The Context of our Solution
We live in a world dominated by European civilization. Their standard of living is the de facto global measure of national success which developing nations strive to attain. Achieving this standard involves developing a capital-intensive economy and requires per-capita incomes of at least USD15,000 (year 2000 CPI) to sustain. Many Third World countries are in the process of moving from a labour-intensive economy into a capital-intensive economy to achieve this income level. As long as a national economy remains labour-intensive, incomes will remain low.
The story of how capital raises standards of living can be summarised in one sentence: Reducing the proportion of output generated directly by labour by increasing the component generated by capital increases output per person and raises incomes.
How did some people come to form nations that were proficient at creating and employing capital while others remained stuck with a low-productivity workforce?
Maybe the following story might help us understand what went wrong.
Human beings started out as Hunter-Gatherers. A Hunter-Gatherer's full day's work yielded only enough food for his own personal consumption.
At some point, somebody discovered how to grow his own food -- cultivation techniques -- rather than forage for it. A person who developed and employed these cultivation technigues (intellectual capital) dramatically increased his output of food (these people came to be known as Farmers). A Farmer's average day's work yielded more food than he could consume. This surplus became wealth (financial capital) when the farmer discovered that he could use it to acquire resources to address personal issues other than hunger.
Some people were then able to depend on Farmers for their food by providing these Farmers with such resources in exchange for a portion of their wealth. They were able to provide Farmers resources other than food because they were no longer pre-occupied with the activity of feeding themselves. They were now able to sit around thinking and worrying about other things (lets call these people Engineers). The more of the Farmer's personal issues that the Engineer was able to address, the bigger the share of the Farmer's wealth this Engineer was able to demand for the products and services he provided the Farmer.
One of the Farmers' personal issues happened to be how to further increase his personal food output so that he could accumulate more personal wealth so that he could address even more personal issues (let's call this particular personal issue the beginnings of greed).
Some Engineers tried to address the beginnings of greed by building devices for making soil more physically habitable to farm crops (these devices came to be known as ploughs). Other Engineers addressed the beginnings of greed by developing ways to make soil more chemically habitable to farm crops (fertilisers). Still others developed new and better cultivation techniques (technology).
Farmers then acquired and employed the ploughs (capital equipment), fertilisers (procured resources), and new cultivation techniques (intellectual capital) in his farming work. His increased output further increased his capability to accumulate wealth to satisfy the beginnings of greed.
Right at about this point in the story of capital, the people who would eventually bunch together into what are now Third World countries stopped developing and retaining intellectual capital, turning these into capital equipment, and using both intellectual capital and capital equipment to increase output and capability to accumulate financial capital.
Meanwhile Engineers from other communities continued to accumulate knowledge capital and used this to build better ploughs. Farmers from these other communities used these better ploughs to accumulate more wealth
In the societies that stopped or slowed their accumulation of capital (let's call them Contentists) the beginnings of greed did not go on to become just simply greed. These societies had no need to form huge city-states and settled into a contented state of existence where the biggest organisational unit was the tribe. Their rates of consumption and populations were in equilibrium with their environment.
Other societies (let's call them Wantists) continued to create and employ capital to address what had by then become simply greed. The Wantists went on to effect greater control over their environments and dominate the Contentists once the rate of development they were undergoing removed them from a state of equilibrium with their immediate environment. They continued to develop and accumulate capital to achieve this increased control and domination of the Contentists.
Some of the Wantists wanted (that's why they are called such) some Contentists to enjoy the fruits of the capital they acquired (of course keeping in mind some of their own vested interests as well). They provided knowledge capital such as medical care, deployed capital equipment and facilities (roads and bridges), and introduced commerce (by infusing financial capital) into the Contentists' societies.
The Contentists readily embraced the fruits of the Wantists' capital and their consumption rates and populations increased to levels that their immediate natural environments could no longer sustain without artificial influence -- influence that is enabled by capital. Unfortunately, many Contentist societies failed to appreciate and embrace the means to create this capital indigenously at a scale required to sustain the levels of consumption and population that they have grown accustomed to. The Contentists became dependent on the Wantists for this capital because they had grown accustomed to the standards of living that the Wantists' capital afforded them.
The Contentists soon came to resent this dependency and sought a political solution to rectifying what to them was an unacceptable state of affairs. This political solution became a popular solution among the Contentist peoples. It involved removal of the the Wantists' political influence over the Contentists' people. Those that succeeded then proceeded to declare their respective nationhoods using the principles of nationhood that the Wantists taught them.
However, since the political approach did not address the true issue which was a dependency on the Wantists' capital, the people of many Contentist nations are now less happy than they were before they came in contact with the Wantists.
The factors that led to the tapering off of the Contentists' drive towards domination of their environment and control over their futures in a Wantist-dominated world and those that sustained the Wantists' energy for continuous innovation and accumulation of capital are still evident today and are still serving as barriers to the national development of many Third-World nations.
Above diagram shows different points where the course of our development was determined
Today, our access to Western knowledge and culture describes our dichotomous circumstance: (1) it sets us on an irreversible development path to relative poverty and (2) presents vast opportunites for leapfrogging the mistakes Western countries made during their development. Our pre-colonial ancestors were most likely to have been perfectly happy with their level of development and our cultural character reflects these roots.
But our history has taken us down the irreversible path of eating the forbidden Fruit of Knowledge of Western Lifestyles and Standards of Living. We and many other Third World nations have sentenced ourselves to forevering measuring ourselves against that European standard of national success.
In effect we can now only live with European-defined national success. It's now a case of "If you can't beat 'em, join em" or "When in Rome do as the Romans", and other such cliches. The past is gone and irrelevant as such.
Having decided this, our development efforts should now focus on surmounting the barriers to acquiring the cultural character required to sustain European-style development (yes, all of the above verbosity was to lead to this decision).
What are these barriers?
There is only one mother of all barriers that we fail to acknowledge much less address.
We have a cultural character not compatible with the Western model for development -- a non-migrant culture that is indigenous to a tropical habitat rich in natural resources and arable land. Ergo:
So what are we to do?
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