CAPITALISM IN THE INTERNATIONAL POLITICAL ORDER

Do we receive different performance results when economic systems are embedded in different international political settings? What can be expected from different combinations of those two structural realms? More specifically, how is the capitalist economic mode affected in a multipolar international political state structure? The analysis of political systems, including economic systems, does strongly benefit from the rule-based nature of things. Even when we think about qualitatively oriented elements of our societies, we can identify many mechanical interrelationships that govern how we behave. For instance, if there are two interchangeable products, we tend to buy the cheaper product, given that there are no normative components in play that would influence our decision. Even in the case of normativity involved in our buying preferences, we can identify certain rules that govern our preferences. In short, when we are looking at how economic systems produce different outcomes in varying international power settings, we can rely on those mechanisms to hypothesise about the potential effects. The aim of this article is to do that. Currently, the stage of international politics is unipolar, meaning that there is one very dominant nation, the United States of America (hereinafter the USA), that has a vast power advantage over the rest of the nations in this world. That being so, this nation can dictate certain conditions of economic conduct and even enforce political developments to some degree. In a bipolar world order, as experienced during the Cold War, two such powers exist. State behaviour is inherently different here, as well as in multipolar world orders. A multipolar international system implies that there are many roughly similarly strong regional power hubs in the world. In the article Unipolarity vs Bipolarity vs Multipolarity, the specifics of those different systems are discussed in greater detail. In this article, the effects of the international systems structure on the capitalist economy are explored.

Basic Features Of Capitalism

Capitalism is an inherently naturalistic approach to economic policy. There are some fundamental principles that underlie the capitalist idea, of which the assumption that economies quantify societal success is the most fundamental one. Success, in turn, is measured against the aggregate material wealth of a society. Because the economy quantifies or visualises the development of a society, the capitalist idea is a growth-oriented economic system. When the economy grows, the implicit assumption is that the society is doing well, which is also a source from which political success is derived in those economic systems. When we then add the basic properties of growth to these principles, we can better understand the more surfacing ideas of capitalism. Growth is most efficient when organic. A plant naturally seeks the sun, an animal the fastest way to water and water itself, though not growing but solely being efficient, seeks the fastest way downstream. Capitalism incorporates this natural phenomenon in structuring economic conduct in a way that allows economic behaviour to be organic by reducing intervention in the natural tendencies and drives of the economic actors within the system. In very rudimentary terms, friends of the capitalist idea argue that non-intervention in the economic system will produce the best possible outcome for societies and further their development.

Main Problems Of Capitalist Systems

Of course, this idea faces some challenges in reality. First of all, the assumption of societal success is false and leads to great problems in the long run. As the capitalist maxim of ever-increasing wealth is an inherently relative one, the system lacks an objective normative argument for the success of societies. If it were true that material wealth equals societal success, the system would be bound to produce losers in order to survive. Wealth is relative, meaning that it can only be measured against at least a second reference point of material wealth to assess one’s own wealth. Devlet provides a comprehensive discussion of this phenomenon. Capitalism, therefore, has the structural problem of never being able to be successful as it needs to create its own losers for its winners to be able to exist. This leads to the second problem: marginal diminishing returns. With the idea of material wealth in focus, the satisfaction of the biological need for material wealth will reduce the value of further increases in wealth. In other words, economic actors first satisfy their biological needs, such as food, clothing and shelter. Once satisfied, they tend to overconsume. However, overconsumption is less relevant than the initial satisfaction of those needs. Then, the economic actor proceeds to satisfy social needs through material consumption and overconsumes once the social status is also sufficiently improved. With increasing consumption and accumulation of wealth, the next unit of wealth acquired becomes less valuable, hampering growth – an important principle of capitalism. When capitalist development is so advanced that the majority of the society, or multiple societies, is in stages of overconsumption, no one is really a loser of the system in absolute terms. In such a case, natural drivers of economic growth become weaker and produce the need to create new consumption incentives. As the natural need for such consumption is not given, the newly created incentives are inherently inefficient. Finally, as we acknowledge that societal success is much more multi-layered than the mere accumulation of wealth, the development of non-material aspects of life is not accounted for within the purist capitalist idea. Without the delimitation of boundaries to safeguard those non-material facets of politics and society, the capitalist mode is in danger of foregoing the achievement of those goals for the sake of maximum efficiency in the economic realm. In other words, the tree might always grow towards the sun but might also break off if it grows one-sidedly. Here too, Devlet provides comprehensive insights into the real measure of societal success. Based on those fundamental principles and problems of capitalism, the discussion below will explore how capitalism is to be viewed in different international state orders.

Unipolarity

Characterised by one leading nation in political and often also in economic terms, the unipolar system is an inherently relational global order. Identifying such a superpower in the first place would not be possible if there was not a vast pool of other, significantly less powerful states that we could compare it to. Unipolarity requires the existence of at least two more actors, which both need to be clearly weaker than the strongest actor, the hegemonic state. That being so, the unipolar system aligns with one of the important principles of the fundamental capitalist idea. Within the unipolar world order, there is already a winning actor, the leading superpower, and with it, there are also implicit losers. The remaining actors might not be in bad positions in absolute terms, however, they are significantly worse off in relative terms towards the leading power. Remember, the capitalist mode requires a relative discrepancy between economic actors as it is centred around the increase of wealth. That being so, the unipolar global order can be said to aid the application of capitalism. On the other side, however, this situation also produces an inherent interest for the hegemonic power in defending its superior position. Naturally, the hegemon will use its privileged position to implement rules and adopt behavioural patterns that grant itself structural advantages in economic conduct, such as implementing a reserve currency or sanctioning other states. The moment this happens, the capitalist idea is infringed in its rudimentary terms. When the hegemonic power intervenes in the natural economic development to defend its position, the non-interventionist idea of organic growth no longer holds. Also, the growth aspect of capitalist systems suffers from a certain exclusivity. Neither of the actors would like to see equal growth rates for all actors but rather an exclusive growth of the own national economy. This is true for the hegemonic state that wants to protect its position but also for the remaining state actors that want to catch up with the leading superpower. The current economic struggle between China and the USA is a suitable illustration of this dynamic. It is, therefore, not the capitalist idea itself that is attractive for state actors in unipolar systems but only the domestic benefits for the own nation. Hence, the unipolar system has the structural advantage that the winner/loser-requirement of capitalist systems is always given. However, the extensive powers of the hegemonic state are likely to be used to create market inefficiencies and political moves against other actors to uphold the political position towards other actors. Thus, the unipolar international order reveals that mere wealth creation and development cannot be the sole driver of economic conduct.

Bipolarity

Whereas international power is concentrated in a single state within a unipolar global order, the bipolar international state system comprises two similarly powerful state actors. These can either be cooperative or competitive. Ideally, the two leading nations are cooperative as this fosters global societal and economic growth as well as peace. However, there are some prerequisites for such a situation to occur in a bipolar international state system. Either of the two nations mentioned are normatively highly similar, usually based on a common culture. For example, if Tunisia and Iraq were the two most powerful nations in the world, with the rest being significantly less powerful, bipolar cooperation could exist because they are culturally similar and, therefore, have a better basis for diplomatic relations. However, there is an inherent tendency of such two hegemonic states with a shared culture to merge over time, effectively creating once again a unipolar state system. The other possibility for a cooperative bipolar state system is the adoption of devletist economic principles. As devletism is not built on the artificially created state goals of power expansion and wealth creation, the two leading nations are not in a relational struggle for power over the other. Conduct between those two states does not require the overtrumping of the other to safeguard their own position. Rather, the alignment of the devletist economy with the purpose of our existence, namely genuine knowledge production, the potential for political friction is reduced.

Based on the contemporary economic setting that is grounded in the capitalist idea, the bipolar international state system is producing much greater inefficiencies than the unipolar global order and is highly competitive across all policy fields. In the constellation of two superpowers that are governed by the false assumption of the purpose of the state being more powerful and wealthier than others, the states are compelled to constantly overtrump the counterpart. The goal within such a normative setting is relative by nature, and the only measurement of the relative success is the other superpower. Policymaking in bipolar orders is completely designed to be reactionary to the behaviour of the competing counterpart. Being better than the other is the only driver of state behaviour and policymaking. Therefore, the policy options are greatly reduced. This is also true for economic policy. As capitalism aims to enable market dynamics to unfold freely, the bipolar order limits the range of development to those options that are anticipated to lift one of the two superpowers over the competing one. Just as with the unipolar system, the incorporation of relativity in the global state dynamic is something that aligns with the capitalist principle. However, such relativity is much more concentrated on a few relevant points of development. In unipolar orders, the hegemon must develop about much of all policy fields to remain at the top as different competing nations have different points of strength. In unipolar systems, economic policymaking, and policymaking in general, are limited to those strong points of the counterpart and the own nation, as these are the only relevant aspects to gain an advantage in to stay ahead of the competitor. As we have seen during the Cold War, there is also a strong interventionist element that comes with the bipolar structure of the international stage. The two nations will seek to influence other nations to exploit them diplomatically and economically, posing a major infringement of the capitalist idea. Both the USA and the Soviet Union intervened in many nations’ affairs, so it is fair to say that there was never true capitalism during the time of the Cold War.

Multipolarity

The best structure of global politics is the multipolar international state systems. Across the world, there are multiple power hubs that are influential over a region of relatively similar nations. This does not imply that the regional powers have exclusive influence or even authority over those neighbouring states. Rather, they serve as the first and most important reference point for those smaller nations – a first among equals. For example, Colombia is more likely to develop extensive trade relations with Brazil than with Iran. Afghanistan, on the other hand, is more likely to trade with Iran than with Canada, and so on. A multipolar state order depicts a situation in which those stronger nations serve as hubs of concentration for economic and diplomatic relations, as well as societal exchange, without exclusivity. Trade, exchange and diplomacy will still be made with all other nations, just not to the same extent. Certainly, this requires the regional powers to be rather similar to each other in terms of economic and political power. If one regional power becomes too strong, there is the danger that the international balance is disturbed and a unipolar international state system emerges. Intuitively, one might be inclined to think that preserving this international balance among those regional powers is quite difficult. Not only is the multitude of actors a point of concern, but also the multi-layered structure and interrelation of different policy fields. Capitalism, however, can aid in preserving this balance to a certain degree. Since the regional hubs have inherently different strengths due to their unique territories and cultures, they will be specialised in those economic fields. Their contributions to the world economy will be based on those unique economic resources, producing striking strengths but also weaker points within the regional economies. Those weaker fields are then filled with the resources provided by other regional hubs. Due to the importance of free market dynamics within capitalism, the concentration of expertise and resources in different regions is amplified, creating a somewhat natural dependency between those regional hubs.

The problem is that the relational character of capitalism, stemming from the assumption of wealth maximisation, will create a constant incentive for states to break the international state balance for their own national or regional benefit. The free market dynamic will create an international balance. It is basically one of the core ideas that the market will shift forces to those places where it is most efficient, which perfectly aligns with the multipolar global order. However, the falsely pursued goal of states and another core element of capitalism is the maximisation of wealth, which is relative. Therefore, the balance of nations and regions is not the desired outcome of capitalism. Without winners and losers, the capitalist idea in the contemporary form cannot be successful in the context of the goals it outlines. Multipolarity in the international state system can, therefore, only exist for a short period as states will seek opportunities to exploit the balance and create advantages to become more powerful in relation to other nations and regions. Nonetheless, the capitalist economic system promises the best societal outcomes within the multipolar international order. Here, the free market can rearrange economic conduct in a way that aligns with the strengths of the regional power hubs led by a regional power. Intervention is limited due to international checks and balances created by the power balance between those regionally leading states.

Unlike the two other international state systems, the multipolar order can accommodate the contemporary capitalist only for a limited time due to the constant pressure to disturb the balance of states for national benefit. Only with the adoption of the devletist economy, can states create a lasting multipolar order based on free market dynamics to create sustained and global societal development. As it overcomes the shortcomings of current capitalist systems that solely aim to maximise wealth, the devletist economy removes the inherently relational struggle between nations and creates an economic and political environment of cooperation, peace and stability.