Will the US Remain Dominant?

Posted: March 4, 2009 in Geopolitics
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The world economy needs some kind of global currency, or else a power that is willing to backstop international trade and exchange. There has always been an economic superpower (some would say hegemonic) that is at the center of global trade networks and that provides a global currency, or ensures the safety of payments. First it was the Italian city states, then Holland, and Britain, and since WWII, the U.S. Interestingly, all of those centers have also been the dominant and enduring naval power, with an ability to both interdict hostile merchant shipping and directly challenge any other navy in the world.

As long as the U.S. remains the dominant naval power and that its various economic centers stay at the top of the global production and trade pyramids, then it is in no danger of losing its dominant position. However, history has also shown that countries have swung between greater and lesser forms of free trade and protectionism, capitalism and mercantilism, and market driven or regulated economies. I believe we are at the beginnings of a swing towards protectionism, mercantilism and regulation, even to the point of a renewal of state ownership. One could argue that the various nationalisations of financial risks and even assets is only temporary, but in my mind it has already broken the unwritten assumption of the last decades that government can only be bad if it tries to regulate economic activity or be an economic actor.


© 2009 Richard Martin

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