World-System (1960-2100) Six Futures for Germany

 

In a prior post (here) I presented results from the DEL20 Model that suggested the German Economy may have reached a steady state sometime after the year 2000. I have also argued (here) that the Steady State Economy, although it will solve some environmental problems by stabilizing CO2 emissions, might create other Geopolitical problems by becoming the target of predatory economies focused on World domination (e.g., Germany in the Nineteenth Century) The question for this post is whether some (new?) Geopolitical Alignment might protect Germany from the (possible) fate of stagnant steady-state economics. The answer isn't encouraging.

From the graphic above, you can see that alignment with the European Union (EU) or Business as Usual (BAU, NS, RW) don't shock the German Economy out of the steady state. Alignments with the World System (W) or the United States (US) are even worse. Here are the specific results:

• Random Walk (RW)
• Nation State (NS)
• European Union (EU)
• Business as Usual (BAU)
• World System (W)
• United States (US)
• Russia (RU)

NOTES

World-System (1980-2100) Eight Futures for Canada

The Trump II administration has threatened a Trade War with Canada and the imposition of tariffs has been delayed while negotiations proceed (here). Canada, Mexico, China and the EU are the US's largest trading partners. I have presented the MXL20 (Mexico Late 20th Century) model here with eight future growth forecasts. In this post, I will do the same for Canada.

The Canadian forecasts are a little different in that they group clearly into two classes: Growth and Steady State (presented above) or Collapse (presented below) when compared against a the Random Walk (RW)--I give more detail about the classes of models with the MXL20 model here--the best two forecasts are the TECHE (Technical Efficiency) forecast and the Business as Usual (BAU) forecast. The forecasts do not predict growth forever (the Techno-Optimist forecast) but rather a steady-state after 2100 (the type of forecast one would get with a Classical Economic model).

The forecast for Geopolitical Alignment with the United States is very interesting and, I would argue, speaks directly to the threatened Trade War. The forecast with the USL20 model driving inputs to the CAL20 model suggests a Growth-and-Collapse scenario with a peak around 2025 at the start of the Trump II administration. In other words, the benefits of Canada's alignment with US have reached their peak and are not forecast to continue into the future--and my forecasts start in 2010!

Both the IMF (here) and the OECD (here) argue (as of 2024) that Canada needs to focus on internal structural issues and Technology, the BAU and the TECHE (Technical Efficiency) forecasts above. Reorienting the Canadian Economy will be difficult during a Trade War with the US, to say the least.

It would be reasonable to argue that some other Geopolitical Alignment might serve Canada better than alignment with the US, which appears to be ending.  I have estimated three other alignment models: World System (W), North America (NA) and China (CN). All of these models (presented above) predict collapse, some collapses being severe (NA and CN, respectively). Even focusing on Technical Productivity (TECHP) is worse than a Random Walk (RW, tomorrow being like today except for random shocks).

In summary, the CAL20 model suggests that Canada should concentrate on getting it's structural house in order and implementing efficiency-producing technologies, two steps that the IMF and the OCED have been emphasizing for the last twenty years. Let the Trade War with the US play it's way out. Geopolitical Alignment with the US has run it's course.

The IMF (here) and the OECD (here) economic reports about Canada bring up many other macro-economic issues. I'll look at those issues in the future. Setting the big picture for the Canadian Economy will help put detailed policy issues in a better perspective. I want to emphasize again that the future is unknowable. All I am doing is creating scenarios based on state space models. We will have to wait for the future to understand how useful such models might be.

NOTES

The Measurement Matrix for the CAL20 model is:

The first six indicators in standard scores are taken from the World Development Indicators (WDI). KOF = KOF Index of Globalization, EF = Ecological Footprint, HDI = Human Development Index. The second two components: CA2=(0.721 LU - 0.675 EF) and CA3 = (0.586 LU + 0.680 EF - 0.249 CO2 - 0.263 Q - 0.2076 N) describe Environmental and Unemployment Error Correction Controllers (ECCs). I will present the behavior of the Canadian ECCs in a future post.

You can run the CAL20 model here. The Bootstrap confidence intervals for the coefficients are:

You can convert the model into a Techno-Optimist model by setting F[1,1] = 1.0 in the System Matrix, but that would be an improbable value although it is close to the Upper Confidence Interval (UCI) of 0.990595.

World-System (1950-2080) US Capitalist Accumulation Crises

 

Reading between the lines in the Classical Capitalist Model (see Higgins, 1985, Chapter 4) and the Neoliberal Model, Capitalism and Inequality go together.  Higher concentration of wealth ensures that funds are available for investment in the unceasing drive to accumulate capital. Too high concentrations of capital result in the Crisis of Capitalism. Too low concentrations require Neoliberal Renewal of Unfettered Capitalism.

I can develop these insights by starting with Higgins Classical Model and adding a GINI Coefficient (0 = perfect equality, 1= perfect inequality) as an output of the Classical System State in the causal diagram above, O=(L,Q,T). By applying the ideas of Systems Theory, the Capitalist Error Correcting Controller (ECC) is now the major output. What this means is that the relationship between Inequality (GINI) and Capital Accumulation (K) has to be monitored in a Capitalist System. From the perspective of Systems Theory, this ECC is one way to possibly maintain Capitalist growth, by continuing to keep (GINI > K).

When I apply the Marxist and Neoliberal insights to the US (see the Measurement Matrix in the Notes below), we get three components: Classic1 is the overall growth in Capital, Investment and Inequality explaining about 96% of the variation. Classic2 is the important controller here, ECC2=( 0.80 GINI - 0.778 K) that explains only about 3% of the variation. Classic3 is another controller for Investment, ECC3 = (0.548 GINI - 0.795 I) and explains another 0.08% of the variation. What the small explained variance for the ECCs means is that, in the Post WWII period, it has not been necessary to exert much control over capital accumulation in the US. 

When we put Classic2 in a state space model (here), and construct an attractor path for the US, the result is presented in the time series plot at the beginning of this post. Numbers above zero (dark black line) indicate increasing Inequality available for capital accumulation. The attractor path (dashed red line) indicates that Inequality has been well below expected levels and has plenty of room to increase under the Trump II administration. But somehow, since the 1980s, the US has stayed fairly close to (GINI - K) = 0.

What is notable is that there was a Neoliberal accumulation crisis during the Reagan years (the start of Neoliberalism in the US) and an impending Marxist Overaccumulation Crisis starting after 2000. But still, the US is below the World System attractor path. 

The attractor path at the beginning of this post is driven by the World System, overall growth of the system, environmental effects on agriculture and world markets. The graphic above takes the World System out of the model and allows ECC2 to work as expected. 

European Neoliberalism after WWII was meant to reintegrated the World System after the shock of Fascism. The Trump II administration is signaling that Neoliberalism is at an end in the US and that some type of Right-Wing Authoritarianism is being planned along with Isolationism.

The World System attractor path reaches a steady state after 2060 which may signal an impending Crisis of Capitalism in the US or simply that there would now be enough inequality to ensure continued accumulation for ever. Although the current Trump II Administration is committed to increasing inequality to really high levels, it is also committed to detaching from the World System--contradictory policies that may cancel each other out. 

You can run the USL20_Capitalism model here. Other futures for the USL20 model are available here.

Notes

The Measurement Matrix above was constructed using Principal Components Analysis with standardized data from the World Development Indicators. The USL20 Capitalism model with input from the World System is stable and cyclical (Eigenvalues = (0.8023969+0.119491i 0.8023969-0.119491i) and it is the best model out of the ones tested [-285.6 > AIC = -254.2 > -231.5]). For the BAU model [-260.2 > AIC = -242.3 > -220.5].

The confidence intervals for AICs of the W-input and BAU model overlap and are not statistically different even though the W-input AIC is better. What this means is that, even though the outputs of the two models are very different, political forces within the US could easily switch back and forth between either model--another reason why the future is unknowable. In a future post, I will discuss the importance of the World System for Neoliberalism.

 The full USL20 Capitalism model is available here (both W-input and BAU).

Terms

   US = United States, K = Capital Stock, Q = Production, I = Investment, 

    GINI = Gini Coefficient [0,1], L = Labor,T = Technology, N = Population, 

    O = Output, ECC = Error Correcting Controller

    Neoliberal Accumulation Crisis = (GINI < K),   

    Marxist Accumulation Crisis = (GINI > K)

References

• Marx Collected Works
• Higgins Economic Development
• Slobodian (2020) Globalists: The End of Empire and the Birth of Neoliberalism

World-System (1970-2050) Five Futures for Syria

 

In a prior post (here) I presented one collapse scenario for Syria, now that the long standing Assad Regime has fallen. In this post, I will explore some alternatives (in the graphic above). A description of the SY20 model is provided below.

• BAU The Business-as-Usual model is probably the best description of the Assad Regime. It was a unstable regime maintained by force. One fear about the collapse of the regime is that the future will be chaotic. Using the Akaike Information Criterion (AIC), the BAU model is one of the best models (-54.37 < AIC = -10.37 < 23.99) describing the SY20 system (see Notes below, the smaller the AIC, the better). 
  
  
• US Diplomatic relations between Syria and the United States are currently "nonexistent". Syria was put on the State Sponsors of Terrorism list in 1979 and is the only country that has remained continuously on the list. From the period of the "War on Terror", the U.S. government has imposed a series of economic sanctions on Syria. After the government crackdown during the 2011 Syrian revolution; the US (alongside the European Union and Arab League) withdrew diplomatic recognition. The US has provided political, military and logistic support to the Syrian opposition. The new Syrian government might seek stronger linkages with the US, but the projections above are not very promising and somewhat unlikely (

  107.6 < AIC = 161.3 < 203.3).

   
  
  
• RU Diplomatic relations between Russia and Syria have had, up to now, a long, friendly and stable history. Unfortunately for Bashar al-Assad (the current and now deposed president), Russia failed to defend the regime even though it had been providing military support up to the final coup. From the graphic above, the projection for Russia's support of Syria is cyclical and not much better than a Random Walk. The RU Puppet model, which Syria long resisted, would not be the best model for the future (97.65 < AIC = 162 < 219.9). Russia has it's own set of problems (not dissimilar to Syria) which I will cover in a future post.
  
  
• RW The Random Walk model essentially makes no predictions about the future except that tomorrow will be like today with the addition of random error. Notice that it is not much different from either the US, RU or World models when taken as input. For the RW model (55.99 <  AIC = 95.64 < 125.5).
  
  
• W Maybe somewhat surprisingly, linking Syria with the World System would not produce a result much better than a random walk (119.4 < AIC = 177.1 < 217.6). However, in World-Systems Theory, Syria is a Peripheral Country with weak institutions and a small share of World wealth. 
  
  
• MEA The worst possible future for Syria is linkage with the MiddleEast-Africa. Projections indicate a severe collapse for the system (97.65 < AIC = 162 < 219.9).

In significant ways, these future projections for Syria do not capture the real problems for both Syria and Russia. In the Measurement Matrix, presented below, the primary feedback components for Syria are 1) Environmental (SY2 = 0.6926 EF - 0.4920 Energy Use) where EF is the Ecological Footprint and 2) Globalization induced unemployment (SY3 = 0.8838 LU - 0.363 KOF) where KOF is an index of globalization. I will cover these issues in future posts.

Notes

The SY1 state variable is a relatively equal weighting of six indicators from the World Development Database plus the KOF Index of Globalization, the Ecological Footprint (EF) and the UN Human Development Index (HDI). The FR2 index is (EF - EnergyUse) and the FR3 index is (Unemployment-Globalization) error correcting controllers (ECC), respectively. The major component creating the collapse in Syria is FR2, the environmental component. It should come as no surprise that Syria is in environmental crisis (here).

The SY20 model has no indicators describing the now-collapsed Syrian dictatorship so the future will be dominated by continuing environmental problems and globalization-driven unemployment. A government of rebel commanders is unlikely to address any of the issues that led to collapse

The SY20 model also does not capture trade relations, particularly with Russia (a vital supplier of essential commodities). I will cover Syrian Trade in a future post.

You can run the SY20 BAU model here. The model is unstable (see the System Matrix below).

You can stabilize the system by setting F[2,2]=1.012095084 to some number < 1.0 but greater than zero and rerunning the model. What results to you observe?

To give you a brief idea of what the Syrian Battle Space was like (a mess) here is a map from 2021.