Britain's competitive advantage

I've been trying to find learned economic opinion on which of two events has had the greater effect in Britain's economic renaissance since around 1970 - the US coming off the Bretton-Woods gold standard in 1971, or our joining the EEC in 1973. And which now leaves us more vulnerable to the winds of change blowing around the globe.

One might characterise the past fifty years as a period of change from internationalism to globalism. Bretton-Woods was internationalist, and its institution the IMF was at its inception a body charged with the regulation of relationships between national capital. However, that has undergone a fundamental change. Under an internationalist system of trade, goods are mobile whilst capital lives at home; once the change came to a globalist system under which capital was also mobile, all the old structures began to crumble. We have a globalist IMF intent on the disintegration of nationality, aided by a globalist UN and a Federast EU busy destroying European national identity.

In a remarkable prescient essay published in 1999, before globalism really began to bite, Herman E Daly wrote;

Since there can be only one whole, only one unity with reference to which parts are integrated, it follows that global economic integration logically implies national economic disintegration. By disintegration I do not mean that the productive plant of each country is annihilated, but rather that its parts are torn out of their national context (dis-integrated), in order to be re-integrated into the new whole, the globalized economy. As the saying goes, to make an omelette you have to break some eggs. The disintegration of the national egg is necessary to integrate the global omelette.

Daly also foresaw the social tensions created during the past two decades that have given us Trump, Brexit and the Gilets jaunes;

  .. globalization implies the abrogation of another social contract. that is the implicit agreement between labor and capital over how to divide up the value that they jointly add to raw materials. That agreement has been reached nationally, not internationally. It was not reached by economic theory, but through generations of national debate, elections, strikes, lockouts, court decisions, and violent conflicts. That agreement, in countries like the United States, on which national community and industrial peace depend, was basically that the internal division between labor and capital will be more equal than the world average. That agreement is of course being repudiated in the interests of global integration. That is a very poor trade

 He also foresaw the Elephant and the birth of the über-elite of the global 1%;

The economic integration of any high-wage country with an overpopulated world is bound to lower wages and raise returns to capital, widening the gap between labor and capital toward the more unequal world distribution.

The UK is Europe's second largest economy, with a preponderance towards services and intangibles. Germany, Europe's largest economy, is based unequivocally upon manufacturing. Which is now more vulnerable to global change? Which has greater agility with which to meet the challenges of the new?

Daly's observations on the effects of globalism on our military capacity, our ability to defend our nation and protect our people, are also of great concern;

But what about the military proper? What precisely are they going to defend in a globalized world? The globe is not under threat of invasion. Do we imagine that national boundaries will long retain any political or cultural significance once their economic significance is gone?

.... No doubt it is considerations such as these that lead some people to favor globalization. It is good, in their view, precisely because it makes the national military obsolete. Given the destruction and waste wrought by national militaries it is hard not to have some sympathy with this position. But while globalization seems to make national militaries obsolete, it does not remove the need for appeal to force. Laws, contracts and property rights still must exist and be enforced, even if they are global rather than national. Economic inequality and class conflict grow as the old national social contract between capital and labor dissolves along with the power of nations to guarantee it. Do the globalizers envisage a global government to enforce global laws with a global police force? Or do we, to avoid really big government, follow the privatization and deregulation model all the way, letting the military evolve into private Pinkerton guards hired by each global corporation to protect its property and enforce its contracts? Global corporate feudalism?

I know that we have not arrived at this point yet. But make no mistake about the fact that globalization is being pushed hard by powerful transnational corporations, and that the weakening of the nation is part of the agenda. Conversion of the national military into a corporate police force is consistent with such an agenda. Maybe globalization will stop before it completely disintegrates nations. But who or what will stop it? Might the nationalism, or even patriotism, of the military provide a barrier? So far it has not.

These issues are all now in the balance. The push-back against globalism by the grown-ups  has started and I am happy to count myself amongst the resistance. Anti-globalism is no longer a naive excuse for youthful agit-prop and overturning rubbish bins in central London, but a fight for national survival.

Russia - good fences and good neighbours

At the home in which I grew up, our plot was separated from the narrow country road that ran along a boundary by a 2m wide strip that belonged to Suffolk County Council. It was annoyance at the Council's lack of maintenance that drove my mother to add its grooming to my boyhood task-list of mowing and trimming. So for a length of 70 or 80m as the road ran alongside our land, an unkempt, blowsy country roadside assumed a neatly trimmed tidiness. It took three or four years for the Council to twig that we were maintaining their roadside - whereupon, they started regularly to send out a maintenance gang to pre-empt my efforts.

My mother took it as a sign that local bureaucracy was amenable to her own particular form of 'nudge', and was happy that she had a neat boundary. I was happy at losing the task of maintaining it. Now, of course, I realise that the Council had been prompted not by a sense of obligation to a ratepayer but from fear that if we maintained it for 12 years and they didn't, we could claim ownership of the 2m strip from them through adverse possession. I'm glad my mother had no knowledge of this quirk in British law - it would have prompted her to surreptitiously expand on all borders. 

And so with Russia. Russia will expand in any direction that is not clearly and signally defended and 'owned'. That includes land, sea and air. It doesn't make Russia any more of an enemy than cutting a verge made me an enemy of Suffolk County Council; Russia acts in a very proper Adam Smith type of economic self-interest. And peace is best served by NATO and the UK maintaining forces, fleets and air patrol and response capacities that signal clearly and without doubt where the boundaries are. A minimum of 2% of GDP but ideally for the United Kingdom, a spend that gives us a standing army of 100,000 men and a fleet of 50 warships. 

That Russia also must be an ally in the coming conflict with African mass migration, Islamist aggression and Malthusian challenges doesn't mean we shouldn't also keep clear boundaries and military parity in sight. The EU of course is blind to the realpolitik and risks conflict through its insane territorial ambitions - a dangerous stupidity that needs the UK's level head to counter. If Theresa May makes Presidents Putin and Trump her key diplomatic priorities, she is doing absolutely the right thing.