The emergence of national corporate economists versus traditional national economists, and a different future of their political economic role on globalized markets, including the USA, China, India, and Europe.
The arrival of Donald Trump to power has introduced in the world’s academy the need for a new type of scholarship to be recognized at a Governmental level, if the world’s governments want to be able to properly decide on national economic policies. This new academic specialty could be called that of the National Corporate Economist.
The starting point for this new important academic role is made evident by the confrontation of two sets of data, one limited to America and the other to world’s markets.
In 1945, at the end of World War II, the GDP of the USA was roughly 50-60% of the World’s GDP. In reality if we consider, as we shall try to do in 2018, the Market GDP in reference to some specific key element of growth, which could be for instance the knowledge produced, circulated and sold in a nation – the percentage of America’s Market GDP at a world level would not only have been higher, but somewhat closer to being quasi-monopolistic.
If we leave this for the moment open to further clarification, the notion of Market GDP, as being peculiar to the wealth of a nation qualified by some sort of motor promoter of higher GDP, and we compare America’s 1945 data with that of 2018, we see that America’s GDP is reduced from 50% to 25-30% of the World’s GDP. Of course, the growing of other economies is the expected answer to clarify (not justify) the reduced total impact on world’s wealth, and it would be perfectly acceptable if….
There is always an if in the interpretation of data when important percentages change drastically over time. In this case, if refers to a different notion of the market’s share of GDP, which we shall consider. This time the market notion we will consider is the contribution to World’s GDP by America’s corporations, which is about 50% of World’s GDP. In other words, roughly the same data as America’s percentage was immediately post-World War II. Then shall we say that in reality nothing has changed? No. because what has changed is at the origin of what the government’s new academic scientist should consider: the emergence of a Corporate World Economic Order.
Of course it would be interesting for the UN to appreciate the contribution to World GDP by other national corporate entities, such as those of China, India, Europe, Japan, South Korea, etc. And, it is useful for the sake of the birth of this new Academic Economist to consider that it is not a casual event that the Trump’s cabinet is basically composed of corporate entities.
In a series of articles published in this magazine, I have explored before and after Trump’s election the radical changes introduced in politics by the coming age of Corporation Politics as it could be visualized in terms of the politics of Trump versus Aristotle (also here, and here). And indeed, if it were not for the need of a reliable strong supporter and qualified friendly advisor for Russiagate problem in a key position, the Secretary of State would still be a past CEO.
In my previous mentioned articles on the change in logic with regard to politics after 25 centuries of Aristotle’s intellectual monopoly, I tried to focus on the change in ethics, the national balance of power and some other key pillars that would be drastically modified, as they were, by Trump. Now it is clear that the emergence of Corporate role in Market GDP introduces a most fundamental change in the way to appreciate economics and communication with regard to national economic policy-making.
But before spending more words on this change, we should focus on the other anticipated data that provides a most important support for the emergence of the need, if not emergence, of new academic type of economist.
In Bretton Wood times we could safely say that 90%, or even more, of the relevant world money supply was provided by Central Banks.
In 2018, money supply provided by Central Banks is at most a negligible percentage (probably not even 5%) of the total money supply available. The remaining 95% has been provided by the private banking system. Digital money created by banks is by far the most important basis for the money supply of a nation. And that becomes an important field of confrontation: the national corporate economist versus the traditional political economist.
It needs to be understood that this huge percentage of money supply made available by banks plays a most clamorous role when we have a financial crisis and we ask governments to solve the crisis and to help increase the GDP.
Let’s make two different examples to explain this, both as applied to the USA. Blue collar unemployment in the USA is clearly dependent on the massive transfer of production to China 1: A deliberate Corporate Economic Strategy that cannot be offset by duties if corporations oppose them as they do. Donald Trump, who was elected thanks to the peculiarities of electoral system (he lost on total individual popular votes, but won on electoral votes2) promised to sustain blue collar employment, which came in a very limited quantity since the situation won’t change just by the raising of duties or limiting illegal access of Mexicans, if Corporate economy is against such measures.
Again with respect to the USA and the 2008 crises. Lehman Brothers failed. AIG was saved. Why? It is quite clear that the Corporate economy ruled the difference. And when I say Corporate economy, I mean Management power interests and Communication. Because with the emergence of Corporate economy, communication becomes one of the fundamental pillars.
Let’s take an European example: the Italian budget. The present government is fighting to move the economy with a little, higher deficit spending. Not much, a bit. Correct. Deficit spending is a normal political tool in times of crisis. But the European Central Committee – rightly – opposes it. Here we have a very strange situation. Both parts are right. Italy needs a higher deficit spending to move on the economy, and as such its approach with regard to the budget is politically correct; At the same time, the European Commission opposes the increase of deficit over GDP — and they are right too.
Now it is clear that both parties are right because they are acting from a different vision of economy. Italy’s vision is of political economy, while the European opposition is of corporate economy (European Central Bank).
The same conflict is on the agenda in dealing with the difficult situation of Deutsche Bank. In that case, the political economic vision doesn’t justify the bailing out of the bank (Why any bank should be bailed out with the money from common people if their management was not appropriately working? Is it correct that common people should pay for the mismanagement?). But on the other hand, a corporate economic vision scares people with threats of a global disaster if we start treating banks as other normal companies do. Here it is clear that corporate communication is able to occupy the media and scare the population and markets3.
Political economics vs Corporate economics. It is clear that Italian political parties have to come together and negotiate their willingness for their deficit spending with corporate economists — and if they don’t do it financial markets will menace big damages. But it is also clear that financial markets do not care if a health system is broken or educational system is not properly considered4. If the Italian Government in addition to a political economist had tried the assistance of a corporate economist, a solution to the higher deficit could perhaps be explored.
But let’s go back to the issue of USA’s corporate GDP amounting to 50% of the World’s GDP and to that of the money supply created by commercial banks (waiting for other types of money to come). It should be clear the Governments have to come to deal with corporate economists vision. As such this highlights the need for a different type of professional academic.
One thing is for sure — the World economy is moving towards a much higher role of Corporate Economy. It is clear that the modernization of a National economy cannot move ahead without the contribution of corporate economists for a very simple reason that globalization will not be reversed by any specific country. The Corporate economy is here to stay. The problem is rather to appreciate what capacity have governments to make a better cocktail. Then we may ask ourselves: How is the world reacting to such critical change? Are governments looking for a new type of economists to interact with traditional national economists? Do they behave very differently.
The USA and China seem to be in radical opposition to this respect. The USA is a country where the role of traditional political economists is being drastically reduced. Sooner or later one of the big Ivy League universities (Harvard, Columbia, etc) will create a position for National Corporate Economists, and when that happens the academic specialist will flourish. China is just the opposite because corporations are really an offshoot of the Government and hardly can be considered the birth of such new academic specialist. China will maintain the position of traditional academicians.
Europe and India are in a quite different situation. Europe is experiencing major confusion. Politicians want to maintain maximum power in the economy, but they do not reflect on the fact that they do not have the tools to manage the economy if they do not play the corporate game. Therefore elections are going to be dominated by protests, and programs are going to play that game: surfing protests without programs.
India in my mind is much better located on world scenario for two reasons. India is probably the only country in the world that can play the game of a dual economy. The current Indian government is a much more a modern entity with respect to previous governments because they can play that game. Secondly, because the chief economic reference for the renewal of the economy of the country – NITI Aayoug – has been constructed by PM Modi with a clear vision of pushing social reforms and at the same time eying market economy.
1. Brexit was sold by promoters on deep-ending excess spending for EU, but if we look a the key role of unemployed blue collars and somewhat neutral standing of labor party basically depended on the same reason.
2. A system, by the way that I appreciate very much in a confederation of States ,which should be tried in Europe the day it will be decided that European Parliament in addition to pay very good salaries to a gigantic bureaucracy will have some legislative role.
4. In the Italian case the last the governments have been doing their best to destroy the educational system – with success — by appointing to that responsibility totally incompetent persons.