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Who Will Be Tomorrow's Superpower?

The geo-political map is set to change. Is the world ready?
Wednesday, December 17, 2014, 10:15 AM

There’s a popular geopolitical parlor game called Who will be the next superpower?

While the game excels at triggering a mind-fogging tsunami of nationalistic emotions, it doesn’t shed much light on the really consequential question: What is power?

These are important questions to ponder as, around the world, unsustainable policies from the 20th century are beginning to fail in earnest. What will the future geopolitical landscape look like in their aftermath?

What Is Power?

In geopolitics, the conventional view is that Power is the capacity to coerce others to serve your interests at the detriment of their own.

This is a scale-invariant definition, meaning that it applies equally to the school bully, the drug lord, the dictator, or the Emperor. Each has the power to coerce others to do things that are counter to their own interests to serve the interests of the powerful.

While there is certainly truth in this definition, at the geopolitical scale it leaves much to be desired. General and Emperor Napoleon Bonaparte was well-positioned to understand the limits of coercive power, limits which he described in this truculent phrase: "Do you know what amazes me more than anything else? The impotence of force to organize anything."

The greater power than coercion, it turns out, is the power to align others’ interests with one’s own, so they willingly submit to your authority as a means of furthering their own interests. To do this effectively and sustainably, power must organize the transnational flow of capital and labor in ways that offer benefits to all participants.

The great superpower of the ancient world, the Roman Empire, showcased this form of inclusive organizational power: though the Legions were available to suppress outright rebellions, Rome’s long Golden Era was characterized not by perpetual wars of rebellion but by widespread peace and prosperity for even the far-flung members of the Empire.

This is not to gloss over the institutional slavery and oppression that enforced the Ancient Rome’s grip, but the point is that free participants accepted the dominance of Rome because it protected their opportunities to better themselves in relative safety, providing they did not undermine the Empire’s interests.

Even so-called Barbarians benefited from trade with Rome. Many tribes intermarried with peoples under Rome’s sway, and by the end of the Empire, the line between Barbarian and those living under Roman rules blurred.

Even as political and military control eroded and was lost, the organizational system created by Rome’s power—of roadways, waterworks, money, trade and commerce—continued to hold former dominions together. It was only when that complex system fell to pieces (for many reasons, a good deal of them resource-related) that the Empire expired.

There is a third form of power that is often overlooked, perhaps because it’s so obvious in functioning systems we don’t even notice it: the power to solve problems. The power to solve problems with the resources at hand is perhaps the greatest power, far greater than coercive power and ultimately more powerful than organizational power, which erodes if power cannot solve problems with the available resources.

How does power solve problems?  Though the answer is complex, we can discern a few generalities:

  1. Power must accumulate capital and invest it productively
  2. Power must invest the capital where it has long-term leverage (i.e. in systems that conserve resources, labor and capital over the lifespan of the system)
  3. Power must enable the free flow of intellectual capital/knowledge and encourage experimentation as a means of solving new or emerging problems

The ancient world empires tended to accumulate capital in two ways: by taxing their own citizens, and by conquering the wealth of other regimes. Modern-day great powers tend to accumulate capital by taxing their own citizens and fashioning economic arrangements for profitable commerce and credit that attract capital, talent and profits that can be taxed.

In other words: power solves problems by attracting capital and talent, and then enabling their productive use in a system that is effectively organized to solve problems.

Capital and talent are two forms of wealth that don’t respond well to coercion. Capital and talent both flee dictatorial control; and in today's world, both are increasingly mobile. So the source of modern power’s wealth is not coercion so much as being more attractive to those with capital and talent than the alternatives. 

This has two facets:

  • enabling people to serve their own interests within the dominant power structure, and
  • maintaining an inclusive system that is organized to optimize solutions

If the system is too chaotic or rapacious to enable solutions to be implemented, capital and talent are both fruitlessly squandered.

If capital must be spent suppressing rebellion, there is less available for productive investments.  The empire soon collapses under its own inefficiency. This is why empires based on coercion burn out quickly. And why empires without inclusive, well-organized systems also fail.

The Roman Example

The Roman Empire offers some useful examples of problem-solving via productive investment. Rome’s expansion of durable roadways and fresh water supplies were critical to the growth of trade and the expansion of healthy urban centers that fostered innovation, the sharing of knowledge, and the accumulation of capital.

Rome’s suppression of piracy enabled the free flow of grain from North Africa to Europe, and the extension of trade routes to faraway Britain. 

Technologies such as engineered concrete aqueducts and metalworking spread throughout the Empire due to the sharing of technologies and expertise.

Roman coinage enabled low-risk commerce all throughout its boundaries.

While the occasional drama of slave revolts and rebellions against Imperial might are the natural subjects of movie dramas, the day-to-day reality was spectacularly mundane: without the advantages of fossil fuels, Rome managed to extend relative peace and prosperity over much of the human world.

The same can be said of the Tang Empire in China: providing additional validation that security, commerce, a unified money system and widespread prosperity go hand in hand.

What System Is Best Able to Solve Problems?

Virtually every nation and trading bloc faces the same set of entrenched problems: demographics, debt, energy and currency.  The problems created by aging populations afflict the entire developed world, and fast-growing developing nations face the opposite problem: not enough work for their burgeoning cohort of youth.

Debt has long been the solution to all problems: just borrow more money (or borrow it into existence) and throw it at the problem of the day. But since debt accumulates interest, and interest siphons off productive capital, this “solution” has run into rapidly diminishing returns.

The foundation of the modern global economy is abundant, cheap energy. And the traditional source of that abundant cheap energy—fossil fuels—is no longer cheap (despite the recent drop in price, the production cost for oil remains near all-time highs), or it comes with real-world limits on its expansion.  Declining supply and rising costs crimp growth of consumption and the expansion of capital, the twin foundations of the status quo arrangement.

Currency—paper money—is the financial basis of that arrangement.  The ease and appeal of printing money (or credit) becomes increasingly compelling as diminishing returns set in, but the rampant expansion of money and credit undermine the system just as fatally as the decline in cheap, abundant fuels.

The temptation is to create money out of thin air to solve the other problems: just create money (or borrow it into existence) to pay for old-age social security, youth unemployment, higher energy costs, and every other problem facing the status quo.

But this “solution” generates its own problem.  Even more damaging, issuing money and credit doesn’t actually solve any of the other structural problems; it simply papers them over, allowing them to fester behind the façade of freshly printed money and debt.

Power and Superpower

We can now formulate a preliminary answer to the parlor game question Who will be the next superpower?

Any nation or trading bloc that sustainably solves its pressing structural problems will qualify as a Great Power, simply by avoiding the consequences of not solving these problems, i.e. collapse. Muddling through is not a sustainable solution.

There is no law or rule that mandates the existence of superpowers.  The world can go on quite well without a dominant global power.  That said, what qualifies a nation or trading bloc to be labeled a superpower?

Within the context outlined above, the answer is: the solutions organized by the superpower become the dominant global system because they are far more effective, efficient, resilient, flexible and sustainable than the solutions organized by other nations and trading blocs.

In Part 2: Who Will Dominate This Century?, we look at the key requirements for sustainable power in this new century and which countries are best-positioned to exert their influence going forward.

That long-standing geopolitical relationships are changing is a given at this point. The question is: is the world ready for what's coming next?

Click here to access Part 2 of this report (free executive summary; enrollment required for full access)

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5 Comments

darturtle's picture
darturtle
Status: Bronze Member (Offline)
Joined: Nov 24 2014
Posts: 29
First Paper Money

Paper money was first introduced in China, even before printing was available at Gatlinburg. Marco polo wrote in his book as a "great invention". Although it had been introduced to use parallel with coins, it first became sore legal tender after Mongolians conquered China. Paper money was tried in Mid East but failed in a few months.

In China, Mongolian empire set following rules:

1. Ban trade with silver and gold; can only use government issued paper money

2. People can convert paper money back to silver through government institutions

3. Special institutions been setup and laws been issued governing all sorts issues (such as fading paper money, penalty of counterfeit, ... etc.)

At that time, there was no government bond market. While government ran deficits, they print money.

Results:

1. Silver convertibility was maintained about 20+ years then lost convertibility through government

2. Through several stages of debasement in ~ 40 years

3. Hyperinflation happened later but at that time, lots of lands already lose to rebels

4. People went into barter instead of use gold/silver to trade

5. Paper money rejected by people

6. No paper money in China for ~500 years until later learned from West

Since the Mongolian Empire (ruled China) is still the largest empire in recorded history, we can learn:

1. Hyperinflation won't happen easily in core economy (such as USA)

2. Deflation has to run its course first

3. Don't listen to gold bug

4. Gold will have its shining days but not now

5. Of course, not to buy gold which is stored in UK (more dangerous than USA)

 

darturtle's picture
darturtle
Status: Bronze Member (Offline)
Joined: Nov 24 2014
Posts: 29
Fiat Money Came before Paper Money

Fiat money has been used before paper money in China. It seemed also in Japan. They minted a number on a coin. For instance, one nation in S.W. China ~200AD minted 100 on a coin to force people treat it as 100 times of its weight (copper coin).

Bankers Slave's picture
Bankers Slave
Status: Platinum Member (Online)
Joined: Jul 26 2012
Posts: 520
This man knows who...

KennethPollinger's picture
KennethPollinger
Status: Platinum Member (Offline)
Joined: Sep 22 2010
Posts: 653
How to interpret Thomas Friedman? 12/21/14

NYtimes lead article today about Russia.

With a Worldview (theoretical Framework) to make sense of all that is going on, and with these books:

The Creature from Jekyll Island (600 pp), by Griffin,

Rule BY Secrecy, by Marrs ( My personal favorite, as he goes back to the Sumerians!!!!)

All The President's Bankers, by Prins

Tragedy and Hope (1,300 pp) by Quigley

Tragedy and Hope101, by Plummer (summary of Quigley)

Etc, etc.,etc.

What can one make out of FRIEDMAN?  Especially in light of the video above.

P.S. NYTimes today:  "How READING Transforms Us,"   in Grey Matter: Oatley and Djikic.  Imagine if we had read these books in our history class!

Shall we start an "Anti-New World Order Panther" group? Or just farm and f--k it all? But pray/meditate, of course, for either way, we lose.

 

 

 

KennethPollinger's picture
KennethPollinger
Status: Platinum Member (Offline)
Joined: Sep 22 2010
Posts: 653
China and Russia SEEM to have unlimited natural

resources:

NYTimes 12/21/14;  "China Invests in Region Rich in Oil, Coal, and Also Strife," by Edward Wong.

The Colder War, by Katusa.     Putinization of oil, gas, uranium, etc.

I can't help but wonder how the USA compares with these two giants relative to oil, gas, coal, etc, resources??  Do we not have sufficient in-ground resources or are we just waiting to use them when needed, AFTER gobbling up the resources of other countries??

Are natural resources the BASIS of geopolitical power, or to what extent do military forces matter? In either case, it seems that the Financial Elites manage to get the most profits in any situation, especially those that they create.

By the way, WHERE are the Rothschilds these days?  Still behind J.P?, where hidden???  $500 TRILLION can buy lots of things and people, no?

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