What is the new political-economy of this century to be? One does not have to be of rigidly historical materialist perspective to perceive that different ages have been governed by different patterns of political economy. The political economy of the Bronze Age was different from that of the Iron Age. If only for the fact that swords needed sharpening more often, putting greater cost on armies moving from their home territory, necessitating ploughs made from wood and restricting long distance communication other than by sea.
The Iron Age bought in horse shoes and blades that kept their edge longer (the radical pacifist use of such blades was in carpentry, which may be a lost metaphor in the life of Jesus). Political economy was for millennia, restricted to a relatively anarchic pattern of warfare and freedom.
An understanding of electromagnetism, microbial life and the use of the stored energy of fossil fuels changed the pattern of human organisation. Now we have a diverse array of revolutionary tools bought about by a deeper ability to harness the power of semi-conductors and genetics. What are the likely emergent patterns, one might ask?
After 1989 and the collapse of the Soviet economic model it seemed that the world would be united under one approximately equivalent legal framework based on European legal models, with the idea of private property central to economic development. Fast forward a few decades and we see Francis Fukuyama scribbling away to remove the egg from his face.
For rather than a triumph of the liberal order across the world we face forms of divergent organisation of political economy. In China, the liberal idea of individual human rights makes little inroads into a fusion of traditional Confucian values combined with novel interpretations of Marxist-Communist thought, a mere sprinkling of market dynamics exists within a framework of limited property rights and competing state sponsored actors.
Across much of the West, the liberal order is subverted by a hyper-individualism and international economic order that does much to evade and subvert national laws, States and indeed large corporations. A succession of billion dollar scandals flashes across the pages of news outlets from month to month. 1MDB, Greensill, various Laundromats, Wirecard, Danske, etc….The level of routinised tax evasion in invoice mispricing and offshoring is a not insignificant percentage of global GDP (4-7% of GDP across Africa as much as 9% of the GDP of Mozambique ) , such that we observe not so much the Liberal Order as an illiberal disorder in political economy.
With rapid electronic transfer of unlimited amounts of cash, the situation is more than a little comparable to Atlantic piracy of the sixteenth and seventeenth century. Large cargoes of capital seized on the high seas by actors that were often impossible to identify. The question of political economy then becomes, is the law enforceable? If not does it need to change, and if it does, can it be changed and what will the new law be? The current competing models would seem headed towards a techno-authoritarianism or an anarcho-capitalism. Both characterised by extreme levels of economic and political inequality.
Clearly the current trajectory of both systems has bought us to an ecological crisis. The question then becomes what could change this. One historic example is the compensation of slave owners after the abolition of slavery in Great Britain. Owners of fossil fuels could be compensated; the bond holders and shareholders, of the supply chain.
Compensation for the abolition of slavery was possibly the largest ever transfer of state wealth to private individuals. If we assume broadly that the people who would need to be compensated are already the richest on the planet, then we face the unfortunate conundrum that 1,300 people are said to account for 93% of the world’s wealth and as result, what do you compensate them with?
The most obvious alternative is discipline or punishment, but only China seems willing or able to do so to its nationals. Capitol Hill’s interrogation of the Americas tech giants being something of a wash out with almost no material action since. Similar might be said about the response to companies involved in some of the more outlandish episodes of the financial crises of 2007 in all countries bar Iceland.
The Sackler family may have suffered for the sins of Pharma. But there has been no whiff of a Senate hearing, let alone legislative action on the other great industrial funder of the US lobbey and prime suspect for the ecological crisis, Oil. With wealth comes power, and how do you exert power over those with power save through law, which as mentioned above, is notable for its patchy enforcement against national champions.
Looking out on this, it is hard to see how a market society can change its underlying incentive structure to redirect resource use into less destructive and extractive patterns. Doing so would mean the rearrangement of profit rights, which would face a blizzard of pressure while the planet burned. Centrally directed resource use is more likely to achieve clear goals, as in war, and so it has proved with Chinese capacity to install more wind power in a year than the rest of the world had ever managed. But just as in a market society, that a centrally directed economy can, does not mean it will.
So it would seem that we should expect to move into a new productive system created by the coming of age of variety of technologies, not least, artificial intelligence, in an environment where the legal framework is too slow to adapt to the range of economic opportunities. This might be seen as a complex system changed on some crucial parameter such that the behaviour that emerges is as different as water is to steam.
So let us look at these new tools and guess as to the shape of political economy that will grow out of them in the medium term, assuming no radical departure from the current legal framework.
svendesai 