Geoeconomics of the Current Global Power Transition. US, EU, China, India and Russia Competing for Position in the International System of Division of Labour

It has been long argued that relations between the states of today no longer conform to the historically established patterns of military competition and territorial acquisition. Globalization and the shocking experience of two World Wars effectively revealed the inadequacy of traditional physically belligerent practices as the means of achieving long-term political stability and economic growth, offering both democratic and authoritarian states alike to rely on the benefits of economic interdependence, international production specialization, and the division of labor. Starting with classical economic-centric works of Adam Smith and David Ricardo on the one side, and politically oriented writings of thinkers like Emmanuel Kant on the other, the liberal thought on the matters of International Relations seemingly obtained a full-fledged physical embodiment as the current system of international settlement, the one in which the pursuit of economic gains is first and foremost associated with the employment of economic means. More recent observers note the successes of states that had abandoned traditional concerns over territorial gains and complete self-sufficiency of their economies in the 20th century and began to be actively engaged in international trade and finance, with technological progress amplifying their achievements multifold (Rosecrance, 1986). Not to mention the pacifying component to such alternations of wealth-acquiring strategy, territorial acquisition simply no longer provides the same benefits as it used to. With the rise of free movement of goods, labor and capital, services sector prominence, and never stopping scientific progress, the land had seized to be the major geopolitical asset. Instead, financial and human capitals, along with the nation’s effectiveness in employing them to create the additional value to the resources, that can easily be obtained from abroad, is what defines the domestic prosperity of the state. Putting it in another words, the modern state itself is changing in its character and nature, from mercantilist commander of the national resources, to the “Trading state” whose primary concern is to construct beneficial patterns of domestic production and international exchange, to the “Virtual state”, which in analogy with “virtual companies” is economically emancipated from the territoriality and relies on the mobile assets - capital, labor, finance, and technology, the major geopolitical assets of 21st century. Such a shift is based on the application of practices of regular individual-centric commerce to the realm of interstate relations. These practices on the microeconomic level take place under the supervision of the state that can usually guarantee factors to what English School writers refer to as the foundation for any society - restraints on the use of force, clarity of the property rights and convergence on the expected outcomes (Bull, 1977). What makes the situation on the international level of analysis different and deserving an examination is the classically emphasized condition of anarchy. Despite unprecedent formal and informal institutionalization, there is still no supreme body to have a monopoly on power use in order to enforce the predictability of the system. In fact, some theorists go as far as to argue that the modern nation-state is no longer a viable concept, an “unnatural business unit” to the present world economy system that hinders its development (Ohmae, 1995). Contrary to that, the “dark forces” of world politics like autocracy, economic nationalism and territorial struggle seem to have reasserted themselves in the latest decades (Ikenberry and Deudney, 2018), following the absence of Great Power rivalry in the immediate aftermath of the Cold War. This may well be explained by the decline of the United States’ unipolar moment that invites other states that had managed to acquire increased absolute and relative influence to have revived ambitions, or, as this paper will proceed to argue, by the mix of these opportunities and of conceptual restraints put on territorial entities like states in the zero-sum environment, to pursue purely commercial logic, forcing them to resort to the belligerent mindsets and wage wars through the means of commerce (Luttwak, 1990). Ultimately, the eternal quest for not merely economic wealth, but for acquiring the dominant position in the realm of the International continues in the 21st century. What is different as opposed to the international politics of the time immemorial is understanding of the need to employ economic statecraft to put the state at the top of global production value chain as the sure way to secure both power and plenty.