World Order – The evolving economic trends
Very often we consider the military strengths of nations and their geopolitical clout to be the other notable influencers of world order. It may well be so… However, the most important core factor is the economic strength of each nation. Military strength as well as geopolitical influence cannot exist in a vacuum. They can only be built on top of a strong economy. Hence, economic strength is the lynchpin that holds the other dominoes of world order in place. If the economy of a nation strengthens, its military and geopolitical strengths also increase, and vice-versa. Therefore, let us take a journey through the evolution of global economic trends that have determined the overall world order through the centuries up to contemporary times.
Contemporary Global Economic Disposition
Primarily, in the past, the economic activities of nations were entirely based on the production and trade of physical goods and commodities. This is referred to as the tangible “Brick and Mortar” economic model. Nowadays, a significant part of global economic activities has become speculative. A part of the world has become like one big economic casino, unlike the original, tangible, meaningful, sustainable, and well-grounded physical economy that has sustained the vagaries of ups and downs of world order over many centuries… On the other hand, the speculative part of economic activity through derivative markets, etc does not reflect the true state of the underlying physical economy. Most often it tends to create big bubbles that make a nation’s economic health appear to be far more robust than it is.
The large dependence on the speculative part of the national economies of countries tends to make their economies more fragile. This was never the case when total economic activities were purely based on physical commodities and products. Contemporary speculative economies are now far more fragile and tend to go into a tizzy in event of global turmoils. The speculative economic bubbles quickly burst during high-pressure geopolitical events because they never had solid foundations supported by the production of physical goods and commodities. In the modern era, this results in frequent collapse of big chunks of national economic outputs from time to time, rendering the overall economy in bad shape, thus threatening possibilities of high inflation, recession, or even depression in some situations… However, the impact of geopolitical events is far less pronounced and easily manageable for those nations that primarily depend on their physical economic outputs rather than the speculative aspects.
Gradual move towards Speculative Economy – The reason for current woesSo, one might ask, why don’t nations stick to the robust and time-tested physical economic model only? Why do they opt for a speculative economy? … To answer this, let me ask you a counter-question… What if, a nation aspires to achieve strong economic clout in the world order but does not possess enough natural resources and commodities? What if nature has not endowed a nation with adequate resources? Yet, the nation wants to be seen as economically strong in the roster of the world order. Then, what option does it have other than to artificially bolster the economy by creating additional bubbles through speculative means? … One might now ask, why would other nations accept such artificial economic bubbles as legitimate? … Well, that’s what is called hegemony my friend!
A few nations of the west who had a very close alliance through World War 2, ganged up together and prevailed over others after the war. This was a very vulnerable time in history when all nations were tired and shaky. This handful of WW2 alliance nations decided to create sets of rules for all nations to follow. Needless to say, these rules were framed with the intent to favor themselves. All other nations, being physically and economically spent after WW2, agreed because they didn’t have many options. They were very vulnerable and weak… This marked the beginning of the era of “Neo-Colonialism”… These rules that most of the world now grudgingly continues to follow are what they call “The rule-based world order”.
Historical Economic Evolution and Trends
Was the economic world order always the way it is now? No! Absolutely not… All Kingdoms and nations enjoyed complete autonomy in a multipolar environment. Trade was always based on bilateral choices and agreements. Unlike today, there were no overarching international bodies dictating rules of trade.
Several centuries ago, the world was thriving. There were several ancient, well-established, and rich civilizations. To name a few, they were Babylonian, Egyptian, Persian, Roman, Greek, Indian (Indus Valley, Maurya, Shunga, Chola, Gupta Empires, etc.), Chinese (Shang, Zhou, Qin, Han, Jin Empires), etc. Though several of them ended, the Chinese and Indian civilizations have been among the oldest global civilizations, spanning over 7000 years, that continues to exist even today. They were the wealthiest civilizations in the world. For instance, From the 1st century AD to the start of the British colonization of India in the mid-17th century, India’s GDP was between about 25% and 35% of the world’s total GDP. Collectively, India and China had around 60% to 65% of the world’s GDP at that time. That’s why there was a mad rush among the British, Dutch, French, Spanish, and Portuguese to discover the sea route to India. Of course, America wasn’t discovered yet. The Europeans kept trying, and then Christopher Columbus while looking for India accidentally discovered America. He thought he found India and called the natives Indians (red Indians)… Finally, Vasco Da Gama succeeded in discovering and charting a sea route to India… The question is, why were they so desperate to find India? Well, India was the wealthiest nation in the world, and they wanted to trade.
From Barter System to Gold coinHow was trade done in those times of early civilization? The methods were simple and honest. Originally, it was the barter system. Commodities and goods were traded in exchange for one another. This was rather cumbersome, especially when it came to international trade. Very often the goods were perishable. Hence, holding such goods in large quantities for long periods during trade transactions at times became difficult. The trade procedures evolved. Instead of exchanging and holding such goods as proceeds of business transactions, it was a better idea to value goods in terms of metals that were not perishable. However, several metals like iron, copper, etc which were initially used proved to be corrosive. Gradually, precious non-corrosive metals like gold and silver became the favored metals in trade. This was a good idea that could be used both for domestic as well as international trade.
Now, all countries began to mint coins made of silver and gold. They had their intrinsic value and denomination based on the weight of each coin. Moreover, the most convenient thing was that gold or silver coins minted in any country were readily accepted by all other countries. It didn’t matter where they were minted. They had their intrinsic metal value. Therefore, the question of foreign exchange conversion didn’t arise. This arrangement worked for global trade for a very long time. However, as the volumes of business became larger with time, it started becoming inconvenient to exchange and carry large and heavy boxes of gold from one country to another for every trade transaction. This is when the concept of currency notes came into existence.
Emergence of Currency Note – A new notion of wealthWhat is a currency note? After all, it is a piece of paper. So, how can it be attributed to wealth? … Well, currency note is not wealth per se… It is a promissory note (like an IOU). Each currency note promised to pay a certain amount (equivalent to the value of gold then) on demand to the bearer. These promissory notes (currency) were issued with a sovereign guarantee to be honored by the nation that issued them. At any time, the bearer could exchange it for an equivalent value of gold or any other commodity or goods. These currencies were backed by gold and silver reserves held by respective countries. A nation would issue only as many currency notes into circulation as the value of the gold it had in its treasury. In other words, the currency of each nation was pegged to the gold that it possessed. Gold-backed international currencies became a norm. This system worked extremely well for a very long time till the gold-backed currency concept was discarded in 1971. This was done by the USA when they decided to delink the USD from gold holdings and peg it to what they claimed to be “Faith”. In other words, USD was pegged to nothing but thin air and thus left with no intrinsic value. Why did the USA make this move? It is because they had started running out of gold stocks. The international value of the USD was on the verge of plummeting. However, at that time in history, nobody in the world dared to ask the USA, why should we trust you? … That marked the beginning of the new world order based on US hegemony. Nobody squeaked, everyone followed like cattle.
However, now the wheel has started turning once again. Very gradually but methodically various nations in the world have begun to move back to the more rational, equitable, and accountable gold-backed currency standard. Unfortunately, several nations, under the cover of the convenient notion of faith, have been printing and injecting into their economies, disproportionate amounts of currency. They are eventually going to feel the pinch because they may not have enough gold or natural commodities to back the value of their currencies. Under the shadow of faith-based currency printing, they have turned themselves into debt-ridden economies with such colossal debts that run into trillions of dollars each. If they were required to settle those debts now, they would collapse as bankrupt and insolvent nations. BTW, all of them belong to the category of “Developed” nations. Most of them have debt burdens as high as 100% to 400% of their respective GDP.
Colonial Era – Propping Up Scarcity Ridden Europe through Deceit and Plunder
Let us now return our focus to the key narrative. Until the end of the 15th century, while India and China flourished with their GDP exceeding 60% of the global aggregate, and America had not yet been discovered, the combined GDP of Europe and Britain was a meager 17% only… Why was it so? The reason is that the European continent has not been endowed by nature with enough natural resources, on the other hand, Asia and Africa are lands of natural abundance. This is a hard reality. The scarcity or abundance of natural resources in different parts of the world has always determined the prospects of natural prosperity and productivity in each region.
While large nations like India and China with natural resource abundance were thriving, the European region was facing a considerable resource crunch in all spheres. Land route trade between India, China, and Europe was being carried on but volumes could not be very high due to difficulties of transportation by land. It became imperative for the Europeans to discover sea routes to facilitate high-volume trade. Without access to natural resources from the east and the global south, European economies were destined to be doomed. It was easy to reach Africa by crossing the narrow Mediterranean sea but reaching India was a different story.
Discovery of India by Sea Route – Birth of global colonializationAfter considerable efforts by the Europeans, by the end of the 15th century, first, America was discovered in 1492, which they initially thought was India. However, a few years later, in 1496 Vasco Da Gama finally discovered India via the sea route. The British, Dutch, French, and Portuguese competed to reach India to establish trade links. Although the French, Portuguese, and Dutch were content with setting up trade centers in India, the British over the coming decades chose to have nefarious designs that were well beyond honest trade. They discovered that rather than being a single large politically administrated entity, India was a congregation of several smaller cohesive independent kingdoms ruled by local regional rulers. British interacted with each kingdom and gradually managed to sow seeds of distrust among neighboring kingdoms. They used it to their advantage to secure lucrative trade deals for themselves. East India Company was formed in December 1600, but so far British were not having administrative control over India. Although economic colonization had started, the formal administrative colonization of India was yet to begin. Thereafter, the Battle of Plassey was a decisive victory of the British East India Company over the Nawab of Bengal and his French allies in June 1757. This was the turning point that lead to the expansion of the British colonial footprint across India. In 1858. they declared India an administrative colony of Britain… Eventually, of course, India got her freedom to become an independent Republic in 1947.
Although India was the largest British colony, they went on to colonize various other nations in Asia and Africa. Some of the prominent ones were Afghanistan, Egypt, Ghana, Gambia, Iraq, Jordan, Kenya, Malawi, Malaysia, Myanmar, Nigeria, South Africa, Sri Lanka, Sudan, Tanzania, Uganda, UAE, Yemen, Zambia, Zimbabwe, etc… Other significant economies like Indonesia and Philippines were colonized by the French, Dutch, and Spanish. This was an era of great European plunder and deceit. Oil, Gas, Food grains, cotton, tea, spices, minerals, metal ores, gold, and other natural resources were shamelessly looted from these colonies and taken back to Europe for their own use and selling to other European countries. Thus, the abundant resources plundered through colonization brought about the era of European industrialization.
All European colonizers, especially the British became unduly rich, far beyond justifiable means. For instance, the value of resources plundered from India alone during British rule is believed to be valued at around 45 trillion USD. Since all this wealth was the proceed of plunder, it certainly could not last for eternity… Nature has its way of serving justice. In 1939, WW2 broke out in Europe. By 1945, when it was over, Britain and entire Europe were decimated. Britain and other colonizers could not hold on to their colonies much longer. One after another, most of the colonized nations attained their independence.
Decline of the Colonial Era – After the grand plunder of global wealthThe era of free, unfettered, and abundant direct access to global natural resources for Europe was coming to an end. British remained in denial mode for a long time. They simply could not adjust to the fact that all the flow of wealth they thought would always be theirs had actually vanished. They created an organization comprising all former colonies, called the “Commonwealth of Nations” to be headed by the monarch of England. Initially, it appeared that the Commonwealth will serve to their benefit. Eventually, as newly independent nations gradually consolidated their economic positions, the concept of the Commonwealth became more and more insignificant… After all, the very notion of the Commonwealth is a lame and patronizing idea. How can the wealth of independent nations be considered by the British to be common in nature under British monarchy? Britain had no claim over the wealth of any independent nation. That’s the hard reality… Nevertheless, Britain could never get over it. They still have the Commonwealth, and most nations out of diplomatic politeness continue to attend their events, but no one cares anymore. Commonwealth is essentially a dead organization kept alive by the fantasy of the British.
After attaining independence from the former colonizers, these nations thought that over the coming decades, it was perhaps the time to grow and prosper fully to their respective potentials. However, that was not to be… There was a new kid around the block. It was the USA. Economically, the USA gained the most out of WW2. While Europe and the rest of the world were suffering in misery, the USA made windfall profits from the great war. Insulated by the Pacific and Atlantic oceans on either side, thus being protected from wars on their soil, in an environment of tranquility, the USA became the biggest industrial hub and a global supply source during WW2. In 1945, when the war ended, the GDP of the USA had risen to 40% of the global economy, while the Soviet Union was 14%, and India and China had shrunk to around 5% to 6% each…
Not only had the USA emerged as a huge economic and military power, it realized that it was the most opportune time to create its new version of Colonialism. However, unlike the British during the earlier colonial era, when they were not economically strong and hence had to physically reach out across the world to influence other nations, the Americans realized that from their position of economic strength, they didn’t need to replicate the British model physically to achieve same results. They could achieve the same results simply by threatening either militarily or economically to squeeze other nations into submission. They knew that when all other nations were so vulnerable, they could use threats and diplomatic pressure to make them all fall in line and follow their dictates… The era of “Neo-colonialism” was just about to begin.
Neo-Colonialism – Post-WW2 Era of Building Economic Superamacy by Artificial Means
While recovering from the horrendous shock, destruction, and devastation of WW2, entire Europe, and the UK found themselves on their knees. The Ex-colonial nations of Asia and Africa, who might not have faced such destruction in the war, had already been bled white by the colonizers through ruthless plunder. In other words, the whole world was down in the dumps. It was only the USA that could salvage the world from its misery. From its massive position of economic and military strength, the USA decided to take the reigns and carve a new world order that could help rebuild the misery-stricken UK and Europe but only if they agreed to follow their orders to the letter. Of course, the Soviet Union was there as another major power with control over east European nations tied together by what was to become the Warsaw Pact. The Western European nations were scared of their future. The USA knew that two major power blocs had come into existence. They needed to act quickly and draw all west European nations into their fold. NATO was formed under American leadership… The cold war era between two strong blocs was about to begin.
Although NATO was projected as a defensive organization to provide collective security to western nations against any possibilities of Soviet aggression, in reality from the American perspective, NATO was an excellent tool to keep the flock together as a bloc and use it to promote its global hegemony. Collective security was the motto, however, from the USA’s perspective it never really needed Europe for its own security. At the same time, the USA hardly cared much for European security. Therefore, NATO served wonderfully as the core tool for the USA to create a long-lasting transatlantic puppeteer and puppet relationship. They did this job remarkably well. Moreover, under the NATO framework, the weapon systems of these nations had to be standardized for interoperability. Who else but the USA was best suited to supply weapons? This strengthened American industrial production and gave birth to their multi-billion dollar Military Industrial Complex (MIC).
Creation of new Global Institutions – Setting the stage for Neo-colonializmAfter roping in the transatlantic nations through NATO, it was also necessary to get the rest of the world on a common international platform that could eventually be under proxy control of the USA… The United Nations Organization (UNO) was born with its headquarters in New York, USA. The UNO was primarily structured into the UN General Assembly (UNGA) with all nations as members but with limited powers. They could adopt resolutions on global affairs, but the resolutions were mostly to be legally non-binding in nature… Another organ called the UN Security Council (UNSC) was created with limited membership. It was the high table of the elites among the committee of nations. UNSC had 5 permanent members with veto powers and another 10 rotationally chosen members with simple voting rights but no veto. Except for the Soviet Union, the other 4 members of the UNSC were essentially on one side of the political divide. The USA, UK, and France were NATO bloc nations, while China of UNSC at that time was Formosa (presently Taiwan). Mainland communist China was not the one that was included in UNSC… Many years later, PRC replaced Formosa at the UNSC.
Therefore, the UNO and NATO were together a perfect launchpad for the USA to dominate the world… Only one more thing remained to be taken care of. It was to create instruments and institutions for the financial subjugation of the world. The plan wasn’t far away. The global financial order was set to be created under what we came to know as the Bretton Woods system. We will talk about it in a moment… With NATO (Military domination), UNO (Political domination), and Bretton Woods (Financial domination) a triad of tools for overall world domination was now ready.
Influence of Britain in the emergence of USA-centric Unipolar World OrderWhile all of western Europe was still trying to figure out the ramifications, the UK was quick to do what it does best. Churchill had realized ever since the Potsdam meeting in 1945 in Germany between himself, Truman, and Stalin, even before WW2 ended, that the days of British leadership were over. Therefore, Britain decided that if it can’t be the king anymore then the next best thing was to become the king’s, right-hand man. The USA was now the king in the driver’s seat while Britain chose to quickly jump into the back seat. Britain knew that a person in the car’s back seat could often influence the driver far more than what one might imagine. Just like the man of the house often never realizes all his life, that contrary to his belief, it was indeed the good wife that had been calling the shots in family affairs all along… The Anglo-American relationship of the post-WW2 era is of a very similar nature. The USA undoubtedly has all the military, political and economic power. However, Anglo-American think tanks like the Atlantic Council, etc influenced mostly by British thinkers; the City of London, the Rothschild organization, and financial cartels have consistently played a big role in carving major macro-level policies of the US… A famous American thinker Lyndon LaRouche had said several decades ago in 1980 that – The USA is a dumb giant on a British leash… Now, come to think of it, how true were his words!
Why was Britain so desperate to position itself to be able to actively influence US policymaking? The reason is, they knew that the unfettered access to the continuous flow of enormous wealth that they had from their former colonies was gone. Sustaining the British economy and lifestyle was at stake because they were aware that Britain was a land of resource scarcity. They desperately needed to be a part of the promising alternative, Neo-colonialism. The USA was the new power center, but unlike Britain, it had sufficient natural resources. Hence, by itself, the USA was not so needy. They were more inclined to opt for relatively greater multilateralism in the world order. Such an approach did not suit Britain. They had to push the USA away from that line of thinking. It was imperative to drive the USA towards a world order of hard-core neo-colonialism so that sustained access to cheap global resources to the west could be quickly restored.
Bretton Woods System – An institutionalized framework for global capital controlThe next and perhaps the most vital factor for the west to seal the neo-colonization deal was to establish global financial control through a set of new rules. This was to become the cornerstone of – The rule-based world order. To achieve this objective a conference was held at Bretton Woods, New Hampshire, USA in 1944. They established a new set of rules to be followed by all nations to conduct international financial and commercial transactions. Originally, the Bretton Woods system pegged the USD to gold at a fixed conversion rate of $35 per ounce. The US Dollar was to become a fully convertible world reserve currency. Key international financial institutions like the World Bank (WB), and International Monetary Fund (IMF) were formed. The stated objective of these institutions was to provide credit and investments for growth and development projects around the world. There was too much capital control of the USA and other western countries on these institutions. Hence, gradually they turned into political tools of the USA to influence sovereign policies of developing and poor nations and subjugate them to align their policies with US interests.
For the first 15 years, till the 1960s, the Bretton Woods system appeared to work reasonably well. However, after a point, the USA began to feel the pinch. Their gold reserves started systematically depleting resulting from the effect of global USD-Gold convertibility. It increased the liquidity crunch and led to USD conversion bottlenecks. The USA was in a dilemma. The shortfall had to be met by capital outflows from the US. This could manifest in a balance of payments deficit. The net consequence was the increase in inflationary pressure in the USA from 1965 onward, financial instability, and fiscal deficit… After all, gold reserves were not unlimited. Therefore, trying to make USD the global reserve currency which was required to support huge volumes of global growth over the coming decades, while pegging it to finite gold holdings of one nation, the USA, was bound to fail. It was like trying to feed a large neighborhood from a small bowl of rice.
After the devaluation of the sterling in November 1967, pressure mounted against the dollar via the London gold market. In the following three years, the US put considerable pressure on other monetary authorities to refrain from converting their dollars into gold. Yet, the French and the British expressed intent to convert large amounts of USD to gold in August 1971. Preempting this move, the US decided to suspend and eventually totally stop USD-Gold convertibility and unpegged USD from gold in 1971… This marked the demise of the gold-based Bretton Woods system. However, since the USD continued to remain the world reserve currency, its exchange rate became highly volatile. The market dynamics based on supply and demand were now determining USD exchange rates. USD had become an unstable currency. After all, it was bound to happen because now the USD had no anchor, it was no more pegged to any physical commodity that could be attributed to wealth. It was like a free-floating balloon that could be pushed anyway depending on market dynamics.
Collapse of Bretton Woods – Imposition of a fiat global reserve currency based on thin airThe USA had to do something to stabilize its currency. They had to quickly find some valuable commodity to peg to the USD and prevent it from freely floating like a balloon. Unlike gold used by the Bretten Wood system, something else was needed that was available in absolute abundance. One could perhaps think of air or water that fitted the bill, but these items did not have any intrinsic monetary value… So, what could it be? Aha! There was something that was available in abundance and was very valuable but the problem was that it didn’t belong to the USA. Therefore something had to be done to make that abundant and high-value foreign commodity fall under the USD umbrella… This commodity was crude oil. The largest producer at that time outside the Soviet Union was Saudi Arabia. The USA pounced on the opportunity and struck a deal with the Saudi king… In 1973, the petrodollar system was created through an agreement between the US and Saudi Arabia. The countries agreed to price and trade oil exclusively in US dollars. With oil standardized in terms of dollars, any country that purchased oil from Saudi Arabia would have to use dollars. That’s it! Mission accomplished… USD was now pegged to more than abundant crude oil. USD immediately stabilized in the currency market.
What did Saudi Arabia gain from this deal? Well, during that period, the west Asia and Gulf region faced regional turmoil, instabilities, and threats from neighboring nations. It was not a very safe or stable place. The USA offered military protection to the kingdom from any form of threat originating from any source. Saudis felt secure. Not only was the era of the Petro-Dollar born, but the USA discovered another lever that they could use around the world to get things done. From then on, to date, the USA continues to use that leverage to get things done… What was this lever? They discovered that they could use their military around the world to intervene anywhere and offer selective protection to nations, as and when it suited them, in exchange for a pound of flesh… Thus, began the great “American protection racket” around the world.
With all the blocks in place, a long era of Neo-colonialism had started. The concept of Petro-Dollars created USD stability. This laid the foundation of two important, unshakable, and firmly entrenched tools in the hands of the USA…
First, is the US Dollar mandated as the global reserve currency which allows the USA to access and buy any global resource by paying in USD, their own currency. They could print any amount of USD required to meet their needs without fear of currency devaluation. Of course, it also meant a cumulative increase in debt but they didn’t care because they could always print additional USD whenever they want to service debt liabilities. USD is the de-facto currency for international settlements. As of this date, the US international debt exceeds 31 trillion USD. To them, it doesn’t matter, as long as the USD enjoys unchallenged reserve currency status. However, if someday, the USD loses its reserve currency status, the USA will be in a horrible mess. However, in this unipolar world of US global hegemony, they believe that the status quo will never be allowed to change.
The second aspect of hegemony is based on the “protection racket”, powered by economic and military arm-twisting of non-compliant nations. They start softly with perception management. It’s like first marinating the meat to make it tender before cooking. The target nation is humiliated, maligned, indicted, and incriminated to systematically influence world opinion and isolate it in the committee of nations through endless accusations using their well-oiled 24×7 propaganda mechanism which includes print media, MSM television, social media, etc. The playbook is always the same. They cast aspersions on the democratic credentials, human rights, minority rights, religious freedom, etc of the target nation. After manipulating world opinion in their favor, they begin to act. They may orchestrate a coup to place a more compliant and favorable government, or they may fund descent and insurgency that could overthrow the existing government. At times, they may covertly create insurgency, then reach out to the incumbent government with military and financial help thus getting a foothold into that nation. If nothing works, they don’t shy away from waging a war to overthrow or assassinate the incumbent ruling dispensation. When it comes to larger and more powerful nations, where coups and trouble-making don’t work and military intervention may be risky or disastrous, they resort to the imposition of sanctions in the hope of economically destroying that nation. These sanctions are illegal but Americans don’t care.
Dawn of a New Era – Return to Physical Economy-Driven Multipolar World Order
The above-described neo-colonial, hegemonic, unipolar, west-dominated world order which they claim to be the rules-based world order has been in place for more than 50 years. However, the winds of change started almost a decade ago. Several non-western nations across the world began to realize the injustice and inequality posed by this global system. They wanted to start working towards a more just and equitable system of international engagements that would not unduly favor a preferred group of nations but provide equal opportunities to all irrespective of their economic, military, and political standing.
The first part of the 21st century was an eye-opener for the world. Earlier, What was only a form of benign injustice, now started manifesting, due to ever-increasing interventions from the collective west, as coercion and interference in matters of other sovereign nations. This was becoming unacceptable… The USA with support from its western allies regularly started displaying signs of global political belligerence.
Collapse of the Soviet Union – The strengthening of Unipolar American global hegemonyAfter the dissolution of the Soviet Union and the end of the Warsaw pact, the USA got a free pass. Here are some examples of 21st-century US-led western atrocities… Wherever they intervened, they left behind an endless trail of destruction. For instance, they decimated Libya and killed Gaddafi only because he decided to discard the use of USD and sell the nation’s oil in gold. Then there was Angola and Serbia. Two wars were waged on Iraq leading to ruthless bombing, destruction of infrastructure, the killing of hundreds of thousands of civilians, and the eventual killing of Saddam Hussain. These wars were justified on manufactured lies because Saddam too wanted to discard USD for crude oil trade. They waged war on Syria, ruined the nation, and continue to control and steal their oil. To date, an estimated value of 110 billion USD worth of Syrian oil has been siphoned away from Syria.
The USA continued to wage wars with impunity. Afghanistan was invaded and ruthlessly bombed under the pretext of finding Osama Bin Laden. However, Osama was found tucked away at a military cantonment in Pakistan in 2011. Yet, the USA continued to occupy Afghanistan for another 10 years till 2021. Then, there were other interventions in various parts of Africa like Sudan, Somalia, Rwanda, Niger, and Yemen to name a few. These wars were carried out under fancy names like the War on Terror, Operation Enduring Freedom, etc… In all, the USA has so far conducted 251 military interventions around the world since 1991… While the USA thought that the world was in awe of its invincible powers, all along, the rest of the world was watching these actions with a sense of disgust.
Not only does the USA conduct military operations against sovereign nations, but it also continues to impose economic sanctions against them. These irrational, illegal, and unilateral sanctions are imposed to economically cripple target nations to make them tow the American line. Not only are the sanctions imposed on the target, but all other nations around the world are expected to abide by US sanctions, or else, they are threatened with secondary sanctions for not obeying them… In a way, the USA does not seem to recognize or honor the sovereignty of any nation by not allowing them to make their own choices. However, with time, the efficacy and fear of unilateral sanctions are fading away. More and more nations are looking the other way while caring far less about the threats of sanctions. The weapon of economic sanctions is getting blunted. Eventually, nobody will care anymore.
Winds of Change – Beginning to break away from west-dominated unipolar world orderAs I mentioned earlier, the winds of change have now started. Non-western bloc nations want to break away from the shackles of hegemony and neo-colonialism. Most nations of Asia, Africa, and Latin America are eagerly looking up to the economically more powerful nations of this region to take a lead and show the path out of the present situation. Needless to say, despite being often summarily brushed aside by the west, this non-western group, collectively has tremendous latent power. They form around 85% of the world’s population representing a huge market size. They occupy about 80% of the inhabitable planetary land mass. They own more than 70% of global natural resources. They are all emerging economies with tremendous growth potential with a current collective GDP of around 65% in PPP terms. For instance, the United States, imports 60% of all manufactured goods from the Global South. The GDP growth rate of this region is several percentage points higher than the GDP growth rate of the collective west… Moreover, the future growth potential of the global south is colossal, with a very large population segment of young and productive people, as against an aging population profile of the west leading to a dwindling western workforce. The aspirational middle-class segment in countries like India and China is exploding leading to unprecedented growth in consumption. This, in turn, is paving way for greater domestic production, local industrialization, and phenomenal growth in the GDP of these countries.
The countries of the global south led by China and India, with endless natural resource support from Russia, are poised to take over the global economic narrative within the next 10-15 years. The fatal mistake the west has made, that countries like India, China, and the rest of the south have not, is the undisputed fact that the world economy cannot survive its growth trajectory without Russia. The fact is that Russia is naturally endowed with such vast and diverse resources that it can technically be regarded as the lynchpin of the global economy.
Because of the above-cited reality, the nations of the global south have started engaging more seriously in bilateral and regional multilateral economic relationships. Several multilateral organizations of the global south have been formed. These include BRICS+ and SCO. The SCO is a regional economic trade and cooperation organization for countries within Asia. On the other hand, BRICS+ encompasses the entire global south. The original members were Brazil, Russia, India, China, and South Africa. It is fast expanding with upcoming memberships applications from Iran, Argentina, Algeria, Egypt, UAE, Saudi Arabia, Indonesia, Tukiya, Afghanistan, etc in the first phase, with another 12 countries also considering joining. Not only is BRICS+ an economic cooperation forum, but it also runs its own international banking institution called the New Development Bank (NDB) with more than 80 development projects funded across member nations till 2022. NDB works as an alternative IMF and the World Bank but provides credit on more sustainable and practical terms.
Moving away from USD Reserve Currency – Focus on national currencies for bilateral tradesWith the necessary basic multilateral mechanisms in place, the focus is now on creating new transaction mechanisms for trading in the national currencies of various nations instead of USD reserve currency. Other tools and mechanisms for international trade facilitation and settlement as an alternative to SWIFT is being created. A separate system for international integration within member countries of national credit cards like MIR of Russia, RUPAY of India, etc is a work in progress. Various national integrated online payment systems like UnionPay of China and UPI of India, etc are being linked for seamless cross-border payments… All this is happening rapidly at this point in time.
The objective of such multilateral collective exercises is not to replace the western system but to create robust redundant platforms to function in tandem by complementing one another. At the same time, such systems will also offer the much-needed leverage to sustain autonomy while avoiding pressures and intimidation from any quarters in event of international political disagreements. The overall objective is to create resilient supply chains with an open, free, and resilient economic environment for global trade and transactions. It needs to be robust and not affected by conflicts, whims, and fancies and must be free of any kind of unilateral controls.
Returning Focus to Physical Economy – Emerging economies increase focus on domestic productionFocus is expected to turn to a greater emphasis on the physical economy, the production of physical goods, and meaningful services rather than the current global economic trend of relying heavily on a speculative economy. Due to the large demography, a largely young, educated, and skilled workforce, a large market of aspirational middle-class, growing consumption, abundant availability of natural resources, and tremendous industrial potential, the economic centerstage of the world economy is poised to rapidly shift towards Asia with India, China, and Russia being in the spotlight in near future. The transition from the west to the east is taking place rapidly… It’s just a matter of another 15-20 years. The contemporary rules-based world order will be replaced by international law-based world order.
The 5 Factors that are destined to shape the economic growth and strength of nations in the futureThe shape of the future world order and the economic growth of nations will be based on 5 vital factors. Unlike the artificially propped-up economies of the neo-colonial era, the future is expected to be built on more robust foundations and will be determined by real growth devoid of economic manipulations that we have witnessed so far. The economic growth of nations will be heavily influenced by the following five meaningful indicators…
Domestic Natural Resources – The availability of local natural resources will become the primary driver of national economic growth. Any nation that is endowed with abundant domestic natural resources like energy, ores, minerals, water resources, etc will find itself in a pole position. Moreover, several kinds of rare metals (Titanium, Palladium, etc.) and rare gasses (Neon, Argon, Krypton, etc.) are not prolific in nature and are only available in a few countries. Yet, these rare resources are, at times, vital for major industrial activities. With the evolving trend, more and more nations having their own natural resources will start processing raw materials and setting up domestic industries for making value-added end products for the world market. Resource-rich nations will no more be inclined to sell large volumes of these raw resources at a bargain price to the less naturally endowed nations. Hence, global industrial production will shift away from the traditional goods-producing nations to the countries having ample domestic resources.
Domestic Agricultural Output – Food self-sufficiency in terms of domestic food production for its citizens will help nations to ensure domestic economic stability. Staple food including other food items of regular consumption like wheat, rice, other grains, pulses, cereals, edible oils, sugarcane, milk products, vegetables, eggs, meat, etc if produced by a nation in abundance will ensure the nation’s food security and will provide an edge over others who need to rely heavily on imports. Agricultural production is hence another vital factor for stability and economic growth. Another vital agro-industry-related factor that is not often given enough importance is fertilizer production. Nations that are self-reliant in fertilizers have a major edge.
Large Demography with a Young Educated Workforce – Nations with a large population and a demographic profile comprising a significant percentage of young people can become an asset. Needless to say, the education of the youth and providing advanced skillsets are important to leverage growth potentials by creating a highly skilled and well-educated workforce. The abundance of such a workforce is an asset that would drive industrialization, innovation, and creativity to propel national growth rapidly. This is a form of the demographic dividend that not many countries can boast of.
Large Population with a big Young middle-class Consumerbase – A large population would generally indicate large consumption. More goods and products would be needed to fulfill a large demand. Domestic production would get a major impetus due to big consumer demand. The demand for goods is propelled by the middle class and more so by the younger aspirational middle-class population. Naturally, the nations with hundreds of millions of such consumers will be able to grow at a very fast pace because of a huge domestic demand for their locally produced industrial and consumer goods.
Low National Debt – Debt burdens of nations, whether it is in the form of international sovereign debt, domestic public debt, or unfunded liabilities lead to financial burdens on the economies of nations. So far, many western nations having fully convertible currencies (reserve currency) are getting away with indiscriminate currency printing for debt servicing and for quantitative easing. However, when other nations reduce reliance on these reserve currencies and routinely start using their national currencies for international settlements, the USD, Euro, and Sterling will begin to come under substantial pressure resulting in the devaluation of such currencies. Huge national debt burdens will become a problem. Only those nations with low Debt-to-GDP ratios will continue to do well, while highly debt-ridden countries will have a difficult time. The acceptable and sustainable upper limit of the Debt-to-GDP ratio of a nation should be no more than 50%. Ideally, it should be below 35% for the best long-term growth outlook.
It would be a utopian dream for any nation to qualify under all 5 of the above-cited criteria. However, the fact of the matter is that no country fulfills all the above requirements. The most resilient economies with good prospects of sustainable long-term growth in the future are those that qualify under at least 3 or more of these criteria.
India and China Economic Outlook
Take a look at India and China. These nations have a score of 4.5 each… They are self-sufficient in domestic agricultural output, have large demography, a large consumer base, and a low debt-to-GDP ratio of 19% and 15% respectively. In terms of domestic natural resources, these nations have ample mineral and water resources but lack in sufficient hydrocarbon energy resources, hence getting 0.5 points for this criterion, leading to a 4.5 score. Another factor that works in favor of these nations is that their GDP composition is approximately 50% in physical goods, commodities, and agriculture with the service sector accounting for the balance 50%. Both India and China have the best long-term economic growth potential among all nations of the world.
The US Economic Outlook
The US economic outlook is also stable and sustainable in the long run but may not have such robust growth potential. The USA scores 3 points as per the criteria. It has domestic natural resources, agricultural output, and a dynamic educated workforce. However, the other 2 indicators do not qualify. The middle-class population of the USA is not so large, moreover, it is gradually shrinking as per US Federal Bureau of Labor Statistics data. The 5th indicator of the Debt-to-GDP ratio is badly breached with a very high ratio of 102%. Moreover, the GDP composition is less robust with about 78% from the service sector and only 22% from the physical economy and agriculture. This makes the economy a bit more vulnerable.
Russia Economic Outlook
Russia also has a stable and long-term sustainable economy. Their score is also 3 but the combination of indicators is different from that of the USA. Although due to a much smaller population of 145 million, its skilled workforce as well as the domestic consumer base is not large, however, its Debt-to-GDP ratio is less than 32%. The availability of abundant natural resources including large hydrocarbon deposits, coal, metals, rare gasses, fertilizer production, and a mammoth agricultural base places Russia in a unique and unenviable position. Moreover, its GDP composition is very robust with 70% contribution from the physical and agricultural economy, while only 30% is attributed to the service sector. Although the GDP of Russia is much smaller, the above indicators make it a very robust and stable economy. The economic resilience of Russia is unbeatable.
UK and Europe Economic Outlook
The UK and Europe do not appear to project a happy economic scenario in terms of long-term sustainable growth in the foreseeable future. The 5-point economic indicator score is no more than 1 or 1.5. This region lacks sufficient availability of natural resources. Energy resources are quite scarce. Agricultural self-sufficiency is also questionable due to excessive focus on irrational green agenda. The Debt-to-GDP ratio is devastatingly unsustainable. Most of these nations are borderline insolvent due to huge debts. For instance, the Debt-GDP ratio of the UK is 275%, France 253%, Germany 182%, Italy 141%, Spain 170%, Switzerland 285%, Belgium 169%, Austria 165%, Norway 133%, Denmark 158%, Greece 298%, etc… The GDP composition of this region is around 80% service sector with only a dismal 20% physical goods production. This tells the whole story of the region. Moreover, the growth of the collective regional middle-class consumer base is low. The single-point score, as of now, comes from the availability of a collective regional educated and skilled workforce. However, due to the current trends of low birth rates in the region, resulting in an aging population over the next 20 years, this limited advantage might eventually also get neutralized.
Rest of the World Economic Outlook
The short-term economic outlook for the rest of the world in 2023 will be fraught with difficulties due to disruption in global supply chains. However, gradually conditions should improve over the coming years. Countries in Asia, Africa, and Latin America are expected to face the consequences of elevated energy prices and food shortages in several pockets. Nevertheless, with multi-polarisation and multilateralism slowly becoming a norm against the prevailing unipolar world order, nations of the global south are moving towards regional trade arrangements. We see the emergence of a more active and resurgent African Union, Gulf Cooperation Council, ASEAN, and Eurasian Economic Union along with a wider role for SCO and BRICS+ in shaping the new multipolar world order. Countries like Indonesia, Egypt, Argentina, Algeria, Vietnam, Thailand, Gulf states, and central Asian republics will begin to prosper along with several others. An important common aspect of most of the emerging economies of the global south as against those of the collective west is that they have ample natural resources and untapped agricultural potential. Moreover, most of them have very viable Debt-GDP ratios falling well below 30-40%. Iran has the lowest at 2% only. Greater economic partnerships will emerge among the countries of the global south resulting in less dependence on the collective west for sustenance and growth. While SCO, BRICS+, G20, etc will become more assertive in the coming years, the G7 will begin to lose its dominance. Heavily sanctioned countries like Iran and Venezuela will gradually come back into the mainstream of trade under the evolving global economic framework.
- 0.1 World Order – The evolving economic trends
- 0.2 Gradual move towards Speculative Economy – The reason for current woes
- 0.3 From Barter System to Gold coin
- 0.4 Emergence of Currency Note – A new notion of wealth
- 0.5 Discovery of India by Sea Route – Birth of global colonialization
- 0.6 Decline of the Colonial Era – After the grand plunder of global wealth
- 0.7 Creation of new Global Institutions – Setting the stage for Neo-colonializm
- 0.8 Influence of Britain in the emergence of USA-centric Unipolar World Order
- 0.9 Bretton Woods System – An institutionalized framework for global capital control
- 0.10 Collapse of Bretton Woods – Imposition of a fiat global reserve currency based on thin air
- 0.11 Collapse of the Soviet Union – The strengthening of Unipolar American global hegemony
- 0.12 Winds of Change – Beginning to break away from west-dominated unipolar world order
- 0.13 Moving away from USD Reserve Currency – Focus on national currencies for bilateral trades
- 0.14 Returning Focus to Physical Economy – Emerging economies increase focus on domestic production
- 0.15 The 5 Factors that are destined to shape the economic growth and strength of nations in the future
- 1 List of Articles under this Section