A Leaderless World:
Chaos is the new norm in the global arena as there is no single country or a bloc of countries with enough political and economic might to affect, solve or alter the course of even a single impending global problem unilaterally. Take 2016’s export data for instance as a simple measure for economic success and run a 9-year projection on its outlook; the international trading world as we know it in 2021 would be a much different place should the current trend continue undisrupted. The decrease in both fossil fuel export volume and value (+$4 Trillion 2012 est), which is the most traded commodity for the past half century could result in contraction of the world exports’ value by %52 compared to that of 2012. Total crude oil production in 2015 alone was 4 Billion toe (30 Billion barrels), extracted from 142 locations/ countries across the planet.
Oversupply of fossil fuel unleashed by means of hydro-fracking in combination with reduced market demand due to availability of cheaper alternative energy sources namely The Death of The Combustion Engines, resulted in what has been the sharpest price drop in over a decade: WTI prices plummeted from $102/bbl to $30/bbl in a period of 18 months (July 2014~ Feb 2016) but stabilized at $50/bbl almost a year later – That being said, the AEO considers 3 scenarios for the future of crude oil price by 2035.
Historically, Crude oil reached an all-time high of $145.31 in July of 2008 and a record low of $1.17 in February of 1946 according to Trending Economics data. As for the future of the world oil prices ARIMA model forecasting however paints a much more gloomy picture of $5 per barrel, whereas recent troubling geopolitical developments in Venezuela, Libya, Iraq and reduced development investments in Azerbaijan and China suggest supply insecurity and a sudden jump to $80~$120 levels despite rising numbers of oil-rig counts in the US.
Although world’s total export volume for all products is set to contract by 2021 China, the USA & Germany’s combined share of global export will continue to grow from %27 in 2012 to %52. In fact, China’s share of global exports will grow to %27 in 2021 in comparison to %11 in 2012; that is over ¼ of the total global export; thus, the US Dollar will perhaps no longer be the most preferred currency for international traders after 2020.
Let China Sleep, for when the Dragon awakes, she will shake the world. – Napoleon Bonaparte
Similarly, by 2021, Japan, Korea, Hong Kong & France will each have only %3 ~ %5 of the global export market share which combined with that of China, the USA & Germany’s share will account for %70 of the world’s total. Meanwhile, no other country will be left with more than %1 share of this $10 Trillion market.
It is further speculated that while Papua New Guinea, Cambodia, Vietnam, Myanmar, Bangladesh, Serbia, Dominican Republic & Sri Lanka will enjoy %132 ~ %420 growth in export volume within the speculated 9 year period, at current pace the following countries consisting mostly of petrodollar and underdeveloped economies will drop out of the exporters bloc by 2021: Zambia, Bolivia, Belarus, Trinidad and Tobago, Brunei, Equatorial Guinea, Norway, Azerbaijan, Oman, Colombia, Ukraine, Algeria, Kazakhstan, Angola, Nigeria, Qatar, Libya, Venezuela, Kuwait, Russian Federation, Saudi Arabia & United Arab Emirates.
Take a closer look at the following data illustration and try to recognize the new world order which is about to prevail upon the unsuspecting nations.
Database: Global Export Forecast (2012-21)
2050 – GDP by PPP Projection
Global scale disruptions namely the rapid progression of renewable free energy, fossil fuel abundance as a result of hydro-fracking, rise of A/I machines, ascent of the Demonic Kalifate and surge of right-winged populism across the planet followed by widespread resistance against it has been shaking the pillars of stability around the world in unprecedented levels leaving most governments out of touch with their electorates’ deteriorating economic wellbeing more so than ever.
Liberal governments’ economic deficit around the world notably their underperformance in addressing unemployment, aging population, the combined mounting debt of $40 Trillion and subjective wealth distribution amid austerity measures of the 2009 recession has left the naive, hopeful of populists’ faint promises. This time around protectionism and populism is wrapped in colorful nationalist flags of BREXIT, FRAEXIT, GEREXIT, ITAEXIT, to be provoked further by ever-famous Trumponomics; a series of bold promises to cut taxes, drain the swamp, kick bad hombres out, reform trade deals and introduce large infrastructure and defense fiscal stimulus plans funded by fictitious capital, while restricting freedom of press and independence of judiciary in the name of fake news and by means of providing alternative facts.
Despite the overwhelming abundance of economic data pointing to opposite direction, it seems Don Quixote, his horse Rocinante, and his squire Sancho Panza conspire yet another round of unsuccessful attack on the windmills for …
-“Destiny guides our fortunes more favorably than we could have expected. Look there, Sancho Panza, my friend, and see those thirty or so wild giants, with whom I intend to do battle and kill each and all of them, so with their stolen booty we can begin to enrich ourselves. This is noble, righteous warfare, for it is wonderfully useful to God to have such an evil race wiped from the face of the earth.”
-“What giants?” Asked Sancho Panza.
-“The ones you can see over there,” answered his master, “with the huge arms, some of which are very nearly two leagues long.”
-“Now look, your grace,” said Sancho, “what you see over there aren’t giants, but windmills, and what seems to be [their] arms are just their sails, that go around in the wind and turn the millstone.”
-“Obviously,” replied Don Quijote, “you don’t know much about adventures.”
― Miguel de Cervantes Saavedra, Don Quixote
What is wrong anyway?
Sadly, export performance is only one side of the coin. Import and trade deficit imbalances, however, tell us an entirely different story for no single nation on this planet is adequately independent to stop or restrict imports when it comes to growing demand for new technologies, energy, and goods not produced locally; thus, rendering protectionism self-contradictory at its best more so than ever.
Domestic problems around the world even in the most developed nations such as the USA or Japan prevent many countries from taking global leadership roles against impending international crises such as climate change, poverty or terrorism. It is speculated that some %40 of the entire federal budget is spent on pensions and health insurance in the USA alone. China may be years away from confronting this problem; however, its per capita income is yet to reach 1/3 of Portugal’s, spelling out income inequality at its best.
Not much to anyone’s surprise, the effects of global warming such as drought and flood sends food price shockwaves around the world; nonetheless, most governments just don’t have the resolve to cooperate at an international level to combat climate change, leaving every nation for itself. Same holds true for international security and combating terrorism/ totalitarianism when the international coalition is mostly comprised of paper-pushers and pen-lifters. The end result of such reluctance is eventually translated into mass-migration of millions of homeless illegals to safer shores at the expense of disrupting free movement of people across dozens of nations notably the Eurasian continent, causing transportation and tourism industries to lose billions of dollars in revenue.
The rise of “pivot flexible states” to economic success is yet further proof of a leaderless world. Those who are not bound by the rules of a single ally and stay flexible, such as Brazil and Turkey profit from multiple relationships with Western-led globalized economies as well as the BRIC members in contrast with those who employe NAFTA / Japan model risking over-reliance on US economic cycles.
As the inevitable forces of change are reshaping the future, the current power vacuum will boil down to a G2 world comprising of China and the USA. Unlike the antagonism of the Soviet era, these two superpowers are bound by rules of commerce: China is a major creditor to the US, while the US is China’s largest buyer! In the very likely event that China and US fail to cooperate on some major global issues, the rise of strong pivot states would form a world of regions where every state is deemed on its own with some stronger ones taking the initiative to address regional and transnational problems specific to their region. For example, South America would be led by Brazil while the EU would seek Germany’s leadership in matters concerning the Europe, North Africa, and the Middle East.
But why are we running into so many domestic, regional and international problems with no clear solution at hand? What is wrong? Is it because of the Russian’s meddling with democratic governance across the globe or was it all because of a Chinese global warming hoax?
According to OECD, economic growth will slow over the next 50 years, while inequality will rise by 40 percent in Western countries. The widespread dearly held notion that “the best way for a society to grow and be prosperous is for it to allow its individual citizens to pursue their self-interest in a free market” is no longer in synergy with the rapidly changing reality of the world so the neoliberalist economic model seems to be failing. But why?
Some contributing factors to the unsustainability of the neoliberalist economic model are:
- Increased use of FIAT Money by governments – a currency that isn’t backed by Gold/ Silver and printed as needed to combat financial crisis with no hopes of future repayments
- Financializing – interests on loans and mortgages creating & circulating unreal money worldwide
- Global Imbalances in Trade Deficits – US & EU’s national debt grows as they import more than they can export to Germany, China, Japan & OPEC member countries
- Sharing, Free for All, Overly Abundant Economy made possible by information technology
Capitalism is founded upon property ownership, but property ownership matters less in our information-based world where we’ve started to develop a system in which money no longer determines the value of a product so it’s free, it doesn’t make a profit and it’s not anybody’s property. This time, it is neither communism nor socialism but it is the information technology that is the primary reason for disrupting the fundamental principles of capitalism. There is no way an economic system with free goods and no property rights can be capitalist. i.e. Wikipedia
If you have been following the news you already know that these disruptions are not limited to information goods only as the rise of autonomous robots, IOT enabled devices, & A/I automated production systems will be driving the production/ transportation costs to near zero. Similarly, the renewable energy production costs are limited to operational expenses only. That is because no one owns the endless abundance of sun-rays nor the wind force, unlike the way some corporations have formed a monopoly over the oil-rich regions of this planet for the past 100 years.
These reasons combined with major shifts like climate change, aging labor force, rising pensions and migration will force nations to start developing post-capitalist economic models; i.e. basic universal income funded by taxing the job-stealing robots!
Simpler said than done, transitions of this importance could be a long and painful process shaped by technological advances and global shifts but certainly not by means of protectionism or populism. It took us more than 15 centuries to fully develop and relinquish feudalism after our hunter-gatherer ancestors mastered farming and domestication of animals some 4000 years ago. The transition from feudalism to capitalism was a complex process too, prevailing to unsuspecting masses not by choice but through encountering the inevitable forces of change such as rapid population growth leading to famine of the 13th Century, and formation of banking industry in the 15th Century followed by the conquest of American Continent and development of printing press serving as catalyst for advancement of science. Industrial capitalism too has gone through many changes; according to Kondratieff’s theory of Capitalism’s Adaptability, industrial capitalism goes through 50 year-long synodic wave cycles: 1790 to 1848, 1840 to 1890s, the mid-1890s to 1945, and 1945 to 2008. The upturn is driven by the development of new technology and high investment, and the downside typically ends with economic depression. It may be that capitalism’s adaptability has been stalled despite the fact that the elements of a fifth wave have started to appear yet high unemployment, bankruptcy and the unavailability of credit don’t seem to go away anytime soon. Or, could it be that employment opportunities of the 5th wave are being created as we speak but for robots, this time around as opposed to the cheap 3rd world labor, and that capital gains are distributed across the planet among the stateless corporations which happen to have grown more powerful than their debt-sunk governments? It’s good to know that tax evasion costs governments $200 billion per year and some $7.6 trillion [%8 of global household wealth] is being stored in offshore tax heavens.
We now live in such an advanced era that most blue collar jobs are up for grabs by Robo Sapiens and cyborg hybrids, so you can’t really build a wall to keep the robots out. At the current pace of widening the gap between manufacturing jobs vs output, the future societies will be a place where the majority are left with few options for income generation limited to renting housing to others or relying on their life-savings and pensions. Those without property or savings’ only options will be to use their remaining money to upload themselves into a digital life form or rely on charity from the hyper-wealthy!
So, once again the inevitable forces of change such as energy depletion, overpopulation resulting in growing scarcity of earth’s resources, climate change, aging labor population and migration will eventually force us to react and develop a more sustainable economic model for if there is one thing history has taught us is that it’s only on the brink of destruction and precipice that we find the will to change and evolve.