Platt Perspective on Business and Technology

Reexamining business school fundamentals (reconsidered) 10: macroeconomics, microeconomics and the gap between

Posted in reexamining the fundamentals by Timothy Platt on March 9, 2017

This is my tenth installment to a series of brief, single issue sketches in which I reconsider each of a set of core issues that I first addressed in this format in a 2010 series. See Section II of my directory: Reexamining the Fundamentals for that earlier related series, and in particular see my earlier same-name counterpart posting to this one as included there: Reexamining Business School Fundamentals – macroeconomics, microeconomics and the gap between.

I have been developing this series as a single, relatively tightly knit narrative, and in a manner that is different from what I pursued when offering my Section II series. My goal there was to offer a succession of quick snapshot perspectives on a set of crucially important general issues, and with a goal of their fitting together to at least in broad brushstroke present a single wider image. My goal here is to widen and generalize my more loosely organized discussion as offered there, by adding in the issues and complications of change, and to offer an overall composite snapshot image of that change itself, as a window into our now-current 2017 context. And beyond simply addressing the issues of businesses and economies as they exist and function in our as of this writing, current state of flux and uncertainty, my goal here is to add a level of depth into my discussion of the issues under consideration here, per se, and how they adapt and change in the face of change, and whether cyclical or disruptively pattern-altering in nature.

I have been successively building out this series’ larger composite image here, since its Part 1 installment, but explicitly note one other earlier installment to this series here as particularly foundational to all that would follow from it: Part 7: supply chains and value chains as drivers of sustaining value . That is where I first began to systematically address collaborative globally reaching business-to-business interconnections and interconnectedness, that would of necessity cross and collide with the now, as of 2017 wrinkles and barriers to global flattening and openness that I have been addressing here. So I start this Part 10 installment by noting that I frame its line of discussion in terms of that specific posting, as well as the immediate in-sequence predecessor to this one: Part 9. And with that orienting and organizing note in place, I turn here to explicitly present my Part 10 segment of this overarching here-and-now 2017 narrative.

I begin setting up this posting’s narrative by repeating a question that I raised and began addressing in Part 7:

• Can smaller nations make free trade or in the case of OPEC, otherwise managed trade zones or similar international agreements work, without full and wholehearted buy-in from larger developed nation partners?

I briefly alluded to a starting-point direction that might be pursued in organizing a valid affirmative answer to that question, in Part 7. And I rephrase that answer-oriented note, for purposes of this posting as:

• I would argue that the answer to that question is yes, and certainly if the signatory members of these agreements can effectively work with their developed nation trade and agreement partners on specific issues when they cannot do so through open-ended trade agreements per se. And I would argue that the answer to that question is yes, if those cooperating nations can learn their necessary lessons from the problems and challenges that other, earlier free trade and trade regulating international agreements have faced and particularly when they have been organized and driven by smaller and less powerful nations and their needs and initiatives.

I am going to at least begin to flesh out a more detailed answer to that question, by stepping back from the more specific details of this bullet point, to set a stage for more fully understanding it. And I do so by addressing what some might see as a conflation of the disparately separate and distinct in how I have set up this discussion in the first place. I began with international free trade agreements and free trade zones, and then essentially immediately turned to consider an example like OPEC, where a group of in this case major petroleum producers organized together to collectively negotiate the prices that importing nations would pay for access to their natural resources. Have I simply mixed apples and oranges here, to cite an old proverb about conflating the dissimilar and then acting as if they were not? I would argue that that is not the case here, and my reasoning behind that assertion – and my reason for citing OPEC is crucially important here, in better and more fully understanding global flattening and its enacting mechanisms per se.

• Global flattening and opening up in trade and economic terms and in socioeconomic and cultural terms as well, only makes sense and holds meaning when smaller nations that are more vulnerable to outside control and exploitation have a say in their trade and their destiny, just as their more powerful neighbors have in their own.
• When wrinkles and barriers to this are set up to in effect reassert the option to dominate by larger and more powerful nations, this challenges both the very idea of global openness, and of the concept of free world nations per se:
• In effect recreating the exploitative international relationships and agreements of what should by now just be a colonial past – and an historical warning note for what not to allow happen again.
• Ultimately, the truest measure of openness here is in the level of self-determination that smaller, and even the smallest and weakest nations among us can have in managing and owning their own natural resources that might be offered as commodities, and the product of their own manufacturing.
• This can mean open and egalitarian free trade agreements where wide-ranging trade and economic systems can be arrived at. And this can also mean smaller nations organizing together to present a common organized front, in arriving at terms of sale and commerce with larger nations, that would bring more value back to them, than they could achieve if facing larger and more developed nations on their own and separately.
• Think of free trade agreements such as NAFTA and the TPP, or the European Union with their inclusion of stronger and weaker nations and economies, as representing more openly agreed to examples of how global flattening can play out.
• And think of organizations such as OPEC as examples of how individually weaker nations can work together to achieve a more equal voice in a global context, and even in the face of resistance to that from larger nations – at least where a group of smaller nations can collectively organize around the management of widely needed resources and where they collectively comprise a significant essential source of them.
• Think of these two approaches as representing cooperative global flattening and confrontational global flattening respectively. And both types of effort in that direction face potential challenge and disruption, as well as potential sources of organizing strength and stability. In a real sense, you can view my earlier 2010 series, that I write this one in follow-up to, as representing a period when those sources of strength and stability appeared to be more on the rise. And you can view this 2017 series as coming out and going live on this blog at a time when forces of challenge and disruption appear to be more on the rise. But the seeds of change leading to today’s context in this were already present in 2010, and the seeds of a reasserted global flattening and the development of a more robust cooperative global framework are present now, even as an already unpopular new US President Trump, proclaims “America First” in his inaugural address when being sworn into office, and when he sees to break the TPP once and for all, and to pull the United States out of other trade agreements as well – and at the explicit expense of any and all weaker, smaller nation state members of them.

I wrote my namesake counterpart posting to this one in my 2010 series, with the issues of arriving at a single overarching economic theory and system of processes, that would apply to and include all organizational levels, from the most small-business microeconomic through to the most globally inclusive macroeconomic, and that would apply everywhere. I wrote of a need for this type of conceptually and operationally applicable system, and certainly as it would be called for in an increasingly globally open and interconnected context. And I wrote my microeconomic-oriented posting to this series with today’s, as of this writing, friction and resistance to that opening up in mind, and with the wrinkles that are currently arising in response to that push back in mind.

When we face a strident call for the closing off of global opening and connectedness, as we do now in 2017, we are all but certainly viewing the voices of the losing side of history as they confront and challenge an overall long-term trend towards globalization that will come to prevail. But this current phase of that longer-term process does highlight that the meaningful gaps we face are not just between microeconomic and macroeconomic theory. They arise more pressingly and importantly between demographics and socioeconomically distinct groups of haves and have-nots, and includeds and left-outs – as those groups extend across national boundaries and have a more global reach than can be contained within or explained by simple have and have not, or strong and weak nation, international distinctions.

Resolving our current turn away from global flattening and openness, and understanding the seeds for change that led to this, and those that will lead away from it again, mean seeing and understanding and addressing those gaps – and in ways that hold meaning and relevance to those who see themselves as being caught up in them and on the losing side as well as the winning side.

I am going to continue this discussion in a next series installment where I will return to the issues of my 2010 series installment: Reexamining Business School Fundamentals – human resources and managing personnel in an interconnected business context. Meanwhile, you can find this and other related postings and series at Reexamining the Fundamentals, with this series offered as a new Section VII in that directory.

As an addendum note, I completed and uploaded this posting the day before now-president Donald Trump signed an executive order, officially withdrawing the United States from the TPP. I have stated in this blog, as for example in China and Its Transition Imperatives 41: rethinking China’s emerging trends and challenges in the emerging era of a United States Trump presidency 3, that Trump is more likely to actively confront China and on a systematic ongoing basis, than he is likely to follow through on most anything else from among his campaign tweets and challenges. But when he can at least make a show of following through on one of his campaign promises by signing an executive order – and without having to gain support from Congress or anyone else in doing so, that lowers the bar sufficiently, as to increase the range of disruption that he will in fact follow through on. And as a prediction going forward, I now expect him to at least pro forma sign executive orders on matters that actually obligatorily require Congressional approval, if not in fact the drafting and passage of new law. He will do that anyway, as a way to retain support from his base, where he only actually seeks to be president for them. This becomes important here, as the president of the United States, as of this writing, seeks to govern according to “alternative facts” and magical thinking – and on economic issues as much as on anything else – and with all of the friction and factionalization that this engenders. (This addendum, written and uploaded on January 24, 2017, just as I hear word of Trump having just signed an executive order green lighting both the Keystone Pipeline and the Dakota Access Pipeline, and in spite of massive ongoing objection to that and from across the political spectrum.)

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