Updated November 11, 2016
Problems and Issues
In the course of writing my book numerous problems and issues arose which clearly need more discussion. I am sure more will come up. Here is one pivotal issue which will surely be raised as an objection to my implied focus on national economy:
To what extent can we still speak about “national economies” at all in the classical sense? This might be doubted, given the emergence of global supply chains, the large-scale outsourcing of production and growing pressure even on large nations to abandon the traditional goal of building and maintaining an all-round productive base, and to concentrate instead on become a specialized niche or “cog” in a single globalized world economy.
Quite apart from the political issues connected with globalization and the erosion of national sovereignty, the increasing internationalization of supply chains poses a challenge for any attempt to analyze economies as organic wholes. One could argue that even developed economies are fast losing even the minimum degree of “metabolic closure” necessary to be treated as individual organisms interacting with each other. Only the world economy as a whole could be studied as a single physical-economic system.
I would claim, however, that most large nations such as the United States, China, India, Russia and Brazil still maintain the character of national economies and can be analyzed as such by methods of physical economy, despite large trade flows and the internationalization of many supply chains. The BRICS nations in particular are characterized by large internal markets, large state sectors, state industrial policies and (in the case of China and India especially) a considerable degree of state planning. In those nations the tradition of national economy is very much alive, and the export and inport flows can be relatively well characterized for the purposes of analysis. The case of the nations of the European Union the question is more complicated.