Global Division of Capital

Most people in economics are familiar with the term, 'Global Division of Labour'. However, I think the term, 'Global Division of Capital' is also needed.

I believe that understanding 21st century capitalism requires an invention of this concept and its grasp for practical and policy reasons.

I want to argue that there is a global division of capital. I want to give as an example the global division between the USA and China in the world. USA is a par excellence consumer. China is a par excellence producer. This is part of the 21st century global division of capital. This underlines the complex problems of 21st century capitalism.

How can you be a consumer without being a producer? Where does the money come to make you a consumer?

The answer is complex in one way and simple in another.
USA is in debt. China is in surplus.
This is the reality of the 21st century global economy.

However, this does not mean that the USA economy is bankrupt.
It is not the end. It is producer of many products.
It produces services and knowledge technologies.
For instance, Microsoft, Google, Facebook and Twitter are all 21st century US products.

The US economy is not dead. It is very much alive.
It is still the engine of the world economy.
China prospers by having US consumers.
So does the rest of the emerging world.
Equally, China is developing a powerful infrastructure and manufacturing capacity.
It is the world's manufacturing centre.
Once it produced 'cheap goods'.
Now, it has added intermediate goods to this list.

I am using USA and China as illustrations of the new world.
Russia, Middle East and Africa are commodity producers.
They produce the 'raw materials' for the world economy.
India is a software, service and entertainment centre of the world.
Japan is a quality-led producer of cars and electronics in the world.
Latin America is a manufacturing centre for the US market.
etc etc.

The Forbes rich list - shows a changing picture of world - in human terms.
The richest of the world live in this new global division of capital. Their companies represent the micro-levels of the great forces of the 21st century capitalism.

There is a growing diversity in the world's rich.
Euro-centrism no longer has an exclusive monopoly on capital.
The world of the 21st century capitalism is rich in difference.

The concept of the 'Global Division of Capital' can help us appreciate the changes in the world's economy in the 21st century.

I am always happy to coin a new phrase to help us understand the modern world of capitalism.