A Disordered World – Part 1: Fracture

 The world's major world geopolitical and economic structures are fragmenting as the US throws what is left of its imperial power on aggressively contesting the rising influence of Russia and China. By Satyajit Das, a former financier whose latest books include A Banquet of Consequences

• Reloaded (March 2021)

"There are decades where nothing happens; and there are weeks where decades happen".

• The pithy phrase (the attribution to Lenin is contested) encapsulates periods when established orders are challenged and sometimes overturned, often violently. Today, multiple far-reaching pressures are reshaping that setting.
• This three-part piece examines the re-arrangement.

There is a sharp division between the 'West' - the US and its Anglosphere acolytes (Canada, Australia, New Zealand) supported unenthusiastically by Europe and Japan- and the rest of the world

• Support for Ukraine is primarily Western, representing around half of global GDP but less than 20% of world population
• While urging a rapid end to hostilities, the majority of nations have been reluctant to condemn Russia's actions, often professing neutrality
• The West's expressed desire for engineering regime change within Russia is dangerous
• Unwillingness to recognize core interests of parties, increasingly entrenched positions, and lack of interest in negotiations means a spiral into a wider confrontation is possible

In the short term, the measures have affected Covid19 disrupted supply chains, aggravating shortages and price inflation, especially in food, energy and raw materials.

• In the longer-term, the interaction with other stresses may prove significant.
• The effects of climate change driven extreme weather - droughts, floods, storms, wildfires- on food production and transportation links is accelerating.
• Resource scarcity is simultaneously rising due to natural limits. The decisions by major producers to increasingly stockpile or limit foreign sales to ensure domestic supply and control local costs are adding to disruptions to food production.

Winners and Losers

• All nations are affected by these changes, but not equally
• Functioning as an isolated entity or bloc requires a sizeable population, large internal market, self-sufficiency in key resources (food, water, energy, raw materials), necessary technologies and skills, and ability to ensure your security. The alternative is assured access to these elements from within your trading bloc or allies.
• The sanctions imposed following the Ukraine conflict illustrate the dynamics

Jenga games of balancing cutting off Russian energy sales and ensuring adequate supplies to control prices was always going to be beyond the capabilities of economically-challenged bureaucrats and politicians.

• Having been relatively isolated until the 1990s, countries like Russia, China and India are not fully integrated into the global market system. In recent years, these countries have redirected policies and investment towards their home markets, abandoning reflexive globalism. The objective is the greatest possible independence and control over strategic sectors and essential products.

In his 1933 work In Praise of Shadows, Japanese writer Junichiro Tanazaki captured this divergence:

• "We tend to seek our satisfactions in whatever surroundings we happen to find ourselves, to content ourselves with things as they are... The progressive Westerner is determined always to better his lot. From candle to oil lamp, oil lamp to gaslight, gaslight to electric light - his quest for a brighter light never ceases, he spares no pains to eradicate even the minutest shadow."

Mutual Misunderstandings

• Changes in the existing global economic structure threaten Western living standards
• The disruption of global trade and mobility during the Covid19 Pandemic and resulting shortages provided a window into these susceptibilities
• Western thinkers, as varied as Montesquieu, Adam Smith, Voltaire, Spinoza and John Stuart Mill, were wedded to the idea that trading between nations could overcome tribalism, national identity and ideology reducing the risk of conflict
• There was also an implicit confidence about the dominance of the West
• Late twentieth century globalisation, with its espousal of free trade and capital movement, was indivisible from this political end
• Integrating previous antagonists like China, Russia, India and others into global trading arrangements would bring about political change helping strengthen the West's position

China

• President Xi has repeatedly emphasized the Chinese Communist Party's traditional leadership in government, military, economic, civilian and academic matters
• He has preached self-reliance and rejected competitive democracy, the rule of law and the separation of powers as foreign ideas
• Far from being reformers, President Xi, President Putin and Prime Minister Modi see themselves as restorers of their country's proper place in the world

https://www.nakedcapitalism.com/2022/10/satyajit-das-a-disordered-world-part-1-fracture.html