In his excellent three-volume work titled Wheels of Commerce, Fernand Braudel describes countries or city-States as islands in a world economy. This is a reference to the interconnectedness of the world and our dependence on the world economy.
There are always places of gravity and attraction – be they centres of empires or the centripetal force of the city-State – that keep attracting towards themselves more and more of the world economy. Some places endure, while others disappear, giving way to new places of gravity and attraction. Even where a centre disappears, its networks remain and its ideas become incorporated into a new place of gravity and attraction.
‘The island in the world economy’ is an apt metaphor for countries seeking economic progress in a world that is defined by realism and self-interest. The world economy can also be an unsavoury place where competing States try to outdo one another. This can also be a source of upheaval and instability.
Islands in the world economy can sail with the wind or against it, and the recipe for success lies not in formulaic economic theory, but in whether statecraft is a product of a hedgehog or fox mentality.
States can sway their cognitive mass between the hedgehog and fox mentalities. Internal factors within a State can play a big role in whether the fox or the hedgehog survives or whether neither the fox nor the hedgehog exists. Statecraft is a product of the wisdom of a single individual or a Cabinet of Ministers, drawing from public discourse or the dominance of a technocratic class.
Inward-looking States are hedgehog minded and outward-looking ones are fox minded and cosmopolitan in character. In a world where there is much uncertainty, seeing the world for what it is, finding ways to sense the direction of change and being able to muster deft strategic coordination between the inward and the outward are bound to place statecraft in a better position to pass the eye of the storm.
But the ‘inward’ island within the world economy does matter. Its very engagement with the vagaries of the world economy can be undone by the failure of the ‘inner’ to hold its own centre together. The island within the world economy seeks its own economic sovereignty in the vast world of interests because its own State formation is an outcome of the settlements it fosters with key places of economic gravity within the world economy.
States may have natural endowments but they need more than what the privilege of geography and nature has endowed them with to succeed and meet all their needs. There is no wealth when it stays in the ground, even though one may grin at the privilege of having such glittering riches.
States need other things to convert a natural endowment into new forms of sustainable wealth. They need knowledge, technology, finance, expertise, markets and even the safe passage of their goods and produce through insecure places in the world (a dividend of peace that is often unrecognised). There is an old trope: there are no sustainable mines, only sustainable economies.
It is for this reason that being inward looking is insufficient to realise the full fruition of State formation without an outward strategy.
One may not always like the world economy and how its centres of gravity work, but that it is moot point if you have nothing and this drives you, as a result, on a path of dependence on the world economy for what one needs in the short or long haul. States do not have the luxury of wishing their autonomy into existence – they have to create it or even fight for it.
Strategic economics focuses the mind on the relation between capacity and the means to reach an end goal. In a recent work, On Grand Strategy, John Gaddis notes: “Statecraft, therefore, can never balance realism against idealism; there are only competing realisms.”
It is no surprise, then, that internal discord and failure rupture a coherent response to the ebb and flow of the world economy. They can set back the momentum gained from domestic accord in the face of an uncertain world economy. Internal discord, in turn, erodes the internal centre and makes it more and more vulnerable to the forces of change than its own capacity to control the effects of change.
The failure of internal accord can unleash the poison chalice of populism or revolution. The wave of passion that drives revolutionary change often leaves nothing in its wake.
The revolutionaries can adopt a hedgehog mindset, preferring to flatten everything that sings the praises of the old. But such strategies are no succour to a dependent State and may even ruin its future prospects – in the short or long term.
Strategies that rely on populist passion lose the mind of the fox and can succumb to their own folly. As Carl von Clausewitz, the Prussian theorist of military strategy, reminds us, “no strategy anticipates all contingencies, that every solution creates problems, and that these can, at times, overwhelm”.
So, here it is: the State is an island in the world economy and how it navigates its own interests and self-preservation depends on whether it endows itself with the hedgehog mind or whether this supplants the worldly fox mind. Strategic economics, as far as States go, is about securing for its own inner world the fruits of strategic statecraft in a world economy where centres of economic gravity display forms and depths of self-interest with different shades of temperament.
The success of political leaders is dependent on steering the island economy between its inner and outer worlds. It cannot have one or the other.