Part of the aesthetics, one might even say the romance, of writing a novel in Hindi was, for me, using the Devanāgarī script. At the time I started writing my novel, the Roman script was coming into vogue. A fellow writer, Raymond Pillai, had written a play in Hindi using the Roman script. To me, Hindi in Roman script looked unadorned, robbed of its grace and poetry. If this is how Hindi was to survive, then it seemed an insidious, degraded survival; just a temporary reprieve. The trend had to be resisted.

I had learnt Hindi only up to the secondary school level. My first attempt at writing fiction was in Devanāgarī. I wrote a highly sentimental novel in the style of the popular writers of romance. My teachers rightly dismissed it as trash.

I returned to creating in Hindi after I had established myself as a writer in English, three decades later. What I remembered of the Devanāgarī script had receded to the far corner of my memory. I had to bring it to the fore, and work like a medieval monk, arduously forming each letter and word, re-capturing their curve and swirl, putting them together like a jeweller inserting tiny gems to form an ornament. I sensed the old rhythms returning. Devanāgarī was my link with life that I had left behind. The words fell on the page, looking so unfamiliar, unlike the characters I saw in Hindi textbooks. That did not deter me. At no time did I doubt about the worthiness of the writing project. In fact, I was struck by the originality of what was appearing in front of me. I was confident enough to read the pages, as they emerged in slow increments, to a real scholar of the language – Pandit Vivekanand Sharma. He taught Hindi at the university. He came to my office at the University of the South Pacific every morning, an embroidered shawl thrown over his shoulder, and heard me, Scheherazade, telling a thousand and one tales to a tyrannical Sultan who would behead me if I failed. I was hugely relieved seeing the Sultan chortle, guffaw, and at times breaking into uncontrollable laughter. I was assured that the story would live.

‘Smith and Ricardo were our best allies in the cold war against central planning – but that battle is over and won, and we are now facing other challenges where other prophets will better serve Society's needs.’

‘Neo-classical economics fundamentally lacks a theory of economic development beyond seeing it as a process of adding capital to labour.’

‘The “Green Movement” has done us all a great favour by pointing to the severity of the problems of environment and sustainability. But, although they are not aware of it, their solutions to these problems are framed in the static and barter-centred theories of Smith, Malthus and Ricardo.’

‘All levels of knowledge carry with them their own limits to ecological sustainability. For this reason, the habit of making predictions holding the level of knowledge constant produces curious and overly pessimistic results.’

The work of the 1997 Bergo Commission is based on today's standard economic theory, the economics of Adam Smith and David Ricardo. The theories of Smith and Ricardo were our best allies in the cold war against central planning but that battle is over and won, and we are now facing other challenges in areas which these authors ignored. We shall argue in this chapter that today's mainstream economic theory – because of its basic structure – contains important ‘blind spots’ when it comes to the role of knowledge, technology and energy for the welfare of nations. We further argue that the monopoly of this type of economic theory, based on the ‘dismal science’ of Adam Smith, Thomas Malthus and David Ricardo, is a fundamental source of inspiration for the techno- and eco-pessimism which dominated the Zeitgeist of the late 1990s. The same production functions predicting diminishing returns which gave birth to Malthus’ dismal predictions of disaster, are still at the very core of the tool-box of today's standard economic theory.

We here suggest an alternative tradition in economic theory which can help us find our place in the knowledge-based society of the future. Where Smith and Ricardo focused on barter and exchange, other economists have focused on knowledge, production and the harnessing of energy, and produced theories which in our opinion will better serve us as guides for today's challenges.

After Ḍaukā Purān, Subramani spent some 17 years writing an even larger subaltern novel, 1,000 pages long with a word count of over 300,000. If the first, narrated by a man, was a picaresque tale written in a comic mode (as indeed the conventions of the genre demanded), this novel, Fījī Māṁ (‘Mother of a Thousand’, hereafter without diacritical marks and given as Fiji Maa), narrated by a woman, is the ‘subaltern historical novel’, a national allegory, with an epic sweep of a thousand [and one] tales. The novel, clearly structured as a filmic narrative, deploys cinematic techniques of representation with the point of view of the eye of a camera. Indeed, cinema is what the novel becomes in the end as we are informed that fiction – here narrative as biography – will exist in the cultural domain as film and not as book. There is, however, a more difficult reading which is embedded in the novel itself, and this reading turns the reader's attention to language. As a literary work of art, this subaltern work too exists as language, a demotic language that captures the cri en cale, the scream from the hold. This cry or scream that produced the Fiji Hindi demotic is the voice of the coolie, part of the girmitiya historical consciousness through which experience is given form. In other words, discourse itself speaks, as language carries the experience of the race: language, in short, functions as ideology. Language makes the novel a private subaltern affair as it registers a mode of literary articulation that, like an anti-language, is an exclusive social semiotic of the people, a people who can only speak to themselves. It follows that any reading of the text is an exercise at once of interpretation (hermeneutics) and annotation (poetics).

Fiji Maa is divided into six parts of variable length: Kū Kū Esṭeiṭ (167 pages), Matuvālā Gāoṁ (443 pages), Beivākābulāī (97 pages), Beimānā (217 pages), Kū Kū Esṭeiṭ (51 pages) and Matuvālā Gāoṁ (50 pages). If importance is to be gauged by the length of the parts, then the second part, as the longest (around 40 per cent of the novel), is the centre of the novel.

Competitiveness - ‘corporate graffiti’ invades economic theory

Even a casual observer of the practice and science of management will not fail to notice how a continuous flow of new concepts are born, become fashionable and then disappear from management jargon. A recent article in Financial Times (Ref. 1, p. 10) suggests the term ‘corporate graffiti’ - or ‘management graffiti’ - to describe the unthinking use of buzz-words. Management language is ‘opaque, ugly, and cliché-ridden’, FT claims. ‘Management graffiti’ is intended as the catch-phrase to end all catch-phrases.

Clearly these ‘corporate graffiti’ are important not only to the world of business but also to the rest of society - largely due to the influence wielded by the people who employ them. Michael Porter, himself a contributor to corporate graffiti, has issued a warning to managers against paying too much attention to the fads - against what he calls single-issue management. Luckily, most management graffiti live and die without ever leaving the spheres of management. Exceptionally, however, the term competitiveness has taken the leap from management theory to the field of economics and public policy. Does this mean that public policy theory is starting to be subject to the same fads as management theory? Apparently, some mainstream economists are of this opinion. However - although most of the time ill-defined - the term competitiveness seems to fill a need in public discourse. Does the need for such a concept reflect a new situation in the world economy? Do we need the term competitiveness in order to come to grips with increasing globalization (another graffiti term), or is this a new term for a set of problems which have been around for a long time?

In this chapter I shall argue that, although often misused and mostly ill-defined, the term competitiveness properly used does describe an important feature in the world economy. This concept scratches the surface of important issues which are central for understanding the distribution of wealth, both nationally and globally. In spite of its fairly recent appearance on the scene, the term competitiveness in my view addresses issues which have been central in public policy at least during the last 500 years, albeit under different headings.

This chapter looks at the Dutch Republic from the vantage point of the economists of the period. These pre-Smithian economists are normally grouped together in the history of economic thought under the decidedly derogatory label of ‘mercantilists’. Under its standard Whig conception, any idea in the history of economic thought – as identified almost a century ago by English historical economist Ashley – instead of being judged by its relevance in a given context, is either hailed as a surprising early anticipation of a healthy neoclassical economic principle or as an example of hopelessly ill-conceived theories (Ashley 1920: II, 381).

I would argue that as a tool in order to understand the rise and fall of the Dutch Republic, mercantilism had some clear analytical advantages over neoclassical economics. Not only was the mercantilist or pre-Ricardian economists’ toolbox much larger than today’s, the pre-Ricardian system already included a large number of economic factors which the profession presently attempts to re-introduce to mainstream economics. Examples of what gradually was left out of economics starting with Adam Smith are innovations – part of English economics from Francis Bacon (1561–1626) until and including James Steuart's important work (1767) – technology, increasing returns, institutions, geography, synergies, path dependency, that economic activities are qualitatively different as carriers of economic growth, the idea that economic policy should be context-specific, and the whole fundamental question of why economic development is by nature so uneven. With the English classical economists economic theory gradually lost its previous understanding of the vicissitudes of technology and production, and came to concentrate upon trade and prices. The contemporary mercantilists are therefore likely to provide a much richer analysis of the Dutch Republic than what is found in the works of the later classical economists.

Mercantilism can productively be seen both as state- and nation-building (Schmoller 1897/1976) and as a strategy of industrial import substitution (Perrotta 1993), which at the time was seen as two sides of the same coin.1 To the laggard countries of Europe, the Dutch Republic provided important inspiration on both these accounts. That inspiration did not come from Dutch policies, but by asking what policies would have to be created in order to achieve the same results as those observed in the Dutch productive system, but under very different circumstances and conditions; in very different contexts.

‘And the land was not able to bear them, that they may dwell together …’

Genesis XIII, 6.

(quote used by Alfred Marshall, Principles of Economics, London, 1890, in order to emphasize the role of Diminishing Returns as a fundamental factor in human history.)

‘I apprehend (the elimination of Diminishing Returns) to be not only an error, but the most serious one, to be found in the whole field of political economy. The question is more important and fundamental than any other; it involves the whole subject of the causes of poverty;.. .a nd unless this matter be thoroughly understood, it is to no purpose proceeding any further in our inquiry.’

John Stuart Mill, Principles of Political Economy, 1848.

This chapter explores the impact of Diminishing Returns on world poverty and sustainable growth. Diminishing Returns is an economic factor which not only heavily influences the behaviour of costs, wages and standard of living in any resource-based economy - particularly in Third World economies - but, I shall argue, this factor is the key to understanding the concept of sustainability. This chapter argues that the strong warning from John Stuart Mill quoted above is as valid today as it was almost 150 years ago. Mill's warning has, however, been largely ignored, almost completely so in the period following World War II.

Part one of the chapter traces how Diminishing Returns disappeared from economic theory as neo-classical economics and general equilibrium analysis took over from other, less abstract, economic paradigms. Part two discusses the impact of Diminishing Returns vs increasing returns if they were to be reintroduced in international trade theory. Part three describes how ‘The Triple Curse’ of Diminishing Returns, perfect competition and price volatility combine and mutually reinforce each other in maintaining vicious circles of poverty and unsustainable growth. Part four describes how a few resource-rich nations - Australia and Canada taken as examples - managed to escape the ‘Triple Curse’ which threatens all resource-based economies. The concluding part discusses the need for a wide-ranging overhaul of the World Economic Order, an overhaul which once again incorporates the lock-in effects created by Diminishing Returns in resource-based economies.

These volumes represent the second and last installment of my collected papers and chapters on economics. The first installment – The Visionary Realism of German Economics. From the Thirty Years’ War to the Cold War – was published in 2019, also then kindly collected and edited by Prof. Rainer Kattel of the Institute for Innovation and Public Purpose, University College London.

¡Viva el tercer extremismo! was once the only text in a mail I received from a Latin American friend: ‘long live the third extremism’. My friend and I are both what you can call children of the Cold War, born at its start in the late 1940s and spending many formative and active years under its reign until 1989. His point was that my form of extremism, instead of becoming a rigid ideology, was a rather extreme attention to historical facts and the tools and mechanisms they revealed. Indeed, I was very pleased when I found that an influential German economist, Gustav Schmoller, had referred to communism and what was to become neoliberalism as ‘twins of an ahistorical rationalism’1. My ‘extremism’ was intended to be the opposite, hopefully a ‘historical rationalism’, which by necessity had to be more complex than the simplistic solutions of the ‘ahistorical twins’ which dominated the Cold War view.

With time, I found that several approaches qualified as not belonging to any of the ‘ahistorical twins’ that dominated Cold War economics. I came to think of these as ‘reality economics’, but a philosophical discussion started within the group around ‘reality’ and we decided to adopt the term The Other Canon of Economics: the study of the economy as a real object, not defined in terms of the adoption of core assumptions and techniques. The end of this introduction provides a comparison between standard economics and The Other Canon, listing many economists who have provided input to The Other Canon. A family tree of The Other Canon is found here http://othercanon .org /family -tree/

The beginning of the Cold War brought a massive theoretical contradiction to the surface. We could call it Marshall vs. Samuelson. On June 5, 1947, US secretary of state George Marshall presented what was originally called ‘The European Recovery Plan’, later the ‘Marshall Plan’.

The aim of this chapter is to give a brief overview of the historical arguments that have been used to argue for industrial policy in its widest sense, that is, that what a nation (or region) specializes in producing may be of key importance to the wealth and welfare of its inhabitants. Historically it has been generally agreed that symmetrical trade – trade in similar goods between nations at similar levels of technological development – has tended to be beneficial to both trading partners. In these cases, employing Ricardian trade theory has not been detrimental to the trading partners. This chapter explains the situations when Ricardian trade theory is not beneficial to one of the trading partners, and – at the same time – the economic mechanisms which have been identified as making industrial policy desirable. That manufacturing matters has, in various forms, been presented as a main reason for industrial policy, at least since England's import-substitution policies during the 1400s: adding value to English wool by spinning it into woollen cloth and garments. This was mainly achieved by raising export duties on raw wool, making English wool cheaper for domestic manufacturers than for foreign ones. However, the reasons why manufacturing matters have varied. And that understanding has gone from intuitive inferences to scientific evidence. This chapter will historically present this process and the most common arguments for industrial policy over time.

New Perspectives on Cold War Economic Theory: Adam Smith, David Ricardo and Paul Samuelson Revisited

INITIALLY it is of some importance to gain a broader perspective of what has developed into ‘general truths’ of the neoclassical economics during the Cold War.

The fact that David Ricardo's theory of comparative advantage in international trade dates back to 1817 conveys an impression that this principle has been ruling economic theory since then. It is also assumed that David Ricardo merely solidified the free-trade principles of Adam Smith. However, the following quote from the young Adam Smith shows how far away his principles were from the logic of comparative advantage and neo-liberalism:

Introduction

For a long time, economic development in Central and Eastern European (CEE) countries has been seen by most analysts in both academic and policy circles as a largely positive if not a very positive story. For example, at the end of 2005, Business Week ran a cover story titled ‘Central Europe – Rise of a Powerhouse’. It has become commonplace to argue that the success of CEE development is mainly due to neo-liberal economic policies (liberalized markets, balanced public budget, price stability, low tax burden and strongly market-oriented reforms in all socio-economic sectors) pursued by these countries since the early 1990s. In other words, CEE countries have been poster countries for Washington Consensus policies. Indeed, as we show below, during the entire decade of the 1990s, industrial restructuring and embryonic innovation policies in CEE were largely dominated by Washington Consensus thinking. We aim to show that, first, these policies have been a double-edged sword: on the one hand enabling fast and furious industrial restructuring while, on the other hand, locking CEE economies into economic activities with low value added/productivity growth and thus undermining future sustainable growth. However, the impact of accession into the European Union (EU) has been equally pivotal for industrial restructuring and innovation policy making in CEE countries in the 2000s and this process can be summed up as a strong Europeanization of innovation policy in CEE. We aim to show, second, that Europeanization has been largely a double-edged sword for CEE countries. Since joining the EU in 2004 or 2007, and already during the accession process, there is a strong change in innovation policies in many CEE countries towards a much more active role of the state. In this change there is a clear and strong role of EU's structural funding, particularly the negotiations and planning that comes with it. However, these changes come with specific problems: first, there is an over-emphasis in emerging CEE innovation policies on a linear under-standing of innovation (from lab to market) that is based on the assumption that there is a growing demand from industry for R&D (which is not the case because of the structural changes that took place in the 1990s via the Washington Consensus policies); and, second, increasing usage of independent implementation agencies in an already weak administrative capacity environment lacking policy skills for networking and long-term planning.

The Millennium Development Goals (MDGs) are noble goals for a world sorely in need of urgent action to solve pressing social problems. They rest, however, upon completely new principles whose long-term effects are neither well thought through nor well understood. In this chapter, I shall attempt to explain why the MDGs do not represent good social policy in the long run.

One novelty of the MDG approach lies in the emphasis on foreign financing of domestic social and redistribution policies rather than on domestic financing by the developing countries themselves. Disaster relief, which used to be of a temporary nature, now finds a more permanent form in the MDGs. In countries where more than 50 per cent of the government budget is financed by foreign aid, huge additional resource transfers are being planned. This raises the question of the extent to which this approach will put a large number of nations permanently ‘on the dole’, a system similar to ‘welfare colonialism’, which will be discussed at the end of the chapter.

The pursuit of the MDGs may appear as if the United Nations institutions have abandoned the effort to treat the causes of poverty and have instead concentrated on attacking its symptoms. In this chapter, I shall argue that palliative economics has, to a considerable extent, taken the place of development economics. Indeed, the balance between development economics (radically changing the productive structures of poor countries) and palliative economics (easing the pains of economic misery) is key to avoiding long-term negative effects.

How we used to deal with problems of development

In less than one generation, a stark contrast has emerged between the type of economic understanding underlying the Marshall Plan, on the one hand, and the type of economic theory behind today's multilateral development discourse and the Washington institutions, on the other. The Marshall Plan grew out of recognition of the flaws of its precursor, the Morgenthau Plan.

There are few works of world literature that may be unproblematically categorized as subaltern writing. As the voice of peoples marginalized by the grand narratives of world history, including that of colonization, they exist as ephemeral entries (often via translations) in critical discourses on subaltern theory and practice. As autonomous, self-defining texts representative of that voice the examples are few. This is true as well of plantation Indian history (the general backdrop of this study) where once again the texts, often orally transmitted, exist only as fragmentary narratives. A proper intertextual framing of subaltern works is therefore impossible. However, there are a few challenging and defiantly exclusive subaltern texts in the critical bibliography of the field, and these may be mentioned: poems and prose works by Trinidadian and Guyanese Indians such as David Dabydeen, Kumar Mahabir and Rooplall Monar, plays by the Mauritian Patois French writer Dev Virahsawmy and the poems of the Suriname Bhojpuri writer Jit Narain.1 This is an incomplete and partial list that needs correction. In these limited citations, the one work that stands out is Dev Virahsawmy’s dramatic re-rendering of Shakespeare’s The Tempest as Toufann (‘Tempest’). But even as one concedes the power and originality of Virahsawmy’s challenging work, there is nothing in the Indian plantation subaltern literary archive remotely comparable to Subramani’s monumental novels Ḍaukā Purān and Fījī Māṁ (hereafter the latter without diacritical marks and given as Fiji Maa). As already noted, they are works of such exceptional power and originality that they require not only critical analysis but also critical exposure. This chapter is aimed at filling that need with reference to the first of the two novels by Subramani written in the Fiji Hindi demotic.

Subramani’s Ḍaukā Purān (‘The Subaltern Tale’ as I have translated the title) is a rich, indeed seminal, text through which we can talk about subaltern voice and speech. Many books and essays have been written about plantation and post-plantation Fiji history, but there is no work that explores life worlds through which an alternative, subaltern, narrative could be theorized.

Based on the economics of Joseph Schumpeter, National Innovation Systems have since the early 1990s emerged as a holistic and socioculturally embedded alternative approach to explaining economic growth. The idea that systemic relationships exist between different sectors of the economy that influence the production and implemen-tation of new knowledge, and thus economic development is, however, much older than current research indicates. We will argue the Neapolitan mercantilist Antonio Serra coherently presented the kernel of a national innovation system already in his 1613 Breve trattato, including two of its key elements: increasing returns and synergies. The problems of establishing the institutions conducive to economic growth faced by mercantilists at the end of the Renaissance are shared today by policy-makers in the developing world, and it can therefore prove to be fruitful, if not necessary, to explore the historical roots of this early innovation system approach. Indeed, Serra's work has been brought back to light on several occasions in the past centuries, each time as a source of guidance in an era of economic turmoil: first on the eve of Italian unification, then at the dawn of German industrialization. Following the failure of the Cancun meetings in 2003 to reach a trade agreement between North and South, such turmoil is over us again as it becomes increasingly clear that the reigning economic dogma has failed to deliver on its political promises. We argue that, in the economic profession's inevitable search for new means and methods, Serra's message is again relevant.

Introduction—Mercantilism as a National System of Innovation

It has frequently been noted that static, barter-centered mainstream economics, as a collection of theoretical variants orbiting the neoclassical paradigm, is presently under siege by a wider, more dynamic and socially embedded alternative that focuses on production and innovation as mechanisms of economic growth (Broda 1996: 235; Magnusson and Ottosson 1997: 1–9; North 2001: 491). As a subset of the neo-Schumpeterian alter-native, the innovation system approach—broadly conceived as the existence of institutional synergies fuelling innovative activity and economic growth—has become widely diffused in the past few years, recently, with the Globelics network meeting in Rio de Janeiro late 2003, also entering seriously into the discourse on Third World development.

The aim of this chapter is to show that the dynamics of Schumpeterian economics, in addition to explain the creation of wealth, also implicitly contain the elements of a theory of relative poverty. It is argued that the German tradition of economics, of which Schumpeter is a part, has always encompassed the necessary elements of a theory of uneven growth. List, Marx, and Schumpeter have all emphasized different aspects of this uneven growth. This contrasts sharply with the Anglo-Saxon tradition which, particularly since the 1890s, has produced theories of growth and trade which imply an even, converging distribution of world activity and income.

The organization of the chapter is as follows: Section 1 contrasts Anglo-Saxon and German economic traditions from the point of view of theories of uneven growth vs. theories of even growth. Section 2 raises the question of the relationship between technical change and underdevelopment, and identifies two key mechanisms which create uneven distribution of the gains from technical change. The two are (I) the consequences of the extremely uneven advance of the ‘technological frontier’ and (II) Classical and Collusive spreads of technological gains. Section 3 shows how these mechanisms work to create three cases of ‘Schumpeterian underdevelopment’ in the Caribbean. In Section 4 it is claimed that the factors identified in Section 2 may create conflicting interests between the two parts that every individual plays in economic life, that of producer and that of consumer. It is claimed that these are identical only under the assumptions of neo-classical economics and in special cases of what is labelled symmetrical trade. Finally, in Section 5, the policy conclusions of these findings are discussed. It is showed how the conflicting interests of man-the-consumer and man-the-producer, produced by classical and collusive spreads of technical change, were central to the creation of US industrial policy in the early nineteenth century.

Anglo-Saxon vs. German economics: Theories of even vs. theories of uneven growth

Friedrich List, Karl Marx and Joseph Alois Schumpeter are the German economists who have had a major influence on economic policy outside the German-speaking area. The theories of Marx and Schumpeter are deeply rooted in the traditions of the German Historical School of Economics, and although Friedrich List antedates what is generally seen as the starting point of the older historical school, his approach is clearly that of a ‘proto-historical school’.

Introduction: Lost Theoretical Insights from US Secretary of State George Marshall

Seventy-five years ago, on 5 June 1947, US secretary of state George Marshall gave a speech at Harvard University announcing what was to be called the Marshall Plan. The Marshall Plan was probably the most successful development plan in human history, re-industrializing and industrializing countries from Norway and Sweden in the North to Greece and Turkey in the South-East. At about the same time, a similar process based on the same principles re-industrialized and industrialized East Asia, spreading from Japan in the North-East towards the South-West. In this way a cordon sanitaire of wealthy countries was created around the communist world, stemming the communist tide that was rising at the time of Marshall's speech. One country to benefit from the Marshall-type ideology was South Korea, a country that in 1950 was poorer (GDP per capita estimated at $ 770) than Somalia (GDP per capita estimated at $ 1057; Maddison 2003), which today is an example of a failed state (see Figure 20.1 below).

Although sometimes it is misunderstood as a scheme for giving away huge sums of money rather than a re-industrialization scheme, the Marshall Plan is well known. What is less known is that the relatively short speech contained three key theoretical insights with strong relevance in today's situation.

The first insight is the link between a certain type of productive structure and what George Marshall calls ‘modern civilization’, what in a more politically correct and neutral language today could be called ‘development and democracy’ (italics added):

There is a phase of this matter which is both interesting and serious. The farmer has always produced the foodstuffs to exchange with the city dweller for the other necessities of life. This division of labor is the basis of modern civilization. At the present time it is threatened with breakdown. The town and city industries are not producing adequate goods to exchange with the food-producing farmer. During the formation of the European nation-states, it was common knowledge that democracies and ‘civilization’ were both products of certain economic structures associated with ‘city activities’ (chapter 13).

This chapter attempts to flag the profound changes that underwent economic practice and economic theory during the Cold War—from 1947 to 1991—as being at the roots of the present inequality crisis. Two aspects are raised. As regards the worsening inequality between nations it is argued that a key distinction between economic activities—at the core of the 1947 Marshall Plan—was increasingly marginalized as the tools of neo-classical economics carried the profession toward higher levels of abstraction.

As regards the worsening inequality within nations it is argued that a) the system of wage-setting changed from a virtual ratchet wheel effect, making wages practically irreversible without a devaluation, to a system of ‘internal devaluations’ (whether or not recognized by that name) and b) the distinction between financial capital and production capital—which had been there since the Bible and the Quran via Medieval church fathers and persisted in Continental European economics from Marx to Schumpeter—gradually disappeared, leading to the present financialization of economic life.

During the Cold War we find that a very successful economic practice—starting with the 1947 Marshall Plan—dominated economic policy up until and including the theoretical foundation for the Maastricht Treaty and the European Single Market: Paulo Cecchini's 1988 book The European Challenge 1992. The Benefits of a Single Market.

This period from the 1947 Marshall Plan to the Cecchini report 41 years later represents an important continuity. The insights from the Marshall Plan about the importance of a manufacturing industry were built into the original foundations of the European Union, and—in that same spirit—Cecchini argued in 1988 that almost all of the benefits from the Single Market would be the result of the increasing returns to scale mostly found in the manufacturing sector. However, the practice of the European Union after Maastricht slowly changed to represent almost the opposite of Cecchini's vision.

Simultaneously—but completely separately from what happened in economic policy—at the start of the Cold War Paul Samuelson brought David Ricardo's trade theory into the core of economics with two articles in The Economic Journal in 1948 and 1949.