Scott and Max are joined by Fadhel Kaboub, associate professor of economics at Denison University and President of the Global Institute for Sustainable Prosperity: http://www.global-isp.org Fadhel outlines a new critical approach to postcolonial political economy, arguing that re-gaining financial sovereignty is a crucial next step for postcolonial nations hoping to achieve social, economic, and environmental justice. We talk specifically and at length about the CFA franc currency union, a system with violent colonial roots that continues to constrain the economic and political agency of its member states in West and Central Africa.
Scott and Max are joined by Fadhel Kaboub, associate professor of economics at Denison University and President of the Global Institute for Sustainable Prosperity: http://www.global-isp.org Fadhel outlines a new critical approach to postcolonial political economy, arguing that re-gaining financial sovereignty is a crucial next step for postcolonial nations hoping to achieve social, economic, and environmental justice. We talk specifically and at length about the CFA franc currency union, a system with violent colonial roots that continues to constrain the economic and political agency of its member states in West and Central Africa.
You were listening to money on the left, the official podcast of the modern money network humanities division or Nnn HD for short. I'm Billy sauce along with Scott Ferguson. I'm co-director of MMN HD , which is a big tent organization for scholars, social critics and political activists dedicated to recovery and redeeming the cultural and political aspects of modern money past and present us . Follow us on social media at at money on the left and catch videos from our recent international conference on our youtube and Vimeo channels. In this episode, Scott and Max are joined by Pharrell Kubu , associate professor of economics at Denison University and President of the Bins Agora Institute for sustainable prosperity bottles . Research builds on them and teach shed new light on the political economics of post-colonial and developing nations as he makes clear in his chat with Max and Scott. Regaining financial sovereignty is a crucial next step for post-colonial nations hoping to achieve social, economic and environmental justice. They talked specifically and at length about the CFA fromm currency union, the system with violent colonial roots that continues to constrain the economic and political agency of its member states in west and central Africa. Thanks as always to Alex Williams for producing the episode and to Hillbilly Modo by for the theme music. Side note for this conversation, I was out on assignment in Washington d C to cast the poor people's campaign rally on the National Mall. I managed to record some sounds while I was there and we hope to share those with y'all soon .Speaker 2:
Hello Caribou . Welcome to money on the left. Thank you. Thanks for having me. So I was wondering if we could start by having you tell us about your personal background and also your intellectual training. So personal background, I , uh, I grew up in the Middle East and Saudi Arabia in Tunisia. I did most of my education higher education in Tunisia and moved to the u s for Grad School. Um, went to University of Missouri and Kansas City. Uh, did my masters and phd there. The , the timing is relevant here. This is, I started in 2000 January, 2000, which was , uh , about six months after the center for full employment and price stability was inaugurated in Kansas City at UKC. This was , uh, the research center that , uh, was directed by Matt for stat or with , uh, the research team, including Randy Ray, Stephanie Kelton , uh, bubbly and a chairman of a , uh, and later on that he or Fred Lee , uh, joined the economics department and it was just becoming a , a hub of posts, gains and , and institutional economics. So it was just a wonderful place to be , uh, to be at in terms of , um, Grad school , summer programs and, and just intellectual , um , development. Um, after my phd , um, I went into teaching actually even before finishing my dissertation a little bit in Kansas City, obviously at GMPC , which was a great experience. Um, but then eventually , um, started teaching full time tenure track at Drew University in New Jersey and then moved to , uh , moved back here to a Denison university in 2008 , um , on a tenure track and have been here since then, almost 10 years now. And about four years ago , um, Matt for statter and myself had the opportunity to launch the Ben Zagget Institute for Sustainable Prosperity , which is a public policy think tank and independent think tank based here in the u s but from the beginning we wanted to make sure that it's an international organization in terms of , um, our , uh, coverage. Uh , we wanted it to be not your traditional academic think tank that publishes papers primarily for academics. And we wanted this to be solutions oriented and accessible to the media, accessible to grassroots organizations and accessible to policy makers . Um, so we, we still do publish academic papers, but we're trying our best to move , um, into policy making and policy communication , uh, with the general public and with the media and with , uh, with grassroots organizations. And we also from the beginning wanted this not to be a purely an economic policy institute. We wanted this to be an interdisciplinary organization because we do recognize that the biggest problems that we face as a society are complex, multifaceted issues and require multi-pronged solutions. Uh, and economics by itself just doesn't have , uh, enough , um , bread than and , uh , and capacity to deal with these issues. So we wanted, for example, when you think about climate change, I mean, there's obviously an economic dimension to it. There's a political dimension, there's an ethical dimension, there's a scientific dimension to it. So he can't just, you know , uh , try to address it from a , from an economic policy standpoint and , and expect, you know , uh , good results. Um, so, so we wanted this to be an interdisciplinary , um, uh, institute. Um, but also we wanted to have, you know, a solid foundation for what the focus of this institute would. Um, and because of, you know, our background in post Keynesian institutional economics and, or interest in NMT and the job guarantee program , uh , that was clearly going to be one of the central , um, issues that we, that we deal with. Because we do believe this is, this is a policy framework that , um, that kind of challenges the mainstream of , uh, of public policy, that mainstream of the profession to rethink , uh, how we address social and economic problems. But also we wanted this to be an invitation to our friends in the environmental movements and social justice movements who are progressive on every single aspect of , uh, of their work, except they fall in the trap of, you know, if we're going to, you know, deal with climate change, how are we gonna pay for it? And that's where they fall into the traditional economic policy framework that says, well, we need to tax the rich to do it or a tech solution to do it. Or, you know, the government is broken. We don't have resources, so we can't be as ambitious and our fight against climate change or fight against injustice or a fight against whatever social issue is. So we wanted to connect with progressive's and other disciplines and build bridges , uh , that allow other disciplines to be honestly be liberated and empowered by what the, a MMT and job guarantee framework has to offer. So that's really the division . In the last four years we've been building those bridges with people in the humanities, people in legal scholars , um, philosophers and , uh , um , political scientists and people from all kinds of different disciplines. And it's an , it's just the beginning. Um, this is , uh , this is a long process obviously of undoing a lot of the damage that has been done and the economics discipline in academia in general. Um, but especially in public policy. And I, I get this question all the time. Like, are you , are you going really to undo the kneel liberal , you know , political economy with, with this , um, with this institute. And the idea is yes. Um, but also it's a recognition that we're , we're a few decades late and several hundred million dollars behind. We're outnumbered and understaffed when it comes to this. Um, but that's what it takes. It takes building a compelling narrative based on solid academic research and engaging with, with people , uh, at , uh , at the public policy level, at the grassroots level. Because I , I truly believe that the way the neoliberal movement was able to dominate and the starting in the seventies and eighties, it's not because they one academic debates and journals or in you know , conferences, it's because they were able put together and narrative political narrative that was compelling, that, you know, hit a nerve when it comes to the US public at the time in the 70s, especially in the u s and the UK also. And um, I mean the , the Friedmans and hikes , they lost all the academic debates, but they won the political narrative. Uh , and they had charismatic leaders who took it to the streets, so to speak, and they had multimillion dollar type of foundations behind them to push for the media and PR movement and, and kind of shift the culture. Uh, and I believe that's, that's how we're going to counter this. It's not going to be just academics, you know, sending rejoinders to each other's papers. Uh , we've , we've done that and it's just going to stay in those circles. I think this has to be taken to the public domain. If we're going to build a movement, a social movement, it has to be accessible to the general public and it takes a lot of education and it takes a lot of really engage , um, citizens who are w who are looking for alternative and willing to learn the alternative. And by learning, I don't mean in the academic sense learn meaning, you know, in the , in the and the colloquial sense of the term that you'll be able to say what you believe in and articulate how it can work and non academic terms and get other people who are completely disconnected from say, the political sphere, to be inspired and to believe in a different way of doing things and to, and to vote accordingly and to act accordingly. That's really, that's really the vision that we have and recognizing it's , it's ambitious but I, but we're really seeing bits and pieces of this happening. So , um , I'm optimistic. I actually have a follow up question which takes us back to the beginning. I'd like to hear itSpeaker 3:
mind. Yes. A little bit more about , um, growing up in the Middle East in Tunisia and Saudi Arabia. And what your own process of politicization has been and maybe when and where , uh, and, and what that might bring to the modern money project. Um, that's different right then than what we get from other perspectives within that project.Speaker 2:
Yeah, I mean, thank you for the question. This is, I've been, I've been reflecting on this for a few years now in terms of how my own thinking has, has been influenced by , by my upbringing. So as I said, I grew up in Saudi Arabia. Antony's yeah . My , my mother's side of the family , uh, is, are from Saudi Arabia and my father's side of the family's from North Africa, Tunisia , and to some extent Algeria. So thinking back on that experience, I really didn't grow up with a very powerful, overwhelming sense of national identity. I knew it was there because I can see it on , in my cousins, on both sides of, of, of the family, like very, you know, the flag and the national anthem and uh , and a love for the football team and all that. I mean, I love the football teams, but when they, I , I liked both and I liked Brazil and like the Argentina, I liked the other things, but there's this thing that I noticed from the beginning that my goodness, people are crazy about the flag in there, but I never understood what it was. I just thought, well, this is their team. And they like it. Then it's, you know, crazy football fans, you know. Um, but you know, growing up later you realize that this was designed. When you think about the, all the postcolonial , um, uh, states in , in, in , in, in Africa and the Middle East and other places , uh, governments didn't really have a much of a legitimacy. It had to be earned. It had to be created. Uh, in the case of Tunisia, for example, yes, there was the national , uh, leader, the independence leader, who was very charismatic person and, and , and was, but it didn't really , uh , there were no national borders, pre precolonial national borders that were well-defined and that we went there. We're going back to those borders . So the border had to be created and confirmed and, and protected. And then the national identity in terms of language and religion and culture, cause a lot of these places are pretty diverse, ethnically diverse. So national identity was in most postcolonial countries, was created and enforced through music, through culture, through sports, and with the, with the, you know, the idea of what you would call here in the u s patriotism and other countries called nationalism. There's that negative connotation about nationalism, but it's, to me it's the same thing. Um, so, so I , I grew up not, not feeling kind of sucked into that , uh, understanding of national identity. For me it was, you know, this is a country, this is another country. And I like both. Um, but I grew up with a , I never grew up with a sense that I, I will die for my country because which country will you die for? Uh , plus I come from a country that's from a family that's also , uh , very , uh, international. So it wasn't like everybody on one side of the family was Saudi and everybody on the other side of the family was Tunisian . We had, you know, through intermarriage from people from Egypt and Palestine and , uh, Algeria and Morocco and Lebanon. So it wasn't, it wasn't like we had only one or two national identities that the family had to pledge allegiance to. Um, so that, so, so it's an unusual family , uh , to begin with. So to me that, that sort of came back to me later, you know, later in my careers reflecting on this and starting to really think about what national identity means and how powerful it can be in , in war and peace conflict in terms of dividing nations. Um, so I, I've, I, I , I take, I take comfort in knowing that I, that I experienced that at an early age and sort of began to reflect on it throughout my, my life. And now I understand how, how powerful those ideas can be. Um, and, and I can, I can, I can understand when I, when I hear or see, you know, people who feel very, very strongly , uh , about a flag or their military or, or the nation, because I know it's , it's nothing personal if it's just you're born into it and you're brainwashed into it. And to some extent, there's nothing wrong with that. Um, the only part is when it, when it comes to it's us against them , uh, and it begins to divide people because of the difference of their religion or their color and , and things like that. Um, so it's, it's, you know, a healthy dose of patriotism is, is reasonable. I'm not against that. Uh, loving a football team is great and loving the national anthem is great, but when it turns you against other people, it becomes problematic.Speaker 4:
It's really interesting. Um, you're , you're talking about your experience of, of, you know, growing up in post-colonial Tunisia and, and Saudi Arabia and experiencing nationalism. And there, there's a kind of, what makes me think of is the way that post-colonial theorists tend to, you know, they begin from the presumption that you've already alluded to that, that even though relations of explicit political colonization seem to end during the 19th and 20th centuries, that largely there are unjust processes of economic, social, cultural, Co colonization that remains strong. And they sort of frame this and focus on history and the politics of money and foreign denominated debt. And I was wondering if we can kind of now circle that experience back to MMT and if you could help elucidate how an empty can imagine a reframing this critical project , uh, you know, in terms of political economy and then perhaps even , uh, a social cultural critique that you already started to tease out.Speaker 2:
Right. So let me, let me take this back to my undergraduate studies in Indonesia , but I studied economics , uh , in Tunisia and it's , uh, a French , uh, post-colonial education system. So it's not liberal arts. There is no general education. It's four years of economics and nothing but economics and you know, a little bit of accounting and business. And lots of math. Um, so there isn't really anything politically economy per se. And the closest we've got to political economy was the history of economic thought class, which was the best thing of , of ever taking . Um, it was a breath of fresh air in those, in those four years. But to , to link it back to, to your question, the , the reason why I wanted to go back to this is because those four years of economics that I studied in Tunisia, we didn't learn anything about the cheese and economy. And this is not because it was neoclassical economics and neoclassical economics that didn't teach you anything about the real world. No, it wasn't the case actually. We had great teachers who are sort of post Keynesian ish institutionalist kind of French circle , just influence, which, which was great, but this was strictly political. Um, well , I learned so much about the Japanese economy, so much about the American economy, so much about the French economy, but you know, we even, I mean the students, we went to a couple of the professors after class, they can, we just have like one lecture about the Genesen and economy or economic history. And we did take an economic history class, but it was about the Great Depression, the u s and Japan and everything else. And the professor was it , leave me alone. What , what do you guys want? Go Away. Uh, and it's because they didn't want to get into anything that will cross into, into politics. Um, so that, because there were undercover, you know, police officers in the classrooms , um, and on campus , uh, listening in because the history of protest in Tunisia was, you know, either either the labor movement or the student movement or both converging together. So that was when you were going to police the population, you police the university's first. Um, so the, the campus where I, where I studied was not like American campuses. It was a gated campus and guarded by the riot police. Actually the right police had one of their headquarters on campus, full gear. Uh, and those were the visible guys. So the invisible ones were in the classroom. So that's why the professors didn't even dare to talk about anything that has anything to do with the Tunisian in economy. So what I, what I ended up learning about the Chinese economy. I learned it in Kansas City after I, after I left. I mean, I , what I, what I knew about the cheesy economy, it was just observing and living in it then and just trying to piece things together on your own or with a few friends who, you know, people you trust to talk about political economy with a at the time. But what I ended up learning academically, intellectually was just after I moved to the u s I just, you know , started diving into books and archives and whatever I can find through interlibrary loans to read everything that there was to read about. Uh , the StreetEasy economy ended up doing my dissertation on Antonis . Yeah . Um, so there's , there's an important link to your question here about the post-colonial thing. And there's a, there's an intellectual movement actually in the last few years, both in Tunisia and other parts of Africa in particular. Um , uh , trying to essentially decolonize the curriculum , um , because the curriculum itself , uh, in , in any discipline , uh , was a Eurocentric curriculum. I mean, this is true in , in the u s too, but it's, especially in , in the Middle East because when you think of the history , um, of any intellectual discipline, the economics, for example, you read the economic , you know , history of economic thought , uh, textbooks, that classic ones or even the , the newer ones do a little bit better, but not, not much. So if you read Schumpeter , for example, his book was the , the classic history of thought. He talks about the great gap because first there was the Greeks and then the Romans, and then there was nothing for 500 years. And then all of a sudden, you know, the enlightenment happens. Um, and , and you read the history of science books, same thing. There was the room, the Greeks and the Romans, and then there was nothing. And then all of a sudden science immersed in Europe. Um, so, so that's taught in every single textbook, including in the Middle East and Latin America and India and Africa. That's, that's the, that's how the Eurocentric narrative dominates and ends up colonizing the curriculum of supposedly post-colonial independent nations. So you're already put into , uh, an intellectual position of inferiority and economic position inferiority and a political position of inferiority of subordination. But you have your own flag and you have your own national anthem and you have your football team to celebrate. Yeah . You see what I mean? And that, that happens to serve also the interest of the political leadership because in most Polos postcolonial nations, that political leadership was, didn't really democratize the nation. They took over the exact same top-down bureaucratic hierarchy, which was a dictatorial hierarchy created by the colonizers. It's just now staffed by nationals who love the flag. You see what I mean? So it was still , uh , political and bureaucratic institutional structure of subordination. But now led by, you know, the charismatic independence movement leader now turning into a dictator. Um, so I, I hope this, this answers your question in some sense, but that's, that's how I, that's how I read it from for, for several years now in terms of reflecting back on , uh , and, and talking to academics today and Tunisian former professors who sort of , uh, understand that this is really the part of the narrative in addition to the fact, you know, the linguistic , um, domination is, is, has been there from the beginning and constantly enforced by, by the colonial interests. So Tunisia is an Arab country , um, but the, the main language of instruction academically is French. And that over time came at the expense of losing the linguistic , um, quality of , uh, the Arabic language and , uh , in, in, in professional settings and academic settings. And that's, you know, when you lose a language, it's really hard to, to undo that.Speaker 5:
[inaudible] I'm a [inaudible]Speaker 4:
I'd like to pick up on, on your point about the kind of organizational legacy of , of colonialism and, and subordination and, and sort of ask, you know, in, in adopting the colonial governance scheme that was imposed on, on nations in the global south, they, these countries for, you know, large part to do with the, the intergovernmental organizations that, that made sure of this , um, kept this idea that they still depended upon , uh , the United States or France or countries across the globe from the global north , um, for loans and debt so that they could finance their, their militaries and they're often corrupt , uh , dictatorships. And I was wondering if you could talk specifically about the way in which MMT reframes that discussion around foreign debt and, and sort of monetary sovereignty.Speaker 2:
Right. So , um, for, for the followers that are the listeners of the podcast who are not very familiar with, with the MMT framework, I'll just define the four basic bullet points that will be relevant to this conversation. So from, from an MMT perspective, a country , uh, has full monetary sovereignty or full financial sovereignty in, in in sense, you know, full financial independence if the following four conditions apply. And the first two conditions are pretty straightforward and easy for any country to do this. The third and fourth are more problematic for, for post-colonial and developing countries in general. So the first condition is a country prints its own currency issues, its own currency and it's the monopoly issue of that currency. So most, most postcolonial governments, the first thing they do, not the first thing, but a couple of years after independence usually is they started issuing a national currency and they start taxing the population in the national currency. That's the first and second condition of , of monetary sovereignty. And most countries can do that. The third condition is for a country to issue debt or issue bonds or treasuries that are only denominated in the national currency. And that's where a lot of developing countries start to lose their monetary software and teams because they start issuing both categories, bonds that are denominated in the national currency, but also bonds that are denominated in US dollars or Japanese yen or British pounds or any kind of foreign currency. And that part of their , um , bond issuance becomes their external debt. And it's a real burden on those , uh, governments because it's not something that they can finance internally. It means that you have to somehow generate export revenues in excess of what you would need to pay for your imports in order to be able to pay the debt service, the debt and pay principal and interest. And that relates to the fourth condition, which is the fixed exchange rate policy that a lot of developing countries use. So in order to have full monetary sovereignty, you want the flexible exchange rate. In other words, you don't want to stand ready with , uh , excess reserves of dollars or yours or pounds to defend a particular exchange rate. And that because of the third condition that's often violated meaning of countries have a lot of external debt. And have a lot of pressure on their exchange rate to devalue a, that becomes politically and socially very sensitive issue because if a small country faces , uh , a devaluation of their currency and they need to be importing food or fuel or energy or medicine or whatever , uh , necessities, it means with a devalued currency, all of those things now will cost more and there'll be importing inflation, food inflation, energy inflation , um , medical expenses, inflation, and that turns into a social unrest and in many cases. So that's why a lot of these developing countries end up borrowing even more every year in order to defend a fixed exchange rate level, which would prevent that inflationary pressure from actually turning into political and social unrest. So, so to me, that's, that's a very important starting point and that's really the important lens that MMT has, has offered to those, offered us to see with clarity why the issue of debt , uh, is, is problematic. Because before the MMT Lens, people knew that debt was an issue, but there was a confusion or conflation of the national national as an domestically denominated domestic currency denominated debt versus external debt denominated in foreign currencies. And I think MMT tells us that it's that domestic, the portion of the debt that's denominated in the national currency can always be managed and there are ways of dealing with it. But the external portion is what really puts pressure on countries. And that's personally, that's what led me into researching the root causes of the external debt and looking into potential solutions to address those root causes. Cause everything else we've seen in the last 30 40 years is really bandaid solutions. It's really just rescheduling, stretching out the debt payments or getting more external debt and kind of feeding into the same problem. There's just being compounding over over the years. So can you walk us through , um, what it might look like for a country that is heavily indebted, has a weak , productive infrastructure, is not, as you say, sovereign in food and or energy, what, what might be done in a situation as dire as that? Right. Well first I'll tell you what, what is being done and how, how things got worse starting with the postcolonial era and then we can talk about how to get out of it. So going back to the colonial and early postcolonial era, you have to recognize that the economic infrastructure of most of these countries was built up because colonialism lasted for decades, a couple of centuries in some cases. So during that time there was infrastructure built and there was a process of , uh , economic development and economic activity happening, which a lot of people confused with, with the economic development in the purest sense of the term. But when you look carefully at what kind of infrastructure and what kind of economic development was, was done, you realize that it was very extractive. Any kind of infrastructure that was built was purely for the purpose of extraction of wealth and extraction of extraction of resources. For example, Tunisia is , is very interesting case and you can look at the map of most African countries and you know, post-colonial countries and just look at the map of the railroads, the map of the roads, and then identify where the major minds are, where the major resources are and where the ports are built. And it's just direct straight lines from the mining town straight through the rest of the country to the ports. And the railroads are built like that. The roads are built like that. So Tunisia for example, you find a lot of east-west roads and east-west railroads, but nothing going north south because there is no reason for people to go north, south. Um, and , and so once you're independent as a country, you're not gonna , you know, sit down with the, with the rest of the population and say, okay , so this was a big mess. This colonialism, let's now start over again and let's scrap all of the infrastructure and build it the way we really want it to be built. And it wasn't like that day one, after independence, you continue doing the exact same thing you did before independence. So you continued digging the same mines , loading on the same railroads to the same ports and shipping them to the same customers in France or in Italy and other places. So the post-colonial economic infrastructure continue to be built according to the colonial economic infrastructure. It was a continuation of it. It wasn't a , a rupture from the old economic system and it continued to enrich the same , uh, socioeconomic classes and the same vested interests , um, to this day. Um, so it was always extractive, always serving the elite, always serving the interest of the, of the former colonial coal annual interests. So the question today is, you look at, you know, the accumulation of trade deficits and external debt was because we were told, well, you know, your, your economy is mostly extraction of resources and agriculture. You should diversify and you should invest in manufacturing and industrialized , right? So you tried to industrialize it and there's a huge technological gap. Um, so what do you do? You go through an early phase of uh , uh , sort of import substitution industrialization and the 1950s and sixties, basically most developing countries did that. And under protectionism, you know, protection from foreign competition. But then 10 years later you're told that's it. You're , your infant industry is not infant anymore. So now you should , uh, move into export lead growth , uh, good luck ex sporting. So when you move into export led growth in the 1970s, one of the first things you notice with every single country that went through this phase is that the trade deficit explodes. You would think like, we were going into an export oriented mode, we should be thriving through exports. And it turns out you end up importing even more because if your economy is not highly industrialized, you end up importing all the intermediate goods and all the technology and all the input that goes into your assembly line. You know, basic manufacturing system. So you're importing high value added content and you're exporting low value added content. You're just adding the, you know, kind of very basic assembly line skills to export a finished product. So if you're importing more than what you're exporting, your trade deficit is exploding. How do you finance a straight deficit? Because now it's putting pressure on your exchange rate and it's gonna turn into food riots and you know, fuel riots and all kinds of instability you borrow. And that's where the external debt comes in. And you know, you borrow based on the idea that will you grow even faster in the next decade and you'll be able to pay it off. And it just never happens because you're never industrialized enough to, to compete internationally. So there's this whole era of the opening up to free trade and globalization has been a massive trap for developing countries that actually led to even more loss of financial sovereignty over time , um, than , than directly after independence. So the, the way to undo this or to sort of regain or reclaim monetary sovereignty is to look at the specific cases. I mean, there's no cookie cutter approach to this. So , um, every country has its own institutional specificities and needs. So you look at what is causing the external debt, what is really driving it? Is it food imports? Is it energy imports? Typically it's both. For most countries, with the exception of oil exporting countries, and the third category is typically what I described as low value added content of exports relative to the high value added content of, of your imports. So if you're going to reclaim your food sovereignty so you don't have to borrow as much to buy food from abroad, then the only way out is investment in sustainable agricultural policy, domestic agricultural policy. I mean this is, this is something that the west recognized from the beginning. This is not something that I discovered or people discover last few years. If you go back to the free trade negotiations that Gat and other trade negotiations in the fifties and sixties and seventies to this day, the West will always negotiate in this a free trade in everything but arms and farms. So no weapons and no food because that's national security for the west and it's not just national security because you need food during wartime. It's because you lose your, your sovereignty, you lose part of your sovereignty if you're dependent on other countries for your national security, for your food security. And, and this is really, I mean, I've known this for a long time, but MMT really put a new light on this, on this particular issue. So you find the European Union and the United States putting really impossible conditions in these , uh, trade negotiations , um, making it impossible for developing countries to export food. Um, because in the case of Europe, a lot of the former colonies , uh , former colonizers , uh , were dependent on food imports from, from North Africa and other parts of , uh , parts of the world. And that wasn't going to be fun, you know, economically speaking after independence because now you depend on these newly independent nations for your food supply. So , um, uh, cap, which is the common agricultural policy that the EU put in place was essentially , um, virtually a ban on , uh, food imports and also a massive subsidy for European farmers to build up capacity and depend less and less on , uh, on unimportant , uh, an imported food. So that ends up killing agriculture and a lot of developing countries. And when you kill a group culture in developing countries, you're forcing people to move out of rural areas into urban areas, which was pretty convenient because the, you know, cheap labor for manufacturing assembly line jobs was, was waiting for them. Um, because that was the era of export led growth. And that becomes, you know, developing countries become the tail end of the supply chain , um, in , uh, in the global supply chain system. Cause they're just the assembly line for all the, you know , high value added content that's been produced through the rest of the supply chain. And it happens to be convenient because it creates a little bit of , uh, jobs in developing countries, but never enough to truly industrialize. Those countries are truly developed . Those countries are bringing , bring prosperity. Um, so I, I hope this, this clarifies the links between, especially Europe and former colonies in Africa. It does. Can you talk about some of the dangers and potential , uh , inflationary pressures? I know in your own work, you stress , um , um, a strong political movement, but also sometimes a very careful and strategic economic development approach. Yeah. So the strategic economic development or approach to reclaim monetary sovereignty is renewable energy production because that's another major component of the external debt , uh , sustainable food policy. And then because that's the food imports , uh , problem that many developing countries have. And then the third one, which is more difficult of a , of a strategy it takes a long time, is investment in education and vocational training and technical skills. Because if you want to industrialize and over time move up the ladder, so to speak, in the value added content, the only way you're gonna attract manufacturing that produces higher value added content is if you have the infrastructure , uh , in terms of , uh , electricity and telecommunication and transportation, but also the highly qualified labor that's required to be plugged into the production of high value added content. Um, and that's, that takes time. That takes, you know, a couple of generations to move up, move up the ladder. Um, so those are, those are the three strategies that I, that I always emphasize. And the question is, well, can we make the transition overnight or in a decade? To me the answer is not, it's not gonna happen overnight or in a couple of years, but at least you have to start thinking about that direction, planning for that direction, and then shifting resources away from your old strategy into your new strategy. Because the current strategy, for example, is to subsidize food and food imports and so subsidize energy imports because you're importing fossil fuels at the global globally determined prices, which can be inflated for your local consumers. And if you don't subsidize them, you're going to have fuel riots. If you don't subsidize imported food, you're going to have food riots. So governments typically subsidize and offer , uh, food and fuel and transportation at affordable prices locally. The idea here is to shift the shift, some of the subsidies away from subsidizing fossil fuel and imported food into building more productive capacity of renewable energy production and sustainable food production. And over time, accelerate that shift and accelerate the development of those resources. Because that's the ultimate way of , um, reclaiming energy sovereignty and food sovereignty and as a result of monetary sovereignty and as a result, political stuff. Absolutely, because you become less dependent financially on the outside world. And as a result, you're more politically independent. And, and to be honest, I mean, that's been recognized from the beginning by former , uh , colonizers as a threat. I mean, it was, it was clear that having this nail, colonial , um, way of controlling former colonies through the financial aspect is way more effective than having troops on the ground controlling the economy and policing the population because it gives you the illusion of political independence and you have your flag and you have your football team and you have your, you know, your territory are military and we'll even give you eight to help you reinforce your territorial sovereignty and, and police your population and everything. So it feels like, yeah, we've, we have independence, but when it comes to economic , um, reality, you're not independent as a result politically, you're constantly under a manipulation by the lenders. And , uh, and , and typically countries who, who were the , the former colonizers. So that's, that's really the part that the, the average person doesn't necessarily , uh, realize, but political elites know this and they know that they can use it to their advantage because they're not really , uh , in most cases that they're not really willing to take on the challenge , um , of, of challenging that external forces , um , because in , in many cases, especially when it's not a democratic system, they're actually kept in power with the help of , uh, external forces. This was definitely the case with the Binali regime. Um, it wasn't, it wasn't , um, you know, a secret or anything. It's, if anything, you know, during the days of the uprisings , uh, in, in 2010, 2011, the French Minister of Interior , um, was vacationing in Tunisia with the president's family and called France to , uh, request more ship to approve more shipments of tear gas for the police to handle the , the protestors . And the only reason why the tear gas didn't make it to, to because , uh , workers at the airport who are on strike in France , uh , it had nothing to do with the, with the political agreements between Tunisia and France. It was just a coincidence that the workers weren't on strike. And you know, when you traveled through Paris and workers on strike, you don't get to your luggage. So the tear gas never made it.Speaker 4:
So I think , uh, something that's been in the news that is really evocative of what you're describing is the question of currency unions and the way they determine political and economic relations. Um, however, a lot of attention has been paid to the eurozone crisis and in Greece and Italy and Spain and the political unrest that that is kind of resulting from that. I was wondering though, if we could , uh, talk about a currency union, if you want to call it that, that it gets , uh , a lot less attention, the CFA franc . And if you could tell us about the history of it and the structure of the CFA franc , um , today.Speaker 2:
Yes. So the, the CFA franc , uh , is a currency used in Africa today. It's used by 14 countries, mostly former colonies of France. And , uh, the name of the, the currency union changed over time. Um, just to make the name more politically correct, I guess. Uh, so , uh, CFA used to stands for , um, I'm trying to remember the French name. It's , uh , Cole Neef . Han says definitely weak , which means the African , uh, colonies of France. That's what CFA used to stand for. Uh, so it was clearly, you know, these are the colonies and they use the French franc , but this is the , the African version of the French rank. It's controlled by the French government, by the French authorities. Uh, and then after independence, you can't call these, you know, colonies anymore. So it at some point that changed its name from Colone francaise the freak to a communicative concepts , the freak out , which was a little bit more politically correct. And today it's called community phenol cr African, which is the African financial community or union, if you want to call it that way. So it doesn't carry the colonial name anymore. Um, but it still operating under the exact same institutional setting. Um , which is a currency union , uh, that for 14 countries today. It was created in 1945 , uh , right when a lot of the former French colonies were gaining independence, but they were not transitioning to , uh , a national currency , uh, most , uh, colonies. The few years after independence, they continued to use the same colonial currency. Um, but in the case of , um, the west African and central African countries that have 14 countries that remain in that union today , uh , they transition into the CFA, frank [inaudible] CFO . And so when you think of monetary policy and fiscal policy and exchange rate policy, it's all determined by the French government, essentially. I mean, there is a committee and there is a board and there's, you know , some sort of a bureaucratic structure to it that's staffed by representatives from the African nations. And presumably they get to make their own decisions and vote. But, but we all know that the , that it's nonsense that it's set up by the French , um, by the French government. I mean , uh , Macron has been under fire , uh, in , in the last couple of years, especially during his visits to Africa because there's lots of , uh , protest against it. And the students, you know, brought it up during the open Q and a session and he keeps brushing and often saying, well, nobody, I'm not, I'm not standing in the way of any country to leave the CFA if they wanted or we don't control it. This, it's, if anything, he sees it as, as a way of , uh , cooperation and assistance and help , um , to stabilize the monetary system of , uh, of the 14 countries than in the union. But in terms of our experience or knowing what monetary sovereignty means from an MMT perspective, you clearly understand that, you know, a group of countries that use a single currency that follows a particular set of monetary policy rules, has a very limited fiscal space to engage in strategic economic development internally . I mean, everybody's familiar with the situation in Greece and Italy and Spain after the euro crisis. When you have a central bank like the ECB that refuses to , um, allow , uh , any of the member countries to deal with , um , with the economic crisis and imposes austerity on those countries that you can think of. The, the CFA franc system is exactly the same setting. It's 14 countries joined in a monitor union. They have no way of , uh, issuing their own currency and they peg their currency to the euro. Today. It used to be to the French franc , um, which was packed to the dollar in directly , uh, via, via the gold standard at the time. Um, you can understand how much economic development has been withheld and how much economic sovereignty has been withheld from, from these countries. Um, and , and unfortunately it's, it's, it took decades for , uh , this beginning of a movement to start building in the last few years. Um, and I think MMT has a lot to contribute in this regard. And I'm looking forward to working with some of our , um , new m m t s friends in, in this movement to , to build a coherent narrative, a coherent counter argument to the CFA and to, and to bring about the Turner . Uh , and I don't, I don't think this is going to be done through the political elites. I think that it has to be done through , um, a social movement. I don't really believe in, you know, political leaders, quote unquote political leaders or not leaders. They're really followers when it comes to these things. So it has to be a social movement that builds a coherent narrative, a coherent critique in a coherent alternative. And when you get to a critical mass of , of people, of media, of academics who, who engage in a coherent way, that's when political leaders, you know, really take, take action and honestly become followers when it comes to this.Speaker 6:
[inaudible] damn. Yo Man. I know [inaudible]Speaker 7:
[inaudible] paddle out by [inaudible] on his block . I listed this level and this one is, do you have a senseSpeaker 2:
of the way that the eurozone currency project compounds the problems of the CFA? Oh, well yeah. Actually , if you're economically dependent on France and the eurozone for your economic wellbeing and the, and the main unit, the eurozone is going through a crisis, you , you suffer the consequences. Um, so there's, there's a direct link to this and it's ironically, this is really what , what woke up a lot of people to the reality of the connection between CFA and um, and, and Europe. Um, but it , but it was a ironic because it wasn't really in the MMT way because a lot of people were thinking , we're saying, well, the gold reserves of the CFA countries are in France and the French are probably using that to deal with their economic crisis. But, but it did raise awareness about the issue. But obviously to you and me understanding of empty, it's really not about the goal. Um, but, but for a lot of people in these countries, they say, well, what are the largest producers of gold in the world? Where's our gold? It's held in France. And why is our economy not doing so well? But, but it's not because the gold is in France. It's because your economy is producing raw materials and raw materials that are very low value added content. And you'll get, you don't get to control the price of those raw materials in the global system. So no matter how much you produce of your raw materials, if you are the number one export of this particular commodity, you're still not going to be , uh , you know, reaping the benefits of it. And you, you can think of this in terms of , uh, African countries or north African countries. I know this specifically for Tunisia because Tunisia is one of the largest producers of olives in the world. Um, depending on the season, it's number three, number four, sometimes number two. But it doesn't get any of the publicity of being a, an olive oil country. I mean, when you think of olive oil, it's , uh, Italy. It's Spain because these are the distributed brand that brands that you pick up in the supermarket or Greece maybe or Turkey. Um , because they've done a better job at controlling the global supply change and branding their product. And most of the money is actually most of them. The price that you pay is for the bottle, is not for the olive oil a and for the, for the PR that goes with it, with the advertising that goes with it. So it turns out that for the average Tunisian farmer that's producing the olives , uh, they end up selling their entire year's worth of , um, olives, their harvest a year in advance at a set price determined by an Italian company or a Spanish company. And when you look at the , how much of the market , uh, Spain and Italy , uh, collectively control, they essentially have, last time I checked four or five years worth of global supply of all of oil in reserve. So if you're a small farmer and you don't want to sell it, I said , price. They say keep it. Good luck. You know, good luck selling it because we have enough to supply the entire world for the next five years. So, as a farmer, you can't, no matter how big you are, you can't afford to negotiate. And this is true for all kinds of farmers in Africa. So when you think of, you know, chocolates, you know, what , what's, what's the main input, where does it come from? It doesn't come from Switzerland. It comes from African farmers who don't get to control the supply chain. They don't get to control the price. So they're at the lowest end of the supply chain in terms of value added content. And who gets the most of the benefits. It's the companies that add that value added content, which is the pretty bottle or the, you know , fancy designs or the, you know, the nice chocolate boxes or whatever that, that most customers in the west pay most of the price for that, not for the actual raw material. So this is, this is , uh , a structural economic development problem in the CFA region in particular. Um, and yet the recognition of the economic problem came through the crisis in Europe and the thought that the gold was in France. And that's why, you know, things are messed up. Um, but it's , it's beginning a conversation with, with colleagues and activists and journalists about what MMT has to offer about this. And it's, we're shifting the narrative to the real structural problems. Um, not just the, the fact that gold is stored in France.Speaker 4:
[inaudible] you know, talking about these global issues. And , and you know that the story you just described about the olive oil , um , it makes me wonder if there is any, you know, if we're going to reimagine, reimagine what development looks like, you know, in a global economy. Is there any role for , uh , uh, an intergovernmental authority like the United Nations to play in the process of further decolonization?Speaker 2:
Yeah, I don't know . And this is in , and there was several attempts of to , to do this over the years. Uh, and you can guess it's not the IMF and it's not the World Bank. Good guests.Speaker 4:
Okay .Speaker 2:
No . Which are technically , uh , agencies of the UN. They just happened to be the, you know, more politically and financially powerful , um, organization at the end. But within the UN, the organization that has done the most in this regard is unctad, which is the Yuan Conference on trade and Development Movement . And , uh, especially in , um , I'm probably biased here a little bit, especially when young Kriegel , um, was, was in charge of writing the UNCTAD annual reports and organizing the UNC debt conferences. Uh , yon critical is one of the leading post Keynesian economists , the most, one of the most brilliant economists period. Um, but also his work with the UN and his understanding of canes and MMT and the global financial system , um, led him into what I just described basically when, I mean a lot of the things that I've learned about economics and MMT I've learned from young Grego obviously. So you hear a lot of his thoughts in me and then anything that's , um, that's , uh , a bunch of nonsense. It's probably me thinking that not his thinking. Um, but he, he made , uh, he and other economists that UNC that have probably done the most to rally developing countries to think differently and to act differently. But if you ask young Kriegel , I'm not gonna speak for him here or put words in his mouth, you'll hear a lot of , uh , stories about how much pressure , um, unctad as an organization , uh , gets political pressure, gets from the West, from the u s in particular, how much pressure representatives of developing countries who really begin to, you know, learn from the oncotype approach and attempt to act accordingly how much pressure they , they come under. Because you have to realize that the process of international development is not done in isolation from geopolitics. So you're at the UN and you're negotiating , um , you know, economic , uh, development , uh, issues with other governments who also happen to be negotiating all kinds of other things with you and all kinds of other things with other allies that have nothing to do with you. But somehow your vote in the Security Council matters on a particular issue. Um, so you get a lot of pressure for, you know, if, if you attempt to align yourself with the other developing countries who happened to align themselves with, I don't know, Cuba for example, then you're with them. Not with us and you'll suffer the consequences. You have to remember that you're doing this in the context of massive external debt. You're dealing with all kinds of problems, including maybe a potential civil war, including a potential rebels, including potential, a unrest because of food prices going up. Um , so you're extremely vulnerable to pressures from, from , um, from the, from the West. Uh , if you attempt to, you know, gradually, you know, pull yourself out of the, you know, the , the dominant structure that you're suffering from. Uh , because it takes time to build an economic development strategy and put it in place. And that time you need some sort of immunity from all kinds of other threats and interferences and , and pressures. And that's, that's the reality of it. There is no such thing. So that's why a lot of , um, economists and people are thinking about the geopolitics of this. When, when the Cold War ended, it made this even more difficult because for developing countries at the time, they could sort of fall in between the east and west and kind of leverage and play a little bit of the geopolitics. You know, between the Soviets and the Americans to get a little bit from both, but now that we're, we live in a , in a, in a world that's exclusively dominated by US interests , uh , in us power geo politically, there is no negotiation. There is no running away from, from that kind of influence. So then the only way out of this is to start building sort of south south regional cooperation, economic development units. And it's very difficult politically and economically because you have to agree , um, on a, on a , on a joint strategy and you know, to , to get a number of countries to agree in a particular strategy is, is very, very difficult. Um, but also to get a group of countries that have complimentary , uh, assets and resources , um, to, to coordinate , uh , is, is difficult. Um, at some point there was a little bit of hope , uh , that bricks will emerge as, as that alternative geopolitical alternative bricks as in Brazil, Russia, India, China and South Africa. The s was that added eventually as South Africa as , as an alternative to the US geopolitical dominance. Um, but I don't know how, how likely that is going to actually emerge because brix itself as an organization has been divided over the last few years. Um, so in the absence of a block of countries that have geopolitical influence that can offer an, an economic alternative, it's very hard for developing countries to , um, to shift strategy. Uh, there is the possibility , um, that, you know, the Chinese model of , uh , economic development and China's interest in the rest of the world economically speaking at least , um , may offer a little bit of relief, but, but , uh, but you also have to have to take that with a grain of salt because China also has its own economic and geopolitical interest that it's trying to build up to being , uh , a superpower, a true superpower. So you have to take anything that comes from the Chinese government also with the, with a grain of salt fistful of self , they should say. So you've done some consulting work with various governments and groups , um, in what we call the global south. Uh, I'm wondering, can you talk a little bit about those experiences, what you've learned? Um, and yeah, just general lessons from that work. Yeah. So just to clarify, when you say consulting, I don't have any official affiliation or paid positions with any, with any government in the global south. By consulting I mean people reach out and want to, you know, ask questions and, you know, have long conversations or presentations. So yes, I've done that, but not as a , as a paid consultant for any, any government. Um, understood. So the most of the interest is, is really what we described today in this podcast, which is , um , we recognize that everything we've tried has failed. You know, all the, you know , stages of economic development that every textbook follows, including the most recent waves of , uh , privatizing state owned enterprises. You know, leaning heavily on tourism for indirect investment, export led growth. So the, the MMT Lens and the sort of [inaudible] Economic Development Analytical Lens allows us to recognize that those are traps because the more you accelerate your exports, the more you end up with imports of have intermediate good . So you'll never going to catch up. And the more you privatized state owned companies to pay, you know, to generate dollars to pay some of your external debt. Once you've privatized the water company, you can't reprioritize it the next year. Again, it's just a one off and then you lose that asset and then, and then you run out of assets, do it to prioritize . And then of course you lose control over a strategic resources in your own country. Um, the, the idea of foreign direct investment is also a trap for most countries because you realize most foreign direct investment actually goes to rich countries, not to poor countries because it's going after, you know, it's looking for strong infrastructure, water, electricity, transportation until it communication. And most developing countries don't have that. Uh , and it's also foreign direct investment is looking for skilled workers and highly qualified workers. Most of those happen to be in , in Canada and the Netherlands and other places, not then not in the poorest countries. So this idea that foreign direct investment is gonna solve all, all the development and poverty problems is a myth because we use China and India as examples of great places that attract foreign direct investment. But those are not your usual developing countries because they have massive infrastructure of telecommunication, transportation, everything else. And they have invested massively in producing the labor force that FDI, you know, higher end FDI is looking for. So you look at most of the developing countries, it's really assembly line jobs. The , the tail end of the supply chain at the lowest , uh, skill levels, the lowest , um, value added , uh , levels. So that's not , that's not gonna work. Um, so that's the context within which a lot of , um, sort of progressive voices within those governments or , or really eclectic in , um, not necessarily progressive, just eclectic and programmatic individuals try to reach out for alternative ideas. So we start having conversations like the one I just have with you. And then we get into the geopolitical stuff. And then that's when they realize this is, this is going to be a problem because this is not just a technical solution. This is a political economy framework that has to be undone. Um, and it starts with a lot of , uh, education. And it starts with, you know, leading into a social movement. And this is really where you're having these conversations with colleagues in , in Mexico, in , in , uh , in Columbia and other places. And they say, we don't, we don't really have what you guys have, for example, in the u s which is kind of the beginning of a movement, like the groups like real progressive's and others who, you know, all kinds of people from all kinds of walks of life, not academics, not professors, you know, people who are working nine to five jobs, but who are very passionate about public policy, who now understand the issue and can argue and offer a counter narrative and can stand in front of a senator or representative and say, you can't trick me into this because I know better. And I can argue back and I can even educate you on what the solutions might be. Um, so we're at the beginning phase of building , um, sort of a popular movement of people who can actually argue back against the senator or representative and they say, we don't, we don't really have that yet. And we don't have that kind of social movement. We have a few academics and a few activists, but it's not a movement yet. So a lot of the conversation eventually shifts into working on multiple fronts. So beginning a conversation with academics, which is the most difficult one to get, you know, economists , academic economists to , uh, to think differently. Um , working with progressive policy makers who are not necessarily dogmatically wedded to, you know, new neo liberal ideas or neoclassical ideas to start to show the potential , uh, and working on social media and working with , uh, with popular media to popularize the ideas in the public domain and engage with, with the usual suspects, with labor unions, with activists, with , uh , climate justice activists and social justice activists to say, look, whatever we're allies on this thing, we have a solution. And , and this is a solution that empowers your organization, your message to build a United front against neo-liberalism. So this is, this is how you build a movement. And as I said earlier, politicians are the last people to follow because you talk to them behind closed doors and they understand, and then they say, well, that makes sense, but I can't say this publicly because I get attacked by all kinds of media. Other political parties say , you don't know anything about inflation. You want to turn this interest in Bob way or whatever. And if you're the only one trying to counter that, it's, it's, it's difficult. So they say, you know , get me a critical mass of people who, who endorse this and, and other words, get me a social movement and I'll, and I'll come out and embrace it. And I always joke as simple as , um, you know, if I have a social movement, we'll vote you out of office. We don't need . Um, and that's, that's the reality. Um, but, but we can't give up yet . As I said, you have to work on multiple fronts. Worked with policy makers or um , you know, willing mean we're not saying that everybody has to come out and say, I'm an MMT, you know, candidate and I endorse this and that and the other. Just start shifting the narrative and make common sense decisions and parliaments. So when you're, when you're being asked to look at foreign direct investment options, just be more selective. Go for the higher value added content. Try to negotiate a little bit better when it comes to, you know, dedicating resources to, you know, subsidizing fossil fuels versus a , you know, renewable energy , um, um, domestic renewable energy infrastructure. Make the right decision, move away from fossil fuels, no matter what the pressures are. And think of strategies of building energy sovereignty and , and, and food sovereignty. And you don't have to say this is MMT . You don't have to say this is a inspired by Onc, dad or anybody. This is just common sense. Um, so that's, that's where, you know, policymakers can be more effective just by making common sense decisions that, that fit into the broader strategy that I, that I described. Um, but again, we have to work on multiple fronts and, and, and that's why we were really fortunate to have the opportunity to create the bins Agora Institute, because we didn't want this to be stuck in academic circles because we've , we've done that for a long time. And, and as I said, we don't, we don't think that's, that's how the world is going to change. It's not going to change in academic journals that , uh, you know, published rejoinders I liked rejoinders, but you know, they're not gonna change the world. Indeed. Well, this has been incredibly informative and engaging. Follow . Thank you so much for joining us on money on the left. It's a pleasure.Speaker 8:
Thank you . [inaudible] no , that's [inaudible] I'm on. You should be, God said, miss that . Got that fee . Nah , no, that's not [inaudible] God said Mr [inaudible] . Jen . No , that's not, couldn't see. Sorry , I forgot that was [inaudible] .