reached were as logical and clear as a church bell.

Bob himself repeatedly refers to his having been spared the disadvantage of a college education in economics. For that left his mind open to a rich variety of mostly forgotten writers – a great continuum that argued and fought for a more just society. When Bob in his book wishes to ponder the class divisions in the class structure in Ontario life of sixty years ago, he reaches for examples from distinct branches of his own immigrant family, and considers how many servants the more pretentious farm owners could afford and what probable multiples of income the more pretentious branches of his forebears enjoyed over what they paid their servants. That provides him with a better underview of the democracy of that day than is available in many historical studies. And from it he deduces how free the boasted free market really was. Most official views on the subject he regards as theology rather than science.

One of the surprisingly positive effects of reading the Bob Good book is that there in the relative isolation of his farm, with less of the recent literature to demand his attention, he remained on intimate terms with Edward Bellamy’s Looking Backwards, that he notes had been widely read by agrarian progressives, but has since been largely untouched amidst the mass of contemporary books that must be read. But Bellamy and the views of H.G. Wells, remembered primarily as a writer of science fiction. "Utopian," indeed, is the patronizing label that Marxists label that literature. It turns out from a reading of the Good book that the utopia label (Greek for "nowhere," of course) far better suits Russian and Chinese ideologues, and all the other over-bureaucratized lands, while the alleged utopians of a century and more ago nurtured very human aspirations that cannot, and must not be forgotten.

It is more than a charming feature of Bob Good’s book that he can lead up to the problems not only of the Canadian farming community but of our total economy, and reach into his own family to support his main story line.

His family was as complete as a good library. "Example: My grandfather Good came to Canada in 1837 as manager of a new bank. He aroused the anger of powerful members of the banking elite and was bounced from his position. He then bought a lot of land and became a gentleman farmer, a much more hazardous occupation in Canada in 1837 than in Ireland. There, if you owned land, your financial future was guaranteed. [Right there you have reference to the connection between the privileged position of the land-owner vis-à-vis the miserable condition the landless hired hands.] For various reasons, he went bankrupt in 1864. My great aunt had enough money to save 50 acres with the buildings, and a few years later my grandfather was able to buy another adjoining parcel of land. They farmed as partners for 35 years. During this period my grandfather left the high church Anglicism of the Ontario elite and became active in community organizations. It would seem that poverty promoted a social conscience, which my father inherited, strengthened and passed on. Sixty-five years later the Great Depression did very much the same thing across most of society. This reinforced the social conscience of my generation and nourished a useful skepticism about economic matters.

"My social outlook was, early in life, influenced by three people. The first was my father, who was an ardent disciple of Henry George. The second was his good friend, E.C. Drury (head of the United Farmers Party) who thought highly of Adam Smith. And the third was father’s cousin, George M. Ballachey, who was so fiercely independent that no person or doctrine could possibly claim him as a follower.

"When I was 65 I joined the Committee for Monetary and Economic Reform (COMER), an international think-tank, and for several years served as secretary-treasurer. This gave me an opportunity to meet and correspond with brilliant, unorthodox people from all over the world. The COMER people are united in their belief that our debt-money system is unsustainable, but they have widely different views on other matters."

The Feedlot Paradigm

"This book is about widespread, undeserved poverty, and concentrated, undeserved wealth and economic power. As I have had some experience with poverty, by Canadian standards, and a later experience with modest affluence, I believe I can write with a balanced view.

"Let us examine a beef feedlot, managed as we humans are managing ourselves. A group of range calves of quite uniform conditions are put in the feedlot. Almost immediately after feeding, a group is chased away from the food, and kept away. A little later another group is separated from the food. The procedure is repeated until a small group is left. The food (resources) that would have satisfied the wants of those forced away are then force-fed the remaining animals. The feeding practice is continued day after day.

"Not only is the feeding done in this way, but the feed is procured from far away rather than from adjacent farms. This is a waste of resources, but it is considered useful as it increases the GNP.

"When sickness strikes the feedlot, the first group that is denied sufficient food is denied medicine. The result will be a high mortality rate along with a great deal of variance in the finish of those left alive. The operator will go bankrupt and be branded a fool.

"My critics will argue that our system is one of freedom and efficient production with the rewards going to the best producers. Adam Smith noted that the system in his day had to carry the burden of a parasite class which reduced the efficiency. Fifty years later William Thompson argued that the highest rewards did not go for production, but for manipulation. Today the parasite class has grown wonderfully while the meager rewards left for production have gone primarily to the producers of destructive products in our permanent war economy. These products are then used to spread terror around the world."

Terrorism, Wholesale and Retail

"Edward Herman and David Peterson have written an article entitled ‘The Threat of Global State Terrorism: Retail vs. Wholesale Terror’ where they divide terrorism into two kinds – wholesale state terrorism and retail terrorism – with state terrorism by far the worse. For example: the US government claimed back in the early 1950s that it was overthrowing the elected government of Guatemala for fear of Soviet control and the spread of communism. The media never doubted this; they never suggested that this was a fraudulent cover for the desire to protect the United Fruit Company.1

"William D. Perdue wrote in 1989 that an ideology of terrorism is used by transnational corporations to legitimate an ideology of modernization, where what is modernized ‘is a system of global inequality, and what is developed are dependency relations of peripheral underdevelopment. This, simply put, is real terrorism.’

"Franz Hinkelammert has written ‘the repressive forces of the state have grown to the extent that the state has ceased to carry out its social and economic functions. In the name of antistatist ideology, the police state replaced the social state.2

"In 1883 Henry George wrote an essay ‘Slavery and Slavery’ in which he noted that ‘people can be as effectively enslaved by making property of their lands as making property of their bodies – a truth that the conquerors of all ages have recognized.’3

"William Irvine, a member of the Canadian Parliament, wrote in 1920 that ‘It requires millions to misrepresent a question to the extent that people will vote against their own interest.’"4

Free and Forced Trade

This vein of thought, Bob Good then applies to the immense and still incompletely charted subject of "Free Trade and Forced Trade."

"Trade can lose its freedom by being restricted (import quotas, tariffs, etc.), or by being unnaturally stimulated or directed (war or threat of war, colonizing of territory or resources, structural adjustment programs, corporate welfare, bounties, subsidies, advertising, etc.). The foundation for the conventional view of free trade is based on the teachings of Adam Smith. He argued that we should let those people who have natural or acquired skills in producing certain items produce those items and trade them for items produced by people with other skills. Further, let those areas which have suitable conditions of climate, soil, natural resources and technical skills for the efficient production of certain items, produce such goods.

"It should be noted that Smith made an exception to free trade in the case of national security. Trade should be carried in British ships to help keep the British navy strong. Trade should never be allowed to interfere with national well-being.

"When I was a young man there were certain farm jobs that a farmer could never do alone. Threshing or silo-filling required from 8 to 12 men and some of them had to be very strong. To get the job done there had to be an exchange of labour. This exchange was given freely on all sides. In our neighbourhood we were all adequately fed but none of us could get three pieces of pie at noon and again in the early evening, except on the threshing circuit. Thus when I was young a pie per day per person for 5 or 6 days a week was heaven – free trade with benefits. The Mennonites still freely trade their labour."

What Free Trade Bigots Swallow

"There is enough in the definition of free trade or in the teachings of Adam Smith to contradict these examples.

"Opium smoking was introduced into China from Java toward the end of the 18th century, and despite official opposition spread widely during the 19th century. The opium trade grew rapidly and was immensely profitable.

"Another example of coercion in trade is the conflict between England and Ireland in the 17th, 18th, and 19th centuries. Protestant England overwhelmed the Catholic Irish in war, seized the best land and settled it with English aristocrats and tenant farmers. Later they passed laws that hindered industrial development and thus directed trade. As the industrial revolution catapulted England into world leadership in trade, Ireland remained a source of raw materials. The poor were forced into the barren hills and marginal bog lands, where they barely survived in part-time work and potato patches.

"Those who extol the virtues of forced trade under the pretence that it is free trade will argue that if trade is free from tariffs, import duties and quotas, it is then completely free. They consistently ignore a whole range of stimulative forces, some of which are strongly coercive. Probably, the most important comment ever made about our trading system was made in a short article in the Yale Review in 1933 by John Maynard Keynes: ‘I sympathize, therefore, with those who would minimize, rather than maximize, economic entanglement among nations. Ideas, knowledge, science, hospitality, travel – these are things that should be international. But let goods be homespun whenever it is reasonably and conveniently possible, and, above, all let finance be primarily national.’

"In the November 1993 issue of Scientific American Herman E. Daly published an article, ‘The Perils of Free Trade.’ He points out how the hidden costs to the environment and the community are ignored, destroying the comparative freedom argument. Contrary to the implications of comparative advantage, more than half of all international trade involves simultaneous import and export of essentially the same goods. As there is a cost to moving goods, the simultaneous pushing from behind (coercion) is not free trade. It is forced trade!

"Most of the religious terrorism discussed in Chapter One also falls under the heading of advertising, but it does condone and even suggest violence. Economic terrorism uses both methods. We can therefore conclude that forced trade equals economic terrorism, no matter what elaborate, camouflaged delivery system is used to do the persuading."

Good’s reflections on "Economic terrorism" deserve not only reading but pondering.

"For 175 years economists noted the steadiness of the rate of interest as they searched for factors that caused this steadiness. Then about 40 years ago they changed direction. The Encyclopedia Britannica sums it up: ‘The middle of the 20th century saw a considerable shift in the focus of concern relating to the theory of interest. Economists seemed to lose interest in the equilibrium theory and their main concern with interest rates became as part of monetary policy in control of inflation.’

"The new monetary policy of using interest rates as the sole control of inflation greatly increased the power of the banks to administer inflation or deflation. As Irving Fisher noted 80 years ago, the banks had the power to manipulate the economy. That power is greatly strengthened today. Apparently the modern flat inflation theology has as great a control over their minds as the flat earth theology had over the minds of the Church fathers in the 15th century.

"In the 1970s and 1980s a new phenomenon called stagflation developed. This was a condition of high unemployment combined with inflation, a phenomenon that conventional economics could not explain. How much of this can be explained by the change from an economy with a fairly well-defined inflation-deflation cycle to a permanent or semi-permanent sectoral inflation-deflation economy? To guarantee a sectoral inflation-deflation economy it is necessary to constantly reduce wages and the price of raw materials: Is such an economy really stable, or does it have a stable facade on an extremely unstable structure?

"William Krehm makes a comprehensive summary of the myth of market equilibrium in his article ‘Market Monotheism’ (Economic Reform, September, 1997, p. 4):

"By the mid-sixties there was more serious thinking being done. In the English-speaking world John Kenneth Galbraith concluded that there was need to countervail the powers of oligopoly with intervention by government, trade unions, and citizens’ groups. But Galbraith’s preference for social insight over the preening of mathematical feathers, doomed him to be forever an outsider among economists.

"In France critics of the self-balancing market found a more receptive hearing. The outstanding figure amongst French economists, François Perroux, showed that far from being self-balancing, the markets of the real world were, rather, theaters of power.

"Both Galbraith and Perroux stopped short of emphasizing the impossibility of understanding a mixed economy by the code of a single one of its components. You might as well try reading the time of day on a barometer. But as power structures within the market grew in girth and muscle, little encouragement was given to questioning the self-balancing market.

Increasingly, economic theory became a cover-up for massive aggression on two fronts: (1) against the non-market sector; (2) against less powerful actors within the market: labour, smaller and medium-sized businesses."

Bob Good concludes this crucial part of his book with a pointed summation: "The "Market as God" people sealed themselves into a mental fantasy capsule in the 19th century and for most of the time since then have not let any reality of the outside world seep in. The fantasy capsule is a marvelous machine, nourished by feeding tubes from the corporate sector, and equipped with one-way doors. Inside the capsule the guests gorge themselves on the world’s finest provisions, congratulate one another endlessly, and frequently provide prizes to one another.

"For others, this God is a ruthless vengeful and spiteful God, a terrorist on a rampage, using interest and other economic weapons to rule the world. Hopefully, this new God is not yet firmly seated on his throne. Thus, there may be hope for mankind, yet the erosion of the freedom of the market over the last couple of centuries must make us pessimistic." Amen.

William Krehm

1. Z Magazine, January 2002, pp 30-34.

2. Hinkelammert, Franz J. (Winter 1992) "Our Project for the New Society in Latin America." Social Justice, p. 10. "The outlawing of chattel slavery did not eliminate slavery, as the cotton mills and the fields of 19th century Britain and thousands of workers in the Third World [today] prove. George argue that costly and thus inefficient chattel slavery had been taken over by less costly slavery.

3. George, Henry (1966). Social Problems. Robert Schalkenbach Foundation, p. 150.

4. Irvine, William (1920). The Farmers in Politics. McClelland and Stewart, p. 82.

-- from Economic Reform, January 2007