The power shift is going to be from those who borrow or beg to those who produce. From Charles Hugh Smith at oftwominds.com:
The mercantilist dependence on exports for growth, a winner for the past 70 years, has reached diminishing returns. Rather than be a source of growth, it’s a source of stagnation.
Conventional wisdom holds that geopolitical power is inevitably shifting from West to East. It isn’t quite this simple. The real shift is occurring between three sources of power that are not so neatly geographic:
1. The commodity exporters
2. The mercantilist exporters of products
3. The consumer-importing nations
Gordon Long and I tease apart the many dynamics in this complex power shift in Tectonic Shift of Mercantilism Revalued (42 min). There are three starting points: neocolonialism, mercantilism and importer by choice.
In classic colonialism, the colonial power expropriated commodities by force. The invaders took control of commodity-producing nations via military force and then oversaw the extraction of low-cost raw materials to provide the home markets with cheap materials to feed the colonial power’s valued-added manufacturing. The manufactured goods were then sold in the captured markets of the colonial states.
In what I call the Neocolonial Model, the control mechanism isn’t military force, it’s financialization and globalization. The Neocolonial Power extends cheap credit to the commodity exporting nation, and the state and its citizens gorge on this heretofore unavailable banquet of debt. Soon the state and its enterprises are creaking under unsustainable debt loads, and the Neocolonial Power swaps assets for debt, buying up the most valuable resources on the cheap or extracting the wealth via interest payments and refinancing.