Wednesday, January 21, 2009

The Economics of Failure

Given a free market, the market will be self correcting. This is the argument for globalization, money is valuable based on the goods that you can get with it. What happens to solar system of planets, that become one market working hard to produce goods to sell, to buy other goods that they want to own when the seller of those goods, has a resource rich system, has labor which is virtually free and can make decisions and enact them faster than a large group of separate states and companies. When the flow of goods stops and the need to work hard diminishes, your states and companies are left languishing in a depression that they have no hope of getting out of.

Welcome to the situation in the colonies of Mars, Europa, Ganymede and Titan. The Collective could out-manufacture anyone else, primarily because they embraced cybernetics to a level unbelievable to other humans. The melding of a human social society, with socially minded AI's has lead to an evolution of the production line to the auto factory. The auto factory is in all sense and purpose a robot, capable of manufacturing any goods from its designs and raw materials. Materials are usually pre-processed items. To achieve maximum efficiency several auto factories are used, some to make the parts, some to assemble them, some to finish and package the goods. In essence The Collectives manufacturing might comes not from a small oligarchy of companies and CEO's which ruthlessly dominate one economic sector but from the masses of Collective citizens that make goods based on demand out of their homes and ship them off to earth on spur of the moment transports. Once this system started, no one could out manufacture the Collective, star ships we being built by the dozen by some citizens, churned out of orbital factories. At its height the Collective's trade surplus was the same size of Mars with a tenth of the population, it never borrowed money or swapped currency because it always traded directly with Universe Bank. The vast wealth of the Collective though is in its internal barter credit system; It is possible for a citizen of the Collective to never use the Universal dollar instead bartering, this is facilitated by the rapid communication of the Collective's citizens as they have instant access to any other citizen.

And when, the Collective out manufactures the entire solar system for fifty years, the ripple effect of that is that many are out of work, have no way of leaving their colony and generally are far worse-off than they had have been if the Collective wasn't there. The manufacturing giants toppled under an avalanche of high quality Collective goods. The only industries kept alive were the Star-ship, Health-care and food production and this is because of UNAF and Universe bank. The many small companies and the big giants that bought their goods have gone, leaving behind a tray of toxic cookies that no one will eat because they are worth nothing.

When the Collective was cut off from human space, the citizens accustomed to cheap goods continued to buy them till the supply ran out. The value of the dollar went down, sure the Collective lost trillions of dollars but the citizens of the earth Colonies can now only buy a few goods and mostly save what little money they had for food the Collectives safety-net means that their citizens although under siege can continue their existence, they continue to work for the Collectives survival and fight a war which will be brutal and bloody against a superior enemy.

So in essence the situation, now in the late 2000's is not dissimilar to the situation in 2500, except the effects are magnified by vast populations, the disparate dystopia of the Earth Colonies and the ravages of a series of wars which begins between the martian city states.

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