Date: Mon, 12 May 2003 13:02:52 -0700 (PDT)
Subject: HAB: Human Rights & Economics


Re: Ken, "The saving grace of human rights," 30 April, to
the "modernization" Yahoo! group:

http://groups.yahoo.com/group/modernization

Apologies for cross-posting, but this posting context would
be interesting for Habermasians of both lists. See also
postscript to this posting (if nothing else). 
------------------------------------

Ken, 

I'm glad you brought up the topic that I've called "Human
Rights & Economics." I wanted to reply on the 30th, but was
wrapped up in other work. 

K>Habermas underestimates the viability of alternative
economic systems that are coupled with human
rights.....[Banks'] interest in 'democracy' is limited to
stability - and has nothing to do with human rights (this
is where I think Habermas's analyses are naive, I think he
underestimates the prevalence of instrumental attitudes,
esp. within existing "democracies"...).

G: I would agree, at least, that questioing mainstream
finance capital's concern for human rights is a very
worthwhile issue. But what's an example of JH
underestimating the prevalence of instrumental attitudes
within existing democracies? Also, do you have an example
of him underestimating prospects for connecting economic
systems with commitment to human rights?

K> While human rights have become universal, the debates
about human rights are what we need to follow. 

G: Do you mean "universal" as topic of concern? I don't
think you mean to say that human rights have become
universally *respected* (given your other comments). What,
though, *did* you mean?

K> I would, again, recommend Benhabib's latest book[,_The
Claims of Culture: Equality and Diversity in the Global
Era_, Princeton 2002 paperback]. She outlines the *highly*
problematic ways in which human rights have been treated
with regards to 'the other' (religious adherents, minority
groups, and so on). 

G: So, you would approach your claim about JH's first
underestimation above in terms of her attitude toward JH's
understanding of deliberative democracy?:

K> ....She's following Habermas's understanding of
deliberative democracy, and perhaps Habermas would not
disagree with many of the claims put forth - what I like
about Benhabib's analysis is that it deals with a series of
concrete issues and points out where existing
interpretations of human rights become hostile to human
beings. 

G: What's your view of  what JH writes about human rights
in _Postnational Constellation_? He has a chapter on human
rights there. I believe that human rights also gets
attention in _Inclusion of the Other_ and _Between Facts &
Norms_. 

K> The idea [of dealing with concrete issues] is good, but
the practice is horribly inadequate  - and the debates are
often foreclosed upon with physical force... not to mention
the monopoly of interpretations that are common.

G: I don't doubt you're right (though I'm not well-read on
what's going on with specific issues). 

Your comments above were at the end of your posting. Most
of your posting was on economics. But I thought that your
comments about the human rights issue was important to
highlight. 

Your economic comments are interesting, too; a surprise
(like you were in a revelation), since I don't recall you
sharing economic views with the Habermas groups. 

K> I have in mind the possibility of monetary reform.
Monetary reform would involve the transformation of the
existing international banking system. 

G: You would have to be talking about the network of
central banks in developed nations that coordinate with
each other on availability of currencies and interest
rates, for the sake of maintaining financial stability and,
ideally, control recessionary tendencies. 

K> Currently, sovereign nations usually (always?) have a
national bank. When a nation borrows money, however, they
do not borrow from the national bank (which is perfectly
legit and legal), they borrow from private banks....

G: You're right, but you seem to believe that "national
banks" are options for government borrowing, but I believe
that's not the case. I believe that central banks are
currency sources for commercial banks; their prime interest
rates are for bank borrowing, which in turn affects
commercial interest rates. Also, available currency affects
interest rates. When a government borrows from the
commercial market, they suck a lot of capital out of the
commercial market, which increases interest rates for
everyone. This is why central banks can adjust the economic
environment with interest rates and currency. 

K> Borrowing from the private banks has the effect of
centralizing wealth whenever the borrow[ed] money is not
used to generate income....

G: I believe otherwise. Banks "spread" their risk among
borrowers and with other banks and financial entities
(backing loans with investments that are spread), and there
are of course thousands of banks (competing in a global
market); so the wealth is very distributed internationally.
Also, lenders are required to have a percentage of their
"exposure" as cash reserve, but this is ordinarily a spread
of investments. So, I believe that it's not the case that:

K> ...(a loan is money that is created 'out of nothing' and
then disappears with the interest going to the institution
in question....

G: The "institution" is ordinarily publically held, via
securities (stocks), and the interest becomes part of the
profit distribution to stockholders. Corporations are owned
largely by institutional investors, especially pension
funds, mutual funds, and brokerage firms. Large firms,
including banks, are often "widely held," which means that
very, very many stockholders own shares. Mutual funds trade
for their millions of shareholders (a meta-shareholding,
you might say: owning shares of a mutual fund which owns
large blocks of shares in tens of corporations). 

K> ...thus loan creation always serves the centralization
of wealth). 

G: Not true. 

K> The creation of a public hospital, for instance,
centralizes money in the hands of the established banks
(the number of which steadily declines) [the industry is
almost impossible to break into because of the sheer power
of existing banking institutions). 

G: A *public* hospital is often funded by public funds, I
believe, as well as municipal bonds. Bonds are usually held
by private investors, but the development and management of
the hospital is not by the investors. I don't know what you
mean by "break into," since one is free to buy shares of
these banks. Small banks have difficulty because of the
cost advantages of scale, not usually because there isn't a
fair market for banking services. Vigorous competition
leads to thin profit margins, such that "economies of
scale" create efficiences that benefit shareholders. 

K> Thus, the creation and sustaining of public services
(usually those vital to the reproduction of healthy social
life) entails handing money hand over fist to private
corporations. 

G: Creation and sustaining of public services is an
important issue. This is so important to me that it could
be a discussion list all its own. The notion of a healthy
social life is primordial to my way of thinking. I want to
press the notion of health, both as literal issue and as
metaphor for many other issues (e.g., the "health" of
nations, the health of economics, political health, health
of the international community). But this sector of any
economy is a matter of government as well as business. The
so-called "Third Way" approach to economics involves the
promotion of "mixed economies" of public sector and private
sector collaborations in economic innovation and
management. Anyway, it's important to keep in mind that
private corporations are usually widely owned. 

K> Due to the pressure to expand or be eliminated, private
banks - with increasing financial power, merge and form
larger financial entities. 

G: As I mentioned, this is largely about achieving
efficiency through consolidation. When a bank is
eliminated, its market just becomes part of a larger
network of banking markets; the market isn't eliminated.
What's eliminated is a particular management's discretion
to "work" their market. If a bank can't make it, that's
business. What's important here is that there be
transparency in accounting and effective governmental
regulatory policies, for the sake of preserving a fair
market. The Wall Street problems of the past couple of
years have been fascinating. I've followed it in some
detail. My pet issue of trust is a keynote here: regulatory
practices and policies which instill and preserve trust in
the market. A stable, reliable market is a public good. 

K> Because banks primarily deal with money and investments
they are, relatively speaking, very flexible in terms of
their investments - particularly foreign investments. Banks
specifically target areas where they can get the highest
possible return. They look for relatively high political
stability...

G: Agreed.

K>...coupled with low environmental standards, a low
minimum wage, etc (the standard conditions of a
quasi-autocratic society). 

G: I disagree. They look for low costs. If a society fails
to afford environmental controls, then that may help
attract capital from unconscionable investors, but
developing nations also have lower relative costs of
living, such that the exchange rate gives investors a cost
advantage over investment in the domestic market. This
dynamic is independent of the policies of investors. The
Kyoto accords are intended to address environment issues,
partly for the sake of fostering "greenish" markets in
developing, as well as developed, nations. 

K> Because of the nature of banks they are able to invest
and divest relatively quickly - so when political
instability does emerge they are able to pull out
relatively quickly (or, avoid responsibility). 

G: Yes; they are financial entities, not governments. It's
up to governments to manage the conditions of investment.
One can't reasonably expect private corporations to
bankroll failed governments. 

K> Or, even better, find backing from larger institutions
like the IMF, which possesses the capacity to enforce
structural adjustment programs... 

G: I agree. The IMF seems to be doing a good job of getting
Argentina out of crisis (not that Argentina is doing a good
job of following IMF edicts). 

K> Anyway, the destructive power of the banks is well known
and I shouldn't need to rehearse it here.

G: Agreed.

K> Monetary reform entails that a national (or public) bank
borrow money from itself. 

G: I disagree, maybe. You're implying that the kind of
thing that the IMF does is about monetary reform (i.e.,
policies of central banks), but development of a good
public sector requires broad-based reforms in government
policies and practices, as well as reforms of general
market conditions; the IMF is concerned with the whole
picture. Monetary policy would  be only one dimension of
recovery for a failing economy. 

K> This is what Canada did after the War (Canada's debt was
three times what is was not, proportionally, and it was
paid off with three or four years - WITHOUT creation
conditions of inflation). 

G: But paying off debt is not done by printing money. It's
done by providing for a healthy economy. An examination of
how Canada erased its debt would probably be very
interesting---but I bet it was't primarily a matter of
monetary policy. 

K> One of the fringe benefits of this system is that it
reduces unemployment to almost nothing. This is an
alternative banking system that gives priority to public
services - derailing the emphasis on competition and
favouring human development and community participation. 

G: Wonderful. Can you provide some resources that explain
how it is that the Canadian banking system gives priority
to public services? Or do you mean that the government does
this? It's common lore among U.S. liberals that
this-and-that is done better in Canada, but when one gets
to details, it's hard to see what is transferrable as model
practice / policy for other nations. I would be especially
interested in getting more familiar with the Canadian
health care system, as the U.S. gears up for a new
presidential election season, and health care is going to
be a key issue. In 1992-4, when the Clinton adminstration
sought to pass a comprehensive health care plan, the
Canadian model was commonly near to mind; but I forget the
details of that debate of a decade ago. 

K> Under existing conditions, especially the uncertainty of
employment, the minimal conditions required for a
participatory democracy are IMPOSSIBLE. 

G: I don't know. It seems to me that economic need makes a
citizen more likely to vote thoughtfully, though hardship
can rob one of free time for community participations (if
you're looking for work)---or one might say that
unemployment *increases* participation through the free
time that unemployment provides (for persons not motivated
to look for work)! It all depends on the person: If you
have a commitment to participation, unemployment will
proabably be brief, since commitment to issues comes with
general commitment to getting things done, including
finding a job. If you have commitment to  not remaining
unemployed, you're probably more likely to participate in
community projects when you are employed. Making a balance
between occupational life and non-occupational
life---between work for others and work for yourself---is a
very important issue. 

This kind of issue is one kind of reason I'm so intent on
emphasizing the conditions of individuality against
socialist thinking. But it's a very subtle issue, since
socialist thinking has its own ideas about the
individuality it believes it promotes, and my alternative
views (along with the field of educational,
"child-centered" psychology) is *not* about denying the
importance of socialization or the social dimension of
individual development. It's a matter of *better*
understanding how self-actualizing development works, how
socialization may foster individuation vs. how
socialization may create dependency, etc. 

K> The centralization of power in the hands of corporations
(or governments) makes the kind of democracy that Habermas
envisions unlikely (at best). 

G: Your comment would have to be an allusion to _Between
Facts  & Norms_, to be plausible. *Are* you familiar with
BFN? Otherwise, what work of JH do you have in mind?

Thanks for a very interesting posting. You brought up a lot
of issues that I would like to see pursued further, while
I'm especially interested in follow-up on the specific
requests I made, re: Habermas and Canadian resources. 

Gary

P.S. One reason I'm glad that there's a modernization list
is that it provides a thematic focus, instead of a
writer-centered focus. 

http://groups.yahoo.com/group/modernization/message/20

It would be good to develop a network of Habermas-inspired
thematic foci. That might foster some discursive focus that
could be useful.








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