- Preface
- Chapter 1. The further growth of the global capitalism is inevitable
- Chapter 2. The case study of the European Union (EU) and the other possibilities
- Chapter 3. Public Sector Administration and Urbanisation
- Chapter 4. Right and Wrong about Marxist prediction
- Chapter 5. Is it the road to Anarch-Capitalism?
Saturday, April 09, 2016
The End of Nation States: Preface
The End of Nation States: Preface
This political economic essay was written not for favouring and support an economic policy: This was written for the prediction of how the world economy becomes like. This project claims that our world is heading toward the end of the political idealism and speculative manifesto like "It will be like so if something is done." is no longer useful for both explaining about the current world situations and predicting the future world outcomes.
Economic analyses helped to create this prediction. Economics explains various outcomes by using the fact based objective analyses so that economics has an advantage of logically explaining the connection between various past events and the future possible events. By contrast, modern political theories are excessively relying on the subjective normative statement such as what ought to be instead of what will happen. These modern political theories are over-speculative about the future outcomes and they are hardly based on logical inferences like economics as they heavily rely on their fundamental principle of what they dream to accomplish.
What it suggests is adapting to the inevitable change gradually happening now. This prediction is neither an optimistic one such as "Communist manifesto" by Karl Marl and "Capitalism - The Unknown ideal" by Ayn Rand nor a pessimistic one such as "Brave New World" by Aldous Huxley and "Nineteen Eighty-Four" by George Orwell. It simply predicts the change in paradigm which will have both advantage and disadvantage. What some political philosophers said were partially wrong meanwhile they were partially correct to explain about the future world.
Back to Index . . . . . . . . . . . . . . . . . . . . Continue reading
This political economic essay was written not for favouring and support an economic policy: This was written for the prediction of how the world economy becomes like. This project claims that our world is heading toward the end of the political idealism and speculative manifesto like "It will be like so if something is done." is no longer useful for both explaining about the current world situations and predicting the future world outcomes.
Economic analyses helped to create this prediction. Economics explains various outcomes by using the fact based objective analyses so that economics has an advantage of logically explaining the connection between various past events and the future possible events. By contrast, modern political theories are excessively relying on the subjective normative statement such as what ought to be instead of what will happen. These modern political theories are over-speculative about the future outcomes and they are hardly based on logical inferences like economics as they heavily rely on their fundamental principle of what they dream to accomplish.
What it suggests is adapting to the inevitable change gradually happening now. This prediction is neither an optimistic one such as "Communist manifesto" by Karl Marl and "Capitalism - The Unknown ideal" by Ayn Rand nor a pessimistic one such as "Brave New World" by Aldous Huxley and "Nineteen Eighty-Four" by George Orwell. It simply predicts the change in paradigm which will have both advantage and disadvantage. What some political philosophers said were partially wrong meanwhile they were partially correct to explain about the future world.
Back to Index . . . . . . . . . . . . . . . . . . . . Continue reading
The End of Nation States: Chapter 1. The further growth of the global capitalism is inevitable
The End of Nation States: Chapter 1. The further growth of the global capitalism is inevitable
The world in the last century was dominated by the economic and political conflict of national capitalism and international socialism. By means of the political historical analysis based on Hegelian dialectic, it can be explained that the synthesis of this conflict has created the synthesis called the global capitalism combining the capitalism of the former and the internationalism of the latter. Nevertheless, unlike Hegelian political philosophers believe, the characteristics of both the former and the latter were not chosen by means of their virtue: They are chosen and combined by means of their pragmatic interests of unstoppable desires of human individuals as Napoleon Bonaparte said "Men are more easily governed through their vices than their virtues."
The international socialism was the political attempt to unify not only the people of two different classes, bourgeoisie and proletariat, in inside a nation but also all people of the world with an altruistic philanthropy promoting an unconditional share of properties together with all the human individuals. However, this system neglected about the method motivating individuals' competence and productivity and the possibility that some wicked individual may hijack this political system for her/his own good. This political system overestimated individuals' capability to care others all the times and underestimated its weakness of the centralised planned economic system which was easy to be taken over and manipulated by those who are not philanthropic.
On the other hand, the expansion of capitalism based on the division of labour and maximising pleasures was unstoppable. Most of all the modern nation-states have used capitalism for accumulating their wealth which secures their military and political strength. Then, the growth of capitalism has now expanded enough to control, rather than be controlled by, nation-states. The market mechanism of capitalism allowed individuals to doing favours for the others in exchange for their own needs and wants. As this political system has provided individuals with the opportunity to gain their ultimate desires, it has encouraged individuals to be competent. Furthermore, it is difficult for some few political factions to take over capitalism because this political-economic system is decentralised and its market mechanism is complex. Therefore, this system is kept preserved and growing further.
The reason why altruism with philanthropy, such as socialism promotes, is difficult to be a dominant stimulus of individuals' action because of their psychological effect in their mind set. The painful memories tend to remain in individuals' mind far stronger and longer than the pleasant memories. Then, hatred of individuals toward other individuals tends to easily dominate in their mind, and they tend to become deeply suspicious about the others, and those who have a stronger hatred than the others tend to have stronger motivation than those who have less hatred. Therefore, although socialism was originally created for a virtuous aim, it has been violated since its centralised structure was hijacked competent haters oppressing the others.
Of course, individuals are virtuous and philanthropic enough to think of spending their time and energy for establishing the good world for all. But, the motivation power of being attracted to vices and short-term egoistic desires tend to be significantly stronger than trying to be virtuous all the time. In order to become altruistic enough to help others and keep being virtuous, individuals need to be materially and spiritually rich enough not to be worried about losing their personal fortune by spending sufficient amount of time and energies. Such individuals who can spare their energies, resources, and time to accomplish such virtuous actions like being altruism and philanthropy are minority.
Naturally, the first priority of living creatures including individual humans is to firstly fulfilling their primary desires. It takes a lot of resources to fulfil their desires until their marginal utility gained from their action fulfilling their primary desires. So, they start conflicting each others to take the resource pie from the other. Vices are usually motivated by the lack of fulfilling their ultimate needs and wants. By contrast meanwhile virtuous acts like being altruism and philanthropy demand enough resources split from individuals, and majority of individuals eventually need to sacrifice their desires to accomplish these virtuous actions. As individual humans' primary desire is innately endowed by nature, it is unstoppable so that vice tends to be a superior motive than virtue. In the primitive stage of civilisation, pillages and wars were used for this purpose. But, human-individuals gradually developed their peaceful, but yet controversial, political mechanism called the market economy which is also called capitalism.
The moral judgement often tends to be biased by the subjective assumption, and it is not sure whether the current moral justification is right or wrong. So, individuals test and evaluate their judgements all the time to select the feasible morality fitting in with what they need and want under the current circumstances. Even Thomas Aquinas, the remarkable priest as well as political-moral philosopher, admitted it.
In addition, a remarkable classical economist Alfred Marshall claimed that the spiritual well-being is more likely to be born after material well-being is satisfied. Capitalism perpetuates the inequality between those have and have not but increases the aggregate material well-beings so that it provides more opportunities for more individuals to feel materially fulfilled enough to start pursuing their spiritual well-being. So, Marshal claimed for capitalism should be preserved and politics should be led by these materially well-off individuals who have become successful in capitalism rather than poor majority mobs.
The expansion of capitalism is based on the division of labour where individuals share their advantageous characteristics by specialising their work in what they are better at than the others. As explained by Adam Smith, when one manufacturer can produce one hundred nails a day, ten persons of the same skill together can produce thousands nails a day. So, the bigger economies of scale multiply the overall productivity level. The currently notable development of information technology and the transportation has enabled capitalism to expand beyond national borders, and this opportunity has enabled the economies of scale to expand furthermore.
This has not been not initially planned by someone: This has spontaneously happened by letting capitalism grow further after easing the international trade since the end of the Cold War in the last century. The innate desires of individuals combined by the development of the information technology and transportation method has perpetuated capitalism enough to transform it from national to global (international). In another word, the pure desire for pleasures gained from the growing productivity level becomes superior to the love of nation or politics. This implies the twilight of nation-states, as well as all the modern political ideologies basing their national politics. The raison d'etre of these nation states is gradually declining.
Back . . . . . . . . . . . . . . . . . . . . Continue reading
The world in the last century was dominated by the economic and political conflict of national capitalism and international socialism. By means of the political historical analysis based on Hegelian dialectic, it can be explained that the synthesis of this conflict has created the synthesis called the global capitalism combining the capitalism of the former and the internationalism of the latter. Nevertheless, unlike Hegelian political philosophers believe, the characteristics of both the former and the latter were not chosen by means of their virtue: They are chosen and combined by means of their pragmatic interests of unstoppable desires of human individuals as Napoleon Bonaparte said "Men are more easily governed through their vices than their virtues."
The international socialism was the political attempt to unify not only the people of two different classes, bourgeoisie and proletariat, in inside a nation but also all people of the world with an altruistic philanthropy promoting an unconditional share of properties together with all the human individuals. However, this system neglected about the method motivating individuals' competence and productivity and the possibility that some wicked individual may hijack this political system for her/his own good. This political system overestimated individuals' capability to care others all the times and underestimated its weakness of the centralised planned economic system which was easy to be taken over and manipulated by those who are not philanthropic.
On the other hand, the expansion of capitalism based on the division of labour and maximising pleasures was unstoppable. Most of all the modern nation-states have used capitalism for accumulating their wealth which secures their military and political strength. Then, the growth of capitalism has now expanded enough to control, rather than be controlled by, nation-states. The market mechanism of capitalism allowed individuals to doing favours for the others in exchange for their own needs and wants. As this political system has provided individuals with the opportunity to gain their ultimate desires, it has encouraged individuals to be competent. Furthermore, it is difficult for some few political factions to take over capitalism because this political-economic system is decentralised and its market mechanism is complex. Therefore, this system is kept preserved and growing further.
The reason why altruism with philanthropy, such as socialism promotes, is difficult to be a dominant stimulus of individuals' action because of their psychological effect in their mind set. The painful memories tend to remain in individuals' mind far stronger and longer than the pleasant memories. Then, hatred of individuals toward other individuals tends to easily dominate in their mind, and they tend to become deeply suspicious about the others, and those who have a stronger hatred than the others tend to have stronger motivation than those who have less hatred. Therefore, although socialism was originally created for a virtuous aim, it has been violated since its centralised structure was hijacked competent haters oppressing the others.
Of course, individuals are virtuous and philanthropic enough to think of spending their time and energy for establishing the good world for all. But, the motivation power of being attracted to vices and short-term egoistic desires tend to be significantly stronger than trying to be virtuous all the time. In order to become altruistic enough to help others and keep being virtuous, individuals need to be materially and spiritually rich enough not to be worried about losing their personal fortune by spending sufficient amount of time and energies. Such individuals who can spare their energies, resources, and time to accomplish such virtuous actions like being altruism and philanthropy are minority.
Naturally, the first priority of living creatures including individual humans is to firstly fulfilling their primary desires. It takes a lot of resources to fulfil their desires until their marginal utility gained from their action fulfilling their primary desires. So, they start conflicting each others to take the resource pie from the other. Vices are usually motivated by the lack of fulfilling their ultimate needs and wants. By contrast meanwhile virtuous acts like being altruism and philanthropy demand enough resources split from individuals, and majority of individuals eventually need to sacrifice their desires to accomplish these virtuous actions. As individual humans' primary desire is innately endowed by nature, it is unstoppable so that vice tends to be a superior motive than virtue. In the primitive stage of civilisation, pillages and wars were used for this purpose. But, human-individuals gradually developed their peaceful, but yet controversial, political mechanism called the market economy which is also called capitalism.
The moral judgement often tends to be biased by the subjective assumption, and it is not sure whether the current moral justification is right or wrong. So, individuals test and evaluate their judgements all the time to select the feasible morality fitting in with what they need and want under the current circumstances. Even Thomas Aquinas, the remarkable priest as well as political-moral philosopher, admitted it.
In addition, a remarkable classical economist Alfred Marshall claimed that the spiritual well-being is more likely to be born after material well-being is satisfied. Capitalism perpetuates the inequality between those have and have not but increases the aggregate material well-beings so that it provides more opportunities for more individuals to feel materially fulfilled enough to start pursuing their spiritual well-being. So, Marshal claimed for capitalism should be preserved and politics should be led by these materially well-off individuals who have become successful in capitalism rather than poor majority mobs.
The expansion of capitalism is based on the division of labour where individuals share their advantageous characteristics by specialising their work in what they are better at than the others. As explained by Adam Smith, when one manufacturer can produce one hundred nails a day, ten persons of the same skill together can produce thousands nails a day. So, the bigger economies of scale multiply the overall productivity level. The currently notable development of information technology and the transportation has enabled capitalism to expand beyond national borders, and this opportunity has enabled the economies of scale to expand furthermore.
This has not been not initially planned by someone: This has spontaneously happened by letting capitalism grow further after easing the international trade since the end of the Cold War in the last century. The innate desires of individuals combined by the development of the information technology and transportation method has perpetuated capitalism enough to transform it from national to global (international). In another word, the pure desire for pleasures gained from the growing productivity level becomes superior to the love of nation or politics. This implies the twilight of nation-states, as well as all the modern political ideologies basing their national politics. The raison d'etre of these nation states is gradually declining.
Back . . . . . . . . . . . . . . . . . . . . Continue reading
The End of Nation States: Chapter 4. Right and Wrong about Marxist prediction
The End of Nation States: Chapter 4. Right and Wrong about Marxist prediction
Someone has said that everyone in an advanced country is the middle class citizen because an advanced country provides a citizen with the equality of opportunity to be a skilled professional as an owner of an enterprise as long as this citizen has a merit for it. However, these middle class individuals are often exhausted by their workloads and desperate to opportunities of increasing their income and social-status. They do not seem to have enough freedom to spare their time for leisure. They do not seem to have their wage bargaining power enough to determine their own reward for their contribution to the market.
Karl Marx and his followers blame capitalism for impoverishing majority individuals under the harsh free market competition. However, the form of capitalism itself has been transformed from the early stage of the industrialisation when Karl Marx was alive. The entire condition to determine who can secure their position to maintain their dominance as the ruling class has changed. When Marx was alive, owning capital was the fundamental factor enabling individuals to maintain their privilege of both economic and social status. By contrast, both owning capital and the free market competition no longer secure their dominance.
The skilled professional occupations such as doctors, lawyers, managers of major companies, and scientists, and even some entrepreneurs (mainly owners of small-medium sized enterprises) used to be called the petite-bourgeoisie (which literally means the middle-class) because these occupations did not require the hard physical labour like the proletariat. Their professional skill used to be considered as the capital owned by these skilled professionals so that they were considered to have their own means of production which provides them with the stable income source without their hard physical labour.
By contrast, nowadays, these skilled professionals are busy enough to sacrifice their health condition and time as much as the traditional working-class occupations of the proletariat. These skilled professionals and owners of small-medium sized enterprises may earn relatively more income than the other working class occupations. However, they are far more likely to sacrifice their income and time invested for their higher education and be required to have a strong responsibility over their tasks. Furthermore, they do not look like owning their capital emancipating from the hard physical labour, and they rather look like they are required to put their hard physical labour as much as the traditional proletariat works.
This phenomenon is called the proletarisation of the middle class. When the national economy was developed enough to provide majority of citizens with the equal opportunity to acquire these middle class job with a high social status, the supply of those who have become the middle class dramatically increased. Then, the competition among these skilled professionals has become more intense enough to lower their income level and increase their energy and time invested for their productive activities. They are required to work hard enough to gain their means of living as same as the traditional proletariat. Therefore, these middle class individuals are under the pressure of producing the surplus value with their hard labour as same as the traditional working class so that they should be called the the new working class, or the proletariat-nouveau instead of the petite-bourgeoisie.
The traditional bourgeoisie such as owners of a big enterprise still keep their market dominance. Nonetheless, there are new variables enabling them to maintain and expand their dominance. The management of a big enterprise has become so complicated that it requires a huge volume of bureaucracy as same as the public sector management of a nation state government. Not so many competitors are able to be equip with such a huge complex bureaucratic structure so that those corporations which are already big enough can thrive with little fear from the market competition.
The other variables are the taxation and the excess market regulation which has become far more complex than the old capitalism. Government of a modern nation state imposes various forms of taxation and various regulations instructing entrepreneurs in order to adjust their action to government policies. Furthermore, in order to implement these policies which government force enterprises to follow, it requires a humongous public sector bureaucracy constantly monitoring this complex system regardless of any government elected at each time period. This bureaucracy has become an unavoidable tool of governing a modern nation state and its economy due to the complex nature of modern economy and politics. Then, these bureaucrats in this bureaucracy have their strong influence enough to control the market situation for their own interests, and they are the new ruling class that can be called the bourgeoisie-nouveau.
This new capitalism has transformed the social-stratification, and replaced the old ruling class with the new alternative. Nowadays, there is a new wave of transforming the social-stratification which replace the new capitalist economic political model to another. Due to the rapid development of the information technology and the individuals' network based on it, both owning capital and maintaining the big organisations like big corporations and public-bureaucracies will be less significant to maintain wealth and the dominance in both market and politics.
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From now-on due to the information technological development, including both the internet and the artificial intelligence (AI), which has widen the market entrance of both the real-market (dealing with the goods and services) and the financial market (dealing with money and other forms of capital assets). It used to require a high volume of capital investment to open a new business so that those who were already wealthy to own enough capital had a much stronger advantage. By contrast, the current technology enables individuals to gather efficient tools and investment resources from a far bigger information resource than few decades ago.
This leads to the situation where it does not longer matter to seek a heavy volume of capital investment from banks and private investors for starting up a new business as long as any individual has an attractive idea of a new business. In another word, the cost of capital investment has become substantially low. This is one of the reason why the interest rate set by central banks in developed countries is close to zero or even minus. The supply of entrepreneurs will become far more abundant and the market competition among business owners will become far more competitive than it has been.
The traditional bourgeoisie such as the owners of big enterprises are going to face the severe difficulty in maintaining their dominance. These bourgeoisie owning huge enterprises with a high volume of capital are not flexible to change their policies and their organisational structure in comparison to the newly emerging entrepreneurs having started their business with a low volume of capital investment. These new entrepreneurs are far more flexible to adjust their business structure to the market demand and requirement even though their economies of scale is not big as much as the traditional capitalistic enterprises.
The economies of scale are also predicted to be smaller than they have been due to the technological development such as newly invented AI and 3D printers. Furthermore, the division of labour will be more emphasised in this coming era so that it seems to be the case that the industries had better include various independent small enterprises competing and often cooperated together instead of allowing one or few monopolistic big corporations controlling it.
The development of the cloud data base and the close-based administration system also devalue the importance of these big corporations because industries no longer need a big organisation constantly administrating and monitoring the business activities as well as their data-management. These administration tools will be organised by decentralised platforms such as a set of the remotely located hard-drive centres connected via online. The outsourcing will be more popular as there will be more small enterprises offering flexible services with good-quality. Therefore, companies no longer need to marge various departments and divisions inside their company, and these tasks can be easily outsourced.
This decentralisation process will also lead not only the previously mentioned traditional bourgeoisie owning private enterprises but also government-bureaucrats administrating public sectors and the market regulations, who can be called the new bourgeoisie, will also struggle to maintain their dominance. Not only the previously mentioned technological development and the market decentralisation but also the decline of nation-states caused by the globalisation are devaluing the necessity of the bureaucracy. Some of the public sector projects will be outsourced and the communication tool and the administration tools of public sectors will be so efficient that it will require less man-power.
In addition, both the already developed information technology and the newly developed AI will replace many tasks of these bureaucrats. Also, the diversification of this entire world will require anyone including the tasks of the bureaucracy to constantly change enough to frequently requires their skill sets to be always updated or even replaced by a completely new ones. Therefore, the structured static structure of the bureaucracy will be simply inefficient, and it will devalue the level of intelligence, wisdom, and hard-works of these elite bureaucrats.
At the same time, this transformation of the market structure will cause a hardship for the citizens who are already accustomed with their traditional way of living by being employed by a private company, public sector, or any structured organisation. The market becomes far more capital intensive owing to the technological development and the popularlised entrepreneurship owing to the information technology and networks. Then, the number of labour employed will become far smaller than it has been. Therefore, unless they find any new means of living such as starting their own business or any alternative way of sustaining their life, they will struggle to find their means of living. This may result in an increasing social problem of anomie (Normlessness or Meaninglessness) predicted by Emile Durkheim.
Overall, owing capital will become less important meanwhile people will be employed less and market competition becomes more competitive. Because owing (physical and financial capital) will become far less significant to become successful in the market competition, the name called capitalism may be going to be old fashioned. This newly emerging era should no longer be called capitalism although the market competition becomes much complex and intense and the social stratification still remains (It is far from the utopia for all individuals).
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Marx also predicted the previously mentioned polarisation of have and not-have would be furthermore widened. But, what he was wrong about in his analysis was the possibility of the socialist revolution. He said that, as majority individuals become more frustrated by not gaining enough in their life, they put a collective action to redistribute the wealth in the pool of economy. However, majority of individuals in the post industrialised capitalism are less cohesive than the pre-modern capitalism.
A revolution by mass like what he explained in his book requires the high degree of cohesion among individuals sticking together. In a traditional communities where the industrialisation progress is still immature, the cohesive tie of individuals is strong due to their pastoral life style where they always need to cooperate together in a strong conformity based on rigid norms and values as their life style is more static than the competitive capitalism. By contrast, in the fully-industrialised capitalism, individuals move actively across different jobs to work and places to live so that they are no longer bound by their norms and values in one place. So, individuals in a developed capitalism are far more individualistic and normative than those in the traditional communities, and they tend to consider less about the others.
This chart is based on what Emile Durkheim created in his study of suicide. The vertical axis denotes how strong the communal tie of individuals with others is. Individuals become more altruistic as it goes on on the top of this vertical spectrum meanwhile individuals become egoistic as it goes on the bottom. The horizontal axis denotes how normative individuals are. As it goes to the left hand side of this spectrum, individuals tend to be fated with what is given and commanded for individuals to. As it goes to the right hand side of this spectrum, there is no longer any authority or moral-entrepreneur either commanding or suggesting them to follow and obey in their life.
During the early stage of industrialisation, the aggregate productivity level is so low that majority of individuals are encouraged or even forced to be employed for the production as a workforce. When the industrialisation process becomes matured, the average number of employment per capital investment for the production falls as the production method becomes more efficient so that the unemployment starts increasing. As this evolution proceeds, as previously mentioned, even those individuals who are considered to be the middle class (Petite-Bourgeoisie) start facing the same struggle of the surplus as same as the traditional proletariat. Moreover, norms and values become more pluralistic when the mobility of labour and capital becomes more frequent and more dynamic. Then, the traditional norms of culture which these individuals used to follow as their guideline for their life disappears.
In terms of why they still do not divert from the industrialisation process under the growing capitalism, individuals are still attracted to the overall high material productivity level which provides them with the access to the abundant resources of their needing and wanting goods and services and the convenient life style shared among all those living there. The division of labour is required for expanding the economies of scale to maximise the aggregate productivity level so that individuals become more individualistic to focus on their own duty provided by their employers or trading partners. In another word, the industrialisation is like an addiction to pursue: Individuals exchange their risk of anomie with the high materialistic satisfaction.
As seen in the spectrum, socialism is altruistic and fatalistic because the revolutionary government, either forcibly or suggestively, aims at uniting individuals together under an identical norm and commands and suggests individuals to do what they are supposed to do for their communal interest. Even though the characteristic of socialism is different from the traditional communities such as a pastoral community, the quality of both political structures are homogeneous.
By contrast, the fully developed (industrialised) capitalism is categorised as the opposite from both the traditional community and socialism on the spectrum, individuals living in capitalism are considered to be difficult to welcome socialism. It is because their communal tie is weakened due to their individualistic life style encouraged by the division of labour and their value of life is already so different from what socialism suggests. Then, what is going to happen is that capitalism keeps growing so that individuals in this world become more egoistic and less normative. Then, when individuals lose their means of life such as becoming unemployed are suffering from the aimlessness of their life.
On the other hand, it does not mean decreasing chances of the social mobility across different social classes for individuals: The social mobility will become more and more dynamic in this new era. Even though this world is becoming more anomic and the employment opportunity declines, there are more chance provided for inventions and a new form of entrepreneurship will be easier to advertise and borrow cash from investors as long as their new innovation/invention and business entrepreneurship seem to be valuable. In another word, the idea creation becomes the ultimate key of succeeding in the social mobility.
In addition, due to the developed information technology, it has become much easier to look for and recruit an innovative and talented individual from any part of communities regardless of where this individual person is from. As long as investors find this individual person seems to provide them with a high expected investment return, they will be happy to invest. Therefore, this world has become more meritocratic where the competition will be severe but the change for the dynamic successful social mobility is wide opened
The problem of this social transition is that not all individuals are fortunately endowed with the high competence and special talent with innovative mind. As the communal tie among individuals helping each other becomes weak and none provides those who lost their means of living with the alternative purpose of living, there is less aid for these unfortunate individuals than it used to be. Then, more individuals are considered to be the excess supply so that they are abandoned with the anomie. As Durkheim claimed, the excess of anomie increases the suicide rate.
In the traditional communities and the early stage of the industrial revolution, individuals commit some deadly collective political actions by risking their life which can be called revolution to replace the entire political structure with their desired alternative for not only their own sake but also the others called Comrades. By contrast, such a suicidal collective action is hardly provoked due to the lack of a cohesive network of individuals propped up with their altruism and their community norm. Individuals are no longer risking their life for changing politics because none has the motivation to unite together for one normative objective.
In the new era of political economics, individuals commit their deviant actions without provoking any radical action for their collective interest as such altruistic and normative stuff like the collective interest no longer exists in a political scale. Those who are severely despaired of this capitalism tend to attempt one of these following three behaviours. The first one is quietly committing either suicide to end their unfortunate life. The second one is committing a crime or any deviant action which ignores the rules, of both written and unwritten laws, set by capitalism. The third one is simply escaping from this materialism of capitalism to a spiritualism. The former two behaviours are irrational and unproductive so that they are either ignored and taken for granted or mitigated by some negative sanctions. The latter one is predicted to be grow and thrive as the useful method to keep living in a harsh condition of the terrestrial world. Marx, an atheist who humiliated religion and predicted its decline, ironically said "Religion is the opiate of the people" which is all the more needed to mitigate the sensitive pains from the lack of pleasures gained from the materialistic world.
The typical destination of their escape is a spiritualistic life which can be expressed as religion which Marx and many modern political philosophers have predicted to eventually disappear. They tend to prejudge that religion is a form of a normative community where individuals gather together to help each other. However, this is a prejudice cannot explain the true nature of religion. Religion is formed with the faith in some transcendental substance which is not explained by the materialistic scientific measurement. To whether believe or not, it is dependent on each individual's thought and mindset. Those who believe in this transcendental world believe and think there is a transcendental non-material substance formed and developed their mind of thought which is called "spirituality".
Religious community is just a forum of these faithful individuals believing in spirituality, and their faith in belief itself is completely dependent upon their choice. For instance, there are many individuals practice their religious activities without joining any communal institute. Furthermore, there will be a various form of faiths in the transcendental substances which are distinguished from the traditional theistic religion. The new form of religion will be something in which individuals believe their mind of thoughts is directly connected to the spiritual world detached from the material world.
Jeremy Bentham was partially correct but partially incorrect: Some individuals are willing to incur pains in exchange for the pleasures their extremely long future. Bentham was an atheist not believing in a spiritual world at all so that it was nonsense for him to think about gaining the utility (pleasure minus pain) from any non-materialistic substance. By contrast, those who believe in a spiritual world gain pleasures from their belief in the spirituality. The degree of pleasures and pains for individuals depends on not only their biological, material, and social situations but also their psychological situations. Regardless of the controversy about the existence of the spiritual world, the faithful belief in religion and any spirituality increases believers' pleasures by clinging to their faith. Their pleasures from their spiritual faith can be maximised enough to mitigate their pains in their terrestrial life.
As Max Stirner, an individualist anarchist, said, religion is a personal spiritual property which individuals have an invincible power to keep holding themselves. Any material property is not permanent as it decays and it can be either lost or stolen meanwhile a spiritual property which is a faith in religion may remain permanently. Individuals may keep their faith in their own existence and mind even though the others and the market reject these individuals' existence. Individuals live for their own sake without being interrupted by anyone and anything else. When they are more detached from other individuals and material needs and wants in the terrestrial world, what they communicate with and commands them to live is their own mind.
Various universal religions have existed more than millennium and there can be a strong wisdom for their extremely long survival and a huge scale influence. They may have found the effective ways to explain what provides individuals with pleasures while they are despaired of the materialistic world. Some of their explanations are vague and not scientific but they have succeeded in convincing individuals to acquire their pleasures by believing what they have explained. So, regardless of their controversy about the legitimacy and plausibility, as long as there are those who want to believe in, the religion and its faith keep thriving. Then, increasing anomie in the still growing capitalism causing individuals' lack of material gain and aimlessness of living in a capitalist market will increase the demand of religion furthermore despite the prediction by Marx and the other modern political philosophers.
Back . . . . . . . . . . . . . . . . . . . . Continue reading
Someone has said that everyone in an advanced country is the middle class citizen because an advanced country provides a citizen with the equality of opportunity to be a skilled professional as an owner of an enterprise as long as this citizen has a merit for it. However, these middle class individuals are often exhausted by their workloads and desperate to opportunities of increasing their income and social-status. They do not seem to have enough freedom to spare their time for leisure. They do not seem to have their wage bargaining power enough to determine their own reward for their contribution to the market.
Karl Marx and his followers blame capitalism for impoverishing majority individuals under the harsh free market competition. However, the form of capitalism itself has been transformed from the early stage of the industrialisation when Karl Marx was alive. The entire condition to determine who can secure their position to maintain their dominance as the ruling class has changed. When Marx was alive, owning capital was the fundamental factor enabling individuals to maintain their privilege of both economic and social status. By contrast, both owning capital and the free market competition no longer secure their dominance.
The skilled professional occupations such as doctors, lawyers, managers of major companies, and scientists, and even some entrepreneurs (mainly owners of small-medium sized enterprises) used to be called the petite-bourgeoisie (which literally means the middle-class) because these occupations did not require the hard physical labour like the proletariat. Their professional skill used to be considered as the capital owned by these skilled professionals so that they were considered to have their own means of production which provides them with the stable income source without their hard physical labour.
By contrast, nowadays, these skilled professionals are busy enough to sacrifice their health condition and time as much as the traditional working-class occupations of the proletariat. These skilled professionals and owners of small-medium sized enterprises may earn relatively more income than the other working class occupations. However, they are far more likely to sacrifice their income and time invested for their higher education and be required to have a strong responsibility over their tasks. Furthermore, they do not look like owning their capital emancipating from the hard physical labour, and they rather look like they are required to put their hard physical labour as much as the traditional proletariat works.
This phenomenon is called the proletarisation of the middle class. When the national economy was developed enough to provide majority of citizens with the equal opportunity to acquire these middle class job with a high social status, the supply of those who have become the middle class dramatically increased. Then, the competition among these skilled professionals has become more intense enough to lower their income level and increase their energy and time invested for their productive activities. They are required to work hard enough to gain their means of living as same as the traditional proletariat. Therefore, these middle class individuals are under the pressure of producing the surplus value with their hard labour as same as the traditional working class so that they should be called the the new working class, or the proletariat-nouveau instead of the petite-bourgeoisie.
The traditional bourgeoisie such as owners of a big enterprise still keep their market dominance. Nonetheless, there are new variables enabling them to maintain and expand their dominance. The management of a big enterprise has become so complicated that it requires a huge volume of bureaucracy as same as the public sector management of a nation state government. Not so many competitors are able to be equip with such a huge complex bureaucratic structure so that those corporations which are already big enough can thrive with little fear from the market competition.
The other variables are the taxation and the excess market regulation which has become far more complex than the old capitalism. Government of a modern nation state imposes various forms of taxation and various regulations instructing entrepreneurs in order to adjust their action to government policies. Furthermore, in order to implement these policies which government force enterprises to follow, it requires a humongous public sector bureaucracy constantly monitoring this complex system regardless of any government elected at each time period. This bureaucracy has become an unavoidable tool of governing a modern nation state and its economy due to the complex nature of modern economy and politics. Then, these bureaucrats in this bureaucracy have their strong influence enough to control the market situation for their own interests, and they are the new ruling class that can be called the bourgeoisie-nouveau.
This new capitalism has transformed the social-stratification, and replaced the old ruling class with the new alternative. Nowadays, there is a new wave of transforming the social-stratification which replace the new capitalist economic political model to another. Due to the rapid development of the information technology and the individuals' network based on it, both owning capital and maintaining the big organisations like big corporations and public-bureaucracies will be less significant to maintain wealth and the dominance in both market and politics.
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From now-on due to the information technological development, including both the internet and the artificial intelligence (AI), which has widen the market entrance of both the real-market (dealing with the goods and services) and the financial market (dealing with money and other forms of capital assets). It used to require a high volume of capital investment to open a new business so that those who were already wealthy to own enough capital had a much stronger advantage. By contrast, the current technology enables individuals to gather efficient tools and investment resources from a far bigger information resource than few decades ago.
This leads to the situation where it does not longer matter to seek a heavy volume of capital investment from banks and private investors for starting up a new business as long as any individual has an attractive idea of a new business. In another word, the cost of capital investment has become substantially low. This is one of the reason why the interest rate set by central banks in developed countries is close to zero or even minus. The supply of entrepreneurs will become far more abundant and the market competition among business owners will become far more competitive than it has been.
The traditional bourgeoisie such as the owners of big enterprises are going to face the severe difficulty in maintaining their dominance. These bourgeoisie owning huge enterprises with a high volume of capital are not flexible to change their policies and their organisational structure in comparison to the newly emerging entrepreneurs having started their business with a low volume of capital investment. These new entrepreneurs are far more flexible to adjust their business structure to the market demand and requirement even though their economies of scale is not big as much as the traditional capitalistic enterprises.
The economies of scale are also predicted to be smaller than they have been due to the technological development such as newly invented AI and 3D printers. Furthermore, the division of labour will be more emphasised in this coming era so that it seems to be the case that the industries had better include various independent small enterprises competing and often cooperated together instead of allowing one or few monopolistic big corporations controlling it.
The development of the cloud data base and the close-based administration system also devalue the importance of these big corporations because industries no longer need a big organisation constantly administrating and monitoring the business activities as well as their data-management. These administration tools will be organised by decentralised platforms such as a set of the remotely located hard-drive centres connected via online. The outsourcing will be more popular as there will be more small enterprises offering flexible services with good-quality. Therefore, companies no longer need to marge various departments and divisions inside their company, and these tasks can be easily outsourced.
This decentralisation process will also lead not only the previously mentioned traditional bourgeoisie owning private enterprises but also government-bureaucrats administrating public sectors and the market regulations, who can be called the new bourgeoisie, will also struggle to maintain their dominance. Not only the previously mentioned technological development and the market decentralisation but also the decline of nation-states caused by the globalisation are devaluing the necessity of the bureaucracy. Some of the public sector projects will be outsourced and the communication tool and the administration tools of public sectors will be so efficient that it will require less man-power.
In addition, both the already developed information technology and the newly developed AI will replace many tasks of these bureaucrats. Also, the diversification of this entire world will require anyone including the tasks of the bureaucracy to constantly change enough to frequently requires their skill sets to be always updated or even replaced by a completely new ones. Therefore, the structured static structure of the bureaucracy will be simply inefficient, and it will devalue the level of intelligence, wisdom, and hard-works of these elite bureaucrats.
At the same time, this transformation of the market structure will cause a hardship for the citizens who are already accustomed with their traditional way of living by being employed by a private company, public sector, or any structured organisation. The market becomes far more capital intensive owing to the technological development and the popularlised entrepreneurship owing to the information technology and networks. Then, the number of labour employed will become far smaller than it has been. Therefore, unless they find any new means of living such as starting their own business or any alternative way of sustaining their life, they will struggle to find their means of living. This may result in an increasing social problem of anomie (Normlessness or Meaninglessness) predicted by Emile Durkheim.
Overall, owing capital will become less important meanwhile people will be employed less and market competition becomes more competitive. Because owing (physical and financial capital) will become far less significant to become successful in the market competition, the name called capitalism may be going to be old fashioned. This newly emerging era should no longer be called capitalism although the market competition becomes much complex and intense and the social stratification still remains (It is far from the utopia for all individuals).
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Marx also predicted the previously mentioned polarisation of have and not-have would be furthermore widened. But, what he was wrong about in his analysis was the possibility of the socialist revolution. He said that, as majority individuals become more frustrated by not gaining enough in their life, they put a collective action to redistribute the wealth in the pool of economy. However, majority of individuals in the post industrialised capitalism are less cohesive than the pre-modern capitalism.
A revolution by mass like what he explained in his book requires the high degree of cohesion among individuals sticking together. In a traditional communities where the industrialisation progress is still immature, the cohesive tie of individuals is strong due to their pastoral life style where they always need to cooperate together in a strong conformity based on rigid norms and values as their life style is more static than the competitive capitalism. By contrast, in the fully-industrialised capitalism, individuals move actively across different jobs to work and places to live so that they are no longer bound by their norms and values in one place. So, individuals in a developed capitalism are far more individualistic and normative than those in the traditional communities, and they tend to consider less about the others.
This chart is based on what Emile Durkheim created in his study of suicide. The vertical axis denotes how strong the communal tie of individuals with others is. Individuals become more altruistic as it goes on on the top of this vertical spectrum meanwhile individuals become egoistic as it goes on the bottom. The horizontal axis denotes how normative individuals are. As it goes to the left hand side of this spectrum, individuals tend to be fated with what is given and commanded for individuals to. As it goes to the right hand side of this spectrum, there is no longer any authority or moral-entrepreneur either commanding or suggesting them to follow and obey in their life.
During the early stage of industrialisation, the aggregate productivity level is so low that majority of individuals are encouraged or even forced to be employed for the production as a workforce. When the industrialisation process becomes matured, the average number of employment per capital investment for the production falls as the production method becomes more efficient so that the unemployment starts increasing. As this evolution proceeds, as previously mentioned, even those individuals who are considered to be the middle class (Petite-Bourgeoisie) start facing the same struggle of the surplus as same as the traditional proletariat. Moreover, norms and values become more pluralistic when the mobility of labour and capital becomes more frequent and more dynamic. Then, the traditional norms of culture which these individuals used to follow as their guideline for their life disappears.
In terms of why they still do not divert from the industrialisation process under the growing capitalism, individuals are still attracted to the overall high material productivity level which provides them with the access to the abundant resources of their needing and wanting goods and services and the convenient life style shared among all those living there. The division of labour is required for expanding the economies of scale to maximise the aggregate productivity level so that individuals become more individualistic to focus on their own duty provided by their employers or trading partners. In another word, the industrialisation is like an addiction to pursue: Individuals exchange their risk of anomie with the high materialistic satisfaction.
As seen in the spectrum, socialism is altruistic and fatalistic because the revolutionary government, either forcibly or suggestively, aims at uniting individuals together under an identical norm and commands and suggests individuals to do what they are supposed to do for their communal interest. Even though the characteristic of socialism is different from the traditional communities such as a pastoral community, the quality of both political structures are homogeneous.
By contrast, the fully developed (industrialised) capitalism is categorised as the opposite from both the traditional community and socialism on the spectrum, individuals living in capitalism are considered to be difficult to welcome socialism. It is because their communal tie is weakened due to their individualistic life style encouraged by the division of labour and their value of life is already so different from what socialism suggests. Then, what is going to happen is that capitalism keeps growing so that individuals in this world become more egoistic and less normative. Then, when individuals lose their means of life such as becoming unemployed are suffering from the aimlessness of their life.
On the other hand, it does not mean decreasing chances of the social mobility across different social classes for individuals: The social mobility will become more and more dynamic in this new era. Even though this world is becoming more anomic and the employment opportunity declines, there are more chance provided for inventions and a new form of entrepreneurship will be easier to advertise and borrow cash from investors as long as their new innovation/invention and business entrepreneurship seem to be valuable. In another word, the idea creation becomes the ultimate key of succeeding in the social mobility.
In addition, due to the developed information technology, it has become much easier to look for and recruit an innovative and talented individual from any part of communities regardless of where this individual person is from. As long as investors find this individual person seems to provide them with a high expected investment return, they will be happy to invest. Therefore, this world has become more meritocratic where the competition will be severe but the change for the dynamic successful social mobility is wide opened
The problem of this social transition is that not all individuals are fortunately endowed with the high competence and special talent with innovative mind. As the communal tie among individuals helping each other becomes weak and none provides those who lost their means of living with the alternative purpose of living, there is less aid for these unfortunate individuals than it used to be. Then, more individuals are considered to be the excess supply so that they are abandoned with the anomie. As Durkheim claimed, the excess of anomie increases the suicide rate.
In the traditional communities and the early stage of the industrial revolution, individuals commit some deadly collective political actions by risking their life which can be called revolution to replace the entire political structure with their desired alternative for not only their own sake but also the others called Comrades. By contrast, such a suicidal collective action is hardly provoked due to the lack of a cohesive network of individuals propped up with their altruism and their community norm. Individuals are no longer risking their life for changing politics because none has the motivation to unite together for one normative objective.
In the new era of political economics, individuals commit their deviant actions without provoking any radical action for their collective interest as such altruistic and normative stuff like the collective interest no longer exists in a political scale. Those who are severely despaired of this capitalism tend to attempt one of these following three behaviours. The first one is quietly committing either suicide to end their unfortunate life. The second one is committing a crime or any deviant action which ignores the rules, of both written and unwritten laws, set by capitalism. The third one is simply escaping from this materialism of capitalism to a spiritualism. The former two behaviours are irrational and unproductive so that they are either ignored and taken for granted or mitigated by some negative sanctions. The latter one is predicted to be grow and thrive as the useful method to keep living in a harsh condition of the terrestrial world. Marx, an atheist who humiliated religion and predicted its decline, ironically said "Religion is the opiate of the people" which is all the more needed to mitigate the sensitive pains from the lack of pleasures gained from the materialistic world.
The typical destination of their escape is a spiritualistic life which can be expressed as religion which Marx and many modern political philosophers have predicted to eventually disappear. They tend to prejudge that religion is a form of a normative community where individuals gather together to help each other. However, this is a prejudice cannot explain the true nature of religion. Religion is formed with the faith in some transcendental substance which is not explained by the materialistic scientific measurement. To whether believe or not, it is dependent on each individual's thought and mindset. Those who believe in this transcendental world believe and think there is a transcendental non-material substance formed and developed their mind of thought which is called "spirituality".
Religious community is just a forum of these faithful individuals believing in spirituality, and their faith in belief itself is completely dependent upon their choice. For instance, there are many individuals practice their religious activities without joining any communal institute. Furthermore, there will be a various form of faiths in the transcendental substances which are distinguished from the traditional theistic religion. The new form of religion will be something in which individuals believe their mind of thoughts is directly connected to the spiritual world detached from the material world.
Jeremy Bentham was partially correct but partially incorrect: Some individuals are willing to incur pains in exchange for the pleasures their extremely long future. Bentham was an atheist not believing in a spiritual world at all so that it was nonsense for him to think about gaining the utility (pleasure minus pain) from any non-materialistic substance. By contrast, those who believe in a spiritual world gain pleasures from their belief in the spirituality. The degree of pleasures and pains for individuals depends on not only their biological, material, and social situations but also their psychological situations. Regardless of the controversy about the existence of the spiritual world, the faithful belief in religion and any spirituality increases believers' pleasures by clinging to their faith. Their pleasures from their spiritual faith can be maximised enough to mitigate their pains in their terrestrial life.
As Max Stirner, an individualist anarchist, said, religion is a personal spiritual property which individuals have an invincible power to keep holding themselves. Any material property is not permanent as it decays and it can be either lost or stolen meanwhile a spiritual property which is a faith in religion may remain permanently. Individuals may keep their faith in their own existence and mind even though the others and the market reject these individuals' existence. Individuals live for their own sake without being interrupted by anyone and anything else. When they are more detached from other individuals and material needs and wants in the terrestrial world, what they communicate with and commands them to live is their own mind.
Various universal religions have existed more than millennium and there can be a strong wisdom for their extremely long survival and a huge scale influence. They may have found the effective ways to explain what provides individuals with pleasures while they are despaired of the materialistic world. Some of their explanations are vague and not scientific but they have succeeded in convincing individuals to acquire their pleasures by believing what they have explained. So, regardless of their controversy about the legitimacy and plausibility, as long as there are those who want to believe in, the religion and its faith keep thriving. Then, increasing anomie in the still growing capitalism causing individuals' lack of material gain and aimlessness of living in a capitalist market will increase the demand of religion furthermore despite the prediction by Marx and the other modern political philosophers.
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The End of Nation States: Chapter 2. The case study of the European Union (EU) and the other possibilities
The End of Nation States: Chapter 2. The case study of the European Union (EU) and the other possibilities
- Case of Europe
The European integration by forming one unified union of Europe, which is now called the European Union (EU), exists due to various reasons. At the beginning of the establishment, the political intention was strong although the economic situation was also the key factor of motivating the EU integration. At that time, there are mainly two aims. Firstly, these European countries repented for their intense nationalism which resulted in the catastrophe of wars against each other. Secondly, protecting each European country from the oppression of the USSR without merely relying on the US backup was a priority for Europe. Then, these Europeans decided to form a unified economic and political alliance.
By contrast, the motivation based on economics has become much stronger and a more significant factor of demanding the European integration. Of course, the EU still regards highly of their political interest of maintaining a peaceful union with a stronger unified voice, rather than each relatively small country, in the game of foreign diplomacy. It is just a case that the world market situation creates the incentive for the European integration by means of their economic interest.
The reckless attempt of introducing the European Monetary Union (EMU) with a unified currency called Euro (The region of these EMU members where the Euro is used is called the Eurozone) is a symbolic movement of the European economic integration. Joining the EMU means replacing a central bank (The body controlling the national monetary policy and its money supply(supplying a national currency)) of all the EMU member countries with a central bank and its monetary policy of the whole union. So, the monetary policy is now controlled by one central bank which is independent from each nation state of the EMU members.
It has been a huge concern about the fiscal instability which can be caused by lack of the flexible macroeconomic control over each single. This concern has become true in real, and some countries like Greece and Ireland are suffering notoriously. However, despite this concern about the perpetuated fiscal instability, the Eurozone still stays and the monetary union seems to be invincible.
By means of the econometric research, the business cycles (Represented by the price inflation rate), except for Ireland, are harmonised. Although Greek cycles is more volatile, Greek economy is highly correlated with the entire European economy so Greece gains more benefit than cost of keeping her EMU membership. The harmonised business cycle implies the high degree of economic integration with the rest, and they had better share the common currency when their economy is integrated. On the top of this harmony, their inflation rate seems to have been converging into their referenced target rate 2%, and this referenced inflation rate induces the GDP growth owing to the econometric estimation.
Appendix: The European Monetary Union is inevitable, but has to be fundamentally revised
In terms of the benefit from the monetary integration, they eliminate the menu cost caused by the (nominal) exchange rate fluctuation so the benefit is significantly high when the high cross-border frequency is high. Moreover, when the monetary union is unified, the national bonds of these monetary union member nations can secure their national bonds' credibility in the international financial market because of the huge economies of scale backs up the credibility. All in all, when their economy is synchronised with each other like this chart demonstrates, they are still benefited from the monetary integration.
By means of the future prediction, despite the pessimism of the nationalistic Eurosceptics, the EMU not only sustain its existence and benefit but also expands by inviting more members and then growing its economies of scale. The new entrants from the central European countries are achieving the balanced fiscal policy and the notable economic growth recently after passing the test of joining the EMU such as the fiscal stability and the political consensus with the EU.
As a matter of fact, the trade frequency of the international trade within the EU is higher than the inter-states trade within the U.S.A. (Ref. Economics of Monetary Union So, the benefit from the monetary union by means of the trade is higher for the EU than the USA. The monetary union among the states of the U.S.A is stable due to both the strong federal government intervention into the harmonisation and the flexible labour mobility across states.
The high labour mobility is important to offer the supply-side flexibility to harmonise the business cycles. When the labourers can find a better opportunity in their neighbouring region, they can have a better potential to secure their employment. For example, an economically booming region may have an average wage increase due to the need of more labour force and calming down the overheat meanwhile an economically stagnating region may have an average wage decline to repress the rising unemployment rate and the shrinking overall economy.
The following econometric analysis, based on the EU market, indicates the change in the average wage rate of a particular region is positively correlated with the employment in the surrounding region. The average wage increase implies either rise in the labour demand or falling of the labour supply, or both which implies the lack of, and then the need of, the more labour force. By contrast, the average wage decline implies either fall in the labour demand or excess of the labour supply, or both which implies the higher unemployment. This analysis also indicates that the percentage of the shared language spoken by the citizens in these sample region is a key factor aiding the flexible labour mobility.
Appendix: Econometric Analysis of Employment Rate based on New Economic Geography theory
As more Europeans are educated to speak English and become keen to learn more than one language, this flexible labour mobility will eventually become higher than now. So, the benefit from the common market and monetary union will become further more beneficial for them.
In order to ensure the stability of the EMU, they definitely need to then have the unified fiscal policy which is harmonised with the monetary policy. Even with the already harmonised business cycles, it is not enough to only have a monetary policy so it requires the fiscal policy to absorb the systemic shock in the macroeconomic situation. The unified fiscal policy conducting the taxation and the subsidies is effective to help reducing the volatility of the cycles disturbing the harmony. Even though volatility seems to be temporary, the market chaos, like shown in Greece and Ireland, tend to be troublesome due to the panic caused by the instability.
Nevertheless, there are still active reactions against the European fiscal integration by mass. The reason why the EU is pending the full-integration process, which consequently compromises in this unstable situation, is due to the dilemma between the centralisation for the material prosperity and the anti-centralisation for the happiness derived from majorities' political preference.
According to the econometric research based on the happy planet index, people tend to be significantly happier when they are allowed to represent their opinions influence in their politics more directly. By contrast, the centralisation of politics which restricts their direct representation reduces their happiness. At the same time, they also expect the economic development which provides them with a material well-being which requires the centralisation as their economies of scale expands. Therefore, they eventually need to trade off between their psychological/spiritual well-beings provided by the degree of decentralisation and the material well-beings provided by the degree of centralisation as shown in the graph below;
Appendix: Dilemma between Democracy and Technolocracy
The EU's compromised decision causing the economic and political instability which EU citizens are suffering from is caused by this dilemma between the centralisation needed for the economic stability and preventing the furthermore centralisation for their psychological/spiritual happiness.
They might become happy to allow the federalisation of the EU by replacing their own nation state's government with the one unified federal government after realising this is an inevitably necessary path for the EU for stability and furthermore development. They also might just be happy with maintaining the current political structure of the EU even though they have to voluntarily cope with harmonising their business cycles together by repressing their expenditure for controlling inflation and encouraging a more flexible labour and capital mobility across the EU member states. The choice for relinquishing the EU and the EMU is unrealistic because their trade tie together is already strong and their regret about the past nationalism having caused the dreadful wars.
This European integration is an interesting experiment of establishing a transnational political structure overwhelming the traditional nation-states. So, it is natural to have a speculation about whether or not there will be another new resemblance to the European integration in another part of the world. As long as the current economic globalisation prevails and expands by its nature, the possibility is considered to be high. Nonetheless, their integration is more challenging and less dynamic than the European counterpart for the time beings.
In Latin America, these nation-states have already formed the economic alliance called El mercado comun del sur (The common market of the south). Their trade agreement at the microeconomics level such as trading goods and services and legislative matters such as taxation and regulation. Hy contrast, their macroeconomic integration is very less likely to happen due to their overall volume of the inter Latin American trades and the substantially unstable monetary system resulting in the significantly high price inflation all the time.
In Africa, some countries have already established the common monetary policy, and encourage their economic and political unification. However, both their economy and their political function are too immature to expect their economic growths and their political stability without the support from outside Africa. As their aggregate volume of economic activity is low, their volume of the inter-African trades is substantially low. In addition, their strong preference over decentralised organisational structures discourages the growth of their economies of scale. Therefore, they are still less likely to take an advantage of the shared macroeconomic policy for the time being.
Although both Latin American and African nation-states are still not capable to create their own transnational economic and political integration, they are becoming more dependent and involved in the economic globalisation and their international trades with the outside their region will be growing. So, their economic activity is tied up with their global trading partners and more individuals from there will travel around the world, and then their nationalism will be gradually discouraged. But, their nation-state government will still exist for the following purpose.
As their business cycle is harmonised with neither their neighbouring nation-states nor their distant trading partners, the asymmetric shock of their business cycle, shown in the graph below, is more likely to offer.
At the same time, in order to reduce the menu cost caused by the exchange rate fluctuation, the business cycle needs to be harmonised as much as possible. When these developing countries have a frequent international trade with developed countries, the business cycle of these developing countries tends to be exaggerated way faster than their developed trade partner. So, they eventually need their own independent macroeconomic authorities, the central bank and the government, in order to independently control the cycle with their own discrete measure. Therefore, their nation-state government is still required to exist just to mitigate this asymmetry.
The most interesting area of dispute is the East Asia. In particular, the international trade frequency among the South East Asian countries is significantly higher than both the international trade within the EU and the interstate trade in the USA. Their trade frequency in both their real market (goods & services) and the capital market (finance) is considerably high. Furthermore, their labour mobility rate is high and this is encouraged by the fact that more Asians than now speak English their businesses together in both their business activities and their personal relationships.
By means of the dilemma about the centralisation, Asians seems to be more flexible than Europeans to admit the centralisation due to their traditional characteristics of being loyal to their rational authority. In another word, Asians tend to prefer the centralised policy more than Europeans so the centralised economic policy beyond their national borders will be achievable.
Appendix: Dilemma between Democracy and Technolocracy
By means of the perspectives based on economics, it seems to be possible that the South East Asians establish the common economic union similar to the EU. But, unlike the EU, these nations have their own distinct ethnic demography and political past which is a considerable barrier for them to form the economic and political union. On the other hand, as the world becomes furthermore globalised, the need of the integration may emerge regardless of their cultural and political conflict. As Asians are pragmatic about their business relationships, the possibility of establishing the integrated economy governed by a unified transnational rational authority might become in real.
Japan and China are less likely to join any economic and political union because of their already big and independent size and their own unique cultural independence. There is an optimum size of the integration of market and politics by means of the population and the production capacity. Furthermore, the unique characteristics of their culture and ethnic backgrounds cause the conflict with the others when they are fiscally and politically integrated. These two nations will keep being influential in the global market and politics owing to their economic power and their political influences, and inevitably globalise themselves furthermore in order to prop up the strong demand for their exporting products which sustain their own well-beings.
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- Case of Europe
The European integration by forming one unified union of Europe, which is now called the European Union (EU), exists due to various reasons. At the beginning of the establishment, the political intention was strong although the economic situation was also the key factor of motivating the EU integration. At that time, there are mainly two aims. Firstly, these European countries repented for their intense nationalism which resulted in the catastrophe of wars against each other. Secondly, protecting each European country from the oppression of the USSR without merely relying on the US backup was a priority for Europe. Then, these Europeans decided to form a unified economic and political alliance.
By contrast, the motivation based on economics has become much stronger and a more significant factor of demanding the European integration. Of course, the EU still regards highly of their political interest of maintaining a peaceful union with a stronger unified voice, rather than each relatively small country, in the game of foreign diplomacy. It is just a case that the world market situation creates the incentive for the European integration by means of their economic interest.
The reckless attempt of introducing the European Monetary Union (EMU) with a unified currency called Euro (The region of these EMU members where the Euro is used is called the Eurozone) is a symbolic movement of the European economic integration. Joining the EMU means replacing a central bank (The body controlling the national monetary policy and its money supply(supplying a national currency)) of all the EMU member countries with a central bank and its monetary policy of the whole union. So, the monetary policy is now controlled by one central bank which is independent from each nation state of the EMU members.
It has been a huge concern about the fiscal instability which can be caused by lack of the flexible macroeconomic control over each single. This concern has become true in real, and some countries like Greece and Ireland are suffering notoriously. However, despite this concern about the perpetuated fiscal instability, the Eurozone still stays and the monetary union seems to be invincible.
By means of the econometric research, the business cycles (Represented by the price inflation rate), except for Ireland, are harmonised. Although Greek cycles is more volatile, Greek economy is highly correlated with the entire European economy so Greece gains more benefit than cost of keeping her EMU membership. The harmonised business cycle implies the high degree of economic integration with the rest, and they had better share the common currency when their economy is integrated. On the top of this harmony, their inflation rate seems to have been converging into their referenced target rate 2%, and this referenced inflation rate induces the GDP growth owing to the econometric estimation.
Appendix: The European Monetary Union is inevitable, but has to be fundamentally revised
In terms of the benefit from the monetary integration, they eliminate the menu cost caused by the (nominal) exchange rate fluctuation so the benefit is significantly high when the high cross-border frequency is high. Moreover, when the monetary union is unified, the national bonds of these monetary union member nations can secure their national bonds' credibility in the international financial market because of the huge economies of scale backs up the credibility. All in all, when their economy is synchronised with each other like this chart demonstrates, they are still benefited from the monetary integration.
By means of the future prediction, despite the pessimism of the nationalistic Eurosceptics, the EMU not only sustain its existence and benefit but also expands by inviting more members and then growing its economies of scale. The new entrants from the central European countries are achieving the balanced fiscal policy and the notable economic growth recently after passing the test of joining the EMU such as the fiscal stability and the political consensus with the EU.
As a matter of fact, the trade frequency of the international trade within the EU is higher than the inter-states trade within the U.S.A. (Ref. Economics of Monetary Union So, the benefit from the monetary union by means of the trade is higher for the EU than the USA. The monetary union among the states of the U.S.A is stable due to both the strong federal government intervention into the harmonisation and the flexible labour mobility across states.
The high labour mobility is important to offer the supply-side flexibility to harmonise the business cycles. When the labourers can find a better opportunity in their neighbouring region, they can have a better potential to secure their employment. For example, an economically booming region may have an average wage increase due to the need of more labour force and calming down the overheat meanwhile an economically stagnating region may have an average wage decline to repress the rising unemployment rate and the shrinking overall economy.
The following econometric analysis, based on the EU market, indicates the change in the average wage rate of a particular region is positively correlated with the employment in the surrounding region. The average wage increase implies either rise in the labour demand or falling of the labour supply, or both which implies the lack of, and then the need of, the more labour force. By contrast, the average wage decline implies either fall in the labour demand or excess of the labour supply, or both which implies the higher unemployment. This analysis also indicates that the percentage of the shared language spoken by the citizens in these sample region is a key factor aiding the flexible labour mobility.
Appendix: Econometric Analysis of Employment Rate based on New Economic Geography theory
As more Europeans are educated to speak English and become keen to learn more than one language, this flexible labour mobility will eventually become higher than now. So, the benefit from the common market and monetary union will become further more beneficial for them.
In order to ensure the stability of the EMU, they definitely need to then have the unified fiscal policy which is harmonised with the monetary policy. Even with the already harmonised business cycles, it is not enough to only have a monetary policy so it requires the fiscal policy to absorb the systemic shock in the macroeconomic situation. The unified fiscal policy conducting the taxation and the subsidies is effective to help reducing the volatility of the cycles disturbing the harmony. Even though volatility seems to be temporary, the market chaos, like shown in Greece and Ireland, tend to be troublesome due to the panic caused by the instability.
Nevertheless, there are still active reactions against the European fiscal integration by mass. The reason why the EU is pending the full-integration process, which consequently compromises in this unstable situation, is due to the dilemma between the centralisation for the material prosperity and the anti-centralisation for the happiness derived from majorities' political preference.
According to the econometric research based on the happy planet index, people tend to be significantly happier when they are allowed to represent their opinions influence in their politics more directly. By contrast, the centralisation of politics which restricts their direct representation reduces their happiness. At the same time, they also expect the economic development which provides them with a material well-being which requires the centralisation as their economies of scale expands. Therefore, they eventually need to trade off between their psychological/spiritual well-beings provided by the degree of decentralisation and the material well-beings provided by the degree of centralisation as shown in the graph below;
Appendix: Dilemma between Democracy and Technolocracy
The EU's compromised decision causing the economic and political instability which EU citizens are suffering from is caused by this dilemma between the centralisation needed for the economic stability and preventing the furthermore centralisation for their psychological/spiritual happiness.
They might become happy to allow the federalisation of the EU by replacing their own nation state's government with the one unified federal government after realising this is an inevitably necessary path for the EU for stability and furthermore development. They also might just be happy with maintaining the current political structure of the EU even though they have to voluntarily cope with harmonising their business cycles together by repressing their expenditure for controlling inflation and encouraging a more flexible labour and capital mobility across the EU member states. The choice for relinquishing the EU and the EMU is unrealistic because their trade tie together is already strong and their regret about the past nationalism having caused the dreadful wars.
This European integration is an interesting experiment of establishing a transnational political structure overwhelming the traditional nation-states. So, it is natural to have a speculation about whether or not there will be another new resemblance to the European integration in another part of the world. As long as the current economic globalisation prevails and expands by its nature, the possibility is considered to be high. Nonetheless, their integration is more challenging and less dynamic than the European counterpart for the time beings.
In Latin America, these nation-states have already formed the economic alliance called El mercado comun del sur (The common market of the south). Their trade agreement at the microeconomics level such as trading goods and services and legislative matters such as taxation and regulation. Hy contrast, their macroeconomic integration is very less likely to happen due to their overall volume of the inter Latin American trades and the substantially unstable monetary system resulting in the significantly high price inflation all the time.
In Africa, some countries have already established the common monetary policy, and encourage their economic and political unification. However, both their economy and their political function are too immature to expect their economic growths and their political stability without the support from outside Africa. As their aggregate volume of economic activity is low, their volume of the inter-African trades is substantially low. In addition, their strong preference over decentralised organisational structures discourages the growth of their economies of scale. Therefore, they are still less likely to take an advantage of the shared macroeconomic policy for the time being.
Although both Latin American and African nation-states are still not capable to create their own transnational economic and political integration, they are becoming more dependent and involved in the economic globalisation and their international trades with the outside their region will be growing. So, their economic activity is tied up with their global trading partners and more individuals from there will travel around the world, and then their nationalism will be gradually discouraged. But, their nation-state government will still exist for the following purpose.
As their business cycle is harmonised with neither their neighbouring nation-states nor their distant trading partners, the asymmetric shock of their business cycle, shown in the graph below, is more likely to offer.
At the same time, in order to reduce the menu cost caused by the exchange rate fluctuation, the business cycle needs to be harmonised as much as possible. When these developing countries have a frequent international trade with developed countries, the business cycle of these developing countries tends to be exaggerated way faster than their developed trade partner. So, they eventually need their own independent macroeconomic authorities, the central bank and the government, in order to independently control the cycle with their own discrete measure. Therefore, their nation-state government is still required to exist just to mitigate this asymmetry.
The most interesting area of dispute is the East Asia. In particular, the international trade frequency among the South East Asian countries is significantly higher than both the international trade within the EU and the interstate trade in the USA. Their trade frequency in both their real market (goods & services) and the capital market (finance) is considerably high. Furthermore, their labour mobility rate is high and this is encouraged by the fact that more Asians than now speak English their businesses together in both their business activities and their personal relationships.
By means of the dilemma about the centralisation, Asians seems to be more flexible than Europeans to admit the centralisation due to their traditional characteristics of being loyal to their rational authority. In another word, Asians tend to prefer the centralised policy more than Europeans so the centralised economic policy beyond their national borders will be achievable.
Appendix: Dilemma between Democracy and Technolocracy
By means of the perspectives based on economics, it seems to be possible that the South East Asians establish the common economic union similar to the EU. But, unlike the EU, these nations have their own distinct ethnic demography and political past which is a considerable barrier for them to form the economic and political union. On the other hand, as the world becomes furthermore globalised, the need of the integration may emerge regardless of their cultural and political conflict. As Asians are pragmatic about their business relationships, the possibility of establishing the integrated economy governed by a unified transnational rational authority might become in real.
Japan and China are less likely to join any economic and political union because of their already big and independent size and their own unique cultural independence. There is an optimum size of the integration of market and politics by means of the population and the production capacity. Furthermore, the unique characteristics of their culture and ethnic backgrounds cause the conflict with the others when they are fiscally and politically integrated. These two nations will keep being influential in the global market and politics owing to their economic power and their political influences, and inevitably globalise themselves furthermore in order to prop up the strong demand for their exporting products which sustain their own well-beings.
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The End of Nation States: Chapter 3. Public Sector Administration and Urbanisation
The End of Nation States: Chapter 4. Public Sector Administration and Urbanisation
- Public Sector Administration
In a traditional sense of modern economics, each nation is responsible for administrating its own public sectors operated in this nation. On the other hand, this form pattern started encountering a new problem in this globalised world with economic agents with a more active and wide life style and more affluent sets of choice than the Cold War period. This phenomenon encounters with the problem of claiming who is responsible to pay for what they have used. Majority of countries operated by modern macroeconomic concepts operate their fiscal policy based on a national level and two or various regional level in inside a nation. So, there has not yet solid transnational fiscal policy concept emerging yet.
There is also a remarkably significant macroeconomic problem related to this globalisation and the expanding individuals’ activities. Not only the fiscal responsibility issue but also controlling the entire macroeconomic climate such as boom and recession. Due to the globalised activity level of businesses and individual life style, the business cycles of nations are more and more harmonised ever than it used to be. Then, the macroeconomic intervention by the macroeconomic policy such as the monetary policy, the fiscal policy, the international trade policy, and various supply-side policies such as controlling and monitoring the labour and capital mobility is less efficient. This is because one nation’s macroeconomic climate is highly more influenced by the others so that it may rather require the macroeconomic intervention in a tremendously wide multi-national or even a world-wide level which simultaneously control over the entire targeted region of this world at once.
Both the first responsibility issue (microeconomics) and the economic climate issue (macroeconomics) are concerned. The administrators of these public sectors defining the cost coverage responsibility and the resource allocation are more centralised and become in charge of administrating a wider scale. This centralisation may be considered as the optimum only if individuals are happy with their high administrating cost.
The problems of the public sector administration issues cannot be simply ignored. Some economists claim that it should be possible to put the decentralised politics in this global economy without taking these previously mentioned issues into consideration. Their claim is that the responsibility is spontaneously determined by all free economic agents fairly by following the natural free market movement toward equilibrium. Nonetheless, this equilibrium is not always a good equilibrium as many other economists affirm that there are both good and bad equilibrium outcomes.
The Game theory wisely indicates the bad equilibrium condition called the Prisoners’ Dilemma. The good equilibrium condition is where all individual economic agents pay for what they have used and how capable to contribute to. The bad equilibrium condition is where many economic agents are not contributing by means of their ability and responsibility, and then the economic climate is always in turmoil due to their disturbed unstable business cycles.
The prisoners’ dilemma warns of the free riding which means that many take advantage of letting or even enforcing the others to cover for the service meanwhile they obtain the shared common benefit from this service. This Prisoners’ Dilemma takes place when nobody shares the same principle and objective to fulfil their mutual interests because of their ignorance about what is occurring in real and what they are supposed to do to overcome from their unwanted situation. Therefore, by perpetuating this situation, individuals tend to be diverted from the good equilibrium and then be converged at the bad equilibrium as long as the aimlessness and the ignorance prevail.
In the traditional sense, human individuals have kept their reliance on the collective rational authorities to direct their economic policies with their paternalistic wisdom. In the feudalism, the feudal lords and the divine authorities were their representative guardians in charge of this paternalism. In the modern world, nation states and their government are the paternalistic guardian institutes meritoriously selecting their representatives from their general public. This collective authoritarian method has been functional as long as these paternal guardians have their strong principle encouraged by their nobles’ oblige and the scale is optimum size.
As the economies of scale expands furthermore that a nation-state can be responsible for positively controlling, the transnational rational authorities are now required more than before. Even the economic performance of the least developed countries (LDCs) is becoming more correlated with the business cycle of their trading partners. As the industries are more specialised in the global level, the business cycle fluctuation of one LDC is no longer negligible because the performance of its specialised industry affects their trade partners this LDC exports to.
- Urbanisation and market potential
In terms of the new economic geography theory, followings are the key variables of economic development.
V1. Low inter-regional transportation costs of trades backed-up by little geological obstacles
V2. Highly developed logistic networks based on a developed infrastructure such as capability to prepare for a strong infrastructure for the logistics such as a dock capable of launching heavy containers and effective networks of paved roads and railways
V3 Having an accessible trade partners have a high productivity and a purchasing power: This effect is combined with low inter-regional transport costs and highly developed logistic networks because the efficient access magnifies this factor.
* There is an index called market potential index (MPI) which takes account of these three variables V1, V2, and V3 together.
V4. The growth in productive population growth relative to the unproductive population growth (reasonable birth control, affordability of general education and parental love for children, and adjusted population growth to economic growth and land-capability).
V5. The human capital development (E.g. Education, Individual Liberty and Right, and Rationality). This affects the speed of learning newly introduced technologies in the world, adapting them to produce and sell newly introduced goods and services created, and ability to invent an original new technology themselves by referring to existing technologies.
V6. The political and social stability in both the present and the future time period.
V7. Abundant natural resource reserves, which create a trade surplus. The impact of benefit from it is bigger in emerging economies and least developed economies than developed economies, but some developed economies are able to develop further more than the other developed economies due to the extra surplus by extracting natural resources.
In order to fulfil these factors except for the variable V7 (Abundant natural resource reserves), concentrating a big population into one economic and political hub is essential, and this gradual process of the concentration is called urbanisation.
In order to increase the MPI representing the variable V1, V2, and V3, economic agents had better establish an economic hub gathering human and material resources together in one designated compact area. They can efficiently reach their needing/wanting resources when they are allocated closely to each other in this urbanised area. International trade hubs such as ports and traffic-junctions should be located in inside or near this urbanised area to ship in and out these traded goods and traveling individuals together in an efficient pace. The variable V4 (The growth in productive population growth) and the variable V5 (The human capital development) are more efficient when individuals live together closely in order to exchange their information and their resources to exchange. When these materials and individuals are scattered around, the transportation connecting individuals and the international trading hubs becomes very inefficient.
The challenge is the potential conflict among various unique individuals living together closely. In order to concentrate people together into one area, the political stability and the community harmonisation are highly required. In particular, in these Southern economies, the conflict between different identities tends to be an obstacle of their urbanisation process. Therefore, the variable A6 (The political and social stability) is a key element to achieve their urbanisation.
Nowadays, thanks to the globalisation encouraged by the rapid information technological growth, people in emerging and least developed economies have become able to copy the newly introduced knowledge and technologies, and use them to produce better goods and services. But, in order to grow their economy by this process, they need to fulfil these three following conditions:
- They need to improve and develop their education system to become able to copy the newly introduced technologies.
- They need a huge population in either their homeland or neighbourhood countries, or both, to sell these goods and services faster to grow their business.
- In order to accomplish these two objectives, the political and social stability is significantly required.
All in all, these nations require an urbanisation of their economy, which means increasing population density, which enables people to exchange information and physical resources each other fast. The urbanisation requires a huge population already existing. Therefore, an already highly populated nations tend to have an advantage.
Furthermore, the urbanisation lowers the cost of developing human capital because the speed of exchanging knowledge and technology becomes faster as the place become urbanised. The cost of developing human capital used to be a big obstacle for least developing nations when there was a huge barrier of exchaning the information. Both The end of the Cold War and the rapid information technological growth since then brought a globally free exchange of information flow. In addition, the knowledge and the wisdom gained from this flexible information flow have enabled people there to become harmonised with themselves. This aspect of the globalisation has made the harmonisation and the urbanisation tremendously easier than the past.
- The transition of Public Sector Administration and Urbanisation under the Globalisation
Judging from these two big aspects, public sector administration and urbanisation, human individual residents will be more concentrated into a limited number of urban cities to live due to the convenience for them to access to their economic needs and wants. At the same time, the population of many provinces of many countries will keep decreasing, and their industries will be more specialised in the primary industries sorely depending upon the variable V7 Abundant natural resource reserves which is irrelevant to the urbanisation.
The combined phenomenon of growth of the limited number of urban cities and decline of many provinces will reduce the cost of the public sector which is responsible for sustaining the infrastructure for both transportation and utilities in these areas. The cost of maintaining the transportation of the remote provincial areas and the infrastructure of utilities is significantly higher than the tax revenue gained from the local residents. Therefore, the government subsidies provided by the huge distribution scheme by the nation state regime have sustained these provinces.
The declining financially costly provinces and more efficient allocation of resources into an urban area seem to imply the reduction of the government subsidies required for aiding provinces. As the population of the provinces decreases, their power for bargaining to obtain the government subsidies will be weakened. Then, individuals living in an urban area are more keen to maintaining their convenient life style and easier access to the foreign countries with more variety of goods and services to trade. So, these urban individuals will have less sympathy to those claiming for the subsidies for these provinces, and even may insist on reducing their tax spent for these subsidies.
The significance of the public sector management based on the loyalty to nation-state will decline as both the economic globalisation and the urbanisation are growing further, and they seem to be an inevitable phenomena. The globally influential economic agents will also keep lobbying for encouraging these phenomena in order to take an advantage of the efficient resource allocations and distributions in this system. As these globally influential economic agents contribute to the taxation for the public services, they eventually have a strong voice in the political lobbying so that this also create the political movement.
The government of each nation state will function as the subsidiary of the globally influential institutes and individuals. These remarkable globally influential ones are big global corporations and the influential global investors because these globally influential ones are those who contribute to the taxation at most. For the time being, most of the globally influential economic agents are the wealthy minority elites. But, there can be a possibility that there will be a strong active union of majority, who are actively moving across the national borders, sticking together such as a strong trade union of young labourers moving across various jobs in different countries, in the future. The key point is that almost all major economic activities are now world-wide so that the responsibility which a nation state government can cover will be diminished furthermore.
The well-being of these countries is now under the influence of the globally influential economic agents. These countries' national interest is overwhelmed by the global interest of these globally influential economic agents. The lobbying of the global economic agents based on their global interest will become stronger than the counterpart based on the national interest. Therefore, the reason d'etre of a national government declines.
This political transition also implies the end of majority of the modern political philosophies. They include some rebellious ideologies such as Marxism which aspires to destroy the status quo but wishes to replace the current nation state with another nation state. Even these political ideologies which put a strong emphasis on radical scepticism about nation state such as libertarianism are also in danger of extinction. The former example is just an attempt to hijack the nation state governemnt so that it cannot exist without an existence of a nation-state. The latter example is merely an attempt to decrease and minimise the power of the nation state, and its structural concept is still built upon the traditional nation-state function. All in all, this gradually induces the end of political ideological battles represented by the party politics. The near future politics will be more technocratic motivated by the economically pragmatic principle.
Back . . . . . . . . . . . . . . . . . . . . Continue reading
- Public Sector Administration
In a traditional sense of modern economics, each nation is responsible for administrating its own public sectors operated in this nation. On the other hand, this form pattern started encountering a new problem in this globalised world with economic agents with a more active and wide life style and more affluent sets of choice than the Cold War period. This phenomenon encounters with the problem of claiming who is responsible to pay for what they have used. Majority of countries operated by modern macroeconomic concepts operate their fiscal policy based on a national level and two or various regional level in inside a nation. So, there has not yet solid transnational fiscal policy concept emerging yet.
There is also a remarkably significant macroeconomic problem related to this globalisation and the expanding individuals’ activities. Not only the fiscal responsibility issue but also controlling the entire macroeconomic climate such as boom and recession. Due to the globalised activity level of businesses and individual life style, the business cycles of nations are more and more harmonised ever than it used to be. Then, the macroeconomic intervention by the macroeconomic policy such as the monetary policy, the fiscal policy, the international trade policy, and various supply-side policies such as controlling and monitoring the labour and capital mobility is less efficient. This is because one nation’s macroeconomic climate is highly more influenced by the others so that it may rather require the macroeconomic intervention in a tremendously wide multi-national or even a world-wide level which simultaneously control over the entire targeted region of this world at once.
Both the first responsibility issue (microeconomics) and the economic climate issue (macroeconomics) are concerned. The administrators of these public sectors defining the cost coverage responsibility and the resource allocation are more centralised and become in charge of administrating a wider scale. This centralisation may be considered as the optimum only if individuals are happy with their high administrating cost.
The problems of the public sector administration issues cannot be simply ignored. Some economists claim that it should be possible to put the decentralised politics in this global economy without taking these previously mentioned issues into consideration. Their claim is that the responsibility is spontaneously determined by all free economic agents fairly by following the natural free market movement toward equilibrium. Nonetheless, this equilibrium is not always a good equilibrium as many other economists affirm that there are both good and bad equilibrium outcomes.
The Game theory wisely indicates the bad equilibrium condition called the Prisoners’ Dilemma. The good equilibrium condition is where all individual economic agents pay for what they have used and how capable to contribute to. The bad equilibrium condition is where many economic agents are not contributing by means of their ability and responsibility, and then the economic climate is always in turmoil due to their disturbed unstable business cycles.
The prisoners’ dilemma warns of the free riding which means that many take advantage of letting or even enforcing the others to cover for the service meanwhile they obtain the shared common benefit from this service. This Prisoners’ Dilemma takes place when nobody shares the same principle and objective to fulfil their mutual interests because of their ignorance about what is occurring in real and what they are supposed to do to overcome from their unwanted situation. Therefore, by perpetuating this situation, individuals tend to be diverted from the good equilibrium and then be converged at the bad equilibrium as long as the aimlessness and the ignorance prevail.
In the traditional sense, human individuals have kept their reliance on the collective rational authorities to direct their economic policies with their paternalistic wisdom. In the feudalism, the feudal lords and the divine authorities were their representative guardians in charge of this paternalism. In the modern world, nation states and their government are the paternalistic guardian institutes meritoriously selecting their representatives from their general public. This collective authoritarian method has been functional as long as these paternal guardians have their strong principle encouraged by their nobles’ oblige and the scale is optimum size.
As the economies of scale expands furthermore that a nation-state can be responsible for positively controlling, the transnational rational authorities are now required more than before. Even the economic performance of the least developed countries (LDCs) is becoming more correlated with the business cycle of their trading partners. As the industries are more specialised in the global level, the business cycle fluctuation of one LDC is no longer negligible because the performance of its specialised industry affects their trade partners this LDC exports to.
- Urbanisation and market potential
In terms of the new economic geography theory, followings are the key variables of economic development.
V1. Low inter-regional transportation costs of trades backed-up by little geological obstacles
V2. Highly developed logistic networks based on a developed infrastructure such as capability to prepare for a strong infrastructure for the logistics such as a dock capable of launching heavy containers and effective networks of paved roads and railways
V3 Having an accessible trade partners have a high productivity and a purchasing power: This effect is combined with low inter-regional transport costs and highly developed logistic networks because the efficient access magnifies this factor.
* There is an index called market potential index (MPI) which takes account of these three variables V1, V2, and V3 together.
V4. The growth in productive population growth relative to the unproductive population growth (reasonable birth control, affordability of general education and parental love for children, and adjusted population growth to economic growth and land-capability).
V5. The human capital development (E.g. Education, Individual Liberty and Right, and Rationality). This affects the speed of learning newly introduced technologies in the world, adapting them to produce and sell newly introduced goods and services created, and ability to invent an original new technology themselves by referring to existing technologies.
V6. The political and social stability in both the present and the future time period.
V7. Abundant natural resource reserves, which create a trade surplus. The impact of benefit from it is bigger in emerging economies and least developed economies than developed economies, but some developed economies are able to develop further more than the other developed economies due to the extra surplus by extracting natural resources.
In order to fulfil these factors except for the variable V7 (Abundant natural resource reserves), concentrating a big population into one economic and political hub is essential, and this gradual process of the concentration is called urbanisation.
In order to increase the MPI representing the variable V1, V2, and V3, economic agents had better establish an economic hub gathering human and material resources together in one designated compact area. They can efficiently reach their needing/wanting resources when they are allocated closely to each other in this urbanised area. International trade hubs such as ports and traffic-junctions should be located in inside or near this urbanised area to ship in and out these traded goods and traveling individuals together in an efficient pace. The variable V4 (The growth in productive population growth) and the variable V5 (The human capital development) are more efficient when individuals live together closely in order to exchange their information and their resources to exchange. When these materials and individuals are scattered around, the transportation connecting individuals and the international trading hubs becomes very inefficient.
The challenge is the potential conflict among various unique individuals living together closely. In order to concentrate people together into one area, the political stability and the community harmonisation are highly required. In particular, in these Southern economies, the conflict between different identities tends to be an obstacle of their urbanisation process. Therefore, the variable A6 (The political and social stability) is a key element to achieve their urbanisation.
Nowadays, thanks to the globalisation encouraged by the rapid information technological growth, people in emerging and least developed economies have become able to copy the newly introduced knowledge and technologies, and use them to produce better goods and services. But, in order to grow their economy by this process, they need to fulfil these three following conditions:
- They need to improve and develop their education system to become able to copy the newly introduced technologies.
- They need a huge population in either their homeland or neighbourhood countries, or both, to sell these goods and services faster to grow their business.
- In order to accomplish these two objectives, the political and social stability is significantly required.
All in all, these nations require an urbanisation of their economy, which means increasing population density, which enables people to exchange information and physical resources each other fast. The urbanisation requires a huge population already existing. Therefore, an already highly populated nations tend to have an advantage.
Furthermore, the urbanisation lowers the cost of developing human capital because the speed of exchanging knowledge and technology becomes faster as the place become urbanised. The cost of developing human capital used to be a big obstacle for least developing nations when there was a huge barrier of exchaning the information. Both The end of the Cold War and the rapid information technological growth since then brought a globally free exchange of information flow. In addition, the knowledge and the wisdom gained from this flexible information flow have enabled people there to become harmonised with themselves. This aspect of the globalisation has made the harmonisation and the urbanisation tremendously easier than the past.
- The transition of Public Sector Administration and Urbanisation under the Globalisation
Judging from these two big aspects, public sector administration and urbanisation, human individual residents will be more concentrated into a limited number of urban cities to live due to the convenience for them to access to their economic needs and wants. At the same time, the population of many provinces of many countries will keep decreasing, and their industries will be more specialised in the primary industries sorely depending upon the variable V7 Abundant natural resource reserves which is irrelevant to the urbanisation.
The combined phenomenon of growth of the limited number of urban cities and decline of many provinces will reduce the cost of the public sector which is responsible for sustaining the infrastructure for both transportation and utilities in these areas. The cost of maintaining the transportation of the remote provincial areas and the infrastructure of utilities is significantly higher than the tax revenue gained from the local residents. Therefore, the government subsidies provided by the huge distribution scheme by the nation state regime have sustained these provinces.
The declining financially costly provinces and more efficient allocation of resources into an urban area seem to imply the reduction of the government subsidies required for aiding provinces. As the population of the provinces decreases, their power for bargaining to obtain the government subsidies will be weakened. Then, individuals living in an urban area are more keen to maintaining their convenient life style and easier access to the foreign countries with more variety of goods and services to trade. So, these urban individuals will have less sympathy to those claiming for the subsidies for these provinces, and even may insist on reducing their tax spent for these subsidies.
The significance of the public sector management based on the loyalty to nation-state will decline as both the economic globalisation and the urbanisation are growing further, and they seem to be an inevitable phenomena. The globally influential economic agents will also keep lobbying for encouraging these phenomena in order to take an advantage of the efficient resource allocations and distributions in this system. As these globally influential economic agents contribute to the taxation for the public services, they eventually have a strong voice in the political lobbying so that this also create the political movement.
The government of each nation state will function as the subsidiary of the globally influential institutes and individuals. These remarkable globally influential ones are big global corporations and the influential global investors because these globally influential ones are those who contribute to the taxation at most. For the time being, most of the globally influential economic agents are the wealthy minority elites. But, there can be a possibility that there will be a strong active union of majority, who are actively moving across the national borders, sticking together such as a strong trade union of young labourers moving across various jobs in different countries, in the future. The key point is that almost all major economic activities are now world-wide so that the responsibility which a nation state government can cover will be diminished furthermore.
The well-being of these countries is now under the influence of the globally influential economic agents. These countries' national interest is overwhelmed by the global interest of these globally influential economic agents. The lobbying of the global economic agents based on their global interest will become stronger than the counterpart based on the national interest. Therefore, the reason d'etre of a national government declines.
This political transition also implies the end of majority of the modern political philosophies. They include some rebellious ideologies such as Marxism which aspires to destroy the status quo but wishes to replace the current nation state with another nation state. Even these political ideologies which put a strong emphasis on radical scepticism about nation state such as libertarianism are also in danger of extinction. The former example is just an attempt to hijack the nation state governemnt so that it cannot exist without an existence of a nation-state. The latter example is merely an attempt to decrease and minimise the power of the nation state, and its structural concept is still built upon the traditional nation-state function. All in all, this gradually induces the end of political ideological battles represented by the party politics. The near future politics will be more technocratic motivated by the economically pragmatic principle.
Back . . . . . . . . . . . . . . . . . . . . Continue reading
The End of Nation States: Chapter 5. Is it the road to Anarch-Capitalism?
The End of Nation States:
Chapter 5. Is it the road to Anarch-Capitalism? Chapter 6.
This gradual decline of nation-states' power and their raison d'etre has become a negligible trend in this world. This diversification of politics is like a revolution replacing the political status-quo with an alternative. Unlike various political revolutions of socialism, fascism, and anarchism (Such as in Catalunya, Spain) seen in 20th century, this economic political diversification is far less violent and its process is slow, gradual, and even relatively unrecognisable. This new form of economic political diversification is a transition to the laissez-faire.
There are three types of political-structure which are dictatorship, democracy, and laissez-faire. In economics, these three are represented as command-economy, mixed-economy, and pure free market economy accordingly. Both anarchy and free market economy are based on the philosophical principle of the laissez-faire which is directly translated as "Let you do". This philosophical type encourages individuals to follow the flow of spontaneous orders without an intervention by any authority to artificially correct the flow. It assumes that none can be perfect to determine what is truly right and predict the future outcome correctly. It expects individuals to be capable and rational to choose and act by means of their free will, and the natural interaction of individuals without any autocratic intervention by an artificial collective force eventually induces an optimum outcome securing stability and prosperity.
Dictatorship and command economy are based on the complete scepticism about the laissez-faire as they support there needs to be an autocratic figure who is in charge of stabilising politics and economy suffering from the conflict of interests among individuals. Democracy and mixed economy claim the free flow of the laissez-faire requires an occasional autocratic intervention as the means of error correction as the laissez-faire is desirable but not perfect. Nation-states' government have been functioning as a driving force of either dictatorship=command-economy or democracy=mixed-economy. However, the gradually declining power of nation-states described in the previous chapters eventually leads the entire world economy and politics to the laissez-faire.
Anarchism is an extreme form of laissez-faire which does admit any authority like not only nation-states' government but also rational authorities of both judicature and private corporate governance. The origin of anarchism was invented by the idealism created by the Romantic movement which regards highly of establishing an utopian politics of altruistic individuals living in a harmony and philanthropy. The counter-force is political realism which is sceptical about the altruistic cooperation of individuals without being egoistic and power hungry stimulating a conflict of interests. Then, political realism regards highly of the necessary existence of authorities forcibly intervene to prevent the conflicts.
The currently growing global capitalism looks weird in terms of this economic political model because it contains the characteristics combining both aforementioned political idealism and realism: The economic political structure is flat and there is no particular authority fully controlling it meanwhile there is a function mediating the conflict of interests among individuals. The sovereign explained by Hobbes, the remarkable political realist philosopher, in his Leviathan is supposed to be either a single human or an artificially created congregation of individuals. Nevertheless, the market force grown by the expanding economies of scale has already become significantly powerful enough to influence individuals' action patters.
The anti-capitalist conspiracy theorists presume these corporate elites plot to establish their new world order conducted by their leading world government. But, by means of the real economic and legal environment, this is an excessively costly, and it is less likely to be necessary. These conspiracy theorists tend to assume that laws are purely created by the powerful minority elites for their own interests. By contrast, it is extremely difficult to enforce majority individuals to obey this law without fulfilling their interests because it requires the system watching and correcting every subjected individual living under this order all the time.
Law is a form of instruction guidance for all subjected individuals living in a functional order, and it takes account of individuals' desires and natural characteristics influencing their action patters. So, unlike the conspiracy theorists' presumption, law takes account of individuals' custom to instruct individuals to maintain their social order without an intense authoritarian control. The market force itself is a law which spontaneously influences individuals' action patters by providing rewards and punishments for the consequence derived by their actions. As this market force is growing under the ongoing expansion of the global capitalism, the element of this spontaneous law becomes more and more significant in individuals' life.
Moreover, unlike nation-states' government which is plopped up by an involuntary tax contribution from their citizens, private corporate elites need consumers and investors to voluntarily pay the price for goods, services, and financial gains from these corporations. So, these big corporations and their elite executives can be bankrupted when they lose their consumers and investors or commit some injustice reducing individuals' happiness so that these corporate elites always under the pressure of sustaining their businesses and acquiring trust from majority individuals.
Unlike the classical anarchism, this new emerging form of anarchism will remain the public sector in order to preserve the necessary existence of judicature and its rational authorities as an intermediary of fair consistent judgement. These rational authorities in judicature must not belong to any of private enterprises because they have to be neutral to any conflict of interests among individuals. Furthermore, in order to maintain the stable order for the global business interests, the interests for and the benefit to majority mass will be cared because the influence of majority mass on both economy and social policy is strong. Therefore, the fair independent branch of judicature will be preserved even after the end of nation-state.
All in all, the law and order in the post nation-states era becomes more spontaneous than it used to be, and there is no single sovereign directly controlling this order. The key elements of maintaining law and order are the market demand, happiness/utility of majority individuals, and the constraint of available natural resources. Because of the rapidly developed and globalised information technology, it has become easier to know what is demanded and what is available to supply and detect any mischief of individuals. So, individuals are more required to become rational enough to take the others' opinion into account while they attempt to maximise their utility. The influence of sympathy and antipathy will be furthermore exaggerated and this will affect individuals' will more than before.
Individuals' motivation to maximise the utility and gaining sympathy will be restricted under the inevitable limitation of natural resources. So, the incentive of repressing the population growth and the other environmental conservation issues and will be still considered as the negligible factors. As the traditional norms and the universal values disappear, individuals are literally free to do whatever they want under the constraint. This constraint is the natural barrier which is the measurement of how much the earth is capable to afford the natural resource supplies for individuals' economic and personal life activities.
In this new era of the end of nation states, the individuals' sensation will be more important measures of social justice as the universal value is no longer worshiped as the universal doctrine to follow as the principle of social justice. Then, individuals' honest subjective sensation such as pleasure and pain will be the measure for the social justice, and law and legislation will be based on the calculus taking account of how these individuals react on by means of their honest sensation without any abstract value in social justice.
Bentham's word "The greatest sum of pleasures with the lowest sum of pains is the principle of moral and legislation." will prevail all the more. This is a bodiless sovereign with an invisible hand regulating individuals' will and action with the aggregate demand under the constraint of individuals' antipathy and the supply limit of natural resources.
* Small remark for my Project1:
This is my original political compass based on various groups of civilisation and religion. Although the top spectrum of political ideology is not quite technically identical to the current world movement toward the end of nation states, both share the similar characteristics together. The positive law based on the spontaneous order can be explained by the market mechanism derived by individuals' desire, sympathy, and antipathy and the supply limit of natural resource by means of the legislative measure. The normlessness of the end of nation states can be seen as the extended secular-liberalism by means of the judicial measure.
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Chapter 5. Is it the road to Anarch-Capitalism? Chapter 6.
This gradual decline of nation-states' power and their raison d'etre has become a negligible trend in this world. This diversification of politics is like a revolution replacing the political status-quo with an alternative. Unlike various political revolutions of socialism, fascism, and anarchism (Such as in Catalunya, Spain) seen in 20th century, this economic political diversification is far less violent and its process is slow, gradual, and even relatively unrecognisable. This new form of economic political diversification is a transition to the laissez-faire.
There are three types of political-structure which are dictatorship, democracy, and laissez-faire. In economics, these three are represented as command-economy, mixed-economy, and pure free market economy accordingly. Both anarchy and free market economy are based on the philosophical principle of the laissez-faire which is directly translated as "Let you do". This philosophical type encourages individuals to follow the flow of spontaneous orders without an intervention by any authority to artificially correct the flow. It assumes that none can be perfect to determine what is truly right and predict the future outcome correctly. It expects individuals to be capable and rational to choose and act by means of their free will, and the natural interaction of individuals without any autocratic intervention by an artificial collective force eventually induces an optimum outcome securing stability and prosperity.
Dictatorship and command economy are based on the complete scepticism about the laissez-faire as they support there needs to be an autocratic figure who is in charge of stabilising politics and economy suffering from the conflict of interests among individuals. Democracy and mixed economy claim the free flow of the laissez-faire requires an occasional autocratic intervention as the means of error correction as the laissez-faire is desirable but not perfect. Nation-states' government have been functioning as a driving force of either dictatorship=command-economy or democracy=mixed-economy. However, the gradually declining power of nation-states described in the previous chapters eventually leads the entire world economy and politics to the laissez-faire.
Anarchism is an extreme form of laissez-faire which does admit any authority like not only nation-states' government but also rational authorities of both judicature and private corporate governance. The origin of anarchism was invented by the idealism created by the Romantic movement which regards highly of establishing an utopian politics of altruistic individuals living in a harmony and philanthropy. The counter-force is political realism which is sceptical about the altruistic cooperation of individuals without being egoistic and power hungry stimulating a conflict of interests. Then, political realism regards highly of the necessary existence of authorities forcibly intervene to prevent the conflicts.
The currently growing global capitalism looks weird in terms of this economic political model because it contains the characteristics combining both aforementioned political idealism and realism: The economic political structure is flat and there is no particular authority fully controlling it meanwhile there is a function mediating the conflict of interests among individuals. The sovereign explained by Hobbes, the remarkable political realist philosopher, in his Leviathan is supposed to be either a single human or an artificially created congregation of individuals. Nevertheless, the market force grown by the expanding economies of scale has already become significantly powerful enough to influence individuals' action patters.
The anti-capitalist conspiracy theorists presume these corporate elites plot to establish their new world order conducted by their leading world government. But, by means of the real economic and legal environment, this is an excessively costly, and it is less likely to be necessary. These conspiracy theorists tend to assume that laws are purely created by the powerful minority elites for their own interests. By contrast, it is extremely difficult to enforce majority individuals to obey this law without fulfilling their interests because it requires the system watching and correcting every subjected individual living under this order all the time.
Law is a form of instruction guidance for all subjected individuals living in a functional order, and it takes account of individuals' desires and natural characteristics influencing their action patters. So, unlike the conspiracy theorists' presumption, law takes account of individuals' custom to instruct individuals to maintain their social order without an intense authoritarian control. The market force itself is a law which spontaneously influences individuals' action patters by providing rewards and punishments for the consequence derived by their actions. As this market force is growing under the ongoing expansion of the global capitalism, the element of this spontaneous law becomes more and more significant in individuals' life.
Moreover, unlike nation-states' government which is plopped up by an involuntary tax contribution from their citizens, private corporate elites need consumers and investors to voluntarily pay the price for goods, services, and financial gains from these corporations. So, these big corporations and their elite executives can be bankrupted when they lose their consumers and investors or commit some injustice reducing individuals' happiness so that these corporate elites always under the pressure of sustaining their businesses and acquiring trust from majority individuals.
Unlike the classical anarchism, this new emerging form of anarchism will remain the public sector in order to preserve the necessary existence of judicature and its rational authorities as an intermediary of fair consistent judgement. These rational authorities in judicature must not belong to any of private enterprises because they have to be neutral to any conflict of interests among individuals. Furthermore, in order to maintain the stable order for the global business interests, the interests for and the benefit to majority mass will be cared because the influence of majority mass on both economy and social policy is strong. Therefore, the fair independent branch of judicature will be preserved even after the end of nation-state.
All in all, the law and order in the post nation-states era becomes more spontaneous than it used to be, and there is no single sovereign directly controlling this order. The key elements of maintaining law and order are the market demand, happiness/utility of majority individuals, and the constraint of available natural resources. Because of the rapidly developed and globalised information technology, it has become easier to know what is demanded and what is available to supply and detect any mischief of individuals. So, individuals are more required to become rational enough to take the others' opinion into account while they attempt to maximise their utility. The influence of sympathy and antipathy will be furthermore exaggerated and this will affect individuals' will more than before.
Individuals' motivation to maximise the utility and gaining sympathy will be restricted under the inevitable limitation of natural resources. So, the incentive of repressing the population growth and the other environmental conservation issues and will be still considered as the negligible factors. As the traditional norms and the universal values disappear, individuals are literally free to do whatever they want under the constraint. This constraint is the natural barrier which is the measurement of how much the earth is capable to afford the natural resource supplies for individuals' economic and personal life activities.
In this new era of the end of nation states, the individuals' sensation will be more important measures of social justice as the universal value is no longer worshiped as the universal doctrine to follow as the principle of social justice. Then, individuals' honest subjective sensation such as pleasure and pain will be the measure for the social justice, and law and legislation will be based on the calculus taking account of how these individuals react on by means of their honest sensation without any abstract value in social justice.
Bentham's word "The greatest sum of pleasures with the lowest sum of pains is the principle of moral and legislation." will prevail all the more. This is a bodiless sovereign with an invisible hand regulating individuals' will and action with the aggregate demand under the constraint of individuals' antipathy and the supply limit of natural resources.
* Small remark for my Project1:
This is my original political compass based on various groups of civilisation and religion. Although the top spectrum of political ideology is not quite technically identical to the current world movement toward the end of nation states, both share the similar characteristics together. The positive law based on the spontaneous order can be explained by the market mechanism derived by individuals' desire, sympathy, and antipathy and the supply limit of natural resource by means of the legislative measure. The normlessness of the end of nation states can be seen as the extended secular-liberalism by means of the judicial measure.
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