Technology, Resources and Reality

In the 1990s it was argued that globalisation and information technology would create a 'weightless economy' in the West in which manufacturing and farming would be largely obselete and commodities from the developing wolrd would be cheap and abundant. In this brave new world computer literate workers would prosper while manual workers would be largely redundant. The state would also be redundant as flows of information and finance across national borders would be impossible to tax and regulate.

However, the 'weightless, stateless' world theory overlooks four crucial factors- resources, geography, demography and previously accumulated wealth.

In 2006 the weightless economy looks like an increasingly unlikely prospect. The economic boom of the 1990s was initiated by U.S military intervention in Kuwait, and the political collapse in Russia, that lead to a drop in oil prices. In the 21st Century increasing industrialisation in China, India and Vietnam is pushing up oil prices along with prices for many other commodities such as rice, beef, copper, gold, steel and gas. The United States, which is increasingly dependent on foreign energy sources, is also becoming increasingly indebted to overseas creditors.

Although farming and manufacturing employ a relatively small proportion of workers they are still very important to the economies of the West. Revenues from farming in the U.S, Argentina, and Australia have increased significantly in recent years in response to rising demand from China and the Middle East. Although the U.S and Britain have been promoting a shift to a service economy they have also maintained large defence industries to offset the impact of industrial decline in the non-military sector. Meanwhile mining and metal refining is becoming an increasingly important part of the economies of Canada and Australia.

The weightless economy theory also overlooks the wealth the West has accumulated through manufacturing in previous decades. Many people are currently spending inheritances and retirement savings that were built up during the 1950s and 1960s when manufacturing was much stronger. However, rates of personal savings in Western countries are now at historically low levels and today's generation will have little to pass onto their offspring.

Even though capital may be highly mobile, people are not. In a world of 6 billion inhabitants migration is inevitably highly restricted by national governments. Subsequently workers in 'geographically fixed' professions such as construction are protected from overseas competition. Over the last 10 years wages in the buiding trades have increased while many white-collar professionals have struggled to find work with an increasing number of office jobs are being outsourced to India. Only the highest paid managers and technocrats are fully internationally mobile, and even then only between developed countries.

Rather than dying off, governments have actually grown over the last 5 years and this trend looks likely to continue. Security threats from terrorism, contagious diseases and biological pests have recently increased and highlighted areas where state involvement is essential. Organised crime has also grown in tandem with globalisation and prompted the state to increase border and intelligence networks. As the population ages the state is also becoming increasingly important as a provider of health services and pensions in most developed countries.

The state is also providing a vital role in developing the infrastructure for oil and gas extraction. Increasingly long pipelines are now needed to get shrinking oil and gas supplies from isolated regions to where they are needed and this requires considerable inter-state cooperation. The shift to alternative fuels such as hydrogen will require even more state involvement due to the massive long term investment required. Indeed, the development of alternative energy sources may become the largest single government expense of the 21st Century.