As the American political system hurtles toward its quadrennial encounter with the oracle of democracy, it is worth our while to take stock of the country’s place in a world beset by bewilderingly rapid change. (Heaven knows none of the candidates will bother to do this.) I want to suggest that an old yet generally neglected subject remains particularly relevant: the relationship between the size of political units and the effective scale of systems of economic production and exchange. Another way to describe this relationship is by recourse to the hoary scholarly phrase “political economy”, a term of art that has unfortunately gone out of style.
American strategists and statesmen have sometimes been attuned to this subject. In their approach to Europe just after World War II, American leaders understood that political identity and scope, national security, and economic scale were intertwined variables in defining power on the global stage. For most of the Cold War period, however, American statesmen tended to think of politico-military affairs and economic matters as dancing on opposite sides of the ballroom floor. Henry Kissinger famously admitted his lack of familiarity and expertise with economic issues and just as famously implied that, after all, they weren’t very important compared to decisions about war and peace in the nuclear age.
Perhaps that was so in 1968 and even 1988, but it is certainly not so in 2008. The relationship between the size of political units and the scale of economic activity is again critically important. It defines the international context in which the United States operates. It tells us what states have to do to excel and it goes far to define what U.S. leaders must do so that America can keep up with other countries, some of which are growing more rapidly than we are. In other words, it tells us much about what our real strategic options are.Made to Scale
The growth of China, India and the European Union evince one primary characteristic: They all progress economically at more rapid rates than the United States. China and India grow vertically through high percentage increases in GDP per year. The European Union grows horizontally by adding countries, lately about one a year. As a result, the combined GDP of the EU’s 27 members is now higher than that of the United States. Europe will probably go on adding members to its Union without a fixed “manifest destiny” limit.
The economic scale of political units, whether countries as traditionally defined or still unsettled agglomerations like the European Union, is growing because contemporary globalization rewards the big and punishes the small. Political units that can command the largest markets and...