My goal in this book was to explore cultural dynamics (cultural alienation, cultural hybridity, cultural resistance, and cultural evolution) embedded in a world system commodity chain. I devised a conceptual model combining premises from world systems and postcolonial theories and the landlord– stranger paradigm to analyze and better understand the cultural differences in mining that are a root cause of persistent low-intensity conflicts in extraction areas.

I posed some important guiding questions to support my premise of a culturally unequal exchange: To recap: How does the Sierra Leone government address the cultural differences in land management embedded in mineral commodity chains in policy and law? Is there an asymmetric transfer of cultural resources and norms from core and semi-peripheral countries to peripheral nations? Can this transfer be conceptualized as a culturally unequal exchange? Is “illicit” artisanal mining a form of cultural resistance against the impacts of incorporation on customary land rights? Do cultural resistance and cultural hybridity in Sierra Leone mining areas pose challenges to effective incorporation through mineral commodity chains? Can cultural resistance in the Sierra Leone mining sector trigger a development evolution that moves beyond capitalist extractivism toward new development trajectories that embody African cultural values? Or will the continuing marginalization of African cultural perspectives persist in the face of a capitalist global economy inexorably driving toward cultural universalism?

Operating within the commodity chain are Western cultural concepts of mining governed by state laws and indigenous artisanal mining as a timehonored subsistence livelihood managed by the landlord–stranger institution and power associations. The latter is seen as poorly managed and illicit, a colonial legacy, and the former as legal and economically efficient. The cultural differences and power imbalance in this arrangement have generated low-intensity and persistent conflict situations integral to the mining industry in Sierra Leone since its inception.

The state faces legislative and policy dilemmas, a colonial legacy, in trying to reconcile customary land management—the landlord–stranger relationship—with Western notions of mining land use. There have been rapid changes in policies and laws to facilitate mineral extraction amid cultural conflicts. Mining multinationals are privileged and powerful strangers through state laws.

One element explaining the financial crisis is what Hyman Minsky called ‘destabilizing stability’: long periods of stability lead to increasing vulnerability. This chapter argues that similar mechanisms are at work inside economics: long periods of economic progress in the core countries lead to increasingly abstract and irrelevant economic theories (‘terrible simplifications’). This leads to turning points towards more relevant economic theories, referred to as ‘1848 moments’. The chapter further outlines the key variables that need to be re-introduced into economic theory in order to furnish poor countries with the type of productive structures that makes it possible to eliminate poverty.

The United Nations has announced that the number of chronically hungry people on the planet has exceeded the billion mark for the first time. It is extremely unlikely that any of them will ever hold a Swiss 1,000 franc banknote (worth more than 900 dollars), but if they did, they would see the portrait of a man who perceived the essence of the explanation as to why extreme poverty and extreme plenty coexist so naturally on this planet, and of the grim fate of the permanently starving – Swiss historian Jacob Burckhardt (1818–1897). Burckhardt, best known as a historian of the Italian Renaissance, coined the term ‘the terrible simplifiers’ to describe the demagogues who – in his dark vision of what the twentieth century would bring – would play central roles in the future (Dru 2001: 230). Events amply fulfilled Burckhardt's predictions of a cataclysmic twentieth century, of the rule of terrible simplifiers, men whom Burckhardt's colleague at the University of Basel, Friedrich Nietzsche, called power-maniacs (Gewaltmenschen), and John Maynard Keynes referred to in 1936 as ‘madmen in authority’.

A key common element in persistent world poverty and in the financial and (real) economic crisis is the ‘terrible simplification’ – a theoretical overshooting into irrelevant abstractions – that has taken place in economic theory after World War II. As unlikely as it may initially sound, I shall endeavour to explain in this chapter how – in spite of its apparent sophistication – equilibrium economics became ‘mathematized demagoguery’ based on an extremely simplistic world view.

One day in 2001, John O’ Carroll, then a lecturer at the University of the South Pacific, sent me a book with a note, ‘Someone sent me this book to review but I can't read a word of it. Could you please have a look at it?’ The book was Subramani's Ḍaukā Purān. I had read all the great works of literature, was moved by them, couldn't put down Don Quixote, The Brothers Karamazov, or James Joyce's Ulysses or the seven-volume Princeton translation of the Vālmīki Rāmāyaṇa. But occasionally one came across a text that moved you in a different way, a text that made you feel that you were not just reading it but ‘speaking’ and ‘writing’ it as if it were reading you. One such text was V. S. Naipaul's extraordinary A House for Mr Biswas. John O’Carroll's request posed a different kind of challenge as the book was written in a language that triggered a kind of return of the repressed: after all, it was in my mother tongue, a language that was my own secret and which I had never used in an academic discourse. But what an experience its reading was! I read the book over two or three days. I was in a daze for this was a great book, the kind of book that I would quite unabashedly place alongside the very best in the world. I had read much and had been moved by books. But this book hit me in a way so different from anything else. I don't know when I felt that Subramani was writing this book or when I was acting as the amanuensis to his voice. The book was followed by the equally magnificent Fījī Māṁ (Fiji Maa) some 18 years later. These two books have placed Subramani in the pantheon of great writers of world literature. The achievement is extraordinary, magnificent, formidable, even inimitable. They are the absolute, the defining, the definitive texts of the subaltern. Writers and critics had commented on sundry subaltern writing: how these works signified the silent underside of a national literary project, the latter invariably written in a borrowed European language (principally English and French, occasionally in Spanish and Portuguese) or in a dominant vernacular such as Hindi, Urdu, Bengali, Tamil or Arabic.

When the subaltern finally speaks, she stumps theory or at least challenges theory to find ways of accommodating her voice. Her texts explore heterogeneous life practices, those forms of knowledge that refuse dissolution into a grand post-Enlightenment narrative of reason. The life worlds of gods and spirits require cultural investment of a very different kind. Subramani's novels in the Fiji Hindi demotic finally say to postcolonial theorists, ‘the subaltern has spoken, or this is how she will speak if only you would depart from your own source texts in metropolitan languages and read her in her own language’. What this book has claimed is that these extraordinary novels are defining texts of the subaltern, in fact great performative texts through which we can rethink the incomplete project of postcolonialism, enter into alternative, nontotalizing historicities and explore traces that have eluded received modes of historical expression. To understand the theoretical ramifications of the subaltern voice that comes across loud and clear in the comic-realist mode in which these novels are written, I want to return to the challenging essay from which I have borrowed the question, ‘Can the subaltern speak?’ that heads this Conclusion. The author of the question, Gayatri Chakravorty Spivak, published the original version of the essay in 1985. The essay, expanded, was re-issued in 1988. Eleven years later, again modified and extended, it formed the core of the ‘History’ section of Spivak's most important work on postcolonial reason.

I began this book with an autobiographical note about an encounter with Subramani's first novel that provided me with a different kind of literary experience. It was an experience that was linked to my body, to a language that had remained hidden within me, a language of which I was ‘deprived’ but which had not found a proper aesthetic outlet until the arrival of Ḍaukā Purān. Gayatri Chakravorty Spivak's essay had appeared some years before its publication, and the novel, together with Subramani's second, Fiji Maa, is in many ways a response to the challenge posed in Spivak's essay. As it appears in the ‘History’ component of A Critique of Postcolonial Reason, the essay is prefaced by two interconnected prefaces: the first on the location of the subaltern within the Law of Reason and the second on the elisions in colonial archives.

In most arts and sciences – from astronomy to zoology – the Renaissance represents a qualitative watershed in human history, and historians are generally united in considering it a period of unprecedented intellectual ferment. Echoes of da Vinci, Galileo and Machiavelli still resound in the way we approach art, science and human coexistence, and it is noticeable how these developments came ‘out of Italy’ (Braudel 1991). As a precondition for this, the Renaissance was also a period when the productive powers of small European city states allowed a large part of the population to live free from poverty. Where feudalism had provided wealth for the very few and misery for most, the city states of the Renaissance for the first time witnessed a situation where artisans, merchants and public employees filled the ranks of a new middle class.

The Debate on Mercantilism: A Brief Overview

In this picture, the economics profession stands out with a completely different view of the period. The fact that 300 years of economic theory and practice tend to be lumped together under the label of ‘mercantilism’, as if it were a homogeneous mass, alone points to a rather superficial treatment of a long period with much variety. The common view today is that mercantilism was ‘an irrational social order’ (Ekelund & Tollison 1981: 6), the basic feature of which was that economists collectively made the serious mistake of confusing gold with wealth. This practice is referred to as the ‘Midas Fallacy’ (chrysohedonism), after the mythological king whose touch converted everything to gold. Starting with Adam Smith, this Midas Fallacy has been the common interpretation of mercantilism, the one also found in today's histories of economic thought. The Midas Legend had, however, been known as a warning since Roman times, and the mercantilists themselves used it to explicitly refute this view of wealth (Barbon 1696). Two American authors have offered what appears to be an alternative interpretation of mercantilism, that of a society seeking rents, presumed to be non-productive (Ekelund & Tollison 1981).

Both these standard interpretations, of mercantilism, and of pre-Smithian economics in general, present us with serious problems.

Introduction

Development geography and mainstream economic theory have for many years lived separate lives. Especially so since the downfall of development economics, an academic subject which has repeatedly been pronounced dead by one of today's leading US economists. The geographical dimension - the location of production in space - has completely disappeared from neo-classical economic theory. This is, in one sense, curious, because the ‘founding father’ of neo-classical economic theory - the Englishman Alfred Marshall - is still an important figure in economic geography through his industrial districts. We shall return to ‘the two Marshalls’ later in this chapter. Another vintage economist used in modern economic geography, Alfred Weber, with his Location Theory (Standorttheorie) belongs to a school of economics which virtually died out: The Historical School, of German origin.

However, economic theory is itself changing rapidly at the moment - and interestingly one of the new developments is that the ideas of the German Historical School are coming back into economic theory. In contrast to modern economic theory, in the holistic Historical School of Economics, both time (history) and place (geography) play a natural part.4 In this chapter we shall analyze the recent main trends in economic theory, and attempt to assess the implications of these changes for development geography. Especially, we shall discuss the possibilities for a process of convergence between the discipline of development geography and parts of economic theory.

In economic theory there are three main developments which we find are of potential importance to development geography: First of all, the mainstream neo-classical paradigm is being challenged from a growing school under the heading ‘Evolutionary’ or ‘Schumpeterian’ economics, with roots in the German Historical School. This group is gaining prominence within the OECD and the EU. Secondly, from inside the neo-classical school, a ‘new growth theory’ is evolving. It is not clear whether this new theory will reform the neo-classical paradigm from within, or whether it indirectly attacks the very foundations of the neo-classical system in such a way that in the long run it may bring down the whole neo-classical framework.

TYPOLOGIES OF ECONOMIC THEORY AND THE FOUNDATION OF THE TWO CANONS

It has been said that economics as a science – or pseudoscience – is unique because parallel competing canons may exist together over long periods of time. In other sciences, periodic gestalt-switches terminate old theoretical trajectories and initiate new ones. In a paradigm shift, the scientific world moves from a situation in which everyone knows that the world is flat to a new understanding that the world is round (Kuhn 1970). This occurs in a relatively short time. In economics, the theory that the world is flat has been coexisting for centuries with the theory that the world is round. In this chapter we shall argue for the existence of an alternative to today's mainstream theory: the continuation of the canon that dominated the worldview of the Renaissance – The Other Canon. Using a metaphor from Kenneth Arrow, ‘this tradition acts like an underground river, springing to the surface every few decades’.

We argue that during the Cold War, the ‘underground river’ of Renaissance Other Canon economics all but disappeared from economic theory, and that it is time to reintroduce it. Traditionally, The Other Canon has been resurrected in times of crisis, such as national emergencies, which bring production – not barter – into focus. This occurs, for example, when an exclusive focus on barter has caused financial bubbles that subsequently burst, when nations are engaged in serious catching up with the prevailing world leader (as the United States, Germany and Japan were in the nineteenth century, or as Korea was until later), or when a war economy forces a national political system to focus on production (of materials of war). Today the urgency of a change of focus towards the Renaissance conception of economics is particularly acute in the Third World and in formerly communist Eastern Europe. Unfortunately, this is not where economic theory is produced.

The two different canons are based on fundamentally different worldviews, which can be traced back to ancient Greece, where the term ‘economics’ was first used. Today's standard economics is based on a mechanistic, barter- and consumption-centred tradition – static in the tradition of Zeno – that explains human economic activity in terms of physics.

‘Woe to the vanquished’ – a saying of the ancient Romans – came to mind when I attended a conference in the Mongolian Parliament building in March 2000. As the only non-Asian I participated in a forum addressing the severe economic problems of the country. The local newspapers vividly reported that not far away from the snug heat of Parliament, an estimated 2 million animals pasturing on the plains were starving to death in the bitter cold. Permanent desertification threatened the country, and it was clear that this disaster was manmade. What was not reported was the important fact that the 2 million animals dying during the winter of 1999–2000 were only the increase in the animal population over the previous two or three years. The fundamental cause of the disaster was the same type of diminishing returns that has afflicted mankind since biblical times: too much economic pressure on one factor of production, land, the supply of which was fixed. Rooted in this phenomenon, vicious circles of poverty were already well established.

In terms of economic theory, the Mongolian situation takes us back to economics as the ‘dismal science’, to Thomas Malthus (1820), John Stuart Mill (1848) and even Alfred Marshall (1890). In spite of the recurrence and description of these phenomena since the biblical Genesis, the mechanisms at work in Mongolia during the 1990s apparently were not recognized, even when the disaster was a consummated fact. The underlying cause was clearly not global warming, as the Western press reported.

The more I studied Mongolia in the months that followed, the clearer it became that this nation, vanquished in the Cold War, for all practical purposes was being subjected to a Morgenthau Plan (Morgenthau 1945).

Carl Menger, the founder of the Austrian School of Economics, had the ambition that economics should be a ‘map of the forces at work’. Standard textbook economics (‘neo-classical economics’) takes as its starting point a metaphor of ‘equilibrium’ based on the state of the physics profession in the 1880s. This force towards equilibrium is, however, only one of many forces at work. The most fundamental feature of capitalism is change, and this change is only poorly reflected in standard economics. Financial crises are just one of the many things that happen in real life, but cannot happen in standard textbook economics. From the standpoint of Joseph Alois Schumpeter (1883–1950), an Austrian economist and Harvard economics professor who spent much time at Harvard Business School, ‘equilibrium’ is the opposite of economic development. Equilibrium theory therefore fails to reflect many of the mechanisms of industrial and economic dynamics that create economic welfare. This chapter attempts to outline some of these forces.

Productivity explosions

What from a long-term perspective may look as relatively smooth curves of economic development are in reality the result of explosive productivity changes in a small number of industries. Figure 24.1 shows an early such ‘productivity explosion’ from a breakthrough innovation: that of cotton spinning in the late 1700s, when annual labour productivity rose by more than 25 per cent annually for a brief period.

At the time the common sense of economics was for nations to attempt to get industries behaving like this inside their borders. Productivity explosions create a system of triple rents: profits are high, wages rise and the government tax-base grows. In its essence colonialism was a system that prohibited such production activities – industry in general – from being carried out in the colonies. At the time of this early productivity explosion, this prohibition of manufacturing was a main motive for the United States’ independence in 1776.

Recently we have experienced a similar productivity explosion in the computer industry. Moore’s Law tells us that, since the late 1970s, the capacity of the computer chips doubles roughly every 18 months, creating an upward curve like the one of the cotton industry in the 1700s.

Also the activities, even technologically pedestrian ones, that are near the productivity explosion may achieve triple rents. The task of cutting and preparing cables for the computer industry grew up geographically close to the computer industry itself when

This chapter presents a note and an extensive bibliography on the relationship between production capitalism and financial capitalism. The document was produced for a conference held at Leangkollen outside Oslo on 3–4 September 1998. The background for the conference was the Asian financial crisis that started in July 1997. The massive Russian financial crisis had started a few days before the conference, on 17 August 1998, and the Russian participant, Professor Vladimir Avtonomov, brought fresh news from these dramatic events.

The global financial crisis that started in 2008 – ten years after this conference – vindicated the perspectives presented here, and prompted the wish to make the note and the very extensive bibliography of relevant, but mostly forgotten, literature on the relationship between the production sector and the monetary sector of the economy. The conference programme is found at the end of the chapter.

Financial issues are far from being at the core of evolutionary economics. The evolutionary focus has been on the production of goods and services (on what Schumpeter called the Güterwelt), not on money. This has, no doubt, been the right emphasis, particularly as much of our economic policy – both in the First and in the Third World – is still based on what Schumpeter called ‘the pedestrian view that it is capital per se which propels the capitalist engine’. The view of evolutionary economics on finance has tended to be in line with what the same author, Schumpeter, saw as one conclusion from Antonio Serra's 1613 book: ‘If the economic process as a whole functions properly, the monetary element will take care of itself and not require any specific therapy.’ However, in the context of the late 1990s, the financial system seems to intrude into the economic process in a way that is qualitatively different from before. This, we feel, raises the need to discuss the relationship between evolutionary economics and finance.

Traditionally, evolutionary economics deals with the dynamics within the black box of production (the Güterwelt). The dynamics of the Güterwelt require, however, a financial scaffolding in order to develop. At the best of times, then, there is a healthy symbiosis between the two worlds, between the real economy and the financial economy.

This chapter attempts to explain the drastic fall in income experienced by Saami reindeer herders in Northern Norway between 1976 and 2000, in spite of increasing government subsidies. Saami herders maintain a legal monopoly as suppliers of reindeer meat, a traditional luxury product in Norway.

Introduction

The Saami are one of more than 20 indigenous groups across the Northern Eurasian continent that have traditionally made reindeer herding one of the bases of their livelihood. As an ethnic group, they live throughout the Northern parts of Norway, Finland, Sweden and Russia, a territory known traditionally as Lapponia or Sápmi. Their exact number varies from source to source, depending among other things on national criteria used to determine ethnicity, but official sources place the total population of Saami in the area somewhere between 30,000 and 70,000, with about 2,000 Saami living in Russia. In Finland, Norway and Sweden “Saami parliaments” have created parallel indigenous political structures that function as advisory bodies to their respective national governments. Only a minority of the Saami practice reindeer herding, and conflicts of interest over land rights, access to natural resources and political rights often create tensions between the reindeer herders and other Saami groups. Reindeer herders are thus a minority within the Saami minority, and many herders have chosen neither to register in the Saami census nor take an active part in Saami political life.

The purpose of this chapter is to outline the economics and the structural conditions for entrepreneurship of indigenous Saami reindeer herding in Norway today, as well as the historical and political forces that have shaped the present situation. Saami reindeer herders possess a legal monopoly on the production of reindeer meat, traditionally considered a culinary luxury in Norway. As monopoly providers of a highly priced commodity, the Saami reindeer herders have a unique economic position among the indigenous peoples of the Arctic. Nevertheless, despite this monopoly position, at the end of the millennium the reindeer herding communities of Northern Norway found themselves in a devastating economic crisis and had to be saved through emergency subsidies by the Norwegian government.

In The Great Transformation Karl Polanyi (1886–1964) argued that ‘for a century the dynamics of modern society was governed by a double movement: the market expanded continuously but this movement was met by a countermovement checking the expansion in definite directions. Vital though such a countermovement was for the protection of society, in the last analysis it was incomparable with the self-regulation of the market, and thus with the market system itself.’ In the eyes of Polanyi, the forces promoting laissez-faire have been met by a countermovement attempting to protect society and the common weal. As Fred Block puts it: ‘What we think of as market societies or “capitalism” is the product of both of these movements; it is an uneasy and fluid hybrid that reflects the shifting balance of power between these contending forces.’

The last financial crisis – starting in 2008 – seems to have created less and weaker ‘countermovements’ than did the crisis starting in 1929. This chapter looks into these differences, and argues that the main explanation may be somewhat vaguely summarized by referring to a completely different Zeitgeist in economic theory and social attitudes then and now. In order to be more concrete and to provide an illustration of the difference in Zeitgeist, we contrast the personal experience, attitudes and values held by two men in power at the peak of the crises: Marriner Eccles – head of the Federal Reserve from 1934 to 1948 – and Mario Draghi – who will be at the helm of the European Central Bank from 1 November 2011 until 31 October 2019.

The writings of Marriner Eccles show us a man whose point of reference was the poverty and lack of freedom his father suffered in the slums of Glasgow. Eccles’ goal was – at the depth of the crisis of the 1930s – to achieve economic security for his fellow Americans with a minimum loss of freedom.

The Problem: Marshall Plans & Morgenthau Plans

During the 1990s, a majority of the world's nations experienced falling real wages. In many cases real wages declined both rapidly and considerably; a human crisis of large proportions is evolving in some former communist countries, while in most Latin American countries, real wages peaked sometime in the late 1970s or early 1980s, and since then have fallen. The term ‘state’ is hardly applicable to several African countries, and this problem of ‘failed states’ is growing. In these nations many institutions, such as educational systems, that used to be handled by the nation state have broken down, and different areas of what used to comprise a nation are ruled over by different warlords. This is a type of political structure that a few years ago was thought of as belonging to a mediaeval past. If there is something called ‘progress’ and ‘modernization’, globalization has – particularly for many small and medium-size nations – brought with it the opposite: many are experiencing ‘retrogression’ and ‘primitivization’. Poverty and disease increase sharply in Sub Saharan Africa, and a creeping ‘Africanization’ in parts of Latin America can be detected.

These events profoundly challenge the present world economic order and the standard textbook economics on which this order rests. This is because the increasingly globalized economy seems to produce opposite effects of what standard economic theory predicts. Instead of a convergence of world income (towards factor-price equalization), we find that a group of rich nations show a tendency to converge, while another convergence group of poor countries gathers at the bottom of the scale. Mainstream logic is that the more backward a nation, the easier it will be to catch up to some imaginary ‘frontier’. In effect, what is actually happening is very different: Nations specialize. Some nations specialize in producing continuous flows of innovations that raise their real wages (‘innovation rents’), whereas other nations specialize either in economic activities where there is very little or no technological change (maquila-type activities), or where technological change takes the form of process innovations (in which technical change is taken out in the form of lower prices to the consumer rather than in higher wages to the workers, who are typically unskilled – particularly in the area of raw material production).

The objective of this chapter is to show how economic policies based on completely different principles – one described as ‘emulation’ and the other as ‘comparative advantage’ – have been strategically employed in order to achieve economic development when nations have made the transition from poor to wealthy. It also briefly describes key aspects of the process by which Europe, through emulation, developed from a collection of fiefdoms ruled by warlords into city-states and later to nation-states. It is argued that the timing of the strategic shift from emulation to comparative advantage is of utmost importance to a nation. Making this policy shift too early will hamper development much as a late shift will do. It is argued that these principles, although sometimes under different names, were well known and employed by European nations from the seventeenth century onwards – in the United States all the way to the end of the nineteenth century – and that the Marshall Plan implemented in 1947, owed its success to putting the principle of emulation chronologically ahead of comparative advantage.

The Oxford English Dictionary defines emulation as ‘the endeavor to equal or surpass others in any achievement or quality’; also ‘the desire or ambition to equal or to excel.’ In eighteenth-century political and economic discourse, emulation was essentially a positive and active effort, to be contrasted with envy or jealousy (Hont, 2005). In modern terms emulation finds its approximate counterparts in the terminology of US economist Moses Abramovitz, whose ideas of ‘catching-up’, ‘forging ahead’ and ‘falling behind’ resonate with the same understanding of dynamic competition. In his 1693 work English economist Josiah Child made the emulative nature of English catching-up very clear: ‘If we intend to have the Trade of the World, we must imitate the Dutch, who make the worst as well as the best of all manufactures, that we may be in a capacity of serving all Markets, and all Humors.’

By focusing on barter alone, leaving out the dynamics of innovation and competition, Ricardian trade theory neglects a core element inherent to capitalism. There is no forging ahead, nor is there any falling behind, in Ricardian economics, nor in any other type of economics based on metaphors of equilibrium. In a Schumpeterian framework,