There was, once upon a time, a medium sized town containing a number of butchers, a number of bakers, and so forth. One butcher, who was exceptionally energetic, decided that he would make much larger profits if all the other butchers were ruined and he became a monopolist. By systematically under-selling them he succeeded in his objective, though his losses meanwhile had almost exhausted his command of capital and credit.
At the same time, an energetic baker had had the same idea and had pursued it to a similar successful conclusion. In every trade that lived by selling goods to consumers, the same thing had happened. Each of the successful monopolists had a happy anticipation of making a fortune, but, unfortunately, the ruined butchers were no longer in the position to buy bread, and the ruined bakers were no longer in the position to buy meat. Their employees had had to be dismissed and had gone elsewhere.
The consequence was that, although the butcher and the baker each had a monopoly, they sold less than they had done in the old days. They had forgotten that, while a man may be injured by his competitors, he is benefited by his customers, and that customers become more numerous when the general level of prosperity is increased. Envy had made them concentrate their attention upon competitors and forget altogether the aspect of their prosperity that depended upon customers.
In 1946, British philosopher Bertrand Russell (1872-1970) wrote this in one of his ‘Unpopular essays’: ‘Ideas that have harmed mankind.’ Russell explains: “This is a fable, and the town of which I have been speaking never existed, but substitute for a town the world, and for individuals, nations, and you will have a perfect picture of the economic policy universally pursued in the present day. Every nation is persuaded that its economic interest is opposed to that of every other nation, and that it must profit if other nations are reduced to destitution.”
This essay is very relevant again today as US President Donald Trump is bent on pursuing a policy based on the assumption that the whole world has to be disrupted and punished to ‘Make America Great Again’.
Russell argues that the relationship between nations does not have to be a zero-sum game: “If we could feel genuinely that we are the equals of our neighbours, neither their betters nor their inferiors, perhaps life would become less of a battle…” If economic nationalism and selfishness are allowed to prevail, they “will bring our civilisation to a disastrous and disgraceful end”.
Russell was worried that war would break out again and be more destructive than the one that had just ended, where about 20 million military personnel and 40 million civilians were killed. The US dropped the atom bomb on Hiroshima and Nagasaki. Many of the world’s wealthiest cities – including Berlin, Prague, Dresden and Tokyo – were reduced to rubble.
Every industrial country, except the United States, came out of the war with its resources, agriculture and manufacturing largely destroyed. The US shaped the global economy in its interests, putting the dollar at the centre of the world monetary system. Trump, unintentionally, is hastening the end of US global dominance.
Every industrial country, except the US, came out of the war with its resources, agriculture and manufacturing largely destroyed- Evarist Bartolo
Trump blames the rest of the world for America’s de-industrialisation and unsustainable public deficit and debt. American economist Richard Wolff says: “It was never foreigners who did it to us. We have been one of the greatest beneficiaries in the last 50 years of economic wealth, particularly for people at the top, just like him. The American economy is in trouble. The American empire is in decline. We don’t want to discuss it in this country. We engage in denial. And instead, we are striking out at other people – a sad way of handling a decline.”
Another American economist, Peter Schiff, agrees that America’s grave economic problems is not a result of foreign manipulation but decades of domestic policy failure: “We as Americans, for decades now, have lived beyond our means. We get to live a standard of living that’s higher than what we’re really entitled to based on our collective productivity. We’re going to have to live within our means, which means we have to consume a lot less. We have to save a lot more.”
For Schiff, the only path to recovery is through painful restructuring: “We have to go back to work. We have to stop spending. We have to start saving. We have to build factories and supply chains,” he said. “If we don’t do the right thing, then we’re going to have a lot of pain – but it’s not going to be constructive. It’s just going to lead to long-term, more pain, worse pain.”
In World War I (1914-18), some 8,500,000 soldiers and 13,000,000 civilians died as a result of wounds or disease. This immensely large number of deaths dwarfed that of any previous war, largely because of the new technologies and styles of warfare used.
The whole world was expected to be so horrified that World War I would be ‘The war that will end war’. Yet, 20 years later another world war broke out that would be more deadly and catastrophic than the one that had just passed.
To prevent another world war breaking out, Russell concluded: “There will have to be a realisation, at once intellectual and moral, that we are all one family, and that the happiness of no one branch of this family can be built securely upon the ruin of another... Perhaps, though I scarcely dare to hope it, the hydrogen bomb will terrify mankind into sanity and tolerance. If this should happen, we shall have reason to bless its inventors.”
In a world with 3,880 active nuclear warheads and 12,119 total nuclear warheads and all sorts of new weapons, more powerful than ever before, Russell’s stark warning is more relevant than ever.
Evarist Bartolo is a former Labour foreign and education minister.