Tensions in Hegemonic Stability and Global Structural Transformation
You don’t need to be told that tensions across the world are high right now. You know it. You can feel it! The developing world needs change. The developing world needs further development. The formula that has allowed us to survive and advance, transforming nature, is now counterproductive, making action most difficult. It is easier for us to continue transforming nature than to transform ourselves. The question is: what can be done about it? Some would argue that there is a fundamental tension characterizing the process of global development and structural change. Industrial policy is necessary for triggering structural change in the developing world.
The Need for a Hegemony
International relations theory is the study of international relations. The three most prominent theories are realism, liberalism and constructivism. Drawing from international relations theory, a “hegemon” is necessary to provide international public goods such as peace, which are critical for development to be possible in the first place. A Hegemony is the political, economic, or military predominance or control of one state over others. Some feel this would be helpful in modern times as well. This necessity gives the hegemon expansive powers over international institutions of economic governance. This enables the hegemon to externalize the costs of adjustment associated with structural change in the developing world.
Understanding Tensions in Trade Theory for Development
The Ricardian tradition of international trade argues that each country should specialize in the goods and services in which they are least bad at producing. This makes sense, right? One of Ricardo’s errors was his failure to recognize the heterogeneity of labour. The theory of comparative advantage does not address the fact that different economic activities have varying propensities for and intensities of productivity growth and technological diffusion. Therefore, catch-up can be elusive when systematic productivity differentials exist.
The evolutionary approach maintains that comparative advantage is, to a significant extent, dynamic. For this reason, new comparative advantages can be created through state intervention. In fact, some would argue that no country has ever industrialized without using such interventionist measures. We just don’t realize it or publically address it. That being said, the industrialization effort is not easy.
Development Aid and Assistance
These three dimensions are expertly handled and mediated by economic leaders. Development aid and assistance are at the disposal of the leading economic powers to give! This development policy space is substantially regulated in international institutions of economic governance whose construction, structure, and operations are substantially influenced by the leading powers. As well, access to leaders’ markets are further regulated by the leaders themselves. This is done both directly, through national policy, and indirectly, through the influence over international policy.
We live on an Earth under attack by bacterial and rapidly mutating viral pathogens. We are unable to control the consequences of our own science and technology. Nuclear weapons, climate change, and artificial intelligence are all against us.
The nine alienations from reality that are leading us to extinction are eternalism, supernaturalism, developmentalism, hyperindividualism, immediatism, capitalism and the highly interrelated financialism, scientificism, and fatalism with its two variants, providentialism and nihilism. The depth of our dilemma is that the hegemonic economic and political structures and their media are largely based on short-term gain despite long-term consequences. This must be addressed, and soon! Read Equilibra to learn more.