15 January 2007

Efficient Specialisation v Robust Autonomy

Although he never quite goes there, Jared Diamond in Collapse (see review above) implies that specialisation can lead to a society's collapse. The collapse of friendly trade, either through the collapse, hostility or isolation (e.g. icebergs preventing ship visits) of a previously friendly trade partner is one of the factors that can lead to the collapse of a society.

Quite simply and obviously, the more dependant the society is on foreign trade, the more vulnerable it is to a collapse in that trade.

Trade comes about through specialisation. I make spears, you hunt, I swap my spears for your meat.

Specialisation is efficient. Comparative advantage.

Autonomy - autarky - is robust but inefficient.

This is why I'd like to see every household with a a vegie patch, with solar power, and collecting rainwater off its roof - it is perhaps inefficient, but it makes society less vulnerable to terrorism and natural disasters.

This is why it is in the United States' interest to bring countries such as China into the world trade system (aka the Pax Americana).

It is not only because democracies or countries with McDonalds don't go to war with each other.

Rather, it is because or partly because America controls the high seas. In other words, America is in a position to disrupt any country's trade.

So any country that has been brought into the US-centred world trade system and is trading on its comparative advantage(s) has everything to lose by annoying the US.

I am told that Stalin had a similar system - e.g. radios were assembled in one republic from parts manufactured in other republics, meaning that one area of the USSR could not secede because it was not industrially self-sufficient.


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