The Economic Foundation Of A Liberal Geopolitics And Political Economy

The liberal answer to the despotism of Russia, Venezuela, Saudi Arabia, and other petrostates is ultimately pretty straightforward: use technology to make oil and other fossil fuels, which are also damaging our environment and driving climate change, irrelevant, replacing this with energy obtained from cleaner and decentralized renewable energy and vehicles that run on electricity.

Authoritarianism thrives in economies where the key factor of production is ownership of resources, whether that's farm land, gold, sliver, coal, or oil.

In contrast, in a commercial economy, where the most important factor of production is not just labor, but intelligent, voluntary work, you need to spread out economic resources to induce those willing, smart economic contributions from many people. The decentralization of wealth and power that flows from that favors a more open, democratic society, since the funds to run a state must be obtained through taxation of the many secured with their democratic permission, and not just ownership of those resources.

Commercial economies need to be market based. But they don't need to be truly "capitalist" in the Marxist sense, and indeed, ideally aren't. In a truly capitalist economy, in this sense, capital (i.e. raw wealth) is they key factor of production and ownership of it, while more amorphous than wealth based upon ownership of raw resources, can lead to similar effects.

If owning the factory or equipment becomes as important as owning land used to be in medieval and early modern Europe, you get a society that may look like a commercial economy, but is just as controlled by oligarchs as the economies that came before it. In the extreme of a capitalist society, financial wealth can dominate and replace land or oil as the concentrated factor of production that facilitates an economy based upon ownership of the key factor of production by a few.

To be clear, this doesn't mean that we should resort to Marxism's flawed "labor theory of value." What matters is results, not effort. Treating goods and services made less efficiently as more valuable than the same goods and services made efficiently is just dumb. But ideally, know how and efficiency that maximize the value of labor relative to the value of ownership of property is the goal.

This approach, like every approach has winners and losers, which somewhat align with modern political identities. Right wing politics are favored on one hand, by people who want to increase the importance of ownership of property as a key factor of production, and on the other hand, by people who are only capable of providing inefficient labor, who don't benefit from a system that rewards widespread and diverse forms of efficient labor.

Another threat to the political structure of a decentralized commercial economy is intellectual property. When it is too strong, as it is in our economy, ownership of intellectual property prevents innovation rather than encouraging it, and concentrates wealth in whomever owns a right to royalties from it.

The fundamental project of those seeking a healthier political economy in the West is to undermine the importance of merely owning wealth and intellectual property.

In the case of intellectual property, we've kept that at bay so far, by making it easy to copy and having lots of opportunities to innovate and make older intellectual property grow obsolete, although laws weakening intellectual property rights would help.

In the case of finance, we've tried to create financial institutions that make it possible to funnel access access to resources to people who have good ideas, while lowering the returns to ownership with low interest rates and modest returns to ownership of equity. But tax laws that favor unearned income over earned income have helped undermine this, as has the weakening of estate and inheritance and gift taxation that facilitates the transfer of wealth to dumb money.