Unlike regular national economics, the field of international economics covers a broader political dimension that spans the entire planet. It is normal for countries to trade with others to acquire whatever they need for their own economies. In international economics, the three most common variants of trade so far are Free Trade, Protectionism, and Autarky. The Work-Standard is designed to circumvent the metaphysics of all three by adopting its own conception of international trade where Arbeit and Geld define the everyday affairs of the Socialist Nation.
A Free Trade Agreement (FTA) refers to a trade policy that has no conceivable restrictions on the movement of goods, services, migrants, and Kapital across international borders. These restrictions are identified as ‘Barriers to Trade’ because nation-states impose them to deter any excessive trading across its borders. Its basic premise claims that no State should impose those Barriers to Trade out of supposed consideration for the ‘consumers’ and the ‘producers’, as if the people of a nation-state can never become anything more than just those two simple categories.
FTAs proliferated after 1945, the Historical End of World War II, when the Jeffersonians convinced the Allied Powers that by removing Barriers to Trade, there will be no future conflicts. The widespread prevalence of FTAs among nations outside the Western world since the late 20th century is a consequence of the Bretton Woods System establishing the International Monetary Fund (IMF), the World Bank and the General Agreement on Tariffs and Trade (GATT), the precursor to the World Trade Organization (WTO). Claims of Free Trade deterring actual wars is a recurring meme that originated from the Enlightenment. It states that two nation-states, under the Incentives of Supply and Demand, could be dissuaded from engaging in open hostilities if their economies are interdependent with each other. Any ‘open hostilities’ according to this claim have consistently factored military power alone within the context of the Balance of Power; it never bothers to consider the economic and financial ones as in the Balances of Trades and Payments.
After the Death of Bretton Woods, it has become commonplace for entire nation-states to have their economies dependent on Exports or Imports. The temptation of Export-driven or Import-driven economies shares the same negative flaws, with the real difference being a matter of perspective. Export-dependent countries cannot afford to reduce their Exports without a noticeable reduction in the Standard of Living. Import-dependent countries also cannot afford to reduce their Imports without an equally noticeable reduction in the Standard of Living. Worse, this shared predicament is known to spread the destructibility of various economic or financial difficulties beyond the borders of its country of origin. Known examples include the Energy Crises of 1973 and 1979, Black Monday of 1987, Black Wednesday of 1992, Asian Financial Crises of 1997, the Dot-Com Bubble, 9/11, Great Recession and more recently the Coronavirus Pandemic.
Past decades of crises have witnessed the slow, gradual reintroduction of Economic Nationalism and its Protectionist trading policies as a consequence of Globalization. These developments have occurred without any country adopting Autarky or even the formation of trading blocs similar to the Western and Eastern Blocs of the Cold War. Knowing the methodology behind Protectionism is not just crucial for understanding this ongoing phenomenon, it is also pivotal in realizing how it affects the performance of a Currency pegged to the Work-Standard.
The most common methods of Protectionist trading policies have been Tariffs and Import Quotas. Tariffs are special excise taxes imposed on imported goods and services. The higher cost is supposed to compel the ‘consumers’ to support their local ‘producers’ as an Incentive. Import Quotas are limitations on the quantity of imported goods and services. The lower availability is the Supply and Demand aspect by imploring the ‘consumers’ to support their local ‘producers’. Other methods involve allotting Subsidies as Incentives to encourage more exports and Direct Subsidies as another set of Incentives to encourage even more exports.
Less frequent methods of Protectionism are not necessarily reliant on the Incentives of Supply and Demand insofar as they can also be reliant on the Intents of Command and Obedience. The latter can be seen as examples of what Hamiltonianism is capable of. One example is the recent emergence of “Administrative Barriers,” where the State imposes a number of safety, quality and environmental controls to deter Free Trade. Anti-Dumping Laws can forbid foreign commercial firms from ‘dumping’ large quantities of cheap, inferior goods and services at low Prices that undermine their true Value. Technical Patents are another example by defending national industries against industrial espionage from potential rivals, and adjustments to Exchange Rates by the Financial Regime and greater prioritization on national industries by Central Planners are other ways of carrying out an Autarkic trading policy.
Another, albeit less common trade policy, is Autarky. An Autarkic policy involves the Socialist Nation conducting as little international trade with other nations as possible. Such a policy does not have to be done whilst being diplomatically isolated; it can be pursued with other friendly nations as part of a trading bloc or an economic and currency union. Should Autarky be realized by political-economic alliances, it becomes feasible for the Socialist Nation to import everything it needs at preferential Exchange Rates which can be negotiated as part of its upcoming or active Real Trade Agreements. Moreover, if the Socialist Nation does decide to enter trading blocs or economic and currency unions, make double sure that there are arrangements set in place to ensure the Work-Standard will operate unaffected.
Compared to those three policies, the Work-Standard advocates for the “Real Trade Agreement” (RTA) as a suitable alternative to the Free Trade Agreement. An RTA takes its formal taxonomy from the Realpolitik approach to diplomacy and the economic measurement of Currency Depreciation/Appreciation according to the Attrition/Inaction Rate and overall Mechanization Rate. The goal here is to provide the State and Totality with the Intent of discerning their own Value of Arbeit based on how much they can afford at a given Price of Geld. Depreciation leads to cheaper Exports but more expensive Imports, whereas Appreciation leads to more expensive Exports but cheaper Imports.
The Work-Standard stresses the need for the Socialist Nation to maintain its Balances of Trades and Payments, favoring a trading policy somewhere between Protectionism and the Autarkic practice of engaging in trading blocs and economic or currency unions. The State should make the necessary adjustments to the nation’s trading policies as it would with economic and monetary policies. Once its Currency is pegged to the Work-Standard, the State is able to look after the VCS Economy and ensure that it will receive whatever it needs to serve the Totality.
Regardless of whether all Currencies are pegged to the Work-Standard, the Socialist Nation must be able to maintain ample reserves of Foreign Currencies. The Council State needs to maintain a balanced budget in all of its trade expenses, otherwise it is going to accumulate Schuld owed to foreigners by failing to exercise fiscal discipline within international trade. If the Schuld is owed to Liberal Capitalists, be prepared to pay them in Kapital denominated in their Currency.
RTAs may either be bilateral in their transactions between two States or else multilateral as part of an alliance. Once an RTA is signed and recognized by the involved States, the Socialist Nation will be able to set up special retailers called “Specialty Shops,” which are designed to sell goods to foreigners in exchange for their Currencies. The Socialist Nation may even be compelled to establish those same retailers in the foreigners’ home countries as well.
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