Chapter 13. Balance strategy in foreign trade.
- This chapter's goals.
- The equilibrium of balances of payment.
- The problem of currency.
- Invention of foreign money.
1. This chapter's goals.
This chapter deals with the balance strategy in foreign trade, completing
what has been said in chapter 10 concerning
The main idea is that the balance of payments equilibrium must be granted,
and to this end the introduction of the telematic cheque-invoice can become
the unreplaceable tool as it provides a complete information on the situation
at any given time. In this way an appropriate customs policy can be fixed
in order to stop the imbalance between import and exports.
On the other hand, the use of foreign trade cheque-invoices forbids
international capitals speculation activated by present day systems of
currency markets, as every operation will be made in domestic money units
and only the treasury will hold foreign currency. Every day the equivalence
of the domestic money unit with foreign currencies will be fixed through
an arbitrary «gold standard» related to the international market
of gold metal.
Finally, as we said in chapter 10 with respect
to domestic market, we will apply a similar strategy to invent communal
money for foreign trade, according to production surpluses.
2. The equilibrium of balances of payment.
The main strategy of any foreign trade is that the whole exported goods
(producing and produced) must be equilibrated with the whole of the
imported goods (producing and produced), that is import and export
of goods must be equilibrated.
If this equilibrium is not present, in the long run foreign trade will
have to stop as the country in deficit (importing more than it exports)
finds itself in an interior situation of unsustainable insolvency which
harms also its creditors.
This equilibrium is rather easy to be fixed with the use of the telematic
cheque-invoice, as it supplies a deep knowledge of the situation of the
balance of payments at any time and with every country (bilateral treaty)
or group of countries (multilateral treaty). According to this situation,
variable «customs duties» can be introduced: if the balance
with every foreign country is equilibrated, customs duties will be nil;
import duties will increase in the case of balances in deficit, and export
duties will increase in the case of superavit balances.
Customs duties, automatically fixed according to well known legal scale,
will be transmitted for the asking to any domestic or foreign company,
with no consideration to the goods to be imported or exported: the only
point to be kept in mind is the existing equilibrium of balances with the
country of origin or destination under consideration. These customs duties
will be held to the interested company for a prudential period if it promises
to effect the operation according to a submitted proforma invoice within
the fixed period.
By this system a dynamibc and continuous equilibrium of balances is
obtained, which is the best guarantee for the good working of international
free trade according to the law being in force in the geo political society,
but above all according to all the private solvent and free enterprises.
Foreign trade and customs authority will also consider that in every
proforma invoice, submitted to know customs duties, the invoiced prices
should agree with the minimal sales prices, wholesale and retail, fixed
in the domestic general duty book. Should foreign prices be lower than
the minimal prices fixed by the corresponding guilds, (or by specialized
economic justice), the anti-dumping customs duties will be the difference
between the original price of every imported merchandise and the listed
With respect to the export of services (freights, insurance, etc...),
salaries, interests, dividends, royalties, capital repatriations, etc.,
concerning investments, companies or foreign inventions in the country,
and export of capitals to any foreign country, the Foreign trade and customs
authority will have to respect not only general legislation mentioned before,
but also the contracts signed within specialized law with any private person
or public institution (individual or collective).
3. The problem of currency.
As we have seen in chapter 4, foreign trade
implies international monetary relations which at present are distinguished
by «currency floatation»: there are no fixed exchange rates,
as they float and evolve according to the price of every currency in the
Price rate of every currency should float in principle according to
the productive and monetary situation of every geo-political society; reality
demonstrates that the irrationality of the present money system allows
normal fluctuations to be increased, troubled and even inverted, because
of the so-called «speculative capital movements» or hot money.
In this case, fixed rates do not correspond to any mercantile reality,
as they correspond to a speculative will, and instead of being used for
a greater and better development of domestic and foreign markets, they
only trouble them and sink them into disorder and contradiction.
The first condition to be fulfilled by any rational money system, as
we have seen, is that «there can be no money movement without the
corresponding and correlative inverse movement of real goods (whether producing
or produced goods)». The same rule must be applied to foreign trade,
and therefore it is clear that the «currency market» is totally
suppressed in any geo-political society introducing the telematic cheque-invoice
as the only legal monetary instrument. The exchange of one currency for
another will be instrumentally and completely impossible, without an actual
operation with abroad. Currency exchange for trade will have to be solved
by the central government, which manages all the geo-political society,
as follows: any commercial operation with abroad, whether import or export
of producing goods (capitals, work, inventions, staff) will imply the production
of a foreign trade cheque-invoice.
Two cases may present themselves:
Foreign trade telematic cheque-invoices will always be established in a
foreign currency (whether that of the foreign trading state or an internationally
accepted currency agreed upon by both).
The foreign importer or exporter will pay or receive money in such
a currency, through the treasury, the only one to have foreign currencies.
The local importer or exporter will not have any currency: in his current
account there will only be amounts (credited or debited) in domestic money
units. To exchange foreign units to domestic units, a simple mechanism
of «gold standard» can be used: a constitutional law will establish
an aribtrary gold standard for the domestic money which will be compared
daily in the international gold market1
with every foreign currency. From the daily relationship «gold-domestic
money unit» and «gold-foreign currency» (at the free
market prices) it will be possible to logically deduct a relationship «domestic
money unit-foreign currency», which will be used to exchange from
one to the other currency.
- Another alternative -exceptional at the beginning- to effect
foreign trade, will be for the foreign agent to accept to pay, or be paid
in domestic money units (against delivery of the goods, if it is an exporter,
or against delivery of currency, if it is an importer). Of course, the
open current account will only be valid within the geo-political society.
This will be quite normal when foreign tourism or foreign investment are
- With this system any possibility of speculation on the money unit disappears,
and the floatation of the exchange value with respect to all other currencies
will depend exclusiveliy from the evolution of the production market.
4. Invention of foreign money.
The same strategy for the invention of communal money which we have
seen in the domestic market can apply if necessary to foreign trade with
respect to existing surpluses.
When all the production cannot be absorbed by the domestic market -in
spite of the granted credits and distributed finances- then «credits
and finances» can be granted to foreign countries interested in the
Foreign trade becomes therefore the third outgoing channel of the domestic
In the same way, any foreign country (bilateral treaties), group of
foreign countries (multilateral treaties), any company or group of foreign
companies can grant to their own country investment credits or consumption
finances, within the legal contractual exercise of comparing its interests
with those of the national geo-political society.
The formula for the equilibrium of foreign trade balances is
therefore the following, much simplified:
Ip + Ie + idp
Foreign trade = --------------- = 1
Ep + EE + ide
Ip = private imports
Ie = imports through credit and finances granted by a foreign country
idp = interests and devolutions of capitals, credits and finances,
which of course come from abroad.
Ep = private exports
EE = exports through credit and finances granted to a foreign country
ide = interests and devolutions of capitals, credits and finances granted
price of gold metal as fixed in London is accepted by all the countries,
which allows to establish this equivalence with respect to foreign market
and avoids going back to concrete money whether intrinsic or extrinsic.