Tuesday, March 21, 2006

Winner in economic race

Cosmic Duck had the story. And now you can also find it in the Copenhagen Post March 21:

Nation's economy best in EU
By The Copenhagen Post

The Danish economy has been named as the best in the EU at creating growth and employment ...., according to a report from the Centre for European Reform, A London-based think tank devoted to improving the quality of the debate on the future of the European Union.
The centre's report makes it likely that all ears will be on the prime minister, Anders Fogh Rasmussen, when he speaks about the Danish flexicurity model on Thursday at the EU economic summit in Brussels to discuss.
'The flexible Danish labour market, in which it is easy to fire and hire, combined with a high level of social security make Denmark a role model for other EU countries,' concluded report author Aurore Wanlin

What is interesting about this story is not the fact that the Danes may be good at making money in the honorable old sense of capitalist enterprise, but how they make it, and what they intend to do with it doesn't cause much of a bother. Money is a medium for something else. It is not an end in itself. In this regard there's something we may have completely misunderstood - not only in Denmark, but in the whole of the EU.

The European Union set itself the honorable goal of being the "most competitive knowledge economy in the world by 2010".

As part of its globalisation targets published recently the Danish government has repeated this goal, but for the sake of modesty - or realism perhaps - they call it a goal for 2015. Then, not only the Danish economy, but the Danish society shall be the "most competitive in the world".

Then one must ask: - Are we in a sports arena, - or is it the "animal spirits of capitalism" that are driving the the Danish government (and the EU for that matter)? Imagine the consequences of all countries in the world pursuing this goal. Who'll be sweeping up after this rat race of the most most fit economies?

After it ends, and we have perhaps reached the top of the pinnacle, what will we masters of creation think: That we're the best in the world in the economic race? What does that prove about us as human beings - quite apart from the homo oeconomicus aspect of us?

What is interesting about the knowledge economy in a wider sense is how you compete. Actually, You do it by out-competing others in knowledge. It is all done in the highest principle of free and fair competition. - Or so it is thought. In real life it is a different story. The rat race of the knowledge economy is about building up monopolies in well-defined areas of software, recipes for making drugs, of building computerised systems or logistics systems that others will come to depend on, and hence be ready to pay a lot of money for. You'll be a privileged earner of monopoly profits, as long as your patents run. And when they've run out, you'll have developed new ones.

It is also a question of political power. In the WTO (World Trade Organisation) the Western countries, the knowledge economy leaders, control the negotiations on regulations on trade in services. Through the WTO the forceful opening up of weaker economies is brought about in trade agreements. They have to accept investments from multinational Western corporations.

A hierarchical system of trade relations and division of labour is formed, with the strong knowledge economies on top and those lower in the hierarchy farther down. The task of the latter is to receive the outsourced polluting production from the advanced service economies at the top. Buying cheap industrial goods from the mass-producers in the South and selling expensive knowledge service products to them, secures the best of possible worlds for the rich Western countries.

So, is it only by being good, diligent schoolboys that this position is secured for them? No, it is actually by exerting power in the trade negotiations and by enjoying the fruits of the good transnational monopoly which knows how to do transfer pricing between branches and mother company.

Sitting with Maersk, NovoNordisk, Bill Gates and other highflyers of the knowledge economy at the top of the globalisation ladder, all the white-collar, well-dressed Danes can bring a toast to the hard-working labourers toiling away producing industrial goods at the lower rungs of the ladder. This is the difference between Veuve Cliquot and unhealthy chemical-tasting Coke. But the ladder doesn't reach into heaven.

Mr. Rasmussen may tell EU leaders a thing or two about flexicurity, hire-and-fire, and other wonder principles of modern capitalism. But when it comes to making peace at home between people of various ethnicities he won't have much to say. Modern economics is a discipline onto itself. It is not concerned with ethics, nor does it deal with the illogical aspects of human behaviour.


Blogger Steven said...

That was a good read, and you beat the newspapers to the story too. :)

GNight Cosmic Duck

6:43 PM  

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