A victory for historical materialism
It is not accurate to see the end of the Cold War as a victory for laissez-faire capitalism or for Western democracy. As shown above a market economy based on a private financial sector has just rendered the whole system close to bankrupt. It is not a success of Western mass democracy either. That system has rendered a number of Western States close to bankruptcy as well, developing a large welfare state that is no longer sustainable.
It is instead, and first of all, a victory of Materialism by which is here meant that increased wealth is the direct result of production and trade. Instead of production and trade the Western world has more or less voluntarily destroyed its factories and opted for an economy built on services and the service economy, more in line with the growing financial sector. This development has been encouraged by most economists. This has probably been our biggest strategic mistake as a professional group. Services are important for the economy, but should not be allowed to dominate. Those countries in the west which have held up a certain production capability are also those who have not failed, first of all Germany, Sweden and Switzerland.
Marx's historical materialism meant that change and improvement of society was brought forward by productive forces, such as tools, instruments, land, raw material, human knowledge and technology. Another way to explain this process of progress is to say that advances are made through man's work on nature. This seems to confirm the route chosen by modern day China. As such China can rightly argue that they are following a form of Marxism. Others have argued that it is difficult to see what is "historical" in Marx's materialism. Unfortunately the term materialism and economic materialism has come to mean the excessive desire to consume and acquire material goods in most peoples' minds. In this way the reference to "the material" alone has been deprived of its potential explanatory significance. For that reason we shall use the term "historical materialism" and "economic materialism" to describe the essence of the strategy that makes nations competitive today. Unfortunately, as has become apparent over the last twenty years, it might also result in irreparable damage to the environment and hence lead to the end of the human race, but this is not inevitable. We sometimes forget that our species has proved before that it can rise to a challenge. It may do so again.
In this age of economic materialism, when trade has become truly global, we see the nation state adapting to the perspective of the multinational enterprise, for it is now the multinational enterprise, not the nation state, which is taking on the role of locomotive of the future. To complicate things, this success of the organizational form exemplified by multinational enterprises and larger companies tells us nothing about who are best suited to run or own multinationals. The answer could well be the nation state. The success of this genre of organization derives from its meritocratic structure, with a professional management, a board, and clear incentives. It need not be a private-sector company.
Some see this development as irreversible. Others see it as a political choice for the present moment, a natural result of the time we are living in and the political, economic, and social conditions from which our current political trajectory has emerged. Whether the phenomenon is temporary or more permanent, it has inaugurated a new era, that of geoeconomics.
(Cf. Lorot 1999: 5.)
The era of geoeconomics does not mean that all social processes are being steered by economic concerns, but many of them are. Moreover it means that economics and corporate interests have the upper hand. This contrasts starkly with the Cold War period, when the focus was on politics and political ideologies. Earlier still, economics and the free market had the upper hand at the beginning of the twentieth century, until the 1929 crash; but in those days economic relationships were more national than global, and regulatory bodies were weak. The year 1929 marked the first major economic downturn of modern times; we are now living through the second, again partly caused by laissez-faire politics, this time beginning in the 1980s. However, so far at least, the crisis has not been bad enough to change our minds about the direction of politics at large, or even bad enough to make us press for tougher financial laws and regulations to govern the world's financial markets more effectively. The main reason for that is that we still think the crisis will pass; but also, the owners of the world's financial system, who are largely banks and financial institutions in the USA and Britain, fear that tampering with existing rules will weaken their position. Legal initiatives have mostly been a national concern, as we have seen in Germany and France. It will take much greater disorder before we start seriously rethinking the entire economic system, or questioning the concept of progress through material production.
It is possible that the endless struggle to achieve ever-higher standards of living will change once Man sees the consequences of increased materialism, the damage it involves to everyone's livelihood and to living conditions on this planet. That will probably depend just on how bad things get. Ironically, that may also be when it is too late. The double irony of this is that we could probably more easily change direction under a system of authoritarian rule. One example pointing that way comes from recent statistics showing that China is planting more trees than any other nation in the world to counterbalance the loss of clean air caused by Brazil and sub-Saharan African countries, most of which are democracies (Economist 2010).
Private initiatives are on the world agenda. At the same time it is premature to assume that the nation state will be entirely replaced by private initiatives. We are not experiencing the death of the nation state. Some day we may actually experience its renaissance, but not yet, and probably not for another few generations.
