How public is a US “public university”?

A couple of weeks ago, I read an article that I subsequently had trouble recovering a second time on Google Scholar — despite its usefulness to me on Wikipedia. The article, titled ‘Ideological Voting Applied to the School Desegregation Cases in the Federal Courts of Appeals from the 1960s and 1970s’, is an interesting look at how circuit courts dealt with the questions arising after Brown v. Board of Education outlawed de jure segregation. Whilst the article’s results are mostly — though not all — familiar, it makes an interesting comment that is still remarkably familiar:

“i. Law School Education

There has been a common criticism by conservatives that the federal judiciary is comprised of liberal activists from elite Ivy League law schools. In the Fifth Circuit, justices serving in the 1960s and early 1970s attended several different law schools. Fifteen justices represent the Fifth Circuit... and only three of those judges attended Ivy League schools: John Cooper Godbold, Irving Goldberg, and Elbert Tuttle. Interestingly, these three judges do meet the common conservative argument noted above. All three judges held an impressive liberal voting record (eleven to one) on school desegregation panel”

At the same time, it has been a pertinent observation that since Charles Evans Whittaker in 1957, no jurist who obtained his or her law degree from a public law school has been nominated to the Supreme Court of the United States. [To be precise, the last twenty-six confirmed candidates, and last thirty nominees, all gained their legal education from private law schools]. Given my familiarity with arguments like those of Red Flag and Robert Ovetz, and the shift of US politics to the right since the 1966 midterm elections and the expansion of trade beginning slightly earlier, one should theoretically be unsurprised by the disappearance of public law school educations from SCOTUS. However, it is interesting that another article I have read — ‘Harvard and Yale Ascendant: The Legal Education of the Justices from Holmes to Kagan’ — notes how the Supreme Court has become completely dominated by Harvard and Yale graduates without noting the earlier disappearance of public law school educated jurists from the Court.

In its summary, ‘Ideological Voting Applied to the School Desegregation Cases in the Federal Courts of Appeals from the 1960s and 1970s’ did suggest as possibilities for further research:

“Other research possibilities would be comparing justices [judges] who attended public versus private law schools, or elite law schools versus other law schools (Ivy League schools are not the only elite schools).”

I did the first of these and found, to my surprise, that judges who attended public law schools were, by Pearson correlation coefficient, actually a little more conservative than those who attended private law schools, though the difference is almost certainly insignificant. Moreover, those attending elite law schools (the T14 plus Texas and UCLA) show the same result as for public law schools, while those attending nonelite private law schools (private law schools not belonging to the T14) are no more conservative than judges attending public or elite private law schools.

What may explain this result is that, throughout US history, the “public” sector has often been viewed as a coalition of private organisations rather than actually owned by the public as more modern theories would expect. This is most clearly seen in the debates over the nature of primary elections between 1921 and 1944, in which political parties were frequently viewed as private entities with the right to exclude people on any basis they wished. As Hans Hoppe noted in his Democracy: The God That Failed, this is exactly the opposite of modern democratic theory. This influence upon the “public” sector in the US is entirely consistent with the lack of abnormal liberalism in the voting of those judges educated at public law schools. In fact, even on the Supreme Court those judges educated at public law schools were not by any means uniformly more liberal than contemporaries from private law schools. For instance, three of the conservative “Four Horsemen” of the New Deal era — James Clark McReynolds, William Van Devanter and George Sutherland — were educated at public law schools, as was conservative Chief Justice William Howard Taft.

Why climate change helps the rich — evidence of a nondoctrinaire kind

Although publications like Red Flag Magazine have long demonstrated that capitalism is entirely incapable by its very nature of ameliorating, let alone solving the climate crisis — and are perfectly effective even with deeply flawed and outdated geopolitical assumptions — Red Flag have now become truly open that the fight to prevent runaway climate change is purely and simply class struggle against the wealthy. In ‘Tropical Cyclone Alfred and the politics of ‘keeping politics out of it’’ and ‘Why Only Socialism Can Save Us from Climate Catastrophe’, alongside articles I could not find or were rewritten, Red Flag demonstrate that climate change is purely and simply class struggle on a global scale.

What is interesting is that Harvard University’s Branko Milanovic, Peter H. Lindert and Jeffrey G. Williamson, so early as 2007 in their thesis ‘Measuring Ancient Inequality’, made a strong implication that the capitalist class does have much to gain from global warming.

‘Measuring Ancient Inequality’ is a study of inequality in preindustrial societies. The critical issue the thesis notes is how the presence of a “subsistence minimum” below which human survival is impossible creates an Inequality Possibility Frontier (abbreviated to IPF) at a Gini index that appears low by modern industrial standards. Hence, in these ancient societies, even if extraction by the ruling class was the maximum possible, it only permitted seemingly modest inequality before the majority could not survive.

Milanovic, Lindert and Williamson use the symbol ε for the proportion of the population belonging to the ruling class, and s for the substance minimum in 1990 US dollars. The initially assumed value for the subsistence minimum is $PPP 400 — a value based upon the work of Angus Maddison in The World Economy: Historical Statistics from 2003.

Discussing their results, Milanovic, Lindert and Williamson note on pages 15 and 16 that:

“If we used Maddison’s subsistence level of $400, then four estimated Ginis would be significantly greater than the maximum Gini (at their level of income) implied by the IPF: three of these are based on data from India, and the fourth is from Nueva España.[The 1752 Old Castille is also slightly above the IPF.] Recalling our definition of the IPF, these four cases can only be explained by one or more of these five possibilities: (i) a portion of the population cannot even afford the subsistence minimum, (ii) the actual ε is much smaller than the assumed ε=0.001, (iii) inequality within the rich classes is very large, (iv) our estimate of inequality is too high, and/or (v) the subsistence minimum is overestimated. We have already analyzed and dismissed the first three possibilities. The fourth possibility is unlikely: since our estimates of inequality are based only on a few classes, they are likely to be biased downwards, not upwards. The last possibility offers the more likely explanation. It could well be that the subsistence minimum was less than $PPP 400 for some societies. In particular, this is likely to be the case for subtropical or tropical regions where calorie, housing and clothing needs are considerably less than those in temperate climates....”

“If the IPF is drawn under the S=$300 assumption, it shifts the frontier upwards enough to encompass at or below it all our estimated inequalities, with the possible (and modest) exceptions of Moghul India and Nueva España.”

If we invert what ‘Measuring Ancient Inequality’ says above about tropical and subtropical societies, we would logically conclude that in genuinely cold climates with extremely high food, shelter and clothing needs, subsistence minima might be substantially greater than $PPP 400. We might also suppose that in the very hottest regions with the most minimal such demands, the subsistence minimum could be still lower than $PPP 300. The initial ‘Measuring Ancient Inequality’ said nothing about how high or low subsistence minima could potentially be. A revised version from 2008, which incudes additional societies, does say it is unlikely that even in the hottest deserts the subsistence minimum could be less than $PPP 300. A 2011 version says:

...violations of the ‘maximum feasible’ definition of the IPF might be due to measurement errors or might reflect the possibility that some people can live below subsistence temporarily. The measurement errors could be of three types: mismeasuring national product per capita, mismeasuring inequality or applying the wrong (too high)  subsistence...[...made more likely by the fact that the extraction ratio is a ratio of two numbers, each calculated with significant amount of uncertainty: Gini, and maximum Gini which depends on estimate of mean income]. In the case of Moghul India and Nueva España, a portion of the population might have been expected to die from hunger, exhaustion due to forced and underpaid labour or lack of elementary shelter. Poor people’s income often does, in any given month, or even year, fall below the minimum and they survive by borrowing or selling their assets. Still, the same individuals cannot, by definition, stay below subsistence for long. The fact that the only two societies in our sample exhibiting a ratio higher than 100%, 1750 Moghul India and 1790 Nueva España, were notoriously exploitative seems consistent with this explanation

If the subsistence minimum were greater than $PPP 400, this would however be difficult to prove. One would need to demonstrate inequality as sufficiently restricted relative to income that a higher requirement becomes exceedingly probable. Even then there always exists the possibility of lesser extraction above a lower minimum. No society in any climate colder than temperate oceanic Western Europe is analysed in ‘Measuring Ancient Inequality’, and partly for reasons I will discuss below, candidates for such are few. [China in 1880 would lie partially within climates likely to have subsistence minima above $PPP 400, but the average subsistence minimum for the whole society would be dominated by the hot southern regions — at least judging by the result of the thesis.]

The above facts acquire deep relevance in light of runaway global warming. Milanovic, Lindert and Williamson imply that a hotter and hotter world will, ipso facto, increase the profits of the capitalists by reducing the absolute minimum wage they are required to provide to workers. Thus, the international capitalist class not merely has zero incentive to ameliorate global warming, but has vast potential gains from making it as bad as possible and permitting lower wages and greater profits. The results also explain the rapid movement in many countries from cooler to hotter regions: capitalist classes were seeking areas where they could gain greater profits, and the lower subsistence minima in hotter regions fit this goal perfectly.

Another fact explained very clearly by ‘Measuring Ancient Inequality’ is why civilisations evolved predominantly in hot deserts. The establishment of a stratified society requires that a surplus be produced, and logically this surplus will initially be small. Thus, it would be critical for the development of a surplus that the society’s subsistence minimum be as low as possible. Hot deserts — especially as they are the most likely region after extremely high mountains to evolve animals with the hierarchical social structures required for domestication — are ideal as the would-be elite is required to give such limited wages. Even more dramatically, the absence of even one origin of civilisation or even of crop agriculture in any latitude beyond the subtropics — European agriculture came via migration from the Middle East — suggests very low subsistence minima were critical for the evolution of stratified societies.

Did Barrington Moore write too early?

Re-downloading and re-reading Ron Rogowski’s Commerce and Coalitions, I was struck by a quite interesting and revealing quotation:

“In one of the classic works of modern comparative sociology, Barrington Moore, Jr. (1967) [Social Origin of Dictatorship and Democracy] focused attention on a particularly malignant — indeed, protofascist — developmental coalition, namely the protectionist one of capitalists and landowners against labor. If the present [Commerce and Coalitions, 1989] approach is correct, such an alliance was likeliest to arise in the formative nineteenth century in countries where land and capital were both scarce and only labor was abundant — that is, virtually all of Europe save its economically advanced northwestern corner, and all of eastern and southern Asia. There capital and land could be expected to unite in support of protection and imperialism; only labor, and the most labor-intensive agricultural and manufacturing enterprises, will normally have supported free trade and a less expansive foreign policy.

What Moore saw — rightly, in my [Rogowski’s] estimation — as the far more hopeful coalition of capital and labor should have arisen, according to the present theory, principally in two quite different circumstances: where both of those factors were abundant, and only land was scarce (essentially northwestern Europe, our first case[)]; and where both labor and capital were scarce, and only land was abundant (the “frontier” societies of the third case). In the former case, workers and capitalists alike will have favored free trade and a foreign policy of restraint; in the latter, both will have embraced protection and imperialism. In either of the two cases, however, the fatal alliance of land and capital is circumvented and, in Moore's perceptive telling, the path to a tolerably free society remains open.”

In light of last year’s US presidential election, the rise of Peter Dutton, and the much longer-term rise of geopolitically powerful petro-dictatorships, I get the feeling that Moore wrote his book too early, indeed much too early.

As I have repeatedly emphasised over the past two years, during the era discussed by Moore there existed no example of Rogowski’s “fourth case” — where both capital and land were abundant and only labour was scarce. Under such a situation, which today prevails in:

1. North America
2. continental Oceania [Australia, New Zealand, New Caledonia]
3. the Persian Gulf oil states
4. the more advanced countries within North and Central Asia

capital and land are expected to unite in favour of free trade and a (theoretically) less expansive foreign policy, while labour and more labour-intensive enterprises will favour protectionism and (theoretically) imperialism. The problem, which Rogowski does hint at, is that the recent history of the United States and the East Slavic and Turkic “core USSR”, alongside the entire history of the Gulf States since oil was discovered, demonstrate the capital and land are never satisfied with whatever suppression of labour they achieve, because their goal, as emphasised here and here by Red Flag Magazine, is always to increase profit. Moreover, the scarcity of labour encourages ruling classes to import labour in order to lower wages in the labour-intensive nontradable sector. This has several critical effects:

1. it virtually eliminates the ability of labour in those labour-abundant countries [South Asia, Tajikistan, the Levant, Central America and the Caribbean, non-continental Oceania] from which labour is imported to gain from exporting
2. it reduces the ability of the countries noted in 1) to offer competition for the capital- and land-intensive production via labour-intensive production
3. it thus eliminates the political power of labour in the countries noted in 1) and further increases the control of capital and land in countries rich in both
4. as Christopher Allen Culver of Pennsylvania State University and the US Air Force Academy has noted in his ‘Remittances and Autocratic Regime Stability’ and ‘Manipulating Remittances’, remittances sent back to the countries noted in 1) allow these labour-abundant countries stronger currencies, which further:
1. weakens export competitiveness
2. strengthens local capital and land against labour
3. strengthens the global hand of the ruling elites in capital- and land-rich nations

As discussed most explicitly by the late Sophie Body-Gendtrot in her 2002 The Social Control of Cities: A Comparative Perspective, the ruling elites of this free-trading coalition favour the most extreme possible social control of the domestic underclass. Although it is not explicitly discussed, the fact that the wealthy favour the most intense policing is, plainly, because political activity — requiring international class solidarity — is the only exit route for the ghetto underclass. Mass incarceration is a direct reflection of the political hegemony of America’s very rich, whose primary goal is closing any route to a challenge from the bottom ninety percent. Placing the poorest and potentially most dangerous under direct control is a huge step towards this goal, and the Gulf States do the same thing via their contract system with expatriate workers. Labour, contrariwise, will favour a much more open and free domestic policy, illustrating Sigmund Freud’s principle that economic freedom is opposed to political and sexual freedom.

Free-trading capital and land under expanding trade must ensure trade continues to expand. Externally driven declining trade [via export controls by labour-rich nations, as with Cold War-era Southern Africa] will in these labour-scarce trade-open economies empower previously powerless labour, as discussed by Ron Rogowski, and Texas Tech’s David Letzkian and Dennis Patterson. A free-trading coalition of capital and land must thus ensure labour-rich nations cannot restrict exports to them. Consequently, the theoretically less expansive foreign policy of the free-trading coalition of capital and land becomes much less restrained than Stolper–Samuelson theory predicts. This factor explains the existence of the IMF, World Bank and WTO, whose strict and enforceable trade rules are exceedingly critical to the global power of the United States and its Gulf Cooperation Council allies. Alexander Etkind in his Russia Against Modernity (reviewed here) similarly suggests that Russia’s war against Ukraine is aimed to prevent foreign states decarbonising and Russia losing its fossil fuel profits. Whilst Etkind’s assessment is debatable, massive and influential lobbying by the Gulf States in the West is much more definitively aimed at preventing the loss of profits through reduced global oil and gas use. US wars against Central America (between 1944 and 1996) undoubtedly had the same aim of preventing those nations controlling trade.

Returning to Social Origins of Dictatorship and Democracy, Moore did note the importance of the alliance between Southern planters and northern industrialists to US politics — transformed today into an alliance of fossil fuel producers and giant agribusinesses — since the great globalisation following Reconstruction. He noted the possibility of this coalition evolving earlier, which presumably would have shaped the US into the de facto oligarchy it became during the Jim Crow era and more decisively after the expansion of trade that began according to Rogowski in 1963 — but minus the democratising reforms of Reconstruction. In Saudi Arabia, power-sharing between the Al Saud and Al Ash-Sheikh meant an alliance between the rentier capital of the state and the Wahhabi clergy (land) had forged a free-trading coalition even before capital became abundant after oil was discovered. Similar links between imams and sheikhs developed in other Gulf states. This has prevented any possibility of a tolerably free society for anyone except capitalists and the traditional nomadic pastoralists, and, as noted in the preceding paragraph, is potentially much more dangerous in the long term than the better-known protectionist alliance of land and capital.

Two Great Revenue Divergences over the twentieth century

Recently I have been reading ‘The Great Revenue Divergence’ by Alexander Lee and Jack Paine of the University of Rochester in New York State. The paper is really interesting for showing that in western Europe and east Asia, alongside their settler colonies, government revenue increased dramatically, whereas this did not occur anywhere else in the world. Whilst I was aware that government size increased dramatically after World War I, and that this had frequently been attributed to the demands of activist working classes in Europe, I was not aware that these increases in revenue were not remotely replicated outside Western Europe, Japan, and a small number of settler colonies.

Lee and Paine argue that Western Europe, Japan and settler colonies were able to increase revenue because efficient bureaucracies allowed them to gain sufficient information about their citizens to develop high-yielding income taxes between World War I and the end of the Bretton Woods system in 1971, without the exit of wealthy taxpayers, who were in these societies not “hidden citizens”. They do argue strongly that:

1. increased demand from assertive working classes and from the costs of major military mobilisations for war was necessary for large fiscal extraction in the West and Japan
2. between 1815 and 1914 when industrial workers almost invariably could not vote, the small electorate resisted taxation to an extreme degree

The dramatic effect of enfranchising urban workers was previously noted by Jonathan A. Rodden in ‘The Long Shadow of the Industrial Revolution: Political Geography and the Representation of the Left’. Urban workers and the urban poor demanded taxation to fund services they required but could not afford, whereas the middle and upper classes and the entire rural population resisted taxation vigorously,

Whilst their analysis of the period up to 1971 is very good, Lee and Paine overlook that following the end of Bretton Woods there appears to have been a “Second Great Revenue Divergence” although communication with Lee and Per Andersson (who created some of the sources for ‘The Great Revenue Divergence’) does not confirm this.

“The Second Great Revenue Divergence”?

Studying details of government revenue in the 2010s, what one notices is that the largest shares of government revenue relative to GDP are not found in high-tax Western European nations. Rather, they are found in Persian Gulf petromonarchies, who impose no direct taxes whatsoever. As illustrated by Wilson Prichard, Paola Salardi and Paul Segal on page 300 of ‘Taxation, Non-Tax Revenue and Democracy’, these petromonarchies gain their wealth from rents selling oil and natural gas.

‘The Great Revenue Divergence’ notes the large non-tax revenue of these and other petrostates, but says absolutely nothing about when, how and why their non-tax revenues came to be so large. In communication with me, Alexander Lee says that the petrostates are entirely unrepresentative of former colonies, and that the trends in ‘The Great Revenue Divergence’ still hold. However, Alexander Etkind and Emma Ashford (in her book Oil, the State and War) argue that these non-tax revenues give petrostates unique leverage both geopolitically and economically. It is also highly plausible that the existence of fiscally successful states that impose zero taxes on extremely wealthy individuals — even considering the disadvantage of Islamic banking laws that forbid the rich gaining interest on accumulated wealth — permitted the tax revolts that halted the great increases in revenue in the West and Japan during the “long mid-century” between World War I and the 1973 oil crisis.

Botswana — although it possesses no oil or gas whatsoever — resembles oil-wealthy states in its high levels of non-tax revenue relative to GDP and population. This is because it

1. possesses large deposits of “lootable” diamonds
2. has the highest land:labour ratio of any country in the world, which permits rents for leasing land to graze cattle to be a valuable and significant source of revenue

Whilst I have not been able to confirm the reality or nonexistence of my putative “Second Great Revenue Divergence”, Michael Ross in his 2013 The Oil Curse: How Petroleum Wealth Shapes the Development of Nations does give evidence based upon data from low-income Nigeria that petrostate non-tax revenue did jump abruptly following the 1973 oil crisis. If the thesis of a “Second Great Revenue Divergence” is correct, one would expect that:

1. non-tax revenue collected by wealthier petrostates (Ashford’s “Oil-Wealthy States”) increased much more during and after the 1973 oil crisis than beforehand
2. total government revenue increases in oil-wealthy states since 1973 should be qualitatively larger than in the rest of the world
3. as late as 1972 there would be no states collecting as a percentage of GDP the large non-tax revenues found in many petrostates today

The clearest evidence for a “Second Great Revenue Divergence”, and indeed the only data concerning pre-1970 revenue in any oil-wealthy state, is found in Rostam M. Kavoussi’s 1983 ‘Economic Growth and Income Distribution in Saudi Arabia’, where it is shown that between 1965 and 1977 government revenue – almost entirely non-tax — increased from 37 percent to 69 percent of GDP, whilst total GDP increased by a factor of 4. Non-tax revenue in gold (as Lee and Paine measure it) thus must have increased by a factor of almost eight in twelve years. This fits in with the results of Ross noted above. If data for other oil-wealthy states existed, it is extremely likely similar trends would be discovered.

Contrariwise, OECD government revenue has stagnated since the 1973 oil crisis. As noted above this is likely substantially caused by the appearance of fiscally successful states with perfect conditions for wealth accumulation. Competition with these severely limits the extent to which the wealthy can be taxed without becoming “hidden citizens” in tax havens with fiscal revenue far beyond past high-tax states, let alone previously existing tax havens. In countries with neither efficient bureaucracies to administer taxation nor access to large resource rents, the situation became far worse. Most of these nations were plunged into crises of debt, inflation and large-scale “structural adjustment” in the quarter-century after the oil crisis. Revenue has been restricted in the same way as in the OECD, and as we shall see their status as net debtors may of itself limit possibilities for revenue generation.

Why a Second Great Revenue Divergence?

How, as Kavoussi and Ross imply, did oil-wealthy states and Botswana become able to collect non-tax revenues beyond those of any pre-1973 state? Especially, why could other resource-rich states or colonies not collect these large non-tax revenues?

Ross and Jørgen Andersen in ‘The Big Oil Change: A Closer Look at the Haber–Menaldo Analysis’ show that a key factor behind the increased oil revenues was the wresting of oil revenues from the Western-based “Seven Sisters” resulting from anti-colonial movements in major oil producers. Colonial control is undoubtedly a decisive reason why even the most resource-rich colonies could not collect large non-tax revenues before 1973: allowing colonial governments to collect such revenues would have mortally weakened the resource-poor metropoles and limited the benefits provided by colonies. Another factor noted by Ross and Andersen is that oil and natural gas exceed in value all other minerals combined. Thus, exporters of other minerals lack and lacked access to the potential export revenues of petrostates. I suspect a third factor is that oil and natural gas require much less refining than “hard” minerals whose value is extremely low without expensive, capital- and energy-intensive concentration and smelting. Lootable diamonds are similar to oil in not needing refining to be extremely valuable, explaining why Botswana exhibits similar trends to oil-wealthy states.

Oil and gas are much higher yielding than non-tax revenue sources potentially available to earlier states. Pastoral and pilgrimage rents, which funded the Papal States and Lamaistic Tibet, cannot yield large revenues because of the low value of rented land and the limited income of most pilgrims, and also for another reason. In resource-rich nineteenth-century Latin America, as noted by Ryan Sailer and Nicholas Wheeler in ‘Paying for War and Building States: The Coalitional Politics of Debt Servicing and Tax Institutions’, governments were controlled by debtor landowners, who, they note, resisted tax reform. Debtor landowners would likely be much more resistant still to any reform aimed at increasing rents to a central government, as that would reduce their profits and ability to repay debt. Net creditors would be vastly more willing to pay rents, especially if this means they become freed from taxes. During the 1960s, declining US oil production combined with rapid increases in OECD demand allowed oil-based ruling classes to become large net creditors. To preserve their newly acquired credit, these ruling classes ceded prerogatives to the state, but as even Kevin Williamson in his far-right The Politically Incorrect Guide to Socialism noted, this was actually a case of the oil industry seizing control of the government.

These data suggest three essential prerequisites for large government non-tax revenues:

1. a large, valuable exportable natural resource requiring no extensive refining
2. a state controlled by net creditors who cede prerogatives to that state
• when both prerequisites are met this is done in exchange for tax reduction and asset protection
3. a state removed from control by foreign corporations, who will wish to restrict rent flows
• if this is not met, then the foreign corporations will seek to take potential state revenues for themselves as this gives them greater balance of power

Whilst this list may not be exhaustive or exact, it is suggestive given the dynamics in the lead-up to the Second Great Revenue Divergence. If correct, these requirements make the divergence self-perpetuating inasmuch as debtor states find it extremely difficult to raise taxes or rents, although petrostate rents are less reliable than direct taxes in the West and East Asia. It has made it impossible for even the most powerful states in the West to demand any sacrifices at all from the wealthiest petrostates, even when they are demonstrably the culprits behind climate change, international terrorism and wars.

One year too soon — and where the socialists have been wrong for half a century

Today, after yesterday reading a depressing forecast of hot and dry weather for the next week, and after a windy and unpleasantly grey afternoon that left me hoping for some rain whilst a “medium” possibility existed in the BOM forecast, it has come to me that the runaway climate change I had predicted almost exactly one year ago is now with us.

There was — I kept looking and looking all night — no rain anywhere in sight, and the forecast is getting hotter and hotter day by day with no sign of rain, although it is pointless to look for it! Although Melbourne had 0.2 millimetre of rain on the first day of this month — actually this rain fell in July but was counted in August — it is virtually certain that there will be no further rainfall this month. I made a safe bet of $100 with my mother than there will be no rain for the rest of this month, but almost certainly it will be much, much, much worse. Turning on the tap always makes me realise that Melbourne’s dams will be dry before any significant rain ever occurs again! One cannot — must not —make less dire or less gloomy predictions for the rest of this year, or next, or the year after that, or ever.

The solution to runaway climate change has been, as documented by groups like Socialist Alternative, the former Democratic Socialist Party, and the present Socialist Alliance and Red Flag Magazine alongside such ecosocialist writers as Richard Seymour and Richard Smith, known for a very long time. It is the expropriation of the corporate polluters’ present profits and accumulated wealth without the tiniest compensation and the transfer of every cent to rapid decarbonisation. As early as 1990, this was envisioned in Environment, Capitalism and Socialism. Experiencing worse and worse climate change both locally and globally makes me more and more convinced the ecosocialists are fundamentally correct that there can be no solution to or even amelioration of the climate crisis without total expropriation of the global capitalist elite. It is also clear to me that education on environmental issues could be made much plainer, simpler and more truthful if this were clearly understood at school, where teachers invariably dodge or minimise or cover up irredeemable flaws in the profit system.

Nevertheless, there is undoubtedly a deep flaw in the thinking of the Trotskyists that I feel I have to note. That is their failure to recognise adequately the true culprits behind the inability to counter global warming except in the most farcical way. I myself failed to adequately recognise it for over two decades. The undoubted culprits for runaway climate change are, alongside Australia, the Arab Gulf oil monarchies, the only nations with higher per capita (more accurately, per-citizen) emissions, but who have been even more than Australia, able to totally resist the tiniest calls for environmental justice. Even the tiniest such call would have seen the Gulf States and Australia required to cut emissions by something insignificantly different from 100 percent, alongside less extreme cuts by other supply nations. Once supply is cut off, the profits from unlimited emissions would be eliminated, and a rapid shift towards carbon-free production at a global level become possible.

What is striking on reflection is how little the socialists discuss the Gulf States as culprits when they discuss climate change. They tend to focus upon industrial nations and the pollution from industry, although the Gulf States — like Australia today — engage in virtually no local manufacturing, and unlike Australia have never engaged therein historically due to extreme scarcity of labour. (Actually, the very absence of manufacturing serves to eliminate the one thing, an activist and concentrated working class in the tradable sector, capable of restraining greenhouse gas emissions). Moreover, the core Gulf States of Saudi Arabia, Kuwait, Qaṭar and the United Arab Emirates are much larger total emitter than the EU or Japan, and remain larger even if measured cumulatively since the preindustrial era. Ever since the 1973 oil crisis the power of Gulf lobby groups has most likely blocked or radically slowed shifts to non-polluting energy sources, even in resource-poor Europe and Japan. Despite this undoubted power, the radical left parties so essential to merely ameliorating climate change tend to see even Saudi Arabia as a product of Western imperialism. Actually the Al Sa^cud — today the richest family in the world — established itself as ruler in the Arabian Peninsula in the middle eighteenth century and has almost continuously ruled most of that region since (there was a break between 1891 and 1902.) Moreover, the Al Sa^cud has always aimed to expand its rule in the name of puritanical “Wahhabi” Islam, which eliminates the most basic human rights and — I hope to discuss this later — establishes exactly the type of state the global capitalist elites have desired for a long time but never observed.

Despite these fundamental facts, which I intend to discuss more in a subsequent post, socialist groups have never singled out or even called upon the Gulf States for sanctions, although they have unquestionably deserved the harshest and most uncompromising sanctions ever since the Kyōtō Protocol. At that protocol — which if based upon true environmental justice would have called upon the Gulf States (and Australia) to:

1. reduce their emissions to real zero (not just net zero) no later than 2010 and preferably by 2005
2. pay the full costs of climate change everywhere else in the world
3. accept the most uncompromising sanctions if they fail

the Gulf States evaded even attendance and Australia was allowed to increase emissions. In response, socialist groups gave Australia substantial but inadequate attention, and did not discuss how the highest per capita emitters evaded attention let alone just targets, or their ability to inhibit reductions elsewhere in the world by lobbying.

Why no anarcho-capitalism before the 1970s?

In Commerce and Coalitions, Ron Rogowski argued on pages 165 to 168 that socialism never evolved in the United States because of the enduring abundance of land and scarcity of labour. Whilst Rogowski is too timid about discussing race — for a start, the theories of Eli Heckscher and Bertil Ohlin, and later Wolfgang Stolper and Paul Samuelson, are in no way inconsistent with division on the basis of race if ownership of production factors be divided thereby — he does offer quite reasonable explanations in terms of how labour loses from trade and becomes either timid or powerless except during falling trade.

One related point I thought of on reading Rogowski but which has not been discussed is why anarcho-capitalism evolved where and when it did. Since the Republican Revolution, anarcho-capitalism has been a highly influential ideology amongst the US ruling class, with Randolph Hohle arguing that anarcho-capitalist and allied writers use a code of:

“private” = “White”

“public” = “Black”

to justify their vision of a society without public services. (Although Hohle says this code developed only after the civil rights revolution of the middle 1960s, I feel that it probably dates back to at least the early Republic when free blacks, as I noted previously, became viewed as wholly deviant.)

Despite its influence, anarcho-capitalism has never been subject to detailed scholarly study. The critical question is why, given the benefits not having to pay taxes would have to the extremely rich, anarcho-capitalism only became an established ideology in the 1970s, and never evolved in Europe or Japan at all. Here, Rogowski can provide a very clear answer. Anarcho-capitalism is, by definition, a militant movement of the upper classes to remove the power of labour, and in its goal to eliminate the public sector is the direct opposite of socialist movements aiming to eliminate the private sector. By inverting what Commerce and Coalitions says about socialism, we can predict logically that anarcho-capitalism (or similar militant movements against democracy) will arise where(ever) capital benefits from expanding trade and labour does not, that is, where capital is abundant and labour scarce. In Rogowski’s terminology, anarcho-capitalism will arise in advanced economies with a high land:labour ratio. Under these conditions, capital and land gain from free trade, whilst labour sees its opportunities restricted and its incomes reduced. Thus class struggle is intense as capital and land seek to eliminate the power of groups opposed to their unlimited power by funding politicians so dedicated, and ultimately to destroy all possible sources of power of such groups. Under this condition, those who do not lie at the very bottom of society — lacking the resources to unite with those who do as their skills are devalued — will stigmatise those at the very bottom. Rogowski himself showed that this stigmatisation can be extremely powerful on page 85 of his 1974 Rational Legitimacy: A Theory of Political Support, and on page 157 he suggests that the probability of a coalition between lower classes with different stigmatisation states is likely to be very low if the groups lack combined economic power.

As I have discussed here, there were never any advanced economies with even a relatively high land:labour ratio at any point between the birth of Christ and about 1900. An undated file from the University of Michigan noted this at PS 489.1 (page 5):

“Abundance of Land and Capital, Scarcity of Labor (p. 32):

Who?

1. 1840: no one
2. 1914: US and Canada
3. [1991-: US and Canada, Australia and New Zealand, Arab Gulf States, Russia, Kazakhstan, Turkmenistan, Turkey (marginal)]”

Thus, before 1900 no state favourable to the development of strong and/or influential anarcho-capitalist type movements existed. Although Proudhon’s ideas as depicted by Marxist Left Review strikingly resemble anarcho-capitalism in many respects, if Rogowski be correct then Proudhon was planting an ideological seed onto the unfavourable soil of mid-nineteenth-century France.

In the developed countries of northwestern Europe, enduring abundance of labour meant that when trade expanded, enriched workers pressed for and gained more rights and a larger public sector. Additionally, labour did not oppose capital because both benefitted from trade, and this made capital compromise severely with labour’s opposing demands for the highest possible taxes and greatest regulation. This is even more emphatically true of later-developing East Asia.

In a labour-rich society, labour opposes capital only when capital is scarce. There capital becomes militant only during falling trade and is intensely protectionist. This militant capital will then support autarky with only the most restricted possible trade, a position entirely opposed to free-trading anarcho-capitalism. Unlike anarcho-capitalism, Marxian socialism was and is not explicitly pro-free trade. Thus one could theoretically imagine militant socialism arising in advanced, land-rich economies under falling trade, though history does not provide an example and there exist many reasons why this would not happen even if the falling trade were extremely prolonged. Thus, “no anarcho-capitalism in labour-rich societies” is almost certainly a more rigid rule than “no militant socialism in labour-scarce societies”.

The rule that there is no anarcho-capitalism in labour-abundant societies can also be extended to other forms of ruling class militancy like religious fundamentalism. This also first emerged in the United States after it became abundant in capital, notably with the second Ku Klux Klan, and re-emerged there after the postwar globalisation. It has been the dominant force in the Gulf monarchies since the pivotal oil crises of the 1970s. These movements argue, at least implicitly, that God’s law decrees a natural hierarchy based on non-class distinctions like race, gender or religion, and that this is a natural order for all human societies.

The “Australia shock”

Following on from his Commerce and Coalitions, of which I wrote several discussions earlier in 2023, I have recently been looking at the preview of Ron Rogowski’s new book Shocking Contrasts: Political Responses to Exogenous Supply Shocks.

In many ways Shocking Contrasts is intended as an expansion of what Rogowski discussed over three decades earlier in Commerce and Coalitions. His earlier book looked at how endowment affect politics in differently-endowed societies, whilst Shocking Contrasts deals with changes in national and global endowments of important production factors. The book covers chiefly the Black Death in late medieval Europe and the blockade and quest for Lebensraum in interwar Germany, but also looks at the post-Máo Zédōng “China shock”, the fifteenth-century invention of the printing press, and the “railway revolution” of nineteenth-century Russia.

Some years ago, my mother liked to say that “the world is made in China”, upon seeing

“Made in China — Fabrique en Chine [French]”

on virtually every product we bought from stores like Myer and David Jones.

If China has a unique abundance of labour, Australia has an even more unique abundance of land. On page 162 of Handbook on East Asian Economic Integration (edited by Kimura Fukunari, Mari Pangestu, Shandre M. Thangavelu and Christopher Findlay), it is noted that World Bank statistics reveal Australia to possess:

1. twenty-nine times the global average of agricultural land per capita
2. sixteen times the global average of mineral resource endowments per capita
3. eighteen times the global average of land per worker

Page 94 of Commerce and Coalitions revealed Australia as having the second-lowest population per unit area of agricultural land, behind only Botswana.

Thus, the opening up of Australia’s land — preindustrially useless because of extreme deficiency of essential nutrients in its ancient soils and absence of the advanced technology required to smelt the lithophile metals (aluminum, manganese, titanium) in which Australia is so rich — would be expected to constitute a shock of increased land supply. This process began in the 1850s as new land was opened for grazing and continued intensely until at least 1975. In many ways, especially in Queensland where new land is still being cleared for farming, this “Australia shock” (as I will call it) continues to the present.

Shocking Contrasts illustrates no example of a supply shock involving gain of land. The “Australia shock” is probably too prolonged to be sufficiently unexpected for inclusion. Gain of land via trade between 1850 and World War I has been noted by Jeffrey Gale Williamson and subsequently Kevin Hjortshøj O‘Rourke as radically reducing rents in land-poor trade-open European nations. However, both those authors focused on the “New World” as a whole, although this “New World” is comprises two radically different groups of lands:

1. the New World proper, or the Western Hemisphere of the Americas and New Zealand, which are fertile regions sparsely populated because:
1. they were peopled very late as either ice sheets or deep seas had to be crossed, and
   
2. outside the altiplano native large animals were invariably too egalitarian in social structure for domestication
2. Australia and Africa, more accurately named the “Ancient World”: early-peopled lands whose low fertility and ecological fragility inhibited technological or human cultural development

All the scholars noted previously demonstrate dramatic increases in inequality in the Ancient and New Worlds, and comparably dramatic decreases in the Old World. The situation before World War I is then contrasted with the interwar situation whereby the Ancient and New Worlds experienced egalitarian trends, and the Old World inegalitarian. Nevertheless, even admitting the importance of interwar deglobalisation, technological developments were continuously increasing Australia’s relative abundance of land: for instance, titanium metal could not be smelted commercially until the 1940s, and large areas of southern Australia could not be farmed until chalcophile micronutrient deficiencies were discovered in the 1950s. By then little potential farmland in the temperate New World remained uncleared as remaining land was invariably too wet, cold or steep for any sort of farming, while the hemisphere’s chalcophile ores were rapidly depleting. These trends have accelerated since the middle 1970s.

Evidence:

If there has been an “Australia shock”, we should see evidence that returns to land have demonstrably fallen. Rogowski shows re the “China shock” that wages have fallen and inequality risen even in other labour-abundant nations, suggesting that their labour is out-competed by China.

Falling Returns to Land:

Evidence of falling returns to land ever since the opening of Australia is very well documented for land-scarce Europe and East Asia. However, the trend can also be seen in the economic history of the New World proper, where areas least able to diversify beyond specialisation in agriculture have seen the sharpest declines in global economic rank, as noted by John Singleton for New Zealand, and much more widely for Argentina. Excluding probably Kazakhstan, no nation rivals New Zealand and the Southern Cone for high agricultural land value per capita (see page 162 of Handbook on East Asian Economic Integration and NationMaster’s comparison here for justification).

As Jeffrey G. Williamson noted in the 1990s, increases in total land value in the most land-rich regions under globalisation can reach orders of magnitude. Strong evidence of falling returns to land can be seen in the political strengthening of landless peasants in land-rich parts of Latin America under postwar rising trade, most notably in Nicaragua during the 1970s and Bolivia during the 1990s. This contrasts sharply with the weakness of labour in these regions during the pre-World War I globalisation, and on page 115 of Commerce and Coalitions Rogowski says:

“Nicaragua, as a thinly populated state, should have experienced a radicalization of land rather than labo[u]r”

Despite the growth of trade after World War II, landowners in Latin America were faced with decreasing returns due to to increased global abundance of land and their inability to own newly usable land and ores. Peasants in land-rich nations, who used but did not own land, would benefit from this trend and increasing returns to the labour they owned. Similar trends can be detected in other land-rich Latin American nations, most of which democratised late in the twentieth century, and also in Afghanistan, where the war between the PDPA and the mujahiddin can be understood as an economic conflict between:

• diminishing returns to land (via the “Australia shock”) and
• economic gains of abundant land against scarce capital and labour (via expanding trade)

Certain other land-rich nations — notably Algeria and 1970s Ethiopia — experienced similar effects as  users of land over owners became favoured by increasing global abundance of land at a time when climatic conditions in Australia were unusually favourable.

Impoverishment of Backward, Land-Abundant Societies:

More consistent than unpredicted radicalisation of landless peasants in some land-rich societies has been the plain impoverishment of sub-Saharan Africa and Latin America since World War II. Previously, their per capita incomes and living standards were generally higher than labour-rich tropical Asia and even mainland East Asia. However, with the increasing supply of farmland and lithophile minerals from Australia, those regions became faced with a loss–loss scenario. Their comparative advantages in agriculture and non-lithophile minerals declined, whilst their comparative disadvantages in labour-, capital- or skill-intensive industries did not. The result, as has been noted by many economists, is an impoverishment that (as noted above) extended to what before the Second World War were some of the wealthiest nations in the world.

Rogowski in Commerce and Coalitions attributes some of this impoverishment to protectionist policies favouring the urban elite, but gives little idea as to why the free-trading rural sectors failed to gain political control, and zero idea of why they were challenged after they did in many Latin American nations (e.g. by Shining Path in Peru). Shari^ca Sudan under Omar Bashir and Iran under the ayatollahs, although imperfect cases due to US sanctions (which I previously argued to have only a minor effect), do not suggest “traditionalist” regimes would have fared better than those based upon the capital–labour coalition. If we assume a continuous gain of land from Australia, we do see that countries less land-surfeited than Australia, but unable to specialise elsewhere, will ipso facto be outcompeted and become poorer. Policies designed to increase competitiveness are likely to be difficult to implement. For instance, radical currency devaluations to make exports more competitive with more land-abundant rivals will be painful even for the very richest, and have never been observed even with IMF structural adjustment, as noted by the IMF’s own Independent Evaluation Office in 2007. Similarly, there are limits to which already low farming and mining wages can fall, and to how much these will restore preceding profitability.

Global Warming:

A third aspect of the “Australia Shock”, more obvious than the previous two, is global warming. Australia, is, of course — excluding the Gulf States — the worst offender in greenhouse gas emissions, with per-citizen emissions ten times the global average. However, Australia’s role in global warming is even greater than this because:

1. it has been documented that Australian flora is the most efficient in the world at storing carbon
2. increasingly intense forest fires as observed in 2019 and last September are likely to severely effect carbon storage be removing even small areas of fire-sensitive rainforests
3. Australia has the largest total area of agricultural land in the world and thus the largest area of native vegetation cleared for farming or grazing
4. the superabundance of land in Australia has led to protein production increasingly using Australian land instead of Asian or European labour
5. the extreme abundance of lithophile metals whose smelting is extremely energy-intensive has caused them to substantially supplant scarce easily smelted chalcophile metals, and likely eliminated incentives for recycling chalcophiles
   

The global temperature graph shows a continuous long-term cooling from peak Holocene warmth in the ninth millennium BC until World War I, followed by slow warming during the long mid-century (between the Bolshevik Revolution and 1973 oil crisis) and rapid accelerating warming since the middle 1970s. This does not agree with the peaks in land clearing in Australia — which occurred in the last half of the nineteenth century and the postwar era. However, it is certainly possible that a side-effect of land-clearing in Australia may have been a shift towards land-intensive protein production in the New World, as observed after World War II, for the following reasons:

• as noted in Richard Seymour’s The Disenchanted Earth: Reflections on Ecosocialism and Barbarism, the US government subsidised beef production massively.
• it is certainly likely that this demand for animal sources of protein would have been less if labour-intensive plant proteins in the tropics were not rendered so uncompetitive by Australia’s superabundance of grazing land
• the same increase in beef production took place even in land-poor Europe, based on US government policy with the Marshall Plan

It is also true that the supplanting of chalcophile elements with Australian lithophiles — largely smelted via coal — coincided with global warming accelerating. This also happened immediately after fear of exhaustion of chalcophile “base metals” became acute in the early 1970s.

Thus, even if the raw temperature figures do not imply immediate direct causation, the role of the “Australia shock” in global warming is almost certainly significant.

Secularisation:

Another effect I suspect from the development of Australia’s pre-industrially unusable land is the disappearance of the influence of Christianity, Hinduism and Buddhism on societies previously dominated thereby. Secularisation is a logical effect of any large gain of land, because land is the only factor of production religious institutions can own. Hence, if previously scarce land becomes abundant, religious organisations’ returns will fall dramatically.

The evidence here is highly supportive. The major opening of Australia in the late nineteenth century coincides well with the growth of anti-religion sentiment within the working classes of Europe. The second major “opening” of Australia in the postwar era coincides very well with the complete disappearance of Christianity as a force in Europe, and of Hinduism and Buddhism in land-poor monsoon Asia (where Stalinism and similar ideologies came to dominate). As I noted earlier, even the land-rich New World was by no means exempt from this trend: it simply could never be so land-rich as Australia was.

Also, perhaps more controversially, I can argue that the unpredictability and relative aseasonality of the Australian climate might make religions substantially based upon the very regular (although it must be acknowledged that in places like Gujarat rainy season rainfall is as variable as rainfall in Australia) seasonal cycles of the Levant and monsoon Asia less relevant. Outside the southwestern quarter Australia’s climate is largely controlled by the El Niño Southern Oscillation, which is a highly irregular nonannual cycle with periods as long as seven years and large fluctuations in strength. The climate of the non-ENSO southwestern quarter is vastly less well understood but appears to be most sensitive to acyclical changes in high latitudes like polar ozone depletion and Antarctic pressure and sea surface temperatures. Under such conditions, religious systems developed in Eurasia lose their critical connections to the land and nature upon which their cosmology was based. Because farming in Australia required and requires highly advanced technology to combat ancient soils and a frequently erratic climate, there could never be a replacement religion of a traditional type. Although Australian farmers do speak of attachment to the land, it is extremely important to recognise how unnatural this is because productive crops and livestock require the chalcophile elements so deficient in Australia.

“Australia shock” or European subsidies?

One question I have asked with my putative “Australia shock” is how much its effects are due not to the expansion of land clearing in Australia, but rather to European farm subsidies. Historians such as Jeffrey G. Williamson note that before World War I, although protection of manufacturing was greater than today, agricultural protection was much lower. As noted throughout this post, European and East Asian workers were empowered by nineteenth-century globalisation, and because land was the pillar of ruling class power, subsidising farming became a tool to preserve the influence of farmers against manufacturing workers desiring radical social revolution.

European farm subsidies would logically be expected to have similar global effects to development in Australia. In an artificial manner, they increase the global land supply, and would be expected to reduce returns to land elsewhere in the world, and impoverish backward, land-abundant societies specialising in agriculture. The question is whether European subsidies would have more effect than opening of new land in Australia.

I would argue that this is a debatable question. The critical issue is disincentives to use land efficiently. These are often argued to be a direct result of farm subsidies. Nevertheless, as Wadham Wilson Wood noted in his 1957 Land Utilization in Australia, such disincentives apply equally to superabundant land under a free market, because such land is too cheap and the increase in rent would have to reach extraordinary levels to counter the problem. Politics may be one reason why rent increases have been very limited in rural Australia: Martin Taylor’s Bludgers in Grass Castles from the late 1990s notes how the political influences of pastoralists has made rents “token” in his words. However, limits to productivity on most Australian farmland are severe, with maximum yields for no crop so much as one-half the global maximum, and for some they are as low as one-seventh the global maximum due to the extreme antiquity of Australian soils. This would mean that land values in Australia would never rise nearly so high as in the New World, even under free trade without farm subsidies. Moreover, even if European (and East Asian) farm subsidies do not encourage globally efficient use of land, without the continual opening of new land in Australia up to the twenty-first century the previously noted disincentives would be absent. Hence, the “Australia shock” has itself produced the lavish farm subsidies we see today even in the New World: we cannot entangle it from modern farm subsidies.

Conclusion:

The previously argued points provide substantial evidence for global effects via continued clearing and development of Australia’s superabundant flat land for agriculture. Calling it a “shock” in the sense of Rogowski’s Shocking Contrasts is somewhat inaccurate because the gain of land from opening Australia has occurred over too prolonged a period, but that does not deny its effects.

It is also true that I am uncertain about other effects I expected, chiefly reduced inequality in backward, labour-abundant economies, which I could not relate to the opening of Australia. However, many other predicted effects seem on at least a superficial study to be relatable thereto.

‘Commerce and Coalitions’ III — The Nature of Capital- and Land-Rich, Labour-Poor societies

In my first post reviewing Ron Rogowski’s Commerce and Coalitions, I said I would discuss the numerous issues raised by capital-rich, land-rich and labour-poor economies. Since the book was originally published, the effect of these problems has undoubtedly been multiplied: many of the problematic political and social trends since the 1973 oil crisis can easily be understood in terms of the expected political behaviour of economies rich in capital and land, but poor in labour, under a condition of rapidly expanding trade. This behaviour is, at first sight, contradictory when compared to other economies, but understandable in terms of their basic endowments and structures.

In my review of Commerce and Coalitions, and my communication with Rogowski via email, I noted the absence of capital- and land-rich, labour-poor regions for long periods (in fact for millennia), and that no explanation was given in the book, as if this extremely prolonged absence was accidental and inexplicable.

Why Were Capital- and Land-Rich, Labour-Poor Economies Nonexistent for So Long?

The most significant thing about societies abundant in capital and land but poor in labour is that for almost nineteen centuries at a minimum they were completely nonexistent. Although Rogowski notes that one area in Classical Greece — Miletus, comprising present-day Western Anatolia — was rich in both capital and land, his studies of both the contracting trade of the declining Roman Empire and the expanding trade of the long sixteenth century reveal no region abundant in both capital and land but poor in labour. Rogowski is definite about the lack of capital- and land-rich regions not merely during the long sixteenth century, but until the beginning of the twentieth century. His analysis of the declining Roman Empire is less conclusive but provides no evidence for any region rich in both capital and land.

Rogowski himself seems to have assumed this as coincidence, but given its persistence for two millennia, coincidence seems improbable. My initial reaction was that simultaneously capital- and land-rich economies were the product of lithophile metallurgy, for their emergence at the beginning of the twentieth century coincides therewith; however, upon rereading and noting the case of Miletus, I realised that this is, minimally, simplistic. A re-write of our question would ask why capital was never accumulated within land-rich regions? Evidence does suggest that there may exist unique difficulties accumulating capital in a land-rich region during expanding trade. Because labour, when scarcest, can normally be controlled via methods like slavery, serfdom, niẓām al-kafāla or mass incarceration, if capital be scarce there usually exists disincentive to replace labour with capital in land-rich economies.  Evsey Domar in his 1970 “The Causes of Slavery: A Hypothesis”, argues that owners of labour in land-rich economies gain their wealth from labour, and ownership of land is not so important. Consistent with this, Rogowski implicitly argued that land-rich Russia accumulated labour — not capital — during and after the long sixteenth century, and that this ultimately created an anti-capitalist, anti-Tsar coalition which made the Bolshevik Revolution.

Capital is inherently less powerless than slave or serf labour, while its preferences do not ipso facto coincide with the landed elites’. Contrariwise, where labour is abundant and gains (potential) power via increased trade, the scarce factors of capital and land possess incentive to replace militant labour with capital, thus accumulating the latter.

That land-rich economies began to seriously accumulate capital only via tariffs in North America, Australia and New Zealand in the nineteenth century, and Latin America in the middle twentieth century, supports the hypothesis that expansion of capital is difficult in land-rich economies during rising trade. In the Gulf States, the fact that oil was owned by the monarchs from the beginning of extraction and is extremely capital-intensive, meant that the conflicts noted above were completely bypassed. Possibly critical was abolition of slavery or serfdom, which weakened disincentives to replace labour by capital, and also accompanied capital accumulation in the Gulf States. (The ruling classes, as noted earlier, were always able to reorganise labour control.) These arguments are not conclusive, for most land-rich economies without slavery or serfdom still have never accumulated significant capital, while earlier changes to labour or trade structures were not accompanied thereby.

Where The Powerful Are The Rebellious

The counterintuitive, but critical, feature of an economy rich in capital and land, but poor in labour, is that under expanding trade, it is the powerful who rebel. This is because owners of capital and land can then use their ownership of agricultural products, minerals and capital-intensive manufactures to gain economic power in the world market. “Rebellion of the powerful” was noted in American politics as early as Kevin P. Phillips’ 1969 The Emerging Republican Majority, which argued that Richard Nixon’s 1968 election victory was produced by a rebellion by rural and suburban white America against government-enforced civil rights for blacks. Phillips ignored the role of America’s capitalist class in producing GOP dominance at a presidential level from 1968, while his Obama-era preface ignored the 1994 Republican Revolution entirely. Nonetheless, Phillips does demonstrate how American politics has been dominated by rebellions of the powerful — Southern, Plains and Mountain landowners, and since the 1970s, capitalists. With each new generation of Republicans the demands of richest one percent, even the richest 0.01 percent, for elimination of potential balances of power become ever-more extreme. Current GOP ideology originated from Murray Newton Rothbard and James McGill Buchanan. During the 1960s and 1970s these two, in exact opposition to Marx, saw capitalists as “makers” and the majority as “takers”. Their de facto argument was:

1. the only legitimate state was a privately owned state that gained all income via earning money
• this method is primarily used today by the Gulf oil monarchies
• its impossibility in resource-impoverished Europe and East Asia — where marketable natural resources have been destroyed by glaciation and orogeny — undoubtedly played a key role in those regions’ political development
2. taxation was, ipso facto, theft from the “makers”
3. public debt (following the classification of states on page 18 of ‘The Politics of the Invisible: Offshore Finance and State Power’) was also ipso facto theft from the makers because it devalued their saved wealth

Rebellion of the powerful can also be seen in al-Qa^cida and other Muslim terrorists substantially supported by Gulf royalty, who similarly monopolise local gains from increasing trade. The goal of these terrorists, like the contemporary Republican Party, is eliminating all potential balances of power via either:

1. legitimising absolute monarchy as divinely ordained (until Rerum Novarum orthodox Christianity held similar views) and making capitalists part of the ruling families
2. declaring that God’s laws are divine and cannot be challenged by the masses and a theocracy or caliphate as the only legitimate government

One can detect similar attitudes in Vladimir Putin, and also in the Palmer United Party, and even John Howard in Australia. Under expanding trade, the wealth of the capital–land coalition, as noted by Martin Gilens and Benjamin Page in Affluence and Influence: Economic Inequality and Political Power in America and Thomas Paul Bonfiglio in The Psychopathology of American Capitalism, makes labour-based political organisations financially powerless. Labour within the public sphere — and in the Gulf States and substantially the US labour stands entirely absent therefrom — becomes extremely timid, focusing merely upon limiting further transfers of wealth to the rich, or, as we shall see, colonising external labour into a hierarchically split market.

Split Labour Markets and “Labour Imperialism”

In the middle 1970s, University of California Riverside professor of Sociology and Ethnic Studies Edna Bonacich argued in ‘Advanced Capitalism and Black/White Race Relations in the United States: A Split Labor Market Interpretation’, and ‘Abolition, the Extension of Slavery, and the Position of Free Blacks: A Study of Split Labor Markets in the United States, 1830-1863’ that the United States has been always characterised by a “split labour market” based upon wage differentials between blacks and whites and formal or informal rules to hire blacks last and fire them first. This is an extremely efficient means for controlling scarce labour because it pits nonelites against each other. Under expanding trade the scarcity of labour means labour-intensive tradable industries are moved to labour-rich regions and nonelites work only in nontradable industries. Jacobin noted in November 2019 that nontradable industries possess very limited power to produce class solidarity. This would be multiply so when capital neither loses from trade nor needs compromises with labour.

Split labour markets are also characteristics of the Gulf States, where the majority — in Qaṭar as much as 98 percent — of private sector work is done by expatriates, mostly from the labour-rich Levant and South Asia, where their remittances (despite the extreme exploitation of niẓām al-kafāla) are frequently the largest single source of domestic revenue. These workers have no bargaining power because:

1. they cannot obtain citizenship:
1. de jure for non-Muslims in at least the majority of GCC states
2. de facto for almost all non-Arab Muslims and the majority of Arab Muslims
2. they are forbidden from forming organisations to represent their interests
3. they can be fired at will by citizen employers
4. they can never own capital and usually cannot own land
   

The effect of remittance dependence is undoubtedly profound. It blocks workers in countries like the Levant, Pakistan and substantially tropical Asia from gaining via expanding trade in labour-intensive industries. Instead, workers sacrifice all political rights both at home and abroad for a restricted economic gain. Politically, in fact, workers lose both at home and in their new abodes. De facto Gulf citizen control over workers from backward, labour-rich countries means that conservative authoritarian regimes gain unchallenged power. Their nations’ scarcity of capital and resources means these authoritarian rulers could not challenge the Gulf rulers even if they wished to — and their risk-averse nature precludes them so wishing. This system constitutes labour imperialism: the Gulf States control neighbouring labour-rich nations via remittances and niẓām al-kafāla to ensure an adequate labour supply at low cost. Similar labour imperialist relationships, although less rigid, also exist between:

1. the United States and Central America plus the non-Stalinist Caribbean
2. Australia and noncontinental Oceania
3. Russia and Kazakhstan with the labor-supply nations of Tajikistan and the Caucasus

These relationships undoubtedly blockade necessary challenges to the international power of the United States, Australia and the GCC nations, especially over the critical issue of climate change. Because the workers of the labour-rich nations are not engaging in tradable activities, they cannot generate solidarity against their imperialist oppressors. Free trade serves to intensify the dependence of the most oppressed and labour-rich nations upon the new capital- and land-rich imperialist powers. It can even benefit the public sectors of the imperialist powers whilst weakening those of oppressed nations.

Misconceptions from Absence

There are certain popular theories — even amongst scholars — which may be unconsciously based upon situations where societies abundant in capital and land, but poor in labour, were nonexistent or almost so.

1. Development Produces Democratisation

The first theorem that shows a lack of understanding of societies rich in capital and land is that a developed society will always be at least partially democratic, stated by such writers as Robert Dahl and James A. Robinson. This assumption is, upon analysis, clearly based on the assumption that “developed” societies are labour-rich, which was consistently true between the birth of Christ and the end of the nineteenth century. Under this scenario, workers gained alongside capital in the most developed and powerful nations through a democratisation based upon challenges to the landowning class. Due to their opposed positions on trade, capitalists in advanced nations could not consistently ally with landowners to defeat the demands of labour for democracy. Even in nations rich in land but poor in capital and labour, the inability of capital and land to ally strongly meant that democratisation was frequently possible.

When, however, capital has benefitted from rising access to trade and labour has not, capital will seek to expand trade to increase its gains and labour’s losses by:

1. colonising internal and external labour sources over which capital and land have unlimited control
2. expanding the power of capital sufficiently to disenfranchise labour either de jure or de facto
3. privatising the functions of government so that the actual workers have no say in how they are carried out
   

Similarly, the number of individuals, in the words of Bruce Bueno de Mesquita and George W. Downs

“with sufficient time, education, and money to get involved in politics”

will actually decrease as the economy grows. Economic growth becomes monopolised by a tinier and tinier minority while the majority possess less and less free time for politics as ruling elites makes more and more demands on them as workers, and the money and resources required to challenge rulers multiplies. Thus, a highly developed land-rich nation is likely to become less and less democratic as it accumulates capital. Labour — the sine qua non for democratisation — becomes totally powerless. This can be see through the history of voter turnout in the United States:

1. high turnout of eligible voters before capital became abundant
2. rapidly decreasing turnout amongst the lower classes as the coalition of capital and land made voting more difficult after about 1900
3. moderate increases in turnout between the New Deal and the 1973 oil crisis
4. falling turnout with mass incarceration and increasing disfranchisement since the middle 1970s
   

2. Isolation Produces Social Reaction

Closely related to (1) immediately above is the idea that an isolated society is necessarily backward. Whilst this point is much hard to establish than the first, there is enough evidence to question this assumption as reflecting the absence of capital- and land-rich societies during such periods as the declining Roman Empire. Although Rogowski is less clear about the relative abundances of capital, land and labour there, he provides zero evidence that any region of the declining Roman Empire was relatively abundant in both capital and land. This may account for the strength of religion in the ensuing Middle Ages. With no region where only labour benefitted from collapsing trade, political liberation by democratisation, secularisation, and a more scientific approach, which would if strictly applied help the masses, was disfavoured everywhere during the reduced trade of the Middle Ages.

That social reaction is not a necessary product of isolation can be seen in certain sects in the antebellum United States, such as the Shakers, who were the first to buy blacks from slavery at a time when conditions for them were increasingly bleak, and gave women social equality before they gained the right to vote in land-poor societies. The pre-Sichtungszeit Moravians constituted another example, but there were many other communities of this type before the great globalisation of the late nineteenth century (a useful look can be found in Visiting Utopian Communities: a Guide to the Shakers, Moravians, and Others by Gerald and Patricia Gutek). Intentional, experimental communities are, one might argue, a likely product of a capital- and land-rich society increasingly valuing labour under falling trade. Similarly, social experiments in communal living in North America during the 1960s might be viewed as a product of restricted trade under Bretton Woods, by which workers develop innovative means of decision-making and agreements to work for the community.

In fact, the tendency of ruling classes in this type of society to divide nonelites means such sects and communes are likely whenever trade is not expanding. Nonelites, when they do gain economically, will prefer to associate only with culturally similar peers rather the unite collectively. It would, theoretically at least, mean powerful separatist movements and the creation of numerous small states or even microstates, but this would probably on second thought be countered by the reluctance of these societies to participate in politics.

3. Underestimated Ruling Class Militancy

Another, more significant, effect of the absence of economies rich in both capital and land is the assumption that the ruling class can never be as militant as the working class. However, the radical capitalism of the modern GOP and the militant Islam supported by the Gulf States are extremely militant movements with undoubted ruling class bases, as is the movement for reconquest of Ukraine in Russia, and Pan-Turkism in Central Asia. Rogowski can be faulted for assuming that under expanding trade, ruling classes in advanced nations with high land:labour ratios will simply be content with corporatisation and severe weakening or elimination of unions. In fact, since the 1973 oil crisis the global ruling class has sought to entirely eliminate the freedom of workers, seen in “noncompete” agreements between corporations that virtually eliminate the freedom of many US workers to seek alternative employment, and prevent them, as The Politically Incorrect Guide to Capitalism wrongly assumed, from choosing employers based upon wage. 

The ultimate goal of the global capitalist elite is an entirely private state where law enforcement, courts, defence and intelligence are provided for-profit in competitive markets where the ruling classes can coerce the masses more perfectly. It also means that rulers gain their wealth by means considered “ethical” by capitalist apologists — selling goods or services. This is exactly how the Gulf monarchies gain revenue with zero taxation of capital or land, and limited taxation even of labour. Critics have noted this would mean the rich can access extremely expensive and elaborate services, whilst those without money lack access to these services at all, which would make the poor either:

1. even more vulnerable to exploitation by the super-rich, or
2. totally dependent on the super-rich and forbidden from criticising them

Any such system would undoubtedly be exceptionally oppressive for an immense majority, who would lose the most basic freedoms.

4. Imperialism Comes from Resource Scarcity

It is typically assumed that Western Europe’s incentive to seek colonies in the tropics and North America resulted from that region’s extreme scarcity of land and mineral resources — in turn due to:

1. intensive and repeated Quaternary glaciation producing soils of geologically vanishingly rare fertility
2. highly dense rural populations supported by those soils and a highly favourable climate for agriculture
3. extreme poverty in metallic minerals, which the glaciers largely destroyed

It is typically argued that natural-resource-poor countries are not worth colonizing, for instance Irma Adelman and Nobuhiko Fuwa in ‘Income Inequality and Development. The 1970s and 1980s Compared’. Except where natural-resource-poor lands possess strategic value, this was true for colonisation by Western Europe. This explains why some of the world’s most natural-resource-poor countries, for example Japan and Nepal, were never colonised.

However, if an imperialist country is labour-poor, it will want primarily to control labour-rich countries. Nevertheless, direct colonial rule is improbable because backward, labour-rich countries that have not experienced revolutions led by workers or landless peasants will inevitably possess indigenous ruling classes too weak to act independently of the ruling classes of the advanced, land-rich nations, and too fearful of potential political threats from their lower classes under expanding trade to avoid such alliances. This relationship, it must be emphasised, is colonialism and is imperialism. The advanced, land-rich societies exploit abundant labour, pay this labour vastly less than its productivity, and dictate the politics of the source nations. Although significant local income sources, remittances from the Gulf, North America, Russia, Kazakhstan and Australia are very small vis-à-vis corporate profits.

Similarly, foreign aid emerged with the transfer of global power to the land-rich US and USSR. Aid can be understood as a means of maintaining friendly regimes and consequently access to abundant labour. As Gilens and Page noted in Affluence and Influence, mass interest groups have zero independent political influence even in the purportedly democratic US; however, loss of access to the abundant labour of humid Eurasia would likely empower these mass interest groups radically and rapidly. In other countries rich in both capital and land, loss of this access would likely produce much more violent mass [citizen] rebellions, although, because so many of these societies are so specialised that they do not engage in manufacturing at all, democratisation even under these conditions remains uncertain.

Conclusion

Whilst it is not perfectly easy to ascertain the effects of the absence versus existence of economies rich in both capital and land, it does appear to me that there is a substantial difference in the geopolitical results under these two scenarios. Popular conceptions of politics can be inverted in advanced, land-rich societies where the already-powerful are rebelling against any constraints upon their power — seen today in skyrocketing inequality and runaway climate change impossible to counter because doing so ipso facto depletes the wealth and limits the power of US corporations, Australian coal barons and Soviet and Gulf oil rulers,  who have built a complete geopolitical system precisely to eliminate threats thereto. The question of what conditions permit or prevent the existence of societies abundant in both capital and land is still more difficult and I will not claim to have a clear answer; nonetheless, the observed trajectory of pokitics today makes understanding these societies and the questions they raise more critical than in 1989 when Commerce and Coalitions appeared.

‘Commerce and Coalitions’ II: Cold War-era Southern Africa

In my previous post on Ronald Rogowski’s Commerce and Coalitions, I said that I would look at the somewhat peculiar case of Cold War-era Southern Africa and try to apply what I know about that region in that era.

I will admit I am no expert on Cold War-era Southern Africa, but reading Commerce and Coalitions it has come to increasingly strike me as a peculiar, even sui generis, case that Rogowski undoubtedly could have covered with the information he had in 1987 to 1989 when the book was written.

Following from Thomas Aquinas McMahon in Global Runoff: Continental Comparisons of Annual Flows and Peak Discharges, we can define Southern Africa politically as Angola, Botswana, Lesotho, Mozambique, Namibia, Rhodesia (now Zimbabwe), South Africa, Swaziland (now Eswatini) and Zambia. By Rogowski’s criteria, the entirety of Southern Africa was (and is) a backward region with very high land/labor ratios, in which only agriculture (and mining) would benefit from free trade. [Malawi (formerly Nyasaland), politically linked to Rhodesia before independence, would qualify as labour-rich, for its uncorrected land/labor ratio is only one-third the lowest in Southern Africa proper.] Under expanding trade, it would be expected that traditionalist politics would come to dominate the region in opposition to the urban sector.

However, despite Rogowski classifying the Cold War era as a period of trade expansion, this was not applicable to Southern Africa. Rather, the region — excluding Botswana — was during this era dominated by externally imposed sanctions that severely restricted trade. No region has been subject to sanctions to a comparable degree, and apart from Israel no region has had so long a period of collapsing trade in modern times. In fact, omitting regions unexplored or permanently closed off, the prolonged contraction of trade in Cold War-era Southern Africa is unparalleled since the declining Roman Empire. Under a condition of restricted trade, we expect that agriculture and mining would lose ground to the urban sectors of capital and labour.

Rogowski argues in his discussion of sub-Saharan Africa after World War II (page 117) that the basic political cleavage between the peasantry and the urban sector tended to favour the latter. He gives no examples for Southern Africa, but here the patterns were completely different. In Botswana — both the most land-abundant nation and the only one participating in the postwar expansion of trade — we did observe the predicted landed control of politics and hegemony over capital and labour. As David Ariel Steinberg noted in his 2010 thesis ‘The Politics of Exchange Rate Valuation in Developing Countries’, Botswana’s politics since independence has been completely dominated by cattle exporters (page 223) with urbanites having no influence. Elsewhere, sanctions imposed by the Eastern bloc and Non-Aligned Movement against the Portuguese Estado Novo (who ruled Angola and Mozambique until 1975), apartheid South Africa and Rhodesia blocked trade, and a completely different pattern prevailed. Whereas capital and labour would have been expected to ally, labour actually became radicalised, and Marxist parties (MPLA, FRELIMO) emerged as the chief opposition to the Estado Novo’s rule. In South Africa and Rhodesia, there was major radicalisation of black workers, and although the illegal Communist Party did not emerge as the focus it did in the Estado Novo colonies, the imprisoned Robert Mugabe was at this stage strongly influenced by Marxism. Kautsky’s 1968 prediction agrees with Marxist-Leninist parties being strongest in the Estado Novo colonies where the colonial state was closely linked with the Catholic Church, but even elsewhere the militancy of labour is quite different from the eastern areas of the declining Roman Empire, and far beyond what happened in Australia and the Western Hemisphere during the collapse of trade after World War I.

This radicalisation of workers is unique for a land-rich society, and quite different from the most land-rich parts of the declining Roman Empire (although these were not nearly so relatively land-rich as Southern Africa, and their decline in trade smaller than in the western Empire). The most logical conclusion is that, because the falling trade was driven by external sanctions, workers could identify with the foreign sanctioners rather than the local rulers. This permitted powerful radicalisation in the form of unified internal and external opposition to Southern Africa’s white rulers, and support for continued blocking of trade. Capitalists, rather than moderating the radicalisation of workers, were largely passive. One might conclude that capital and labour did not cooperate because they were racially divided, which further strengthens the case for effectiveness of sanctions whose purpose was to strengthen the ability of blacks to protest against white minority rule.

Two significant final points:

1. unlike Cold War Southern Africa, even longer-lasting Arab sanctions have affected Israel in the predicted way:
• land in the form of synagogues and rural communes has been strengthened at the expense of Israel’s abundant factors of capital and labour
• Israel very strongly resembles medieval Europe in its response to prolonged declining trade in a capital- and labour-rich, land-poor country — religion and agriculture have been strengthened
• as I noted in my original review, medieval Europe and modern Israel illustrate how powerful religion in a labour-rich society requires isolation from world markets, as otherwise labour will largely eliminate religion’s influence
2. similar efforts at sanctions against other land-rich, capital- and labour-poor societies in Iran, Libya, Sudan and Syria have not had the same effect as in Southern Africa. There are several possible reasons for this:
1. these nations are less labour-poor and more capital-poor, so sanctions radicalise owners of capital much more than they do owners of labour
2. the sanctions have been imposed by fewer countries and thus are less effective at reducing trade (in these cases, few nations have joined the United States in imposing sanctions)
3. the political influence of the Gulf States where labour is devoid of political and social rights blocks labour when it gains from reduced exposure to trade
• in this context the Gulf States absorb labour even from relatively land-rich adjacent nations, weakening the organisational ability of those nations’ workers

Which of the three prevents sanctions being effective probably varies between those four nations, and is beyond the scope of this post.