Forging a World Economy

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The reason why the evolution of world’s economy is best assessed through the lenses of economics (political economy), is that it provides us with the scientific insight onto the very essence of economy’s functioning, as such that is being defined by dialectical relationship between relevant causes and effects.¹ To put it plainly – those who utilize political economy’s rationale-based methodological apparatus, as the tool of gaining a better understanding of what drives the economic progress forward, are being automatically put in advantageous position, as compared to those who think of such a progress as being embedded in vaguely defined notion of morality.

The validity of this statement is best explored within the context of post-industrial economic discourse. After all, political economists are being well aware of the fact that is it not by mere accident that, as of today, the value of a so-called ‘physical capital’ continues to decline in exponential progression to the flow of time, which in turn is being reflected by ever increasing profitability of specifically technology-intensive commercial enterprises.

The reason for this is simple – nowadays, people’s endowment with intellect has the ability to replace ‘physical capital’, in literal sense of this word. For example; whereas, after the end of WW2, 80% of Atlantic telegraph cable’s self-cost accounted for copper, the material cost of today’s fiber-optical Atlantic telephone cable accounts for only 10%. And yet; whereas, the old cable could only sustain 128 parallel calls, the fiber-optical one sustains 750.000 parallel calls.² What it means is that in the future, the segments of world’s economy that continue to heavily rely upon exploitation of natural resources are going to be progressively deprived of their competitive edge.

In its turn, this also exposes the sheer fallaciousness of an idea that the reason why people in the Third World countries continue to live in poverty is that Western transnational corporations exploit these countries’ natural resources in rather merciless manner.³ On the contrary – the reason why, instead of developing, the ‘developing’ countries seem to sink ever deeper into primeval savagery, is that as time goes on, these countries end up having less and less left to offer to the intellectually advanced Western world.

Another example – as of today, it is became a commonplace practice among particularly ‘progressive’ politicians to popularize the idea of a ‘welfare state’, where citizens would be able to enjoy full economic, legal and social, equality. For most political economists (with exception of neo-Marxian ones), however, the absurdist nature of the very concept of a ‘welfare state’ appears perfectly clear.⁴ Again, the reason for this is simple – in order for the wealth to be ‘fairly distributed’, it would have to be produced first. And, it is only the proper functioning of free-market economy, which is being absolutely inconsistent with the very idea of ‘equality’, that establishes objective preconditions for creation of an additional ‘surplus value’ (wealth).

In its turn, this proves once again the full validity of an earlier articulated idea that political economy’s methodological framework should be regarded as the effective instrument of assessing the actual subtleties of economy’s evolution. Apparently, the adoption of politically economic perspective onto economy’s workings helps people to get rid of an illusion that these workings are being subjected of one’s wishful thinking.⁵ This is the reason why, as it was pointed out earlier, the methodology of political economy does in fact prove itself quite indispensible, when it comes to defining the qualitative essence of the very notion of economic progress.

References

Baskerville, S 2010, ‘It happens first in America: The brave new welfare state’, New Presence: The Prague Journal of Central European Affairs, vol. 12, no. 2, pp. 3-9.

Coleman, W 2003, Economics and its enemies: Two centuries of anti-economics, Palgrave Macmillan, Gordonsville.

Hoag, C 2006, ‘The Atlantic telegraph cable and capital market Information flows’, The Journal of Economic History, vol. 66, no. 2, pp. 342-353.

LaPalombara, J & Blank, S 1980, ‘Multinational corporations and developing countries’, Journal of International Affairs, vol. 34, no. 1, pp. 119 – 136.

Redman, D 1997, The rise of political economy as a science: Methodology and the classical economists. MIT Press, Cambridge, Mass.

Footnotes

¹ Deborah Redman, The rise of political economy as a science: Methodology and the classical economists. (Cambridge, Mass: MIT Press, 1997), p. 109.

² Christopher Hoag, 2006, ‘The Atlantic telegraph cable and capital market Information flows’, The Journal of Economic History, vol. 66, no. 2, p. 350.

³ Joseph LaPalombara & Stephen Blank, 1980, ‘Multinational corporations and developing countries’, Journal of International Affairs, vol. 34, no. 1, p. 125.

⁴ Stephen Baskerville, 2010, ‘It happens first in America: The brave new welfare state’, New Presence: The Prague Journal of Central European Affairs, vol. 12, no. 2, p. 3.

⁵ William Coleman, Economics and its enemies: Two centuries of anti-economics (Gordonsville, VA: Palgrave Macmillan, 2003), p. 7.

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Forging a World Economy

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