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(C) Copy Right Toshio Suzuki August 1999
All rights are reserved.
Toshio Suzuki
World Government Institute
c/o Japanese Branch of World Government Institute
1-158 Nakakanasugi Matsudo City, Chiba Prefecture, 270-0007, Japan
Web Site: http://www.w-g.jp/wgi/wgi.htm
CONTENTS
PREFACE
Section
I INTRODUCTION
II BENEFITS AND NECESSITY OF WORLD GOVERNMENT
1 Basic Benefits of World Government
2 The Best Economic Policy Is to Establish
the World Government
NOTES
SELECTED BIBLIOGRAPHY
PREFACE
This paper is, as the title shows, to show
that the best economic policy is to establish
the World Government. There are some important
benefits in the World Government.
I INTRODUCTION
This paper is, as written in the Preface,
to show that the best economic policy is
to establish the World Government. In the
world, there are some NGO's which are dedicated
to the establishment of World Government.*1 They are not mentioned in this paper. Only
theoretical aspects of World Government are
considered. Contents of paper are as follows.
In section II, benefits of World Government
are explained. Limitations of the production
and limitations of the effect of economics
are considered. And the reason why the best
economic policy is to establish the World
Government is shown.
BENEFITS AND NECESSITY OF WORLD GOVERNMENT
1 Basic Benefits of World Government
Basic benefits of World Government are as
follows.
1. World Government can reduce or prevent
the war and so the destruction by war is
reduced or prevented.
2. World Government can reduce the military
expenditure.
3. Fluctuation of exchange rate will be removed
because the World Central Bank will issue
the international common currency.
As shown above, there are political and economic
aspects in the benefits of World Government.
Political aspect is a common sense among
many people. So here it is not explained
further. The economic aspect is the topic
of this paper.
2 The Best Economic Policy Is to Establish
the World Government
The causes of poverty in developing countries
are the topic of many economists.*2 But the causes have not been understood.
This section gives an answer for that question.
As written above, the World Government has
some important economic benefits. These are
explained below in terms of economics.
T.R. Malthus (1766-834) wrote in his book
that the population increases geometrically
but the necessities of life such as foods
or clothes increase arithmetically and so
the poverty is inevitable.*3 This theory is not suitable for the advanced
countries while it is said that there are
19 advanced countries in the world. But in
the present world, population is about 60
billion among which 800 million people are
suffering from famine. So Malthus's theory
cannot be denied even now when the world
as a whole is considered.
K.H. Marx (1818-83) insisted the law of declining
rate of profit and insisted that a class
of poor laborers which is called the industrial
reserve army will emerge.*4 This was denied by statistical analysis.
Namely, the profit rate did not decline and
the wage of laborers rose according to the
rise in productivity of labor. These are
known as the stylized facts.*5 But the analysis was made with regard to
the advanced countries. In the world as a
whole, there are many poor people which can
be called the industrial reserve army. And
the capacity utilization in the industry
of developing countries is often low. Namely
the profit rate is low. So, also Marx's theory
cannot be denied.
The dependency theory has developed from
the theories of K.G. Myrdal (1898-987) and
R. Prebisch (1902- ). The dependency theory
divides the world into advanced countries
and developing countries. This theory insists
that developing countries are not falling
behind advanced countries but are depending
on advanced countries and that so it is useless
to spend time.
These theories are concerned with different
aspects of economy. But in a sense, these
theories seem to be concerned with same thing.
Namely, "Peace" in English means
"Paix" in French and "Heiwa"
in Japanese. These words are different but
mean same thing. Like this, these theories
seem to be saying following things. Let us
assume that, in a company where laborers
including the president are 10, 1 million
dollar must be divided to these laborers.
If 1 million dollar is divided equally, each
laborer receives 100 thousand dollar. But
if the president takes 500 thousand dollar
and 4 laborers take 400 thousand dollar,
remaining 5 laborers must divide 100 thousand
dollar. Same thing can be said for the world
economy. There is a limit to the total production
in the world according to the level of technology.
So if the industry concentrates to particular
regions such as Western Europe, USA, and
Japan, other countries cannot succeed similarly
whatever they try. South Asian and African
countries are in this situation. Since the
end of World War II, Japan has developed
dramatically. But even if other developing
countries imitate Japan, they cannot succeed
similarly. Economy of Japan owes its strength
to the technology. So if there is no advancement
of technology as before, developing countries
with low wage will catch up with Japanese
technology, so industry will shift from Japan
to such developing countries, and so Japanese
economy will fall into long stagnation due
to the industrial hollowing. Recent Asian
currency crisis and prosperity in American
economy can be explained by this thought.
Namely, prosperity in Japan and Asia shifted
to USA and therefore the recession in Japan
and currency crisis occurred in Asian countries
like Thailand, Indonesia, and South Korea.
According to this thought, borrowing of investment
fund in developing countries must be prudent.
Because as written above, there is a limit
to production in the world as a whole. So
investment which is an imitation of advanced
countries will not succeed as in advanced
countries. Optimistic investment will not
bring expected profit and it will lead to
the accumulation of debt. Malaysia did not
accept a loan from IMF. This policy is appropriate
from this viewpoint.
Fig. 1 shows the relation among the level
of technology, the effect of economics, the
income per capita, and the percentage of
population above the poverty line. Here,
the poverty line means the level below which
people cannot take enough nutrition, cannot
wear enough clothes, cannot live in the house,
cannot receive enough education and medical
care etc. In the age there was no education
system, people above the poverty line could
receive private education.
From the origin of figure to the right, horizontal
axis OD is the level of technology. The level
of technology means the technology such as
electricity, car, plane, computer, etc. Vertical
axis OJ is the income per capita in real
terms. Horizontal axis from the origin to
the left OA is the percentage of population
above the poverty line. Of course, the percentage
depends on both the income per capita and
distribution of income. It is assumed that
the income distribution is fixed to the ordinary
level and the percentage of population above
the poverty line depends on the income per
capita. Line L1 shows the upper limit of
income per capita which depends on the technology
level. At the origin, the level of technology
is that of primitive age but the income is
OE, not zero. This is because people need
necessities of life such as foods or clothes,
so the income per capita in real term is
not zero. Line L2 shows the percentage of
population above the poverty line which depends
on the income per capita.
For example, if the level of technology is
C, upper limit of income per capita is CH
and this is shown as OG on the vertical axis.
This corresponds to BF and then to OB. Thus
the percentage of population above the poverty
line depends on the level of technology.
In this case, the percentage of population
above the poverty line is OB, namely, below
100%. If the technology level is D, the percentage
is 100%. When the technology level is C,
income per capita can attain CH. But there
is a gap HK which must be conquered to attain
CK. Here the role of economics is the range
shown by the arrow marks along the line CH.
If the economic policy is appropriate, income
per capita approaches H. But if the policy
is inappropriate, income per capita will
decrease. This means that even if the best
economic policy is adopted, income per capita
will not reach K. Let us assume that the
technology level C is that of Industrial
Revolution in 18th century. It is clear that
even if the technology at the level of Industrial
Revolution is diffused to the maximum extent
possible, only a part of people can live
above the poverty line. As for the present
age, it seems that the technology is still
at the level too low to attain the income
per capita DL. This can be said, as written
above, by observing the situation of developing
countries, especially countries in South
Asia or Africa.
When we think about the economic growth in
the world as a whole, there are two ways.
One thought is that the world economy can
grow up to the level of advanced countries.
Another thought is that only some powerful
countries can develop to the level of advanced
countries. For example, Japan has developed
from a poor country in Asia to one of the
advanced countries in the world. The question
is whether other developing countries can
develop like Japan or not. Former thought
insists that the prosperity in Japan can
be diffused to other developing countries
in the world by the power of economic theory.
Latter theory insists that it cannot. As
written above, there is a limit to the production
in the world as a whole, so the latter theory
is appropriate. So the best policy is not
to try to develop the developing countries
further but to save unnecessary expenditure.
Here we unavoidably reach the conclusion
that the best economic policy is to establish
the World Government.
Considering theses things, new research concerned
with the World Government is important. For
example, Japan is spending about 1% of GNP
as military expenditure. It seems that if
Japan spends 5% of GNP for military expenditure,
4% of GNP is transferred from consumption
to military expenditure. But this is not
everything. If this happens, laborers who
have been producing various goods will shift
to the military. They will work as soldiers
so they will not produce anything. So if
laborers shift to the military, the production
itself will decrease. This is very important
for developing countries. If a conflict happens,
laborers who have been producing foods and
clothes will go to the military and this
can lead to the famine. These aspects are
a field of economics to be theorized.
Author insisted that the best economic policy
is to establish the World Government. But
if the benefits of World Government are achieved,
the World Government is not necessary. Let
us assume that there are two planets between
which there are no trade and war. In this
case, considering the benefits of World Government
shown above, there are no benefits between
above two planets. On the other hand, in
case of European Union, currency is common
and heavy military expenditure is not necessary
among EU countries. In this case, the benefits
of World Government are achieved, so the
World Government is not necessary.
NOTES
*1 For example, see Toshio Suzuki, Voice for World Government - 1999, (http://www.w-g.jp/wgi/library/voice-for-world-government/voice-1.htm, 1999).
*2 For example, see David S. Landes, "Why
Are We So Rich and They So Poor?," American Economic Review 80 (May 1990): 1-13.
*3 T.R. Malthus, An Essay on the Principle of Population, 1798.
*4 K.H Marx, Das Kapital, 1867-94.
*5 N. Kaldor, "Capital Accumulation and
Economic Growth," in Lutz, F.A. and
Hague, D.C. (eds), The Theory of Capital, (Macmillan, 1961).
SELECTED BIBLIOGRAPHY
Kaldor, N. "Capital Accumulation and
Economic Growth," in Lutz, F.A. and
Hague, D.C. (eds), The Theory of Capital. Macmillan, 1961.
Landes, David S. "Why Are We So Rich
and They So Poor?" American Economic Review 80 (May 1990): 1-13.
Malthus, T.R. An Essay on the Principle of Population. 1798.
Marx, K.H. Das Kapital. 1867-94.
Suzuki, Toshio. Voice for World Government - 1999. http://www.w-g.jp/wgi/library/voice-for-world-government/voice-1.htm, 1999.
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