For global and EU systemics to work they need more than trade flows. Or less

Here are some systemics and dynamics thoughts (written and tweeted Nov 24, 2012):

What libertarians seem to forget imo is that any group of more than 1 person constitutes a "society" or polis etc. Laws are part of explicit and informal "social contract" between members of a society/group/polis (politics comes from polis). The economy is also a dimension of a social contract when families stopped self producing everything and started trading w/ each other. Intra-polis trade between families created need for prices (even in barter trade) and thus money. But in basic intra-polis/village trade no one was really left "jobless", was mostly specialization benefits.

I am sure economic theories/models (be they of 5000 BCE or 2012 CE) worked much better in 5000 BCE! In a way, extra-polis trade (see eg explorers to "new worlds") disrupted the social/econ contracts/balances of de facto closed societies. Not to mention that lack of competition rules probably had created warlords and other oligarchs inside closed systems/cities/villages.

Why do I say probably? Cos I was not there to see for myself, at 5000 or something BCE. Were you?

Opening up and allowing trade between families in a polis came as part of social and legal contracts/laws/balance. But but inter-polis (ie inter-national) trade/exchanges were not coupled by common laws and a social/econ contract! Were they? No WTO etc.

That is still in 2012 the underpinning element of trade and other inter-state exchanges of all kinds: They fall outside national scopes. Of course so many are in favor of free trade without unification, it sort of allows them to have the cake and eat it too!! Think about it!

Trade between entities not bound together the way a country is bound together is sort of having a cake and eating it too! Sort of "dumping".

That is also part why most economic models/theories have failed. They deal in principle and de facto with closed systems. Look at GATT and the WTO: It regulates basically trade but fails to deal with many other dimensions thus systemically unbalanced. What I am saying is that trade, investment, migration and other flows need to happen within a "system". Is such system compatible with any sub-global/earth sovereignties? In other words is even trade compatible with national sovereignty since separate social contracts?

Can comparative advantage really exist in a league (competition) between 200+ national economies where there is no actual "league"? Does this mean that the world needs to become a federal political entity for "fair" trade to exist? Is it otherwise an "animal farm"? Can national social contracts exist at the same time as free trade exists? Much like libertarians who want to exploit imo the benefits of a society (econ is a social activity) w/o the "costs" of a society ... Or look at how some in the UK want to free-ride Europe and the world w/o any associated social contracts or rules! Pick and choose only!

Thus no wonder that many of the arguments used against the EU are actually prompting localism/separatism in many EU member states!To use absiloute logic, either sovereign states need to become like eg Cuba or North Korea or join together in a federal entity!!

But in any case, imo trade was, back when it started in human history, the first opener for more open systems. But that was thousands of years ago. Not in 2012! The systemics to work need more than trade flows. Or less.

The idea that one can be a sovereign state (city, national, etc) and still engage even in trade with others is imo challenged in this era!  It worked in 1200 BCE or 1400 CE or even 1949 (GATT era) etc but not in the systemics and dynamics of 2000s!

Thus it should come as no real surprise that European and US and world systemics and dynamics are out of control in the 2000s and 2012 and that globalization, regionalization (EU, UNASUR, ASEAN), nationalization (UK), localisation/separatist dynamics do co-exist in 2012!  Because systemically speaking the system is out of whack! Freedom of trade and investment cannot work systemically for long w/o full system integration.


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BRICs, Brazil, UNASUR and the WTO

Food for thought:

Does Brazil want to help UNASUR evolve or to focus on the BRICs group?
Can it do both?

In addition, is the BRICs initiative another symptom of how irrelevant WTO how become?

EU: political union or economic colonisation by world powers?

Especially in our era, few if any local issues and dynamics are not intertwined with regional (eg EU) or global issues and dynamics. Unless humanity goes back to countries-fortresses.

In our era's volatile global systemics, a country can always build walls ie become a fortress in an effort to preserve its sovereignty and its distinct ID, be that in culture and "values", laws and their underlying philosophy. Opt out of the global trade "game" and preserve the ownership of its key industries, rely on its own "capital", be it monetary or any in any other form. Not have to rely on the views of the global financial community or follow the rules of the WTO or other international bodies. Every country should have and has that right. But how realistic is that? How can it be self-reliant on energy, foods (at least the basic ones), security, economics, capital, etc? And what size (land, population, GDP, internal market) does this option require?

Shared sovereignty (via a real political union USA or FR of Germany style) is a better option than being colonised (economically etc) by one of the world powers, ie China, India, USA, Russia. This IMO applies to the countries of Europe, South and Central America, and other parts of the world. And the EU and UNASUR (in South America) are "vehicles" of such "shared sovereignty" but which has yet to materialise via proper political union.

Everyone is different, But that is a relative term. To a certain extent every country is different and to a certain extent all countries are the same. Which is more feasible eg a political union between eg Ireland and Greece or one between Ireland and eg South Korea? To a certain extent neither is feasible and to a certain extent both are feasible! We do live in "nothing is impossible" times.

Local, national, regional (eg European) and global citizen identities can well co-exist. The issue is at what level, local, national, regional (EU) or global the Polity is formed. Continent-state is an emerging model in terms of having the potential, via shared sovereignty, to provide an adequate level of self-reliance in energy, foods, defence, have a large enough internal market, economies of scale in many utilities and social welfare (eg a Health Service).

People have indeed tended to group around ethnic, geographical and cultural ties. But these are not static over time. Plus melting pot models have always existed (see eg my post "Globalisation, today and in 300 BC"). The US or even just NYC (or London) is a place where nationalities, languages etc can co-exist in a melting pot under a common polity, currency, laws and language spoken at work. Dozens of languages (337 according to Wikipedia) are spoken in US homes or even homes in NYC, one of the key metropoles of the era (138 languages spoken in Queens, NY)

The alternative is colonisation, driven by economics, by one of the real world powers of the era (China, USA and maybe Russia and shortly, India (*)). A balkanised Europe, with a minimal EU and each member "sponsored" by one of those powers.

(*) Could one count the global financial system as one of those powers?

What are France, the UK, Germany and Italy doing in the G8?

This is one of the follow up posts to yesterday's post Key factors of "strength" in "post Doha" (and post WTO?) world systemics and on the occasion of the G8 meeting in Deauville (France), today and tomorrow.

The G8 started as G6 in the 1970s with France, Germany, Italy, Japan, the UK and the United States ie 4 large and "rich" (GDPwise) European countries members of the then EEC plus USA and Japan (also large and rich, see yesterday's post). Canada was invited later, and later Russia.
The EU is an extra, "associate" type of, participant.

My observations and points:

1) With G20 now in existence, what is G8 for?

2) Since the EEC is EU (since the 1990s) what is the point/sense of having France, Germany, Italy and the UK?

3) Considering Canada's population size compared to the other 7, why is it there (plus China and Brazil are in 2010 GDP terms richer than Canada)

4) Why is China (No. 1 in population and No. 2 in GDP) not there?

5) India is marginally less rich than Canada and Russia (1.4 vs 1.6 and 1.6 trillion USD 2010 see yesterday's article).

Hence, and depending of the weigt attached to GDP and population, the G8 should be:

either

A) G4: EU, USA, China and Japan

or

B) G7: EU, USA, China, Japan, India, Russia; plus Brazil (or the UNASUR).

The current G8 seems so 20th century and so globally irrelevant to 2011!

And in any case, EU members states have no place there, the EU does.

See also: Key factors of "strength" in "post Doha" (and post WTO?) world systemics

Systemics: If finance is to remain global then polities ....

Assuming the validity of the theories about econ-financial contagion at continental and even global levels, if finance is to remain global, then polities must become continental (ie political union in the EU/Europe, South America (UNASUR), Asia (on top of existing efforts such as ASEAN), Africa (African Union), etc.

Even if finance was to become sub-global, ie continental, then polities should have the same (continental) scope.

Hence: Global finance & world trade need continental if not global polities. The G20, the WTO, the UN, etc cannot or have not shown that they can satisfy the need for political balance to eco/fin dimensions.

For EUrope, that means absolute need for (real) political union and no more myths re national sovereignty in these globalised conditions/systemics. Sovereignty can only be achieved at (near) global/planetary or at least continental level.

The sooner political and opinion & thought leaders in Europe and around the world admit that, the sooner the imbalances that affect the lives of people everyday around the world will be addressed.

EUrope is supposed to be ahead of this wave. But in recent years, it has flirted with populist rhetoric and short termism in national political visions.

A Global Polity for the Global Economy and the de-globalisation option

A "global" (or WTO-wide) Economy does not work properly & cannot be
sustained w/o a global (or WTO-wide) Polity.

That is source of current problems.

Other options include de-gobalisation (eg regionalisation, eg EU, ASEAN, Trans-Pacific Partnetship, Mercosur/USAN-UNASUR, African Union, ...) of global finance and even goods trade!

Regional Systemics: South America is moving forward with UNASUR

While NAFTA is rather a "fail" and the EU is gazing at its navel, UNASUR, the African Union, the ASEAN and China, the Trans-Pacific Partnership seem to be moving forward in regional systemics.

Specifically, while the EU is suffering from Euro and xenophobia induced identity crisis, South American Integration seems to be progressing! UNASUR, which will merge Mercosur and the Andean Community (CAN) into an EU type of entity for South America selected its first Secretary General, the former president of Argentina, Nestor Kirchner, on May 4 (2010, for more on this see eg BBC News report).

In addition, the Paraguayan President Fernando Lugo has made a passionate appeal to his country's Congress (June 26) to overcome their concerns and approve the entry of Venezuela in Mercosur (Mercosur's energy (oil) autarky will benefit from Venezuela's power in oil). Paraguay being the only Mercosur member that has not adopted Venezuela's candidacy (for more see "Lugo Calls for Venezuela’s Entry into Mercosur" in Americas Quarterly)

Note: In November 2005, a few weeks before the failed Hong Kong WTO Ministerial meeting for the Doha Round of world trade talks, George Bush failed to rally the countries of the Americas (Mar del Plata meet) for an FTA (free trade area) of the Americas. Probably, for the best, ex post facto, of all parties concerned (given eg the fate of NAFTA and the Democrats and others' stance re US international trade agreements these days)