This blog has long been replete with repetitions of increasingly obvious truths concerning global economic development which yet remain unacknowledged by the vast majority of economists – at least in their public expressions of opinion. Of these none is more conspicuous than that concerning the ever more desperate efforts to prop up inevitably weakening economic (GDP) growth rates and the consequential decline in the market value of assets.
Numerous postings have noted that this tendency dates from the 1970s, although it has become ever more frantic as its futility has been progressively exposed over time. At the same time these postings have revealed the enormous damage wreaked on global society by many of the supposedly growth-promoting policies that have been pursued, from boosting armaments production to permissiveness towards pornography.
By now, however, the over-riding threat of world environmental catastrophe such as might result from a continuation of economic growth even at the relatively modest rates of recent decades has become apparent – even if the precise correlation between the two cannot be established. Yet even though this danger has been widely exposed and revealed through such phenomena as melting ice-caps, rising sea levels and ever more deadly floods – as well as officially acknowledged by most major governments (as at the COP-26 summit held in November 2021) there has as yet been little sign of willingness (e.g.) drastically to cut dependence on fossil fuels. Whether a few more disasters such as the outbreak of wildfires across Europe in the unprecedented heatwaves of 2022 will be enough to provoke a more vigorous response remains to be seen.
Against this background, since the start of 2022 a more immediate threat to the global economic and political order has quite suddenly appeared in the shape of Russian President Vladimir Putin’s attack on Ukraine as part of a seeming bid to revive the Soviet empire that collapsed in 1991. Whatever Putin’s real purpose may be, this démarche has obviously come as an unwelcome surprise to Western countries, particularly those in Europe. For it has evidently disturbed a web of relationships between West European nations and Russia, built up over decades, which the Europeans – Germany in particular – will find it painful to dismantle, as demonstrated by the difficulties involved in a concerted imposition of sanctions by EU member states and the UK.
As noted in previous postings – e.g. The Perversions of Latter-day Capitalism (February 2019) – the development of these links goes back decades – at least to the “ostpolitik” initiated by West German Chancellor Willi Brandt around 1970. It can also be shown that this tendency to do business with non-market, centrally planned economies such as those of the Soviet Union and its satellites has been driven by an increasing need to find new markets to supplement the ever more saturated ones of the market economies in order to sustain the growth rates of the latter.
This approach naturally also involved disregarding the scant respect for democracy and human rights (by supposed Western standards) shown by the non-market economies. It contrasts with the pattern of the earlier post-war period (pre-1970), when trade and investment relations with non-market economies were strongly discouraged – e.g. by their exclusion from membership of the Organisation for Economic Cooperation and Development (OECD).
Similar motivation seems to have been behind the Western opening to the People’s Republic of China, spearheaded by the Nixon administration, which also dates from the early 1970s. For whatever the undoubted benefits of political and military détente may have been, US commercial interests must surely have been conscious of the potential offered by a market comprising a quarter of the world’s population.
On the other hand such initiatives required earlier ideological constraints to dealing with totalitarian Communist states to be overlooked. This has, however, proved to be a recurring source of tension with China, notably over Tiananmen repression (1989) and Hong Kong pro-democracy protests (2019 et seq.), and to a lesser extent (hitherto) with Russia over its annexation of Crimea (2014). At the same time laundering of Russian money through London and other Western financial centres has continued unabated despite a number of evidently Kremlin-inspired murders of Russian dissidents in exile in the UK. Yet the Western sanctions resulting from these disturbances have been largely tokenistic and have not been permitted significantly to interrupt trade or investment – until Russia’s brutal and unprovoked attack on Ukraine in February 2022.
Seen in the light of the preceding events referred to above – and of Russia’s particularly close economic relations with Germany under the administration of Chancellor Angela Merkel (2005-22) – the assault on Ukraine may appear to have been undertaken based on a calculation that Western nations would find it too economically inconvenient to mount a full-hearted retaliation, not to mention a misplaced assumption that any Ukrainian resistance would be easily overcome. There is in any case no doubt that Germany and several other EU member states have been – and still are – reluctant to commit themselves to full sanctions against Russia, particularly in respect of oil and gas imports.
The picture that emerges from the pattern of events recounted above is clearly one of an ideologically, if not morally, conflicted West (OECD countries) pursuing a strategy based largely on commercial opportunism. Yet just as clearly the Russian attack on Ukraine demonstrates the risks of such an approach for nations claiming – however inconsistently – to uphold the values of human rights, the rule of law and the United Nations charter established after World War II.
Put simply, it can be concluded that the Western countries and corporations proclaiming their adherence to such “liberal values” have too readily subordinated them to the pursuit of their own perceived national economic advantage and of higher corporate profits. Hence it may also be concluded that an ideology based on the primacy of profit maximisation is not only socially damaging but ultimately incompatible with harmonious international relations. In the final analysis the West must accept that such an ideology ultimately demands a commitment to the pursuit of national or corporate advantage almost as zealous as that demonstrated by the rulers of Russia and China.
Furthermore, as the problem of global warming grows more acute by the year (not to mention other symptoms of excessive output in relation to the resources and capacity of a finite planet) so the need to address it by curbing economic growth – or preferably halting it entirely – becomes more compelling than ever. Such a need, it may be readily recognised, can hardly be overcome in the context of a competitive struggle between nations, particularly as competition obviously implies a continued requirement for market growth – even assuming such “free” markets cannot in any case be rigged.
Indeed this serves to emphasise the more general dangers of competition – notwithstanding its theoretical merits, as expounded by classical economists such as Adam Smith and Ricardo.
- Competition between either states or corporations to maximise their share of markets is dangerous – and probably self-defeating – in a world suffering from increasingly chronic overproduction such as may threaten the survival of the human and other species on this planet;
- Hence in order to avoid such potentially ruinous competition and unsustainably high levels of output it is vital that the world’s great powers, including China and Russia as well as the “liberal market” economies of the West , proclaim a global Charter of Cooperation based as far as possible on the principle of the more or less equal sharing of global resources and incomes – both between nations and individuals;
- Economic models based on the prioritisation of maximum profit must be phased out – ideally by progressively restricting access to limited liability.
Of course it would be easy to dismiss such a proposition as a utopian fantasy. Indeed it is arguably only possible to advance it now we have arrived at a point where the human race manifestly stands on the brink of environmental self-destruction. In any case it is hardly possible to imagine such a scenario of global détente in the absence of major political upheavals in both East and West. The outcome of such a process would necessarily mean the emergence of a US régime that had definitively repudiated such quasi-fascist dreams as the Project for a New American Century and a post-Putin Russia that had abandoned the fantasy of reconstituting the Soviet empire.
At the same time (and scarcely easier to imagine) there would need to be an explicit resolve on the part of all the major powers – including the EU, UK, Japan, Russia and China – to redistribute the world’s finite resources far more equally than at present. By the same token a global authority should be empowered and held responsible for ensuring that all individuals on the planet have unconditional access, preferably through mechanisms such as a universal basic income, to food and shelter of minimum survivable standard. Likewise, it should go without saying that all laws against humanitarian or war crimes past and future (as per the Universal Declaration of Human Rights) should be enforced under the aegis of the International Criminal Court, to which all countries would be required to belong.
As indicated, it only makes sense to advance such a radical vision in the context of a looming existential catastrophe such as now threatens to engulf the world before the end of the present century unless drastic action is taken to reverse course. It behoves those of us who will not in any case live to see the outcome to bend every effort to try and avert such a dénouement.