FUTURE SHOCK THE THIRD WAVE

THE THIRD WAVE

 

Often local rulers or entrepreneurs were simply bought off by the Westerners, offered bribes or personal gain in return for sweating the native labor force, putting down resistance, or rewriting local laws in favor of the outsiders. Once conquering a colony, the imperial power often set preferential raw-material prices for its own businessmen and erected stiff barriers to prevent the traders of rival nations from bidding prices up.

Under such circumstances, it was hardly surprising that the industrial world was able to obtain raw materials or energy resources at less than fair-market prices.

Beyond this, prices were often further depressed in the favor of the buyers by what might be termed “The Law of the First Price.” Many raw materials needed by Second Wave nations were virtually valueless to the First Wave populations who had them. African peasants had no need for chromium. Arab sheiks had no use for the black gold that lay under their desert sands.

Where no previous history of trade existed for a given commodity, the price set in the first transaction was crucial. And this price was often based less on such economic factors as cost, profit, or competition than on relative military and political strength. Typically set in the absence of active competition, almost any price was acceptable to ajord or tribal chief who regarded his local resources as valueless and found himself facing a regiment of troops with Galling guns. And this First Price, once established at a low level, depressed all subsequent prices.

As soon as this raw material was shipped back to the industrial nations and incorporated in final products, the low initial price was, for all intents, frozen in place.* Eventually, as a world price was gradually established for each commodity, all industrial nations benefited from the fact that the First Price had been set at an “a-competitive” low level. For many different reasons, therefore, despite much imperialist rhetoric about the virtues of free trade and enterprise, the Second

* Example: Suppose Company A bought a raw material from Colonia for one dollar a pound, then used it to manufacture widgets selling for two dollars each. Any other company seeking to enter the widget market would strive to keep its own raw-material cost at, or below, that of Company A. Unless it had some technological or other edge, it could not afford to pay significantly more for its raw material and still sell widgets at a competitive price. Thus the initial price set for the raw material, even if arrived at under the shadow of bayonets, became the base for all subsequent negotiation.

 

 

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