Drop in crude imports today bullish for dollar

They already have one that can deal with it operationally.
It’s called the ECB.

And my annual per capita distribution of 5% of GDP to the member nations remains the only viable, sustainable solution I’ve seen.

EU Should Create Euro-Area Monetary Fund, Sweden’s Borg Says

By Johan Carlstrom

March 9 (Bloomberg) — The European Union should consider
creating a body similar to the International Monetary Fund to
help distressed euro-area members and sharpen fiscal discipline
in the bloc, Swedish Finance Minister Anders Borg said.

“It’s good if we get an organization that can more
concretely help countries with financial problems,” Borg said
at the office of Prime Minister Fredrik Reinfeldt in Stockholm
today. “Most important, of course, is that we tighten the rules
to make sure that euro countries that are misbehaving cease to
do so.”

The European Commission, the EU executive in Brussels,
yesterday said it’s drawing up plans for a lender of last resort,
or a European Monetary Fund, as leaders try to draw lessons from
the Greek fiscal crisis. Borg said the EU also needs to find
ways to enforce more rigorously the Stability and Growth Pact
rules, which stipulate budget deficits shouldn’t exceed 3
percent of gross domestic product.

If budget rules are breached, the EU needs to consider
imposing “sanctions,” Borg said.

Marking a potential split among EU leaders, French Finance
Minister Christine Lagarde said an EMF may not be the best way
to support fiscally distressed countries. Consideration
shouldn’t be “limited to a European Monetary Fund,” Lagarde
said today. “Other ideas need to be studied and those that
respect the Lisbon treaty are much preferable.”

Looks like behind the scenes they may be getting their banks to fund Greece and, by extension, any other national govt. this which will buy time, though longer term it depreciates the currency, which they may want to happen as well.

As long as the banks can carry their eurozone bonds at par and book the interest as earnings and fund themselves based on implied govt guarantees there is no operational limit to how long they can continue.

The limits would be the extent to which the banking laws restrict this practice, and the political tolerance for any inflation that may get imported through the fx window should the euro continue to fall.

The other problem is the downward pressure on aggregate demand of the prerequisite ‘fiscal consolidation’ is likely to result in increased social unrest as living conditions further deteriorate.

And this could be accelerated if the fiscal consolidation were to include reductions of transfer payments.

Karim writes:

Hearing at the conference here in Manila that China’s elders are not happy with the results of what their western educated kids have been doing.

Wen Warns of Bank Risks, Pledges Property Crackdown

Hong Kong’s Economy Overtaken by Shanghai in 2009

Yuan Options Most Expensive as China Pledges No Rise

China Will Cautiously Scrutinize Property Loans

ICBC adjusts this year’s lending

China to maintain ‘stable’ yuan exchange rate

China sets 8% target for 2010 economic growth

China plans ‘proper, sufficient’ supply of money, credit in 2010

China budgets 1.05t yuan of fiscal deficit for 2010

China’s power consumption grows 40% in Jan

The least bang for the buck the better- means taxes can be that much less for a given amount of gov spending.

Not a good time for Greece and others to be cutting agg demand with
spending cuts and tax hikes, but that’s what the euro’s institutional structure ‘demands.’

The risk is this fiscal constraint employed to reduce national deficits will further reduce demand, which causes revenues to fall further and transfer payments to increase further, resulting in even larger deficits, etc.

But nothing will change unless things get bad enough, which obviously they are not.

EU Headlines:

Europe’s Recovery Almost Stalls as Investment Drops

German Machine Orders Fell in January on Weak Domestic Demand

EU Says Competitiveness of Greek Economy Down ‘Substantially’

French Unemployment Rate Increases as Companies Trim Payrolls

Karim writes:

Hopefully, BLS can put a reasonable number on snowstorm impact on Friday.
Ex-snow and census workers, would look for +25-50k number.

WHAT RESPONDENTS ARE SAYING …

• “Conditions for our business have substantially improved over the last three months.” (Information)
• “We are proceeding with caution based upon the current market conditions.” (Public Administration)
• “Business activity about the same as last month. Perhaps a slight increase in new orders for material and services — nothing major.” (Utilities)
• “The overall unemployment and the net effect of housing [instability] continue to affect our business.” (Retail Trade)
• “Business is okay. Customers are doing a lot of price shopping.” (Agriculture, Forestry, Fishing & Hunting)

I don’t think anyone thinks it would not make any difference to Greece if it was dealing in it’s own currency with the same types of self imposed constraints the US has rather than its current externally composed constraints.

US has legal obligations to pay and self imposed constraints aren’t a valid excuse for not paying.

I arrived in Connecticut to begin a ‘listening tour’ before making the decision to run in the Democratic primary for United States Senate. Tonight I listened carefully to the Democratic candidates as they put forth their agendas for restoring the US economy and both fell far short of the mark. Neither had a credible economic agenda, and what they did propose- tax increases- would only make matters worse.

Making sure that people working for a living are paid enough to be able to buy the goods and services they produce has long been a core economic value of the Democratic party. And what drives the lion’s share of business, both large and small, is the competition to attract the consumer’s dollars by producing the goods and services working people want. Unfortunately, the current situation is clearly one where people working for a living are not taking home enough money to buy what business is desperately trying to sell. Consequently, business has been contracting and laying people off, which makes matters even worse.

The Republican response has traditionally been to give tax cuts and other monetary incentives to business rather than to the people doing the work. That does not result in new hires for the businesses, as business only hire when orders and sales pick up. Instead, it results in higher profits with the hope that those profiting will hire more domestic help and more gardeners, and produce a few jobs that way, which is known as trickle-down economics.

So while, in addition to tax hikes, both Democratic candidates for US Senate proposed tax relief, it was for small businesses- the traditional Republican approach, and indeed, the approach of the Obama administration. Note that last week’s jobs bill featured a $5,000 payroll tax reduction for businesses, and not for employees. In contrast, I have long been proposing a full ‘payroll tax holiday’ where a couple earning a combined $100,000 per year would see their take home pay rise by over $650 per month. That would be enough to fix the economy as people could then make their mortgage payments and car payments, and even do a little shopping. This is the Democratic approach which also gives businesses what they really need- people with enough money to spend to buy their products. It’s people with money to spend that creates the backlog of orders which then quickly results in the millions of new jobs we need to restore our economy to full employment levels and prosperity. The payroll tax holiday also reduces costs for business. In a competitive environment this translates into a combination of both lower prices and better cash flow for business that can be used for the new investment the recession has long delayed.

The reason the Democrats don’t propose this kind of tax cut is because they can’t answer the question of ‘how are you to replace the lost revenues.’ And, in fact the Obama administration has currently put Medicare and social security cuts on the table to ‘pay for’ what they’ve already spent. What both Democratic candidates are displaying is a failure to understand the difference between the function of Federal taxation and State and local government taxation. I grew up on the money desk at Banker’s Trust on Wall St. in the 1970′s, ran my own investment funds and securities dealer for 15 years, currently own a small Florida bank, and visit the Fed (Federal Reserve Bank) regularly to discuss monetary policy and monetary operations. I know how the payment system works, as does the Fed’s operations staff.

What we all know is that when Federal taxes are paid, all the Fed does is change the numbers down in our bank accounts. For example, if you have $5,000 in your bank account, and you pay a Federal tax of $1,000, all the Fed does is change the 5 on your bank statement to a 4, so you then have only $4,000 in your account. With online banking you can watch exactly that happen on your computer screen. The Fed doesn’t ‘get’ anything. It just changes the numbers in your account. And when the Federal government spends, it just changes numbers up in our bank accounts. It doesn’t ‘use up’ anything. In fact, the Federal government (unlike State and local governments and the rest of us who do need money in our accounts to be able to spend) never has nor doesn’t have dollars. Think if it as the score keeper for the dollar. When a touchdown is scored and 6 points go up on the scoreboard, does anyone ask where he stadium got those 6 points? Can the stadium run out of points to post on the score board? Of course not!

So why then does the Federal government tax, when it doesn’t get actual revenue (it just changes numbers down in our accounts) and it does not use up anything when it spends (it just changes numbers up in our accounts)? The fact is, taxes function to regulate the economy by controlling our take home pay. If taxes are too low, the result is excessive spending and the strong upward pressure on prices we call inflation. If we are over taxed, as we are today, and the Federal government is taking too much out of our paychecks, the result is a drop off in sales by businesses, and rising unemployment. Federal taxes are like the thermostat. If the economy is too hot (something I have never seen in my 37 years in the financial markets), they can be raised to cool it down. And when the economy goes ice cold, like it is now, my full payroll tax holiday is in order. The Federal government’s job is to keep the economy just right by keeping taxes low enough so people working for a living can afford to buy the goods and services they are capable of producing.

That’s what fiscal responsibility is all about. But until our politicians understand the difference between State finances and Federal finances, the will continue to fail to make sure our take home pay is high enough to sustain the high levels of output and employment that are the hallmarks of American prosperity.

Let me conclude with a word about China. It was stated in the Democratic debates and not disputed that the US was borrowing $4 billion from China to pay for the war in Afghanistan. However, close examination of monetary operations shows this is not at all as it seems. China has what amounts to a checking account at the Federal Reserve Bank. China gets its dollars by selling goods and services to the US, and those dollars are paid into that checking account at the Fed. And US Treasury securities are nothing more than fancy names for savings accounts at the Fed. So when China buys US Treasury securities, all the Fed does is shift China’s dollars from its checking account at the Fed to a savings account at the Fed. And when those Treasury securities become due and payable, all the Fed does is shift the dollars in the savings accounts (plus interest) back to China’s checking account at the Fed. That’s it. Debt paid. And it happens exactly this way every week as billions of Treasury securities are purchased and mature. And this process has no connection to Federal government spending for the war or anything else. Spending is always nothing more than the Fed changing numbers up in people’s bank accounts, no matter what China might be doing with their Fed accounts. That’s why the ‘national debt,’ which is nothing more than dollars in savings accounts at the Fed, has never created a financial problem, and never will, either for us or for our children. Yet the administration, the media, and the two Democratic candidates for US Senate from Connecticut have the story completely wrong as well, which results in proposals which are bad for Connecticut and bad for America.

America is grossly overtaxed and needs a full payroll tax holiday NOW to stop the bleeding and restore the American dream. The only thing standing in the way of economic prosperity is a lack of understanding of our monetary system.

Sincerely,
Warren Mosler

>   
>   (email exchange)
>   
>   On Mon, Mar 1, 2010 at 3:40 PM, wrote:
>   
>   Hi Warren,
>   
>   I believe this is along the lines of your idea a while back to mitigate the
>   foreclosure problem by having the US Gov’t step in and take ownership of the
>   real property and rent the home to the current homeowners. I was sifting
>   through this Goldman piece about GSE reform and it looks like Fannie may be
>   already doing this in a program called ‘deed-for-lease.’ Were you aware of
>   this?
>   

The largest landlord in the nation? How the GSEs deal with loans headed for foreclosure is critical. According to the recent announcement, these loans will be held in their retained portfolios. However, moving this many loans into the portfolio—worth at least US$300bn—would threaten to violate the caps put in place by the Treasury (see Box). One way out of this situation would be to take ownership of the collateral, thereby converting loans, which count against the cap, into real property, which does not. With close to 2 million current and expected delinquent loans this year, how the GSEs dispose of this property will become an important issue. The GSEs will be under political pressure to hold property off the market, and may be inclined to do so in any case if they see property values bottoming. This could mean renting the properties: in November 2009, Fannie Mae announced a ‘deed-for-lease’ program, which allows homeowners to relinquish ownership of the property and rent it instead. In January, Fannie Mae took another step in this direction with the announcement of a policy to allow tenants in Fannie-Mae foreclosed property to rent the property on a month-to-month basis after foreclosure.

Yes, heard they were trying it late in the game, without many takers, but good that they at least did some, thanks!

Prof James Galbraith had presented the idea a year or more ago to a congressional committee. Don’t know if that was the source or not. Never did get any feedback.

The following, from a 2005 paper of mine, provides a good summary of the argument with quotations and bibliographic citations. Feel free to use for any project of Warren Mosler, as per his instructions. Also, please let me know if you have any further questions or I can provide any additional information. In addition to the information on Colonial Africa, I have added a brief section on Europe and Asia, where the same phenomenon can be found. Also, I refer to a 2006 paper of mine that provides evidence that many of the most famous names in the history of economics were well aware of the phenomenon. Also many political scientists, policy-makers, sociologists, historians, etc. Finally, I have also documented the “tax-driven cowrie shell” from both Africa and Asia, that is, contrary to what has previously been thought (by such economists as Milton Friedman), cowrie currency was not a so-called ‘primitive’ money, but was similarly tax-driven as colonial currency or today’s dollar. Let me know if you would like these references as well.

The economist “Rodney” Warren refers to is Walter Rodney, and his book is in the bibliography. I provide examples from many African colonies, such as Nigeria, German East Africa, French West Africa, British Central Africa, Upper Volta, Southern Rhodesia, and South Africa, but not specifically Ghana. If you need examples specifically from Ghana, let me know and I can provide them.

Once again, please do not hesitate to contact me directly anytime for further assistance. My contact info follows.

Sincerely,

Mathew Forstater

Professor of Economics

University of Missouri—Kansas City

From:

Mathew Forstater, 2005, “Taxation and Primitive Accumulation: The Case of Colonial Africa” in Research in Political Economy, Vol. 22, pp. 51-64.

Direct taxation [and the requirement that tax obligations be settled in colonial currency] was used to force Africans to work as wage laborers, to compel them to grow cash crops, to stimulate labor migration and control labor supply, and to monetize the African economies. Part of this latter was to further incorporate African economies into the larger emerging global capitalist system as purchasers of European goods. If Africans were working as wage laborers or growing cash crops instead of producing their own subsistence, they would be forced to purchase their means of subsistence, and that increasingly meant purchasing European goods, providing European capital with additional markets. It thus also promoted, in various ways, marketization and commoditization. [Direct taxation] appears to have been one of the most powerful policies in terms of both its wide variety of functions, its universality in the African colonial context, and its success in achieving its intended effects. Of course, taxation was not the sole determinant of primitive accumulation [note: “primitive accumulation” or similar terms such as primary accumulation or original accumulation, was a term used by the Classical economists, such as Adam Smith, David Ricardo, and Karl Marx to refer to the process by which subsistence workers became wage-laborers, and the process of early capitalist development in general]. But it has certainly been under-recognized in the literature on primitive accumulation. The history of direct taxation also has some wider theoretical implications. It shows, for example, “that ‘monetization’ did not spring forth from barter; nor did it require ‘trust’—as most stories about the origins of money claim” (Wray, 1998, p. 61). In the colonial context, money was clearly a “creature of the state”. In addition, this phenomenon was in no way unique to the African case. As will be seen following the section on Africa, the same process was also found in Europe, Asia, and elsewhere.

TAXATION AND PRIMITIVE ACCUMULATION IN COLONIAL AFRICA

Colonial administrators at first believed that market incentives and persuasion might result in a forthcoming supply of labor:

Initially the French imagined that if they would only create new needs for the Africans, the indigenous people would go out to work. When this did not happen, the French introduced taxes so as to make Africans earn wages. (Coquery-Vidrovitch, 1969, pp. 170-171)

From the first it was assumed that ample cheap labor was a major asset in Africa…Practical experience soon showed, however, that Africans did not, as a rule, approximate to Indian coolies. Few in sub-Saharan African had experience of working for pay or outside the traditional subsistence economy, and few had any real need to do so. In course of time monetary incentives might generate a voluntary labor force, but during the first decades after pacification neither governments nor private investors could afford to wait indefinitely for the market to work this revolution. (Fieldhouse, 1971, p. 620)

A number of methods were utilized to compel Africans to provide labor and cash crops. Among these were work requirements, pressure for ‘volunteers’, land policy squeezing Africans into ‘reserves’ destroying the subsistence economy, and ‘contracts’ with penal sanctions (Fieldhouse, 1971, pp. 620-621). But the most successful method turned out to be direct taxation.

Direct taxation was used throughout Africa to compel Africans to produce cash crops instead of subsistence crops and to force Africans to work as wage laborers on European farms and mines:

In those parts of Africa where land was still in African hands, colonial governments forced Africans to produce cash crops no matter how low the prices were. The favourite technique was taxation. Money taxes were introduced on numerous items—cattle, land, houses, and the people themselves. Money to pay taxes was got by growing cash crops or working on European farms or in their mines. (Rodney, 1972, p. 165, original emphasis)

The requirement that taxes be paid in colonial currency rather than in-kind was essential to producing the desired outcome, as well as to monetize the African communities, another part of colonial capitalist primitive accumulation and helping to create markets for the sale of European goods:

African economies were monetised by imposing taxes and insisting on payments of taxes with European currency. The experience with paying taxes was not new to Africa. What was new was the requirement that the taxes be paid in European currency. Compulsory payment of taxes in European currency was a critical measure in the monetization of African economies as well as the spread of wage labor. (Ake, 1981, pp. 333-334)

Colonial governors and other administrators were well aware of this ‘secret’ of colonial capitalist primitive accumulation, although they often justified the taxation on other grounds, some ideological and others demonstrating the multiple purposes of taxation from the colonial point of view. “One Governor, Sir Perry Girouard, is reported to say: ‘We consider that taxation is the only possible method of compelling the native to leave his reserve for the purpose of seeking work’” (Buell, 1928, p. 331). First Governor General of the Colony and Protectorate of Nigeria, Sir Frederick Lugard’s Political Memoranda and Political Testimonies are filled with evidence regarding direct taxation: “Experience seems to point to the conclusion that in a country so fertile as this, direct taxation is a moral benefit to the people by stimulating industry and production” (Lugard, 1965a, p. 118). Lugard’s belief that “Direct taxation may be said to be the corollary of the abolition, however, gradual, of forced labour and domestic slavery” (1965a, p. 118), acknowledges the role of direct taxation in forcing Africans to become wage-laborers. Lugard was also clear that the “tax must be collected in cash wherever possible…The tax thus promotes the circulation of currency with its attendant benefits to trade” (1965a, p. 132).

Lugard and other colonial administrators cited a number of other justifications for direct taxation:

Even though the collection of the small tribute from primitive tribes may at first seem to give more trouble than it is worth, it is in my view of great importance as an acknowledgement of British Suzerainty…It is, moreover, a matter of justice that all should pay their share alike, whether civilized or uncivilized, and those who pay are quick to resent the immunity of others. Finally, and in my judgment the most cogent reason, lies in the fact that the contact with officials, which the assessment and collection necessitates, brings these tribes into touch with civilizing influences, and promotes confidence and appreciation of the aims of Government, with the security it affords from slave raids and extortion.” (Lugard, 1965b, pp. 129-130)

The tax affords a means to creating and enforcing native authority, of curbing lawlessness, and assisting in tribal evolution, and hence it becomes a moral benefit, and is justified by the immunity from slave-raids which the people now enjoy.” (p. 173)

Taxation was also justified on grounds that it assisted in ‘civilizing’ African peoples: “For the native,” Ponty stated in 1911, “taxation, far from being the sign of a humiliating servitude, is seen rather as proof that he is beginning to rise on the ladder of humanity, that he has entered upon the path of civilization. To ask him to contribute to our common expenses is, so to speak, to elevate him in the social hierarchy” (Conklin, 1997, p. 144). Colonial tax policies were also introduced in the name of the ‘dignity’ of, and the obligation to, work, where contact with Europeans again was emphasized:

From this need for native labor, the theory of the dignity of labor has developed; this dignity has been chiefly noticeable in connection with labor in the alienated areas. The theory has also developed that it is preferable for the native to have direct contact with the white race so that his advance in civilization should be more rapid than if he remained in his tribal area attending to his own affairs. This is the “inter-penetration” theory in contrast to the “reserve” or “separation” theory. (Dilley, 1937, p. 214)

All of these functions of direct taxation may be seen in some sense as part of colonial capitalist primitive accumulation, whether as assisting in promoting marketization or serving ideological functions in the reproduction of the colonial capitalist mode.

Several points concerning the role of direct taxation in colonial capitalist primitive accumulation need to be made. First, direct taxation means that the tax cannot be, e.g., an income tax. An income tax cannot assure that a population that possesses the means of production to produce their own subsistence will enter wage labor or grow cash crops. If they simply continue to engage in subsistence production, they can avoid the cash economy and thus escape the income tax and any need for colonial currency. The tax must therefore be a direct tax, such as the poll tax, hut tax, head tax, wife tax, and land tax. Second, although taxation was often imposed in the name of securing revenue for the colonial coffers, and the tax was justified in the name of Africans bearing some of the financial burden of running the colonial state, in fact the colonial government did not need the colonial currency held by Africans. What they needed was for the African population to need the currency, and that was the purpose of the direct tax. The colonial government and European settlers must ultimately be the source of the currency, so they did not need it from the Africans. It was a means of compelling the African to sell goods and services, especially labor services for the currency. Despite the claims by the colonial officials that the taxes were a revenue source, there is indication that they understood the working of the system well. For example, often the tax was called a “labor tax” or “prestation.” Under this system, one was relieved of their tax obligation if one could show that one had worked for some stated length of time for Europeans in the previous year (see, e.g., Christopher, 1984, pp. 56-57; Crowder, 1968, p. 185; Davidson, 1974, pp. 256-257; Dilley, 1937, p. 214; Wieschoff, 1944, p. 37). It is clear in this case that the purpose of the tax was not to produce revenue.

To achieve its intended effects, it was also important that the direct tax be enforced, and numerous penalties existed for failing to meet one’s obligation. In German East Africa, “Sanctions against non-payment were severe—huts were burnt and cattle confiscated—so tax defaulters were not numerous” (Gann and Duignan, 1977, pp. 202-203). All kinds of harsh penalties for failing to pay taxes have been documented:

If a man refused to pay his taxes, the Mossi chief was permitted to sequester his goods and sell them. If the man had neither the taxes nor the goods, the chief had to send him and his wife (or wives) to the administrative post to be punished. Sometimes, a man and his wife would be made to look at the sun from sunrise to sunset while intoning the prayer Puennam co mam ligidi (“God, give me money”). Other times a man would be made to run around the administrative post with his wife on his back; if he had several wives, he had to take each one in turn. Then his wife or wives had to carry him around. (Skinner, 1970, p. 127)

Collective punishments were also used widely to enforce the tax. At the very least, failure to “pay could be met, and regularly was met, by visits from the colonial police and spells of ‘prison labour’.” (Davidson, 1974, pp. 256-257)

Another important element in assuring the smooth functioning of the direct tax system was keeping wages low, which had the additional benefit of keeping costs down for private employers. If wages were too high relative to the tax burden, Africans would only work enough to pay off their tax obligation and the labor supply would remain limited:

While taxation is high, wages are very low. It would not do to pay the Natives too much for they would not work a day more than it was absolutely necessary to get tax money. So employers pay the minimum in order to exploit their labourers as long as possible. (Padmore, 1936, p. 67)

Direct taxation was also used to promote and control migration of wage labor. If wage labor and money for cash crops was not available locally, Africans were forced to migrate to plantations and mines to find money wages (see, e.g., Greenberg, 1987; Groves, 1969; Onselan, 1976; although see also Manchulle, 1997, especially p. 8, for a critique).

TAXATION AND PRIMITIVE ACCUMULATION IN EUROPE AND ASIA

In arguing that taxation played an important role in primitive accumulation, this paper has focused on the case of Colonial Africa, but this should in no way imply that the process was limited to Africa. Evidence has already been mentioned in passing with reference to Russia and elsewhere. Vries, in a section entitled “Taxes, the Financial Revolution, War, Primitive Accumulation, and Empire” from his article “Governing Growth: A Comparative Analysis of the Role of the State in the Rise of the West” (Vries, 2002), argues that:

Praising Europe’s state-system and its mercantilist competition implies, whether one likes it or not, praising taxes. The increase of taxation we see in mercantilist countries may also have been a blessing in disguise. Paying them may have been an unpleasant experience, but it need not necessarily have been a bad thing from a macro-economic point of view. It is not farfetched to expect that ever-increasing taxes forced people to work harder and longer. Since the economy of large parts of early modern Europe was characterized by un(der)employment and under-utilization of the available means of production, there was plenty of room for increased production. Moreover, the fact that taxes were collected in money, led to increasing commercialization. Which in turn could increase government income via indirect taxes. (Vries, 2002, p. 75)

Despite Vries’ view of the process as a ‘blessing’, etc., it is clear that the description highlights the ways in which money taxes affected labor supply and monetization in early modern Europe, and even uses the term ‘primitive accumulation’. Later in the article, Vries reports that, in China, “one finds officials proclaiming that taxes ought to be raised to force the populace to work harder” (Vries, 2002, p. 95; for more on China, see Von Glahn, 1996). Vries goes on to report that this development took place throughout Europe and Asia:

When it comes to the way taxes were levied, monetization appears to be the tendency in the entire Eurasian continent. This process had progressed furthest in Europe. All governments preferred to get their income in money and to a very large extent managed to do so. In China an important grain levy continued to exist, but all other important government taxes had gradually been transformed into monetary payments. In India taxes for the central government had to be paid in cash. In the Ottoman Empire monetization made the least progress, but with the increasing weight of cizye, avariz, and tax farming, here too cash payments were on the rise. (Vries, p. 98)

Additional support for Europe and Western Asia is provided by Banaji (2001). Evidence for the notion that money taxes force pressures for increased market activity is provided by the reverse development, namely that a “decline in the exaction of money taxes brought about a decline in trade” (Hopkins, 1980, p. 116, quoted in Banaji, 2001, p. 16). Banaji goes on to report that:

the relentless pressure for taxation in money would also mean that despite the commercial decline which is supposed to have occurred in the Mediterranean of the seventh century, Egyptian landowners and rural communities were undoubtedly forced to meet their monetary obligations through increased production for the market (or participation in it as wage-labourers). (Banaji, 2001, p. 158)

Additional research is necessary to provide a more comprehensive and detailed documentation of the role of monetary taxation in monetization, marketization, and the creation of wage-labor and cash crop production in other regions and time periods, but it is clear that the historical process was in no way confined to Colonial Africa. The fact that various aspects of the phenomenon were recognized by economists as geographically, temporally, and theoretically diverse as Adam Smith, John Stuart Mill, Karl Marx, Fred M. Taylor, Philip Henry Wicksteed, W. Stanley Jevons, Karl Polanyi, and John Maynard Keynes supports the position that it existed with a great deal of generality (see Forstater, 2006).

BIBLIOGRAPHY

Ake, Claude, 1981, A Political Economy of Africa, Essex, England: Longman Press.

Amin, Samir, 1976, Unequal Development, New York: Monthly Review Press.

Banaji, Jairus, 2001, Agrarian Change in Late Antiquity, Oxford: Oxford University Press.

Buell, Raymond Leslie, 1928, The Native Problem in Africa, Vol. 1, New York: Macmillan.

Christopher, A. J., 1984, Colonial Africa, London: Croom Helm.

Conklin, Alice L., 1997, A Mission to Civilize: The Republican Idea of Empire in France and West Africa, 1895-1930, Stanford, CA: Stanford University Press.

Coquery-Vidrovitch, Catherine, 1969, “French Colonization in Africa to 1920: Administration and Economic Development,” in L. H. Gann and P. Duignan (eds.), Colonialism in Africa, 1870-1914, Volume 1: The History and Politics of Colonialism, 1870-1914, Cambridge: Cambridge University Press.

Coquery-Vidrovitch, Catherine, 1986, “French Black Africa,” in A. D. Roberts (ed.), The Cambridge History of Africa, Volume 7, from 1905 to 1940, Cambridge: Cambridge University Press.

Crowder Michael, 1968, West Africa Under Colonial Rule, Evanston, IL: Northwestern University Press.

Crowder, Michael, 1970, “The White Chiefs of Tropical Africa,” in L. H. Gann and P. Duignan (eds.), Colonialism in Africa, 1870-1960, Volume II: The History and Politics of Colonialism, 1914-1960, Cambridge: Cambridge University Press.

Davidson, Basil, 1974, Africa in History, new revised edition, New York: Collier.

Dilley, Marjorie Ruth, 1937, British Policy in Kenya, New York: Barnes and Noble.

Fieldhouse, David K., 1971, “The Economic Exploitation of Africa: Some British and French Comparisons,” in P. Gifford and W. R. Louis (eds.), France and Britain in Africa: Imperial Rivalry and Colonial Rule, New Haven, CT: Yale University Press.

Forstater, Mathew, 2006, “Tax-Driven Money: Additional Evidence from the History of Thought, Economic History, and Economic Policy,” in M. Setterfield, ed., Complexity, Endogenous Money, and Exogenous Interest Rates: Festschrift in Honor of Basil J. Moore, Cheltenham, U.K.: Edward Elgar.

Freund, Bill, 1984, The Making of Contemporary Africa, Bloomington, Indiana University Press.

Gann, L. H. and Peter Duignan, 1977, The Rulers of German Africa, 1884-1914, Stanford, CA: Stanford University Press.

Greenberg, Stanley B., 1987, Legitimating the Illegitimate: State, Markets, and Resistance in South Africa, Berkeley, CA: University of California Press.

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