Parent Category: Programs - Category: Economic Development
By Marios Efthymiopoulos, Founder & CEO of Strategy International
Part I: Political Economy and Terminologies
While I was studying at different Universities completing degrees that were of interest to me, I was hoping to secure a professional position when my education would be complete, either in the market world or academia (as I wished). To be honest, I found out relatively late that without sound economic education and training I would not be an attractive candidate.
I was always wondering why a political scientist, with a diverse background, a multi-leveled and international education and the ability to think at different levels cannot be good enough. I was wondering the reasons why one would not be credible and able to lead, if economic education and proof of completed courses and practice were not included in one’s professional curriculum. I later understood that economic knowledge and professional experience would prove the ability to lead and provide the credibility of making economic or political economic assessments whether in professional work or politics.
In order to gain knowledge and experience I embarked on working, and most importantly learning, in prestigious economic institutions. I acquired the ability to manoeuver at different economic levels of administration and decision-making whether national or international; to understand how capital is created, where and with what credentials would the capital be invested; how would taxation be collected and why is important; why would in international affairs and corporate world the stock market shares and bonds matter greatly. Even more so, how would the economic viability of an international organization or a country would suit the needs of a constant changing world, one of alliances and interests made upon short-term interests and long-term goals. Why would economies boost or face inflation. Why would the world or countries have to face recessions. Why austerity measures would be applied as a consequence of financial negative foresights and actual outcomes. Why would wars occur and why countries suddenly become so interested at the viability, destruction or dissolution of their society.
Answering all the above questions is not an easy task. But it is very important to answer with as much simplicity as possible and as much accuracy as possible. We need to realize at this early stage, that stakes are high. Any possible mistakes in the forthcoming stage/article (Part II), which will include foresights regarding the ‘diplomacy of the policy of austerity’, may jeopardize our main goal. And, that is, to provide a complete and correct insight why things progress the way they do as well as provide a program of possible solutions for consideration.
Therefore, economic foresight is to come in the forthcoming article under established framework which follows below; an analysis and exploration of the basic root causes of political economics. The article will foresight the future of economic prosperity and provide solutions which will explain and balance upcoming international economic developments of the current negative international and national overflow of capital, goods and production. And as stated to the previous article, this is an attempt to understand better the world and provide robust and credible solutions through the understanding of effective analysis, proposals and possible political future engagement. As such, these articles should always be considered as professional/scientific on the one hand but also professional/political on the other. This is the political assumption of how the world is and how it will develop. Lastly it is a statement about the measures we need to take in order to avoid possible negative outcomes in the future, although some of them are unfortunately unavoidable.
Terminology is essential
Economic analysis and foresight requires terminology explanation which in reality is provided by international professionals and economic experts either on a micro or macro level. Nonetheless, it is essential for this article to individually explain – as it progresses – the ways in which we interpret the status of economics and political economy.
There is a need to have and develop a complete understanding of economics in its simplest form when referring to the economic status of nations or international economy. Terminology along with a political economic analysis of the creativity of austerity – instead of productivity – will explain the financial foresight of 2013-2014, as the title of the article introduces, in the regions of Southeast Europe, the Mediterranean, the Middle East and the world.
Capital is created as a result of trade. Capital is the outcome of economic trade which is created for the support of national and international economies, for the benefit of those that privately wish to invest and make large profits out of the production of goods and, at the state level, for the benefit of the state. The state offers possibilities through investment or provides a social infrastructure and as such gives back to its own people and at different levels.
Currency is the actual practical method with which we conduct exchanges of goods for or get in return for our goods or services. The currency used today, suddenly complicated the international economic, trade, banking and acquisition affairs of the 21st century (will explain at the next article why and how it reflects politics). It is a currency that supports the works of national governments or joint interest economies of countries or international organizations and communities.
The stock market and bonds (public or private, even more so equities and natural resources and gold) are realities that strongly boost the shares of a country or company. Both exist in parallel worlds. In the political world (where gold and public bonds are the stocks of the state, also including natural resources) and in the corporate world (where stocks and goods production, innovation and marketing are the key to success) are allowed to exist in order for faster growth to occur. Cash is now able to flow into the company and/or the country, making it more profitable in the short-term and more adjustable to the needs of investment, innovation as well as infrastructure and allocation of resources that will benefit the social structure and its citizens.
Gold is the mechanism of currency exchange. Each state according to its productivity, real-estate wealth, gold and others resources amount to its currency capabilities that allow for goods to be produced, cities to be built and even wars to be conducted. However new energy resources emerged since the 1950s as quite important and equal to gold; today, they reflect new realities for the 21st century. A century in which stability, growth and profitability of the state/s, interest and joint alliances or aims are measured by the ability of a state or a union of states to exploit natural resources as well as scarce natural resources or alternate sources of energy.
Politics and Economics matter
Both policies matter. They are inter-related and applicable in different levels and actions. The Politics of the 21st century is largely a methodology based on the established legalities and laws, on the political philosophy and elitist personalities, and on joint interest groups (hereafter, caveats). This methodology is used to boost a nation’s economy or the entity of a single international organization such as the European Union or the international community at large. Politics is the root cause of economic wishful prosperity although a variety of tactics are implemented for the economic aims to be achieved. It is also a way of swift pragmatic implementation of economics in every day affairs and in between states or organizations and private businesses and firms.
Economic implementation and the increase of profitability through the production and selling of goods is basic for the benefit of a nation based on exploitation of natural resources, marketing and management, communication and public relations, services and goods, technology innovation, energy and security. It is also important for social security and country stability and constant education, healthcare and research. Economic profitability and the enlargement of national or international capital comes forth through investment or constraints (austerity) – yes, austerity could lead to capital enlargement; it also occurs through human interactions, members, governments, states and organizations. Depending on shared – or not – interests, economic profitability increases or decreases. The production of goods also increases or decreases depending on the state and the capacity to produce goods that will be sold in the market or exported. In some cases the stability or instability of a state or region occurs when markets are infected positively or negatively. Also when there is allocation of natural resources which are needed and can or cannot be used by the national government, or when the government or people are faced with internal or external social and political consequences which cannot be resolved thus rendering the exploitation of natural resources difficult. As such the exploitation of natural resources is an issue for the fittest both in political and economic terms, especially when the resources are considered as primary goods for the profit and survival of people and states in need.
Politics and economics is a matter of ‘taking while giving’. As such politics and economics are merely rules with which one can engage public or private affairs. Politics, economics and in this case the rule of law as well, provide the rules of the game. They provide the rules of engagement in the ‘battle of the strongest and the fittest’ thus determining who gets what, when, where, with what objective, in exchange for what, through which means, and on which level.
Ιn Realpolitik affairs, based on a pragmatic approach, currency and capital are used for profit, investment opportunities and resolution of disputes and issues between states, governments and organizations. In the language of political affairs, they are used as peaceful means and/or negotiating terms and mediation solutions.
Taking this to a whole new and practical level, what we are trying to imply in real terms, is: “that everyday life, politics, and the answer to the question ‘why things happen the way they do?’, occur due to economic ties or wishes, as capital is all around us. Capital creation and increase is the main consideration and measure of solid structural success. Economic application is a method for the accomplishment of actual structural, institutional, and lawful – in some instances unlawful – profitability. Essentially, capital and economic prosperity guarantee stability, and some degree of success and prosperity at all levels”.
However, too much prosperity, stability and geographically-concentrated natural resources may also prove fatal, leading to long-term negative consequences for politics, alliances and economy. In such a case the outcomes depends on the nature of attempts that would be made for the exploitation of the natural resources. These include: the right to exploit natural resources by peaceful means; through the ignition of instability; and through the known method of exploitation from the most powerful or biggest actor – the greater the actor the bigger the need for natural resources and everything that comes with them.
- End of Part I -
Next Article: Economic foresight 2013-2014 and the ‘Diplomacy’ of Austerity.