Empires do not collapse in one cataclysmic event. Rather, death creeps up on them in a series of incremental setbacks, so slowly that most of those living within the walls remain unaware of their growing frailty, their complacency and decadence making the probable end inevitable. Though external enemies may hasten decline, they cannot strike fatally when the empire is at the height of its power, but must wait until that power wanes as the system on which it has been built is superseded by another. We live now in such a time. The enemies of American style capitalism, whether they be Muslims or others, need only wait.
Both America and its British satellite are destined to social fragmentation and economic decline because of two aspects of globalisation: migration and the attachment to ‘free’ trade and movement of capital. Voices are raised in awareness, but they are of a minority. Two recent books, ‘The End of the Free Market’ by Ian Bremmer, and ‘Free Trade Doesn’t Work’ by Ian Fletcher, both authors being American and pro-capitalist, warn of impending doom, but the majority of economists bury their heads in trusted models.
William J Barber began the prologue to his book ‘A History of Economic Thought’ with the question “Why should the history of economics be studied?” To me, the answer is plain: those who do not know their history are likely to repeat its mistakes. Modern theorists such as Bremmer and Fletcher are reminiscent of earlier observers like Adam Smith and David Ricardo who so effectively criticised mercantile thinking that preceded the capitalist system.
Ricardo was a great thinker, and it is no discredit to him to say that the ideas of a man who died in 1823 have a tenuous relevance to today’s world. Yet, astonishingly, many continue to justify ‘free’ trade on the basis of Ricardo’s principle of ‘comparative advantage’. A reading of his chapter on foreign trade, in ‘The Principles of Political Economy and Taxation’ reveals at once that the world he describes no longer exists. How could Ricardo have anticipated today’s ease of technology transfer and other developments that have rendered his thoughts on trade redundant? Those thoughts now belong to the confines of academia.
In truth, only America and Britain believe that trade is ‘free’ in any real sense. Free market capitalism is being overtaken by state capitalism, whereby economic activity becomes a tool of politics. In the Anglo-American model those with economic interests used politics to serve their ends: under state capitalism the reverse is the case: those with political interests use economics. This is most evident in China, but occurs elsewhere, including Europe to some degree.
Bizarrely, while clinging to the ideas of two hundred years ago, many Anglo-American firms ignore the lessons of more recent times, by outsourcing their key competencies, thus accelerating technology transfer, while reducing employment in their domestic economy. Perhaps writers like Bremmer and Fletcher are too late, but I hope not.
Boadicea's Chariot 
I never believed in Free Trade, not from a dogmatic standpoint, but because I simply couldn’t understand how it could exist. Of course it cannot and we’re going to have that demonstrated clearly and painfully.
Interesting observations and I tend to agree with you in as much as I believe the US has passed its hegemonic peak and is in terminal decline. Likewise many of the concepts it clings to, or at least professes to cling to, are outdated or no longer serviceable. Ideals such as Free Trade and Democracy are fine in theory, but in practice they are fraught with perils. Free Trade only works if all countries adhere to the rules which in any event need to be universal, practicable and enforceable. Even then tremendous difficulties are raised by the different levels of economic and political development and need that exist between different countries. Economies of scale give some countries huge advantage over others. The US economy is so large that it can support any number of industries without having to export. Smaller nations do not have the same luxury. Thus America has a virtual monopoly in a range of fields by dint of its size. Quite clearly less developed economies and those with a smaller internal market cannot compete. Consequently, exceptions to the rules of Free Trade need to be made. This of course leads to abuse and the US itself is at the forefront of such corrupt practice along with other major economies including France and China. Even if that were not the case, the rules governing exceptions would be far too complicated to be manageable.
One of the most famous efforts to bring about Free Trade was the repeal of the Corn Laws in 1846. It is hardly surprising that such a move followed hard on the heals of the Reform Act of 1832. Politics and Trade go hand in hand. Trade laws are created to serve the ‘apparent’ interests of the electorate and the actual interests of the politicians (though Robert Peel sacrificed his premiership in this instance). The consequences of the Corn Laws repeal were not without severe negative consequences. British Agriculture suffered at the hands of cheap exports from foreign countries that introduced or maintained their own protectionism. Agriculture suffered, rural communities disintegrated and many country folk were forced to find work in the cities or they emigrated. Britain became increasingly dependent on foreign imports of food.
The US despite the lip service it pays to Free Trade is notorious for the levels of protectionism that it employs either by legislation or by sheer reason of its size. Certain industries are deemed vital to national security or national interest. The airline industry, military procurement and manufacturing, agricultural subsidies, various technologies, financial ownership and regulation are just some of the areas where the US operates in a unilateral fashion without regard to the needs and objections of other countries. It was not so long ago that it banned Dubai Ports from owning ports within the US. Boeing, which for years has complained about Airbus subsidies, has been found to have received illegal subsidies via the US military. The US imposes sanctions on companies that trade with countries it deems pariah states.
US interest in Free Trade only extends as far as the removal of tariffs on its own exports. The country is now having to face up to the fact that China is rapidly moving towards becoming the world’s largest economy and is not tied down by the need to pay lip service to Free Trade, or democratic principles. China is capable of the vast economies of scale that for many decades have been the sole prerogative of the US.
As for that other great ideal, Democracy, it is perfectly clear just how flawed is that principle and how politically corrupt the US has become. I believe that right now there is considerably more integrity in Beijing than there is in Washington.
“I believe that right now there is considerably more integrity in Beijing than there is in Washington.” Where shall I start? Naeh, I’m too stupid to understand you. 🙂
Out of the mouth’s of babes!
Sipu, the Corn Laws precedent is an interesting example of what may happen to other industries, and is happening now to some. I don’t know about Chinese integrity, but they sure as hell put China first, and rightly so.
Sipu, Both were quotes from you! Hahahahaha
Tom, re integrity, the way I look at it is that all US politicians are, almost by definition, corrupt. They depend on lobbyists for their campaign funds and that puts democracy in the hands of the rich and powerful. Pork barrel politics is endemic. China may not have democracy but nor does it pretend to. As you say they put China first. US politicians put themselves first.
Then you know little about China.
Yeah, but I know lots about Washington.