UNIVERSAL SINGLE MARKET ECONOMIC ORDER FOR UNIVERSAL ECONOMIC PROSPERITY.
AUTHOR: KESTER GRAHAM DON.
This part of the work set forth to answer the question; what are the consequences of different global currencies on the incremental and uniform sustainable economic growth and development of the under-developed, developing and the developed world economy system and the functioning and growth of the global economy as a whole, and to reach the objective goal of humankind universal economic prosperity of uniform and incremental economic growth and development, what will be the transformative effect of the creation of a universal single market economy by the universal adoption of a strong value universal single currency and an national domestic market economic order prototype universally as opposed to a universal single currency in our current global economy, global political economy and global political order?
STRUCTURE: The working out of the theory of the first part of the above question which is; ”what are the consequences of different global currencies on the incremental and uniform sustainable economic growth and development of the under-developed, developing and developed global economy system and the functioning and economic growth of the global economy as a whole” is based on the understanding of the working of the global economy through research, observation, travelling and following current affairs. This part of the question is predicated on the proposition that there is disjoint and disfunction with incalculable negative economic consequences for the global economic order composed of the under-developed, developing and developed global economies due to the different under-developed low, developing medium and developed economies high value currencies that is broader and wider than what links these economies into the global economy. This part of the question hypothesises how this low, medium, and high valued currencies among the global economic system and within each of them causes economic repercussions and reverberations within and among them to affect the micro and macro-economics and the international economics and, in the final analysis, the consequences of all the above to the output/GDP and consumption and investment in the whole global economy.
After this, the work then continues by first addressing the last part of its question which is “adoption of a universal single currency in our current global economic and global political economic and global political order” by looking at these practices and their problems to reach an objective conclusion that due to globalization our current global economic organisation and practices have become redundant as arrangement for the realisation of humankind’s prosperity. This is done with analysis and theories that hope for humanity universal prosperity that is fading, is insuperable under these organisations and practices.
The work then shift focus and inquiry to the working of national macro-economy order and all it is composed of to function in order to tackle the task of the middle part of the question which is; “to reach the objective goal of humankind universal economic prosperity of uniform and incremental sustainable economic growth and development, what will be the transformative effect of the creation of a universal single market economy by the universal adoption of a strong value universal single currency and national domestic market economy prototype”. This question is answered by the injection of a strong valued universal single currency as the most important, most central and all else changing variable, into existing economic theories and practices and policies. From the classical, neoclassical, developmental, heterodox, endogenous economic theories to global economy policies and theories[1]. Reconstructing them toward the objectives of first, bringing about global income and GDP convergence with the developed high value currency nations. Second, the achievement of uniform global economic growth and development and this condition’s positive effect on the disjoint and disjunction of the world economic order, and third, the effect of the second objective on the increments in global economic growth and development due to the overall convergence of all world economic order, effect which is increased global consumption that makes it possible to sail over the neoclassical steady state growth analysis which posits; “no further growth” once some growth equilibrium is reached through some certain growth and development processes, as is currently being experienced in the developed economies part of the world economy order. And fourth, making possible the endogenous growth model of sustained high and rising per capital income growth into the future by reconstruction of these theories with the transformative effects of a strong value single universal currency on universal output and the necessity of this single universal currency for universal consumption. This is followed by an analysis on which a multiplier effect of these relationship of strong value universal single currency-universal output-universal consumption-universal investments will be derived as an effect producing more universal output, more universal employment and income, more universal investment, and ever more increasing universal GDP and per capital universal income in perpetuity.
This work combines these theoretical and policy analysis with an analysis that run through the work and that bring home to humankind the unsurpassed advantages of universal common ownership of earth’s natural resources as a factor that underlies national market economy prototype to be adopted in combination with a single universal currency. And the work closes by addressing the role of universal macro-economy policy, fiscal and monetary etc to fine tune universal single market economy in contrast to current approaches to the global economy. …
SECTION ONE: The global economy order is composed of the under-developed, developing, and developed economies with all the nations comprised of having their own currencies with different values, low in the under-developed economies grouped together, medium in the developing economies while the developed economies possess high value currencies. The problems of this economic condition for the global economic growth are huge, in short, so huge that all economic theories mentioned in the structure of this paper including policies, micro and macro and international cannot achieve the desired goal of global economic prosperity without correction of these differences of value of currencies factor.
The most important factor in economic growth and development is the availability of capital, therefore the work will cut through the heart of capitalism to reach to its beating which is currency as a means of all economic activities. Without a single universal high value currency, the truth of all the above-mentioned economic theories is doom to failure. First the capital investment need in technology cannot be met within these regions of low and medium value currencies, second the purchasing power of these currencies is too low to be able to afford the right mix of goods and services in the global economy. These regions lack the capital in the form of a high value currency for their economic growth activities. They need the prevailing exchange rates in their own currencies to assess the goods and services of the developed economies, that exchange rate is so high compared to their currencies that they cannot afford them. To buy a pound for example in Nigeria would cost 450 naira and for a good or service costing 50 Great Britain Pounds that would amount to 20 025 Naira. The average monthly salary in that country is 75 000 Naira. With this we begin to see the problem, which is a constant postponing of spending. To take another example, a business that would take 1 million GBP to set up in United Kingdom would cost 45 million Naira in Nigeria, a daunting proposition. These low currencies also affect savings, aggregate supply and demand within these economies and the global economy. In short, it affects all aspects of the global economy. Everything else depend on a strong value universal currency for universal prosperity. The growth of all regions cannot be done by foreign direct investment or foreign aid for only with the expectation of the same profits expected in the currencies of the developed countries of the global economic order will multinational corporations invest at the same rate in all regions of the world economy. At present they cannot do so because the low and medium currencies regions cannot afford their goods compared to the investments made. The global economic order is in imbalance due to this currency factor, it is because of a strong value currency that industrialization in goods and services are concentrated in the developed economies. The driver of economic growth is capital for investment and consumption, due to these differences in currency values, the global supply and demand is in disequilibrium as the aggregate output of the developed economies cannot all get consumed among them because of surpluses in output and that, when exported to the low and medium currencies economies also cannot be consumed because it cannot be afforded. The world therefore is not utilizing its economic resources in full. The problem of these differences in currencies values affects negatively the industrialization in goods and service in all regions of the world, uniform cutting-edge technology across the world, investments capital, consumption capital, savings capital, the accumulation of physical capital, financial capital accumulation, equilibrium prices, global employment, foreign debt, unequal terms of trade, global supply and demand, under-development of the global economy to full potential of growth in output/GDP and under-utilization of aggregate production function.
A high value universal currency will correct all of the above, it will make the cost of industrialization affordable, encourage the introduction of cutting-edge technology across all global regions, make up for the availability of investment capital within countries and among nations and spur investment by multinational corporations across the globe, promote global consumption of goods and services at the same rate, increase saving rate and capital accumulation, lead to equilibrium prices, full employment because of demand in the global economy, cancel out foreign debt indebtedness and do away with unequal terms of trade. Just as the Euro-zone for example is a magnet for MNCs investment due to its strong value currency, so will all regions of the world attract investment if their currencies where of high valued.
SECTION TWO: The world economy is under-developed and not in pace with globalization. The globalization of economies of increasing interdependence between national economies throughout the world, the globalization of market with increasing homogenization of consumer tastes and product preferences in certain markets, the globalization of industries in productive process and the globalization of strategy in the extent to which international businesses configure and coordinates their strategies globally[2]. And the globalization of finance, transportation and communications technologies has all created a global market in which current economic system such as different national macro-economic system, separate national ownership of natural resources, international trade is no longer necessary for they were economic practices of their age that has gone by and transited into a globalized world. We are in an age in which if steered right will produce the best prosperity ever had and in perpetuity. For the global economy to reach its zenith in output and GDP, the current economic method must be dismantled and replaced with national economic order prototype that encompass single source of universal macro-economic regulation and policies toward all nations, common ownership of earth’s natural resources, same universal budget and taxes and same universal treasury debt and spending and central bank and finally same single universal high value currency for on this foundation can the whole world attain that dreamt of universal prosperity. Current arrangements are outdated and further, they have not been able to produce an equal wealth of nations and those nations that are today developed are yet to reach their full potential in GDP and output. The call is to transform an under-developed global economy into a developed one and in which and through which nations will enjoy the same income, employment, output/GDP, and slow rate of inflation.
Globalization has shifted the ground from national market to global market of production and services anywhere in the world and this should be matched with resources and capital anywhere in the world. All tried and tested approaches to economic growth have not only failed to produce uniform global economic growth and development of nations, but it has also stopped, if not reversing the economic growth of the advanced economies and economic theorizing has reached a stand still on the way forward for a while now.
Specialization as in comparative advantage theory in goods and services should now be left to multinational corporations and other market forces rather than to nations. MNCs should be able to harness natural resources, human capital, and all other factors of economic activities anywhere in the world under a single source of regulation, global economy should evolve to the pace of globalization. Humankind should concentrate on macroeconomic equilibrium of supply and demand in the global market for universal prosperity. Separate and different national currencies, national macroeconomic policies, global economic policies based on pursuit of separate national wealth is a hindrance if not a detriment to universal economic prosperity.
The universal political, economic, and legal landscape must be transformed in line with the organic development of humankind’s history, retaining the best and shedding the worst. Capitalism is the best hope for universal prosperity that agrees with human nature to own and barter and for it to produce that universal prosperity we must carter for its heart that is currency for the smooth functioning of the whole. The world today has different system of capitalist economy; the America and Great Britain practice the market-oriented capitalism, East Asia, the developmental capitalism, the German and the Scandinavian countries, social market capitalism. The world shall be adopting the German system of capitalism for it strikes the most appropriate balance between social concern and market efficiency.
SECTION THREE: Together with the adoption of the German economic system and the adoption of a single high value universal currency, the universal economy would be transformed into a high aggregate output and GDP of unimaginable proportion economy provided this universal economy is buttressed with the regulation of a single source universal macroeconomy policy from universal kingdom government for in this state of affairs in addition to those already mentioned, entrepreneurship, global business strategies, savings, investment, consumption, global technology, education, human capital, finance and production, in short, all the current gains of economic growth in the advanced economies will reach unseen depth on a universal scale. This condition of a single currency will bring about the convergence of income among all nations of the world, that is the under-developed, developing economies will meet up with the per capital income of the developed economies, they will be able to consume and invest and would receive profits and wages in the same currency as in the developed economies. This will close the disjoint and disjunction gap in the global economic order as all nations will be able to engage in universal economic activities on the same footings, which will in turn, due to the convergence of income, lead to increased global investment and consumption in the global economy as a whole without reversal or stand still, leading to more universal aggregate output/GDP and rising income in the following multiplier effect;
Strong value universal currency=high investment and consumption=high universal output and consumption=more output, more employment and income= more investment and ever more increasing universal GDP= rising per capital income for global citizens.
SECTION FOUR: The Globalized International economics of International Trade and Finance based on Different currencies.
Different nations’ currencies have a negative effect on pattern of trade which is the total amount of exports and imports of all kinds, the kind of commodities and assets traded and who trade with whom, that is the volume, composition, and direction of trade. Trading on different low and high currencies also causes loss of jobs and industries and a high value currency economy is bound to continue to run a trade deficit when its trading partner has a low value currency. The trade flow between and amongst them cannot be balanced. For the high value currency nations will purchase more from the low currency nations because they can afford the purchases due to the high value of their currencies, while the low currencies countries can only purchase little because of the high exchange rate. Consider the example of China and the US. It is not an issue of unfair trade that the US runs a trade deficit with China, the problem of surplus in China and deficit in the US rest on the fact that the US and her citizens can afford to buy more from China and China and her citizens no matter their desire to purchase from the US just cannot meet the cost in dollars. The solution is not protectionism and tariffs and renegotiation of trade but the institutionalization of a universal single currency regime which will spread production and trade in goods and services evenly world-wide so that consumers can afford those product and services anywhere in the world. This will stem the influx of cheap goods into a nation that ruins its industries that cannot compete with the low prices from low currency countries because the high value currency nations produce and pay wages in high currencies. A universal single currency regime will bring global prices into equilibrium and supply and demand will be in an equilibrium. Same price, and supply and demand will protect all industries regardless of where they are based in the world. More industries mean more jobs and avoidance of loss of jobs and increase in employment. Globalization is a positive force if it is managed correctly, international trade and finance is not conducive with globalization. To harness all the advantages of globalization a single universal market is an imperative for increasing the universal output/GDP which will in turn increase the wealth available to nations from universal government.
It should be added here that the Global South nations are in debts to be repaid in high value currencies that cannot be paid back due to shortages of high value currencies in foreign currency reserves. Universal single currency makes repayment of those Global South nations’ debts possible.
SECTION FIVE: EMPIRICAL ANALYSIS.
This section shall do some empirical analysis of the transformative effect of high value currency on economic growth and development and from the analysis we can start to guess the huge and unsurpassed advantages of a single universal currency for the universal economy. Examples of a high value currency for economic growth and development can be found in; a, East Asia economy miracle, b, the unification of East and West Germany after the cold war, c, the Euro-zone project- albeit incomplete due to differing macroeconomic policy, d, national uniformity in economic growth and development.
The East Asian Economies: All the policies toward economic growth and development and industrialization instituted by the East Asia economies would have come to nothing without one factor that has not been considered even by the world development report on the East Asia project, The fact has become lost in attempt to explain the economic miracle of these East Asia nations, leaving the world at a loss as to how it happened. The factor on which all their developmental state policy rested, on a closer study of these economy, was a strong value currency that was achieved through pegging of their currencies to the US dollars, this was the defining factor which these nations themselves could not pin down in explaining their overall success. This pegged strong value currency afforded them the best technology and industrialization, spurred foreign investment, and shifted MNCs investment toward that region. It was the prolong maintenance of the strong value currency that brought this region their economic growth and development. The 1997 financial crisis they experienced was caused by the devaluation of that currency and this devaluation has reduced the growth of their economies today.
The Unification of East and West Germany: The best example of the transformative effect of the adoption of a single currency and the same macroeconomic system to achieve a uniform economic growth and development can be found in the case of the unification of East and West Germany following the end of the cold war. On the unification of the battered economy of East Germany that has ran a communist economic system for almost half a century, with the West Germany, the integration of East Germany into West Germany strong currency and macroeconomic management brought the two formal separate entities into uniform economic growth and development within a short period. This experiment will be repeated on a universal scale.
The Euro-zone Project: The introduction of the Euro currency among some European countries have sustained their economic growth and development as MNCs and other businesses see this zone as the best place to invest. Had it been a complete project with the same macroeconomics system in contrast to separate macroeconomy policies by the zone’s nations, the euro-zone would have had uniform GDP and hence equal per capital income among its members had the system of that adopted with the East and West Germany unification in which the East and West Germany resumed the same currency and a central macroeconomic regulation been the case.
National Uniformity in Economic Growth and Development: The uniformity in national economic growth and development comes from the use of all that the nation possesses such as the natural resources, a single currency and macroeconomic management of the economy. For if for example the different states of the US use different currencies, the result would have been the same disparity in economic growth and development as experienced across the globe. It is time for universalism universal economic order for in it lies the uniform sustainable economic prosperity of humankind and her nations in perpetuity.
[1] J, Cypher and J, Dietz. The Process of Economic Development. (2004 Routledge)
[2] G. Stonehouse et al. Global and Transnational Business: Strategy and Management, (2005 John Wiley & Sons Limited)
