Political economy of confrontation – Valdai Club

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Today we can speak of two groups of “currencies”. Let’s call them conditionally hard and soft. Hard “currencies” are the traditional set of the era of imperialism: military power, territory, resources, infrastructure, industrial and technological potential. Soft “currencies” are more characteristic of the era of globalization: human capital, attractiveness of ideas and lifestyles, information management, scientific intensity of the economy, including in dimensions such as environment and climate, etc.

Modern powers have a different set of existing “currencies” and different aspirations to maximize them. Two superpowers stand out, whose baskets are very diverse. The US “currency basket” is the most balanced. Washington owns virtually all of the aforementioned assets. Global resource flows associated with these “currencies” are also tied to the United States. China is catching up quickly. It has made a phenomenal breakthrough in the hard currency segment and retains strong potential in the soft currency segment. China has its own ideology, its own way of life, its own information environment and growing human capital. There are certainly differences between the two powers. For example, the United States is not seeking formal territorial expansion. It successfully solves this task with a military presence on the territory of the allied countries. In general, China is not looking for such an expansion either. But the latter faces the task of solving the Taiwan problem, and developments in the South China Sea are raising suspicion among neighbors.

In the context of the United States and China, two other players stand out, whose “currency baskets” are more asymmetric. The European Union has a whole range of soft currencies. But in the durable goods segment, the situation is contradictory. The EU has a strong economy, infrastructure and industrial base. The union includes at least one power that has all types of modern weapons, albeit on a much smaller scale than the United States and China. But the EU is not looking for open expansion. The power of norms in the economy and social organization is already attracting colossal economic and human resources, rendering expansion simply unnecessary. The EU is a postmodern democratic “empire” which effectively achieves its objectives through economy and soft power, without resorting to military might.

In Russia, the situation is different. Moscow’s attributes include its serious military potential, vast territory and natural resources. The industry, on the other hand, has shrunk compared to the Soviet era. But he still keeps enough power to maintain his defense potential. The infrastructure needs to be developed, but for defense purposes it is also sufficient at the moment. In the weak currency segment, the situation is worse. The country is experiencing a demographic crisis and a workforce flight. Its ideology is indistinct. The attractiveness of the lifestyles offered and the effectiveness of its institutions are far from obvious. The economy is lagging behind in a number of areas. At the same time, Russia is in a state of degrading relations with the West; it considers that the growth of military threats for its part is inevitable and strives to balance perceived threats with all available means.


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