The future of capitalism!

It seems that everything old, is new again..

While the E.U. economy is still in shambles and the U.S. is struggling to regain its foothold; China continues to grow and Russia is coming back again under Putin. Considering these trends we can ask ourselves what happened to old jolly Nick (Santa Claus), and why are most of the former first world countries getting so much coal on christmas? Some may argue that it is just a temporary decline, and others may blame it on unfair competition from the emerging countries.

Is it a temporary decline?

Map of First World Nations

As it happens with kids during the whole year, many people in the former first world countries dream of a white christmas, bright lights, and lots of presents under the tree, without regards for mom and dad having to work in order to be able to afford those presents. Starting right after WWII (1945 for those who don’t remember that last big war) people in the U.S. and the E.U. started to enjoy an unprecedented economic grow, fueled by the reconstruction of Europe, and the resources from the third world countries. May people in the U.S. and the E.U. still think that the current economic crisis is just temporary and that in a short period of time they will regain their expected top of the food chain position in the world’s stage.

The problem with this expectation of a temporary decline and a quick resurgence for the first world countries, is that it is based in a completely unrealistic set of expectations. In today’s economy, the whole world has been united by the globalization movement, and it is the first time in history where we all are starting to feel part of a worldwide society. Many people forget that the famous U.S. economic growth really happened only after 1945, and that for the first 40 years of the 20th century, the country had to endure depressions after recessions on an endless circle. People also forget that before 1945, even Europe was also suffering from continuous economic recessions and famines, that could be potentially responsible for the WWI and WWII economic war for resources.

If we look at history, this may not be a temporary decline but a very long part of a regular cycle of rise and fall of countries and empires. The world is full of examples including Egypt, Greece, China’s dynasties, the Mongol Empire, the Roman Empire, and even the Spanish and English empires of the past. All of them had their own periods of growth, followed by long periods of economic and social stagnation and decline. One of the most scary facts is that the subsequent downturns were on their majority as long or longer than their success periods, as exemplified by countries like China, Egypt, Greece, Italy, and others, that after short 200-300 years of success, have endured hundreds and sometimes thousands of years of continuous stagnation and decline.

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Is it an unfair competition

The or Countries (Brazil, Russia, India and Ch...

For almost fifty years most of the manufacturing, development, and well paid jobs were reserved for the elite workforces in the U.S. and the E.U., while the rest of the world had to accept that as the way of life. Improvements in communications, transportation, commerce, and even laws and regulations are setting up the world stage for the first time in human history for a fair fight, and the emerging countries are taking as full advantage of it as the first world countries did before that. Today is the first time in the world where at least theoretically anyone can receive fresh fruits, or flowers from any other country regardless of where they are, as well as is the first time that anybody in the world at least theoretically can have a conversation, and even a video conversation with anyone else in the world regardless of where any of them are at little or no cost at all (Skype, messenger, and others).

The disappearing of the artificial barriers to trade in the form of customs tax, communication and transport challenges, and even the adoption of world standards (the UK can eventually learn that steering wheels should be on the left, and the U.S. can learn to use the metric system), it is facilitating the world commerce and competition. In today’s world, most of the actual production is partially or completely automated, and the costs of the machinery have decreased to a point where every country is able to fund the development of their own manufacturing facilities if deemed necessary. China and India focused their efforts initially in developing their workforce through education, then promoted their countries low labor force in order to attract foreign investment, and finally after their basis were set, started to develop their high technology and heavy manufacturing industries. Other emerging countries are learning from their examples, and using their state power to foster their economic development as part of the newly minted state capitalism economic model.

Looking at these models we cannot agree that it is unfair competition as many have claimed in the U.S. and the E.U. Competition is exactly that, and even the founders of the theory of capitalism stated that the system works only if left on its own, and not continuously manipulated for special interest as it happens many times all over the world. It is interesting that the first world countries call it unfair competition today, but not 50 years ago when emerging countries were only allowed to be sources of cheap materials, and consumers of goods produced elsewhere. Going back to the previous topic, let’s remember that in many cases in previous history, those first world countries enjoyed a short period of glory, while later faded to obscurity when forced to openly compete with many of their neighboring emerging countries. It is not an unfair competition, it’s just competition, and the U.S. and the E.U. better learn their lesson fast or risk having to relive the history lessons of the past.

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Jorge Mastrapa

Managing Director at Inloso LLC
Dr. Jorge Mastrapa is an international author, speaker, executive coach, and entrepreneur. His areas of expertise include cultural diversity, global leadership, organizational culture, and human capital management.

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CC BY-NC 4.0 The future of capitalism! by Inloso is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

About Jorge Mastrapa

Dr. Jorge Mastrapa is an international author, speaker, executive coach, and entrepreneur. His areas of expertise include cultural diversity, global leadership, organizational culture, and human capital management.

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