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Will a One-World Economy Work?
One-world means one ruler, a virtual dictatorship
We will base our analysis and answer on history.
Let's try to see if economic history as distinct from political history is feasible. We proceed by reviewing efforts at setting up a one-world economy in broad outlines.
We will start with barter that grew into mercantilism that grew into capitalism and planned economy.
At the start of conscious efforts to develop economic theory, the concept was political economy. This was one concept not separate, one as political concept and the other as economic concept.
In the first place politics and economy are inventions. In Europe the prevalent political system was monarchy. In the Orient, China, the system was dynasty. These two had in common, absence of the participation of the subjects to select their leaders. Monarchy was hereditary. Dynasty was partly hereditary in the sense that once the pioneer had established himself by means of war siblings will reign. The dynasty was replaced by a more powerful clan.
Monarchy was more faithful to the concept of hereditary reign. However, it was broken by Napoleon Bonaparte, who established his own monarchy by usurping power from the French revolution that petered out.
In both the monarchy and dynasty, the economy was under the power of the king or the feudal lord to decide. The underlying property of both the political system and the economic system was choice. Both belong in the science and art of making choices. Machiavelli attempted and partially succeeded in documenting monarchical methods of rule.
While the kings were making war there emerged a class of merchants who made more money by lending their extra money. So emerged the merchant banker. For example, Nathan de Rothschild lent money to the king of England to finance the peninsular war that saw the defeat of Napoleon in Waterloo. In monarchy, the king made decisions on the coffers of his kingdom.
The king of England gave concessions in politics to be able to tax. The magna carta was actually a concession to several small counties. In France, King Louis XVI called the National Assembly to be able to raise taxes to replenish the coffers that was exhausted owing to his support of the 13 American colonies in their revolt against the British empire. The deputies of the masses asserted that they were the true representatives of the people and launched the French revolution of 1789 towards democracy. Eventually they beheaded the king and queen, for having sought the help of Austria to restore the throne.
In early19th century the sphere of the British pound and the sphere of the American dollar clashed.
"Over the period from 1789 to about 1820 the United States struggled for economic survival in an international environment controlled by Britain. Americans were almost completely at the mercy of the British not only for providing critical capital and manufactured imports but also for purchasing most U.S. raw material exports. Continued access to British markets was absolutely essential to Americans...." (Deese, D.A. "The Hazards of Independence: World Politics in the American Foreign Policy Process." The New Politics of American Foreign Policy. 1994:8).
Political power came into play and political power was backed up with economic power.
A certain group conceived of a plan to weaken Europe so that the American dollar could take over. This group was comprised of British, American and Dutch merchant bankers who were also into government or who influenced governments. The grand strategy was to sponsor a government that could carry out their economic agenda.
Part of the strategy was to weaken Europe and strengthen America. So they armed the Axis powers, mainly Hitler's Germany. They financed Hitler to rearm Germany. Russia was to remain neutral. That is why Hitler made a secret non-aggression pack with Stalin. Hitler rumbled over Europe; Only Great Britain stood in his way. Italy expanded into Ethiopia, Japan likewise expanded over Asia starting with Manchuria of China, Indochina, Malaysia, and the Philippines. Japan had already occupied Korea for 30 years. India stood neutral, and spared Japan of military forces. Hitler thought he could occupy Russia and stabbed Russia while it was unprepared for a German attack. Russia was saved by the winter, a historical precedent that was the fate of Napoleon. German forces dispatched to take Russia were given ammunition and rations good for two months. The United States was cajoled into WWII by allowing Japan to take a sneak attack on Pearl Harbor on December 7,1941. When the Japanese attackers were on their way to Hawaii, the lone scrambler in Pearl Harbor was switched off Before this "day of infamy," in the words of Pres. Franklin D. Roosevelt, America did not want to meddle in the quarrels of Europe.
The plan of the internationalist group to dominate world economy manifested itself with the Bretton Woods conference held in July 1944 in the United States. WWII was still raging. Italy was already defeated by the Allied forces but Germany and Japan had not yet surrendered. The Allied invasion of Normandy was still one year away; Germany surrendered in June 1945, Japan followed suit in August 1945. At Bretton Woods, the gold standard was established with the American dollar as the world currency. An ounce of gold was given the value of US $35. European countries like France, and Great Britain could not resist.
The end of WWII saw the United States as the only source of credit in the world. Countries like Great Britain and France needed loans for reconstruction. The United States gave loans by means of the Marshall Plan I and II. The Marshall plan was an effective method in reshaping the economic policies of Europe according to the wishes of the United States. It prescribed the way how these loans were to be spent, with payment of outstanding loans being the top priority. Great Britain grumbled to no avail (Kolko, J. and G. Kolko. The Limits of Power. 1972).
A country that applied for a loan, say, US$ 1 billion, must put up a counterpart of US$ 1 billion. The whole lot of US$ 2 billion was charged an interest of 5% that belonged to the United States. In effect, the loan recipient paid interest on its own counterpart. US congress would not enact the Marshall plan without this provision.
Russia applied for a Marshall plan loan but was not given. So there emerged the capitalist sphere and the planned economy sphere managed by Russia. Still the capitalist sphere is large enough. So we can say that WWII almost made a one-world economy.
The internationalist group consolidated its economic power with the establishment of International Monetary Fund and World Bank.
There was a long interlude of the Cold War since 1950 up to 1990 when USSR broke up. From the late 1940s Russia and China were allies up until 1959 when they parted ways. Russia has come over to the capitalist camp. China has remained with its planned economy that has adopted some modern technology. China is a member of the IMF-World Bank but not a supine one. In the latest IMF-WB meeting held in Tokyo, the top economic ministers of China did not attend.
China has opened banks in several countries and has been giving loans to several countries.
The United States and China has been allies since 1972 when US Pres. Richard Nixon and Mao Tse-Tung, Chairman of China, signed the rapprochement treaty. However, their alliance is not based on common beliefs or systems. The treaty enumerates their differences that was insisted upon by Zhou Enlai, then prime minister of China. The US-China alliance, initiated by the US through the ping pong diplomacy has realigned superpower politics. When before it was Russia and China pitted against the US, now it is the US and China pitted against the USSR. Russia even went ahead of the US in space exploration but left grassroots welfare behind. It was bound to implode that was diffused by Mikhail Gorbachev at the expense of the Communist Party. At the eve of the break up of USSR Gorbachev appealed to the West not to attack as the empire disintegrated.
There is a fundamental difference between Russia and China. The Communist Party in Russia suppressed the people; the Communist Party in China has the support of the people.
There is one fundamental difference between the US and China. The Chinese government owns all the land in China. The US owns only a small portions of US territory, like national parks. It took a revolution to change the land ownership in China; it is a big leap to the present and future. When its population will have grown in density as China now has, it is doubtful if the US will change its land tenure system. Substantial expropriation will bring about a revolution. The wealth of the US is more in terms of some gold, bonds and stocks; the latter two can easily evaporate. Under the new rules of Basil III (since 2013), gold is now Tier 1, meaning a bank can lend money as much as the equivalent of its gold in its vaults. Assuming that China will have caught up with the US in terms of capital goods and human capital, China will be more wealthy than the US in the future. (I have a Hub "China to catch up with the US by way of the economy."). But for most human beings, abundant material and money wealth don't matter much. Egalitarianism is much more valuable.
The political system of China controls the economy of China. The political system of the United States partially controls economic system of the United States. The Fed largely controls the economy of the United States and other countries in its orbit. Pres. Kennedy issued Executive Order 11110 authorizing the Treasury to mint dollar coins; he was killed and his coins were melted. Pres. Lyndon Johnson who took over Kennedy reversed the executive order. Johnson did not run for reelection after he had a conference with members of the internationalist group, saying "How could I be president if I cannot sit in a conference table and say what I want?"
Corporations in China are corporations of the people. Corporations in the United States are owned by incorporators who are private citizens. In fact, the Federal Reserve Bank is a private corporation. The internationalist group has succeeded in separating economic power from political power. That is true not only in the united States but also in countries within its orbit like the Philippines. Here, there is the Central Bank of the Philippines that makes monetary policies like manipulation of interest rate, or deciding when the government could borrow from the private sector by the issue of Treasury Bills. The members of the board of this bank are appointed upon nomination by the president of the Philippines but once they are appointed they are independent from the Presidency. The central bank is a conduit of IMF and World Bank.
The United States abandoned the gold standard in 1973 and adopted the floating rate system. This is more flexible in terms of expanding the economy because gold deposit is no longer necessary to create money. An entry in the book of accounts would suffice. However, inflation is much easier to come by owing to overabundance of printed money. The floating rate system favors the power that controls it. It can create a bubble or a depression at will.
The United States has been criticizing China for its people's corporations. The internationalist group wants these corporations privatized so that they can come in. However, such criticisms will not make a dent on China. Mao Tse-tung was aware of the internationalist group. He had clashed with them on two occasions. One, during the Chinese civil war when Nationalist China (the old feudal regime) was supported by the US. Two, during the Korean war (1950-53) when Russia and China supported North Korea. In both occasions, from prodding by the internationalist group, the US did not declare war on China. Being the first commander of the United Nations armed forces in South Korea, Gen. Douglas MacArthur wanted to bomb north of Yalu river, virtually part of Manchuria, China because it was used as a "privileged sanctuary" by North Korean and Chinese forces. Pres. Harry Truman (Democrat) did not approve of MacArthur's plan and when MacArthur criticized Truman in the press, Truman dismissed MacArthur as commander of the United Nations armed forces and as commander of US Southwest Pacific theater (Hunt. F. The Untold Story of Douglas MacArthur.1954). MacArthur put the blame on the internationalist group for his dismissal. This group would later on prod Pres. Nixon to forge a rapprochement with China. Such rapprochement could be highly improbable had US and China declared war on each other in their earlier skirmishes. The US has eyed China as the great market since late 1890s.
In a meeting (1975) with Cyrus Vance, incoming secretary of State, and Henry Kissinger, then secretary of State, under Pres. Gerald Ford, Mao identified Vance as former head of the Trilateral Commission, to which Kissinger and David Rockefeller also belong. Vance confirmed Mao's piece of information.
China has managed its economy and has come next to the United States as an economic power. Japan has relegated to third place. Europe is in the verge of economic break down. Germany is in an economic surge though. Great Britain wants Europe to fix its economic mess but will not want to become part of it.
The political alliance and trade between China and the United States will not bring about an economic hegemony in the world.
Brace for the comeback of the gold standard this year. To start with, gold stock is tier 1. More rules from Basil III will unfold so will the consequences.
Our review has shown that two economic systems have emerged in the world. Each system is backed up by its own political power. There is rivalry between them. However, such rivalry is not conducted in the same manner as the Cold War. Pluralism is better than unity in political and economic systems in the world. Pluralism offers choices. Unity is a virtual dictatorship like the Vatican where there are no political parties, where one body serves as legislature, presidency, and judiciary. (The Vatican is considered a state that is why the Pope is given the honors for a head of state whenever he lands in another country.)
[If the Cold War were real and not a game, fear of mutual annihilation prevented nuclear war between the US and USSR. There was another link that looks very trivial: the USSR imported wheat from the US. A distrust of USSR on the part of the US and the China cemented the alliance between the latter two countries. Mao said China will not invade the US; Kissinger said the US will not invade China. When Mao (in 1972) taunted Kissinger on the presence of the US in Taiwan, Kissinger said the US will withdraw from Taiwan. Immediately, Nixon withdrew Phantom 4 warplanes, with nuclear capability, from Taiwan. Taiwan is now a domestic issue of China. Chiang Kai-shek, leader of Nationalist China in Taiwan, called Mao and the Americans bandits, according to Mao (Burr, W. Editor. The Kissinger Transcripts. 1999.]
In human affairs, power has proven a vital ingredient. It may be the same even in the physical universe where the biggest mass of body has the greatest gravity. One body usually governs a unified system, the United States included where there is a shadow boxing bout between two parties. And a lot of Americans are grumbling of big government.
There appears to be a need for a balance between at least two factors as demonstrated even by the human body. The hormone insulin (that stores glucose in the liver) is balanced by the hormone glucagon (that converts glycogen into glucose) so that diabetes or hypoglycemia may not occur. Or sodium is balanced by potassium in every cell so that the cell may live. However, the balancing act in the cell is driven by power coming from adenosine triphosphate,.
A philosopher had said that power is the important concept of today.