Thursday, March 24, 2011

The path to economic equilibrium

War is about money and power at the highest level of society, the level of the ruling elites. (Ruling "mafias", if you will.) When the elite of one nation is predominant in wealth -- and consequently power -- it dominates the rest: the archetype being the Roman Empire. When several states are equal in wealth, they become rivals, for example, England, France, Spain from the 1300's to the 1800's, with the Germans joining the group after the fall of Napoleon. Wars between rivals cost all participants, but when it's over, the winners have the power, by which they enrich themselves, and the losers are generally subjugated and taxed, and kept in a subordinate (ie, weakened) state.

WW2 was part two of the first full-scale, total war of the industrial age. At its end, European and Japanese wealth, social infrastructure and industrial capacity had been destroyed. Among the "winners", only the US remained virtually undamaged. This fully explains what followed: global US military and industrial dominance. And because the war pulled Americans from the darkness of the Great Depression, Americans in their euphoria came to associate the military with glory, salvation, prosperity, and all things noble. Militarism became the new secular religion. (Which explains why "The Greatest Generation" went ballistic at the heresy of the 60's youth culture's -- these days known as the "baby boomers" or just the "boomers" -- opposition to the Vietnam war.)

But now the rest of the world has rebuilt, China and India -- with a combined population seven times that of the US -- have achieved industrial modernity, and through labor arbitrage and the efficiency of modern global transport, captured world manufacturing markets. The US has little left beyond corrupt finance capitalism and for-profit military production. Whatever US wealth remains will be exhausted by military spending and continued but ever-diminishing consumer spending. The US is essentially on a downward track which reaches equilibrium when US labor's decline meets China and India's rise, unless...

I see two possibilities (you may see others) for an alteration in this downward course. (1) The less likely and record-breaking-ugly method -- but consistent with an "exceptionalist" fascist militarist pathology: a global nuclear war that destroys foreign industrial capacity, and puts the US -- as the only intact survivor -- back in the manufacturing catbird seat. For this to work, the US would have to win it big and win it fast -- seems unlikely -- because all modern powers save Germany have substantial nuclear deterrent capability. (2) Technological innovation by which the US achieves a substantial competitive advantage in industrial productivity. Failing that the US is destined to become a starkly two-tiered society of the rich and the trash.

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