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How new technology leads to increased transparency

Other forms of technology used to disseminate information include a wide range of Web 2.0 technologies, which nowadays allow users freely to interact and collaborate with one another: pods, blogs, RSS feeds, social bookmarks, and social networks.

The very existence of all this information technology has far-reaching consequences. From another point of view, it has encouraged demands for more freedom among suppressed peoples all over the world, as witness a series of Arab revolutions in 2011. That is one development tending to make military solutions less attractive to nation states which seek to become more powerful, and this increases the relevance of geoeconomic considerations relative to those of geopolitics. We see this clearly when we look at how China is winning friends on the continent of Africa.

Geoeconomics, and indeed the study of economics in general, matter less to smaller private-sector organizations whose individual activities do not possess national strategic significance. However, taken as a group, these companies have great geoeconomic importance to society. And larger private-sector organizations are even actively engaged in geoeconomic thinking; the larger they are, the more aware they become of the contribution they make to the economic strength of the society of which they are a part, whether at the level of the nation, the region, or their local community. Larger companies, or multinational enterprises (whose annual income often surpasses the GDP of many individual countries) use their position in order to negotiate with the State to obtain special favours, whether with respect to infrastructure investments, labor laws, tax laws, or the like. In consequence, they come close to achieving the same economic and political significance as many national organizations.

How the logic of geopolitics and geoeconomics moves in cycles

The logic of geoeconomics is a process which the nation state does not control in the Western world, since it is moved forward chiefly by private-sector economic initiatives on an international scale. In other parts of the world the State is more actively in charge of economic activities. Thus in China it is the Chinese government itself which is in the driving seat when Chinese companies move into new countries, i.e. in Africa. The United States on the other hand is close to what we should call a corporate state; but both China and the USA are run according to a geoeconomic logic, that is, the political and economic leadership in both countries are aware that a national competitive advantage can be achieved only through a wide range of freedoms conferred on private-sector actors. The amount of State control and intervention differs from country to country, but there is an understanding in all nation states that the State's representatives have a responsibility to govern in such a way that the nation remains competitive. Competitiveness might in future be replaced as an aim by sustainability, as populations come to realize or (most likely) are forced to realize that material growth is limited, and must be so for the planet to remain habitable; but that has not yet happened.

For nation states, geopolitics was a much easier paradigm to manage. While geopolitics was in the ascendant, primarily in the nineteenth and twentieth centuries, competitive advantage was achieved largely through the State's own decisions and initiatives, chiefly and ultimately through waging war. At the turn of the 21st century, nation states are coming to realize that war is no longer a viable option for remaining in control. The best illustration of this is the wars conducted by the United States since the Second World War. These wars have mostly been failures, not just from a humanitarian perspective but economically too. Seeing this, the competitive nations of tomorrow are shifting their resources towards science, education, production, and trade (SEPT) - what we shall refer to as the "golden process" in geoeconomics. The logic is pretty straightforward: first you make scientific advances, then you teach those advances to others and incorporate the new knowledge into new products, which you go on to sell, preferably also abroad. With the newly-gained profits you reinvest in science. And so the process continues. Some countries get resources transferred back into science by encouraging private organizations to make donations to universities, in the way that is common in the USA. Others, including a majority of European and many Asian countries, use taxation to finance these investments. The reason why the US model works better in this respect (eighteen of the world's twenty leading research universities are American and private) is not because it is independent of the State, but because it is based on a meritocratic system. We shall discuss this issue further under the rubric "new class theory".

The history of geopolitics is closely connected with that of the nation state. The nation state rose with the age of Enlightenment and with industrialization. Before that, for instance during the Renaissance, our societies functioned more according to a geoeconomic logic. Local prince lings and city-states ran their affairs much like companies today. This was true at an early period for Venice, but later also for Amsterdam and other cities. Traders were organized in guilds and put under strict meritocratic supervision. A society was in principle a harmonious organism governed by a concern for economic growth, at least until it was attacked by another State. The trick was to build a strong army, but never to use it unless you could be sure of victory. That strategy worked less well when the nation state became stronger, as illustrated particularly by the twentieth century with its two world wars. Now in the 21st century, with even more lethal weapons in existence, the disastrous consequences of war between powerful nations have become yet more obvious. This may prevent superpowers in the future from engaging in large-scale wars with one another. Unfortunately it seems they will have more than enough to do in terms of deterring and intervening in military conflicts within smaller nations, if only because television now makes human suffering more transparent and hence creates immediate public concern. As television shifts to the internet and 4G internet technologies spread, political pressures to intervene are likely to increase.

Both geoeconomics and geopolitics study power derived from the management of natural resources. Thus the end result for nation states is much the same in either case. Through the logic of these disciplines, nations become stronger or weaker economically and politically as a result of how these resources are managed. In the English-language literature we call this "the competitive advantage of nations". This was the very start of the study of economics, as propounded by Adam Smith in his 1776 book The Wealth of Nations. All nations are concerned with their competitive advantage. At the same time, no one nation or culture has managed to stay ahead consistently in this race. Instead we repeatedly see one nation taking over from another as leader of the competitive pack. The length of time for which given nations or cultures have been able to retain the lead has varied significantly, from more than a thousand years in some cases in the past (Egypt, China) to less than a hundred years in others (Portugal, the Netherlands, now perhaps even the USA). The tendency is for it to become ever more difficult to retain the leading position, thanks to a combination of more intense competition and greater individual freedom. How can we understand what makes some countries more competitive than others? That is the fundamental question which we are concerned with in this book, and which forms the starting point for the study of geoeconomics. Consequently we shall seek the answer in an approach which diverges from the assumptions of "classical" and "neoclassical" economics. This means that we shall find ourselves questioning the value of the discipline of economics as currently practiced.

 
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