The World’s “Nash Equilibrium”

The way the world economy works today, driven by a powerful manufacturing country (let’s call it “the Empire”), has created a stable situation where almost everyone seems to win, at least in the short term. Here’s a look at what each group gets out of this deal.

What the U.S. and Europe Get

  • Lots of Cheap Stuff: A flood of inexpensive goods keeps prices low. This means people can easily afford things like clothes, phones, and TVs, which helps prevent inflation.
  • Companies Make More Money: By using cheaper supply chains, big international companies can make products for less and sell them for a bigger profit, making their shareholders happy.
  • Politicians Keep Their Jobs: When the economy (GDP) is growing and prices are stable, people are generally happier. This helps politicians avoid losing elections over economic problems.

What Poorer Countries in Africa and Latin America Get

  • New Infrastructure: These countries get access to affordable projects like railways, roads, and power plants. They also get cheap consumer products, which helps their societies modernize faster.
  • Better Standard of Living: Everyday people can now buy cheap phones, clothes, and appliances. In some ways, they get to skip certain difficult stages of industrial development.

What the Empire’s Elite Get

  • More Government Money: Profits from global industries flow back to the Empire, building up huge amounts of money and foreign currency reserves for the government.
  • Stable Power: By focusing on manufacturing and exporting goods, the ruling class keeps employment high and society stable, which helps them stay in power.
  • Global Influence: The Empire becomes so essential to global manufacturing that other countries can’t easily replace it. This gives the Empire a sense of political security on the world stage.

What the Empire’s Working Class Gets

  • A Better Life (Relatively): Even though they may be overworked, their income and living conditions are still much better than those of workers in places like Africa or India.
  • A Sense of Pride: They get a feeling of identity and satisfaction from nationalistic slogans like “My country is amazing!,” “We are way ahead!,” and “The great rejuvenation of the Empire!”
  • A Feeling of Purpose: Some may even feel like they are part of a grand historical mission, rather than just being used by the system.

How This Becomes a “Nash Equilibrium”

All of these interests combine to create a Nash Equilibrium. This is a concept from game theory where every player is making the best possible decision for themselves, based on what they think the other players will do. In this situation, no one has a reason to change their strategy on their own.

Here’s how it works:

  • The U.S. and Europe won’t completely stop buying the Empire’s products because that would cause prices to skyrocket, people’s standard of living to fall, and politicians to lose elections.
  • Poorer countries won’t refuse the Empire’s products because they would lose a cheap and easy path to modernization.
  • The Empire won’t raise wages or benefits for its workers because that would eliminate its “cost advantage,” which is its ability to make things cheaper than anyone else.
  • The Empire’s working class won’t rebel on a large scale because they don’t have the power to and are also comforted by the story of national greatness.

This creates a standoff where everyone stays in their current position, even if the system is based on inequality and exploitation. No single group can improve its situation by changing its strategy alone.

How the Empire Keeps This System Going

To keep this global system running, the Empire has to carefully manage four key areas:

1. Maintaining an Unbeatable “Cost Advantage”

This is the foundation of the whole system. To ensure the world remains dependent on its products, the Empire must keep its production costs lower than anyone else’s.

  • Control Labor Costs: This means strictly limiting workers’ rights, preventing independent unions, and keeping wages low. The government also ensures there are always enough workers available to keep labor costs down.
  • Control Resources: The government controls the price of land, energy, and loans to make sure factories can operate cheaply.
  • Keep Society Stable: The Empire needs a system to ensure that its huge workforce can handle long hours and intense labor without causing major social unrest.

2. Managing the World’s Dependence

It’s not enough to be the cheapest; the Empire must make sure other countries need it.

  • Become Essential to Supply Chains: The Empire aims to be the place where key parts are made and final products are assembled. This way, if the Empire stops working, the entire global supply chain could break down.
  • Manage Relationships with Poorer Countries: The Empire binds poorer nations to it by funding their infrastructure and giving them loans, making their economies dependent.
  • Divide the West: The Empire tries to create disagreements between countries like the U.S. and those in Europe to prevent them from forming a united front against it.

3. Ensuring Absolute Power at Home

To manage all this, the Empire needs total control over its own country and resources.

  • Prevent Economic Crises: The Empire’s economy is built on debt and investment, which can lead to problems like a housing bubble. The government must use its power to manage these risks without letting the economy collapse.
  • Keep Up with Technology: When other countries try to block its access to technology, the Empire must invest heavily in developing its own to remain irreplaceable in the global supply chain.
  • Push a Powerful National Story: The government must constantly promote the idea that the sacrifices made by its people are necessary for “national rejuvenation.” By creating a sense of national pride, it gives the working class a psychological reward and makes them less likely to resist.

4. Keeping the Working Class “Just Happy Enough”

The workers are the fuel for this system, and the Empire must make sure that fuel doesn’t run out or explode.

  • Allow for Slow Improvement: The lives of the workers must slowly but steadily get better. This “better than before” and “better than others” feeling is key to keeping them psychologically balanced.
  • Prevent Organized Protests: The Empire uses technology and social controls to stop any organized resistance before it can start, keeping the workers isolated and unable to unite.
  • Provide an Outlet for Anger: The government often stirs up nationalist feelings and directs public anger toward other countries (like the U.S. or Japan). This gives people a safe way to vent their frustrations without blaming their own leaders.

The System’s Weakness

Ultimately, whether this equilibrium can last forever depends on the Empire’s ability to maintain a delicate balance between these four pillars: cost advantage, external dependence, internal stability, and the tolerance of its working class. If any one of these pillars weakens, the entire system could come crashing down like a row of dominoes.