Neo-mercantilism and the next economic cycle

The demographic dividend gone and capital becoming scarcer, regions will rely on critical technologies and capital pathways — the new monopolised trade-routes to generate wealth / collect “rent”.

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Graduating in history brings dividends — yet encumbers one with a feeling that nothing is new. Hegel at very least explained the spiral of history brings about same problems, moral choices and individualistic opportunism that previous generations all faced, while dealing with them with means available to them. Motivations are eternal, strifes are perennial, yet knowledge is universal — and it so appears it has been applied on similar occasions.

A famous diarist Samuel Pepys wrote in his diary on May 13th, 1665, on the newly formed ghastly habit to check the time — in what many in the 21st century would recognise about a smartphone:

“I cannot forbear carrying my watch in my hand in the coach all this afternoon, and seeing what o’clock it is one hundred times”

During the same time, numerous merchant companies (for example, Royal African Company in 1660) trade were extended trade monopolies over certain regions, allowing the state to collect its share from commercial enterprises that were given free reign to apply all means of “cooperation inducement” to search, locate and extract precious resources to cover expenses during a long period of religious and them empire wars.

The companies acted independently but according to a defined charter, providing certain degree of freedom for the state. Companies used the laws allowing conscription of young sailors and promoted employment with migrants (losses were high as scurvy was a common blight, aside from tropical diseases, for all seafaring nations).

The period of extraction was followed by capital accumulation and distribution — spilling over to fund scientific methods of manufacturing of final products reliant on the mineral resources. Originally supported by endless supply of slave labour, the practice met with increasing criticism and bans and a major displacement of low-paid and low-skilled labour by machinery began.

Yet the original inventions that stimulated the machine-led industrialisation of the 19th century were openly disseminated — led by Baconian ethos of sharing knowledge — and its the coupling of systemic monopolies and their R&D functions — that provided the urge to more fervently protect the secrets that were originally disseminated and “borrowed”.

For example, Samuel Slater, by bringing secrets of cotton manufacturing from Britain to the US, was called “Slater the traitor” by his compatriots.

One shan’t remind of the whole operation to smuggle silk worms in the mid-6th century CE by two monks, with the support of the Byzantine emperor Justinian I.

Another would be a copying of compass (a magnetised needle, then called a “Venetian needle”, originating in the Muslim Africa by Italian merchants).

Fast forward to today, development and control over critical technologies becomes again a major topic: the aspects of growth like the demographic dividend and cheap capital for all have expired.

The labour force participation is stagnating, population of major exporting countries “greying”:

Simply stimulating the market to acquire talent from abroad is costly: trillions were spent during the last decade predominantly on consumption side (building last-mile interfaces) and less so on production-side.

At the same time, most of the last-mile platform developed in code, rather than in stone, it stimulated codifying new routines in processing logic — with countries less constrained by old infrastructure pioneering new approaches.

Irrespective of patents, the future depends on the ability to implement them and scale them via capital system and law to growing regions (able to consume and pay for them). And it still looks that major corporations will depend on the support of the state, but this isn’t new to world history.