Economic collapse

Is it possible that economic warfare could be waged on the United States or that we could be in the middle of a form of economic warfare? Some would say business is warfare and there is an expansive library of business literature that discusses business in capitalist societies as warfare. Miyamoto Mushashi “A book of five rings”, and Sun Tzu “The art of war” are often read by business majors. What we’re talking about here though is a nation state or non-state actor using the market or manipulation of the world economy to attack the United States. I don’t have the skills of economics, but I can express some manipulation that might be apparent from areas I do have expertise.

More… Systems are interesting. Whether they are networks of computers, or networks of people there is data that flows along the pathways. Systems have inputs and outputs and depending on the granularity we can assume there are feedbacks and failure modes for systems. When looking at systems one especially scary failure mode that is seen when modeling real world systems is cascading failures. When particular inputs are applied or pathways are severed the components of the system are not only affected, but the entire system collapses. Systems analysis can identify designed in “keystones” that will create that kind of failure, but in some cases they are outside the scope of requirements and exterior forces can create failure that was never originally considered.

When looking at systems you look for key points that create failure. For example when examining a countries infrastructure the more technologically sophisticated the country the more reliant the country on an electrical power grid. The more capitalistic the more likely that the power grid is being run by automated systems as centralized control and decentralized execution is used as a cost saving profit driving mechanism. A key concept in information technology and knowledge management is centralized control and decentralized execution as adaptive methods to market forces. As an example of a destructive feedback loop the electrical grid provides the power for the technology that manages the electrical grid. There are a few issues with that model.

The economic force that has the same level of granularity in economies would seem to be currency (the dollar). The dollar is the measurement of the gross domestic product, it is the salary for most people, and more importantly it has an intrinsic value in trade. There are a few models for economic wealth such as the zero sum (pie), trickle down economics, ad nauseum through a variety of models. Similar to electricity if you attack the dollar you can create issues in the economy. Disturbing the dollar can exploit the economy and there are many attacks that seem sustainable against the dollar and aren’t necessarily illegal. National bond fund manipulation, international purchasing patterns, and international business exchange rates all will have an impact on dollar wealth. With multiple businesses having net worth greater than many foreign governments the rise of a corporate state is an interesting concept.

In the rise of a corporate state the movement of assets and cash are likely to be subject to taxes. Rarely would it be of concern to see a corporate entity take hostile action against a nation state as it would seem to be bad for business. This would be especially true when business has a myopic “quarter to quarter” profit viewpoint that is fairly tactical and rarely strategic. What happens though when the corporate entity is subsumed by either the nation state as a proxy or motivated to align with a nation state in action against another nation state. This could be a situation where favored trading practices or profit motivations drive the corporate entity more than the self-interest values usually found in business. The corporate entity might find it to their advantage in the long term to subsume nationalistic interests and take on hostile actions, especially when retribution will be fleeting or rare.

Unlike our example of an attack on electricity where we can measure and trace effects fairly easily and follow feedback or cascading failures through the system by simple analysis there are things stopping us from even seeing issues with the economic warfare. There are few agreed upon metrics that can be measures in a non-dynamic way. A volt is a volt and a mega-watt is a mega-watt. The concept of consumer spending (CPI) and other metrics are subject to change by political fiat. The numbers are suspect and volatile with no hostile action imminent. The power grid is a defined element where you can see the transmission pathways and effect them in substantial ways in the real world. The movement of money is rarely exposed to scrutiny unless somebody is specifically looking, and money laundering detection methods are as much art as luck. How we measure money and the economy is as much the problem as the idea of hostile action.

An attack against the infrastructure of the United States would take on multiple vectors and likely have stages and targets of opportunity (military minds would say center of gravity I imagine). Attacking a nuclear power plant would not be likely or successful, but tossing dynamite into substations on an early Monday morning is a very effective and highly kinetic attack. Lighting traffic flares inside public accessible telephone cabinets at command and control facilities or nexus nodes would be very effective at disrupting delivery mechanisms. An attack against the economy of the United States might take on similar techniques. Attacking the country itself might not be possible, but creating situation where consumer debt drives the economy for a long time would create a cascade effect of loss and disruption. Lobbying for and implementing fearsome bankruptcy laws dealing with consumer debt right before a large scale expected loss is an interesting protectionist corporate tactic.

Devaluing the dollar would seem to impact negatively most domestic corporations that have international scope. Seeing international companies as evil would be silly, but understanding that domestic corporations might not have nationalistic goals is important. Companies by design are going to chase profit and that is pretty important for Keynesian capitalism to work. Profit is not aligned with national goals and that creates a gap in expectations. Attacking the economy of the United States might be as simple as creating a situation of increasing debtor load, followed by forced opening of markets, and then punitive action against the United States through treaties and trade embargoes. The feedback of the dollar and inflationary costs would be similar to the failing of the power grid. First one segment falls, but it takes four more with it. The glacial pace would insulate the public from the pain until the chronic nature became catastrophic. Of course, in most systems incurring a cascading failure the point where chronic becomes catastrophic is rarely determined until after fact. The marginal point of system collapse occurs silently and is only later diagnosed.

These are just some thoughts. I don’t have any sources and likely I’m fairly wrong but in trying to model one problem I used my expertise in systems analysis to identify problems in economic analysis where I’m definitely weak. Piecing together an idea of how an economic attack could be done appears to be fairly easy, but nearing on impossible for execution unless I’m missing something obvious which is likely.