World-System (1975-2150) Breaking Cycles of Austerity in France

 

The background graphic above was from a protest in Aug 2012 (you can see the small peak in AUST1--see the Operational Definitions in the Notes below--in the overlay time series plot). Emmanuel Macron took office in 2017, right after AUST1 hit bottom. His government has been riding the AUST1 Recovery wave since then. From my Business-As-Usual (BAU) model of French Austerity (here), AUST1 can be expected to peak in the next few years and decline after that. However, the decreasing Cycles of AUST1 will continue well past 2150. 

The BAU model, however, is not the best model for French Austerity. In the long-run, AUST is better seen as being driven by the EUL20 model (which is also steady state). In future posts, I will look at Austerity in the European Union (EU). In the short run, the best model is a Random Walk (RW)--validated by the Macron Administration's inability to form a government and retain a Prime Minister. The attractor path for the RW model is presented above (dashed red line). The RW attractor path suggests that AUST1 should be kept at a low level aside from random movements.

Austerity is a difficult component of Neoliberal Theory (see below). Especially, the dominant controller, AUST1, depends on external forces such as US Military support and the Russian-Ukrainian War which is forcing military expenditure up and creating the budgetary crisis with Health, Education and Welfare.

For an understanding of why Austerity has become such an issue in France, keep in mind that the Economy of France is becoming a Steady State Economy (see the FRL20 Model). One interesting hypothesis is that cyclical processes such as Austerity become more important as the system reaches a steady state and the dream of unending exponential growth (Techno-Optimism) is over. Promises can no longer be made that growth will solve Social Inequality problems. The New Axis of Evil can be used to motivate increased military expenditure but, to avoid reducing Social Expenditure, Debt will have to be used to drive the economy, creating another focus for Protest and wide-spread civil unrest.

You can experiment with the FR_AUST model here. For more information about how the models are constructed see the Boiler Plate.

Notes

More reading:

• Six Futures for France
• French Debt, Collapse of the Government, and COVID-19
• Shefner, 2015 here and here.
• Macron has No Good Options
• How Does the Economy of France Work?

Theoretical Considerations (it's bigger than just Austerity):

Austerity, as a theoretical concept, is part of Neoliberalism (see the graphic above and Shefner, 2015 here and here). I will explore the other aspects of French Neoliberalism in future posts.

The data for the AUST index is taken from the World Development Indicators (WDI). The indicators and definitions are listed in the table above. NOTE: AUST is entirely measured by budgetary categories as percentages; the cyclical nature of the index is a result of percentages hitting up against limits [0%,100%].

The AUST index contains three components that explain 94% of the variation in the indicators. 

AUST1 = (0.433 GED + 0.4571 MIL - 0.4477 G - 0.393 GE - 0.4701 GH)  

AUST2 = (0.822 GHE - 0.357 GED - 0.377 GE) 

AUST3 = (Overall Growth) 

AUST1 and AUST2 are historical feedback controllers for the budgetary categories defining Austerity. AUST1 focuses on controlling Education, Military expenditure, Overall Government Expenditure and Health Expenditure. AUST2 focuses on controlling Health and Education Expenditure.

In the Economy of France, Austerity, Debt and Globalization (KOF) are closely related. The relationship can be seen from the Measurement Matrix above when DEBT and WorldGlobal (KOF) are added to the model. In future posts, I will investigate all the indicators of Neoliberalism in France.

The state space of the French Economy is dominated by three components explaining 98% of the variation in the underlying indicators: 

FR1=(Overall Growth)

FR2= (CO2+EF-KOF)

FR3=(LU-L-N) 

FR2 and FR3 are Historical Feedback Controllers regulating Environmental Impacts of Globalization and Unemployment, respectively. EF is the Ecological Footprint and KOF is the Index of Globalization.

You can run the FRL20 Model with code available in Google Sites.

World-System (1960-2100) A New "Axis of Evil"?

 

On September 1, 2025, in the Chinese port city of Tianjin, Chinese President Xi Jinping held a summit in response to the Trump II Administration tariff policies that included leaders of Russia and India and other representatives from the Global South (here). Xi declared that "Global governance has reached a new crossroads," in the fight against US Hegemonic Power. Did Xi just announce the birth of the New Axis of Evil? And, what might this mean for the future?

The conclusion from my World-System models is that the future forecasts for the New Axis of Evil all lead to collapse of the system (except for one worrisome scenario).

In prior posts (see the Notes below), I have looked at the issue of US Hegemonic Dominance and the economic performance of Russia, India and China. In this post, I will look specifically at how the three countries (RU, IN and CN) could interact with the current World-System.

The Measurement Matrix (see the Boiler Plate for more information about Dynamic Component Models) is presented in the Notes below. In terms of overall growth, the first growth components for each country are relatively equally weighted (AXIS1). The historical feedback controller (AXIS2) is dominated by Russia. From the graphic above, Russia's dominance peaked before 1990 and then decline after the Fall of the Soviet Union.

--

For the late Twentieth Century, the system was dominated by the US. If that domination were to continue until 2100, the AXIS System would collapse--pretty strong motivation for eliminating US influence.

If the AXIS System were to align itself with the World-System (graphic above), the forecast for the future is also collapse.

If the AXIS System were to go it alone (as a BAU System), the countries could grow exponentially but it would involve the decline of the Russian historical feedback controller (AXIS2) -- a loss that would probably not be tolerated by Russia.

Unstable exponential growth will not minimize Environmental Damage from growth, so another option for an AXIS system not dominated by Russia is to stabilize growth (graphic above). Stability leads to a steady state after 2100 but would also probably not be tolerated by the AXIS participants.

In summary, none of the Geopolitical Alignments for the AXIS System look very promising. Either the system will eventually collapse or it's reason for existence (unending exponential growth) will not be consistent with World System Balance.

However, pursuing World System Balance does not seem to be a priority of any potential Hegemonic or Multipolar Leaders in the World-System.  In the Functionalist explanation, the AXIS System is necessary for the military-fueled expansion of all the participants .I will investigate the AXIS BAU scenario in a future post (here).

You can run the WL20_AXIS model here, the WL20_RU model here, the WL20_CN model here and the WL20_IN model here. 

You can run the AXIS_of_Evil models here.

Notes

Other relevant postings:

• Geopolitical Linkages: Canada, Mexico and the US
• US attempts to dominate India
• China and the Global South
• Six Futures for China
• India as a Small Regional Country
• Hegemonic Dominance Forecasts
• Globalization and Trump II Tariffs
• Five Futures for Russia
• Alternate Futures for the US
• How to Balance the World System

WL20_AXIS model Measurement Matrix:

World-System (1960-2100) Geopolitical Linkages: Canada, Mexico and the US

 

A recent article in the New York Times (here) suggests that Trump II Administration bullying (Trade Threats to both Canada and Mexico) might bring the two countries (CA and MX) closer together. It's hard to imagine Geopolitical Linkages between Canada and Mexico without the US. Mexico has strong cultural and economic relations with the Southwestern US and Canada has solid culture and economic relationships with the entire Northern US. There are strong inertial forces that will keep the Free Trade Agreements between the three countries moving forward well beyond the limited and inconsistent influence of the Trump II Administration.

The results presented below also suggest (not unexpectedly) that President Trump is tinkering with a system that he does not understand.

In this post, I will put the Growth Components (CA1, MX1, and US1, presented in the Notes below) of the three countries (CA, MX, US) together in a systems model and see what shape the future dynamics might take.** The first question would be which model would be best (from an AIC perspective), the two country model (CA1, MX1) or the three country model (CA1, MX1, US1)? The AICs  for the models are presented in the Notes below. From the AIC perspective, the three-country World-System linkage model is best.

But, let me clarify these results. I assume that politicians follow a BAU strategy: "our country is able to make it's own decisions without regard for other countries or the World System". The reality is, however, that each country is part of the World-System, whether they like it or not and whether they do or do not take into account World-System forces. The BAU results in the Notes suggest that CA and MX might reasonably consider going it alone together. The history of US, Canada and Mexico Free Trade Agreements also suggests that the countries understand the importance of the US as Hegemonic Leader of the World-System. Strong inertial forces will keep the three countries trading with each other long past the Trump II Administration. Inertia does not mean that there are not tensions and contradictions in the system!

The problem with forecasts from the WS-linkage model (above) is that each country will face a possible growth-and-collapse, Limits-to-Growth future. The US will peak a little later (2050) than CA or MX (2025). So, right out of the gate, World System linkage will seem like a bad idea to growth-obsessed politicians. From the standpoint of Environmental Damage from growth, Degrowth would be a positive outcome. So my assumption is that growth-obsessed politicians will turn away from a Limits-to-Growth future and focus on a BAU strategy such as NAFTA or the USMCA (the Trump I version of  NAFTA).

If each country (MX, CA, US) focuses on business-as-usual and their existing linkages (which  is very likely after the Trump II Administration), each country could experience unlimited exponential growth well after 2150 driven by the US, which is the unstable part of the system (you can experiment with the MX_CA_US model using the code provided here). At least unstable, unlimited growth was the vision prior to the Trump II Administration. 

I have suggested here that the Trump II Administration  is essentially taking the US on a Random Walk. If Trump is successful, the result (graphic above) could be a steady state (well after 2150) for all three countries if the US Random Walk persists (you can experiment with setting the US to an RW here; try to determine when the steady state will occur--it's way off in the future). 

In the short-run (year-to-year), the Mexican Economy is also a Random Walk (here). Additionally, setting the Mexican Economy to a Random Walk (graphic above) destabilizes the system and pushes the US into collapse mode. President Trump has to be careful with his RW-policy-approach because it can also destabilize the system.

All of the above is a round-about but necessary way of getting to the question of what effect will Trump Shocks have on the USMCA system? The graphic above shows how a negative shock to the US will affect each country, to include the US. Both MX and CA will be affected negatively to about the same extent and take over twenty years to reach equilibrium again. The US will respond positively in the first years (a prediction of the Shock Doctrine) but will eventually have to deal with the negative consequences for about the same twenty years. In other words, 

the Trade War works in the short run but in the long run helps none of the parties.

You can experiment with the MX_CA_US Model here and the MX_CA_US_W Input Model here. You can experiment with the MXL20 model here, the USL20 model here, the CA_LM model here and the WL20 model here.

In a future post, I will explore finding a steady state for the World System and what it's effect on the MX_CA_US_W Model could be.

 Notes

** More information about how the dynamic component state space models can be found in the Boiler Plate.

AICs

The AICs are: (CA1, MX1 = [104 > AIC=121.6, 137.5]) and (CA1, MX1, US1 = [112.5 > AIC=138.5 > 163]) for the Business-as-Usual Models (BAU) and (CA1, MX1 = [58.03  > AIC=101.6 > 134.2]) and (CA1, MX1, US1 = [ 51.14 < AIC=94.59 < 132.4]) for the World System (WS) input model (smaller is better for the AIC).

MX Components

CA Components

US Components

World Components

World-System (2015-2100) US Attempts to Dominate India

 

Reuters is reporting (here) that the Trump II Administration is planning to impose 25% Tariffs on India and, not surprisingly, creating Political Chaos in India. My first question is "What is really going on here?" Trump's Trade War makes little economic sense and is opposed to conventional Republican Right-Wing Free-Market Ideology.

If Trump's Trade War isn't about Economics, what is it about? My best guess (and there might not be a rational explanation) is that the Trade War is about Political Power. Trump is intent on the Economic Domination of every country in the World-System and has decided that a Trade War is the way to do it. And, right now, he seems to be winning--most countries appear anxious to capitulate. How the Trade War helps Trump personally or the US Economy, if at all, remains to be seen.

Another (and maybe more important questions) is what kind of Geopolitical Alignment is best for India (or any other country, for that matter)? In terms of the models I have estimate, the World-System Linkage model (W)** is the best for India [-99.33, AIC=-60.09, -28.39]*** while in terms of predicted performance, the BAU model [-9.571, AIC=26.53, 57.61] is best (graphic above). In the long-run, US domination will lead to collapse of the Indian Economy (I would assume that the Trump II Administration isn't thinking this far ahead).

Russian domination (RU) is another interesting case. Russia is itself a cyclical economy (think of the Collapse of the Soviet Union) and that cyclicality would be transmitted Geopolitically to India. There would be periods of success and periods of failure.

In the end, my guess is that Indian (and any other country, really) would prefer the BAU model, that is, to be left alone to find their own attractor path. 

You can experiment yourself with the IN_LM_BAU model here. You can learn more about how the models were constructed in the Boiler Plate. For more discussion of the Indian Economy, see India as a Small Regional Economy.

Notes

** Other types of Geopolitical Alignments estimated in my models are discussed in the Boiler Plate.

***Akaike Information Criterion (AIC) Smaller is better.

The BRICS (of which India is a member) are actually an intergovernmental organization of ten countries but the name comes from just five: Brazil, Russia, India, China, South Africa. You can experiment with the BRICS BAU state space models on the following sites:

• Brazil (BR_20 Model) An unstable model that leads to collapse (stabilizing the model also leads to collapse). There are strong historical unemployment and environmental Controllers. See if you can find a steady state for this economy!
• Russia (RU_LM Model) An unstable model with strong Export-Employment historical controllers. Becomes cyclical when stabilized.
• India (IN_LM Model) A Malthusian Economy currently in collapse mode. Stabilizing the economy is beneficial.
• China (CN_LM Model) An unstable economy with strong historical Export-Employment controllers. Stabilizing the economy produces a steady state after 2100.
• South Africa (ZA_20 Model) An unstable economy with strong Globalization-Environmental historical controllers. Stabilizing the economy would lead to a steady state in the distant future (well after 2100).

The BRICS are not a uniform set of Semi-Peripheral countries. They have different dynamics and different historical patterns of development. Neoclassical Economics makes a mistake when applying the same Exogenous Growth Model to these countries.

Trump doesn't think much of either the Indian or the Russian economies (here) and calls them "dead economies". Obviously, the Trade War is not meant to help other countries in the World-System but rather to dominate them (read more about Trump's Trade War here from a World-System Perspective).

World-System (1960-2100) Steady State and Collapse

 

Several studies indicate that no country has achieved a true steady-state economy, which is defined as an economy with a stable level of resource use maintained within ecological limits. 

However, some countries demonstrate features that could be considered closer to a steady-state approach:

• Stable resource use: A few countries have shown relatively constant resource use year-to-year, including Denmark, France, Japan, Poland, Romania, and the US.
• Biophysical degrowth: Germany, Guyana, Moldova, and Zimbabwe are experiencing a decrease in resource use in the majority of indicators.
• Balancing stability and degrowth: Some countries like Lithuania, Slovakia, Sweden, Ukraine, and the UK demonstrate characteristics that lie between degrowth and stable resource use.
• Holistic stability: Japan stands out as the only country achieving relative stability across all seven indicators of the Biophysical Stability Index. 

While no country fully embodies a steady-state economy, some countries are showcasing promising trends in resource use and stability that could potentially lead towards a more sustainable economic model in the future. 

World-System (1960-2100): Six Forecasts for the EU

 

The Trump II Administration has recently threatened to impose substantial tariffs on the European Union (EU). Economists in the EU have recently downgraded their forecasts for growth (here) and additional tariffs (if enacted) are expected to hurt the EU even further. 

Notes

• Was the EU Wrecked by Austerity? No.
• Is Another EU Recession Likely? Maybe.
• Is the EU Heading for a Steady State Economy? Maybe!

World-System (1960-2100): Is the EU Heading for a Steady State?

 

Google AI says no!

Based on the available information, it's not accurate to say the EU is definitively heading for a steady-state economy in the sense of a non-growing economy with stable population and consumption. While there's a strong emphasis on sustainable development and a shift away from a purely growth-focused model, current policies still project and even aim for economic growth within the EU. 

Here's a breakdown of the EU's approach to the economy and how it relates to the concept of a steady-state economy:

EU economic outlook and growth

• Subdued Growth: The eurozone's economic outlook for 2025 and 2026 is projected to be slow, with expected growth rates of 1% and 0.9% respectively, according to Deloitte. The European Commission forecasts slightly higher growth for the EU as a whole, at 1.1% in 2025 and 1.5% in 2026.
• Factors Affecting Growth: Uncertainty from trade policy and geopolitical conditions are key challenges impacting business sentiment and investment.
• Growth Drivers: Less restrictive monetary policies, increased public spending (including NextGen EU Funds and defense investments), stable labor markets, robust income growth, and lower interest rates are expected to support economic activity and consumer spending. 

Shift towards sustainable development

• 2030 Agenda for Sustainable Development: The EU is committed to implementing the 2030 Agenda and its 17 Sustainable Development Goals (SDGs), both within the EU and globally.
• European Green Deal: This is a key initiative aiming to make the EU climate-neutral by 2050, promoting a modern, resource-efficient, and competitive economy, according to Eurofound. It emphasizes decoupling economic growth from resource use.
• Circular Economy Action Plan: This plan aims to transition to a fully circular economy by 2050, reducing pressure on natural resources and creating sustainable growth and jobs. It includes measures for sustainable product design, waste reduction, improved recycling systems, and fostering innovation in circular business models. 

Connecting to the "Steady State Economy" concept

• Focus on decoupling growth from resource use: The EU's policies, particularly within the framework of the European Green Deal and the circular economy, emphasize decoupling economic growth from resource consumption and environmental impact, according to the European Parliament. This aligns with some principles of a steady-state economy, which seeks to minimize the environmental footprint.
• Promoting sustainable practices: The EU is implementing regulations and incentives to encourage sustainable production and consumption patterns, including stricter rules on product design, waste management, and resource efficiency. These actions are aimed at improving well-being within planetary boundaries.
• Not abandoning growth entirely: While aiming for more responsible growth, the EU is not advocating for a complete cessation of economic growth, but rather a shift towards a more sustainable model. This is distinct from a traditional "steady-state economy" which implies constant levels of capital and population. 

In conclusion, the EU is working towards a more sustainable and resource-efficient economy, actively implementing policies to decouple economic growth from environmental impact and promoting circular economy principles. However, it is not accurately characterized as heading for a steady-state economy in the classic sense of a non-growing economy. Instead, the EU aims to achieve economic growth within ecological limits and in a socially just manner.