Why Economies Compete?

By Chandrashekar (Chandra) Tamirisa, (On Twitter) @c_tamirisa

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A decade after the worst economic crises around the world in countries known as emerging and transition economies, those travails had hit home, like a swirling tornado on an around the world journey. The fundamental cause of the crises is a singularity: the factors of global production are finite. There is only so much land and labor to contribute to the global output, always scarce, and more output always means a higher standard of living because more is consumed.

The political boundaries among the nations of the world have stabilized since the end of World War II as the use of paper money matured. Therefore, unlike in colonial times when gold had ruled the roost and nations amassed huge militaries to roam the world for gold and spices through physical occupation of foreign lands, constantly disturbing political boundaries, the world of paper money enabled resources to be bought and sold at will without the need for occupation.

When the land and the wealth under it is finite, the ability of some people to live better than the others is dependent on how much of those finite resources they can claim. They know they can claim all that is below their feet in their nations, assuming they know how to use it efficiently and productively with technology. When others cannot do the same, it makes sense to use up theirs while saving one’s own, to deplete the natural wealth of the others before one’s own can be depleted. Therefore, one’s own standard of living depends on the natural endowments of other nations if the others cannot keep it for themselves through their own ingenuity and strength.

The bitter experience of the loss of political and cultural sovereignty of the rest of the world since the Renaissance in Europe, only to be repeated with variations because of fiat money and Renaissance European technologies even after they had regained their political independence from the colonial European powers, has taught them the hard lesson that the “Great Game” is about technology and the projection of power to not lose their sources of standard of living to feed others. They had all lost it the last time because they had not projected power, unlike the Europeans did for the past 600 years.

That they now know recedes all the world’s armies chasing a better life, just as well as each other, back within their political boundaries. The only resources they can count on are those beneath their feet. Peace arrives through Hobbesian mutual deterrence. In the post-modern world, the mere realization of the modern plots of geopolitics is sufficient to ward off the intruders, from all sides, given the inherent territoriality of human nature, the steep costs due to interdependence and because failure is not an option except when memories are short.

This Hobbesian peace is tentative and fragile, until global integration firmly transitions to the next level beyond the nation state, just as it once had from tribes to nations. The recipe for the implosion of the global geopolitical order is to continue to focus on the other instead of on oneself because it distracts every participant to expend their ingenuity to impede others rather than improving themselves, distorting the very premise of free market capitalism. Competition is about one-upmanship, not a cowboy shoot out in the desert leaving the last man standing over the corpse of the global economy.

The foreign and economic policies of the United States must reorient themselves to return to paying attention to how best to use that which the nation has been naturally endowed, a century after the rise of industrial capitalism. The messianic zeal of global capitalism to use others’ resources for the benefit of the United States must end, for its purpose has been served.


About Chandrashekar (Chandra) Tamirisa

This entry was posted in Economics, Foreign Policy, Politics, Transformations LLC and tagged . Bookmark the permalink.

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