global political economy

Are you accomplices in the current folly of the nations -- the folly of wanting above all to produce as much as possible and to become as rich as possible? What you ought to do, rather, is to hold up to the the counter-reckoning: how great a sum of inner value is thrown away in pursuit of this external goal! But where is your inner value if you no longer know what it is to breathe freely? if you no longer possess the slightest power over yourselves? if you all too often grow weary of yourselves like a drink that has been left too long standing? if you pay heed to the newspapers and look askance at your wealthy neighbor, made covetous by the rapid rise and fall of power, money and opinions? if you no longer believe in philosophy that wears rags, in the free heartedness of him without needs? if voluntary poverty and freedom from profession and marriage, such as would very well suit the more spiritual among you, have become to you things to laugh at? If, on the other hand, you have always in your ears the flutings of the Socialist pied-pipers whose design is to enflame you with wild hopes? which bid you to be prepared and nothing further, prepared day upon day, so that you wait and wait for something to happen from outside and in all other respects go on living as you have always lived -- until this waiting turns to hunger and thirst and fever and madness, and at last the day of the bestia trumphans dawns in its glory? -- Daybreak, F. Nietzsche

Stratfor Global Intelligence offers their members insights into global happenings. Their website states "members include individuals, FORTUNE 100 corporations, government agencies and other organizations around the world" -- heavy hitters in the global game. Yves Smith put a few paragraphs of Stratfor's thinking in a recent piece which is very much worth reading. Stratfor says:

One of the leading reasons the world has been so stable is because the traditional merchant powers have had a deep market to sell into: the United States. Part of the peace accords and reconstruction of Japan included granting it full access to the U.S. market as well as full American protection of Japanese trade lines. Part of the peace accords and reconstruction of Germany included a similar arrangement. These arrangements proved so successful in containing Japanese and German imperial ambitions, revitalizing and enriching their economies, and giving them a powerful incentive to be part of the U.S. alliance structure that the pattern was repeated throughout Western Europe, in Taiwan and Korea, and to a lesser degree in Indonesia and elsewhere.

By granting these states privileged access to the American market — and not necessarily demanding American access to their markets in return — the United States created conditions extremely favorable for its allies’ economic development and prosperity. “All” it asked for in return was the right to determine military strategy, ultimately creating a global alliance network that served American interests. The United States traded some market share to turn adversaries into allies, both reducing the number of foes and intimidating the remainder by the sheer size of the U.S. alliance structure. As a result, some of the world’s most aggressive mercantile powers became placid. They no longer had to go to war for access to resources or markets.

This entire arrangement, however, rested on the basis that the United States generally did not use the full force of its state power in pursuit of its singular economic ends. The United States was content to buy others’ goods and run trade deficits to command the loyalty of its allies in security matters. The question with the Obama administration’s export strategy is whether it marks a change from this mode. To increase exports, one has to increase penetration into foreign economies, and a number of countries’ economies and social systems only work the way they do because they have taken shape with minimal outside pressure — i.e., minimal competition from the United States. This is not to say that many countries do not already perceive the U.S. presence as overbearing, but rather that the United States simply has not spent much energy in competing for foreign market share over the past half century. If it suddenly exerts itself in opening up the doors of trade around the world — and doubling U.S. exports would mean finding buyers for an additional $1.5 trillion dollars worth of goods — it will disrupt a lot of places.

We are not saying that the Obama administration’s export strategy is good, bad, wise, unwise, feasible, unfeasible or anything else. It simply raises the question of whether it is a coincidence that when the dominant global power did not use state power to seek foreign markets, the degree of competition and ultimately violence among players on the international stage was markedly lower than in previous periods. If not a coincidence, then the full weight of the American nation behind a strategy of maximizing exports could have massive unintended consequences.

Now, Stratfor could very much be talking their book here. If they get most of their money from Fortune 100 companies, no one is going to be hurt more if the planet's nations go into a full scale trade war, though few tears will be shed for the Fortune 100. However, there's two important points here I've been harping on for an extended time. First, the world is not going to export and devalue their way out of the financial mess.

The second point is more important. The financial crisis is at root a symptom of the increasingly unstable post-WWII Pax Americana. The United States, the world's greatest debtor, can no longer play the role we've played in global political economy for the past seventy years. We must begin to consume less, produce more of what we consume, transcend our oil addiction, and close the military-bases we have around the globe, cutting the military budget by at least half. That's necessary economic reform for America.

Now this transition is going to take years and it has already begun. It will be a challenge not just for the United States, but for the world, and no matter how challenging it becomes, if we can avoid more wars, the earth will come out ahead. To understand just how tricky this is going to be lets look at the Euro. The creation of the Euro was a direct and healthy challenge to the Pax Americana, however only 15 years old, the Euro is facing an existential crisis. As worries on the Euro grow, we see much of the world retreat to the safe-haven of the dollar, making amongst other things, US export plans problematic. But the problem of the Euro is very much the problem of the dollar, and the problem of the dollar is very much the problem of the renminbi. That is, we are all in this together. Tremendous imbalances in the global economy have risen over the past several decades, they will take years to work out. The thinking and people that brought the world here, are not going to be the people and thinking that get us out.