The world economy has been made much closer. The concept of isolating an economy has become the central method of punishing a country. This is especially true of a country like Russia, with its huge untapped natural resources so desperately in need of development, and its comparatively tiny financial sector.
Russia's recent imposition of sanctions on imports shows how vulnerable modern economies are to the loss of trade. Of course exporters to Russia are punished but the Russians themselves are forced to pay more as access to Western European agricultural products disappears.
Establishing export markets is no small or short-term task. To develop natural resources in countries like Russia, vast sums are needed and it can take decades for multinationals to recoup their investment. The recent friction with Russia over Ukraine isn't helping.
Russia and China haven't financialized. An economy based on capital flows requires an intermediary step, what Marx might see an growing cadre of proletarian workers as a vital echelon, a prerequisite for meaningful revolution. Capitalism to him was an incomplete work, an ordering of society that could and should be improved, to make life better for all.
Unregulated capitalism is the prerequisite for a Financial Economy. We saw that the control over our economic policies and regulatory regime by the financial industry was needed to allow the conversion away from an industrial economy. And dispassion by the ruling elite concerning the fate of the working class is a necessity to keep the imbalances growing.
China is wed to the socialist notion of equal prosperity, at least rhetorically. Whether that will further regulation of their economy for egalitarian purposes remains to be seen.
Coming from a low starting point in its economic evolution, Chinese have been getting richer. Still at some point their laborers will want a 40-hour week and better wages. The working class struggle is inevitable. No matter how much better things get, people always seem to want more.
Countries that want a healthy middle class aim to stimulate industrial production, creating manufacturing jobs that are a big step up from farm labor. Preserving the middle class is another matter, especially once the status quo that perpetuates the creation of government and consumer debt gets established.
As Marx predicted, cycles of boom/bust will be accentuated in a capitalist economy. The duration of the cycles (time between troughs and peaks) seems to have shrunk. With so much of our economy based on intangibles like financial derivatives, the risk of even greater booms and busts has in no way been restricted through regulation--the trend is in fact going the other way.
(Article changed on August 13, 2014 at 20:51)
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
