The Political Economy of Foreign Relations: Raw

Spengler has penned a raw piece with a theory and some observations on economics-driven foreign policy conclusions:

During the Cold War, the Soviet Union was the spoiler, seeking advantage from instability, while the United States sought to maintain stability. In financial parlance, the Russians were long volatility; they stood to exercise their political options opportunistically, and the more chaotic and uncertain the state of the world, the better for Moscow. For the past 20 years, though, it is Washington that is long volatility; in the absence of a contending superpower, instability frightens all contending parties into seeking help from Washington. The more unstable and uncertain the world, the stronger the position of the United States. Whether or not the US recognizes this is beside the point; the fact that President George W Bush has made a dog's breakfast of Iraq makes America's world position stronger.

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Professor Niall Ferguson of Harvard observes that world markets anticipated the outbreak of neither World War I nor II

It's an interesting proposition, but I think that the converse might be true. As the hegemon, sustainer of the Pax Americana, the U.S. is short volatility.

He goes on to the "hard truth", which is that no economic linkages implies no concern about violence:

Bernard Lewis observed that the entire Arab world, except for oil, exports less than the 5.2 million people of Finland. The economic significance of the Shi'ites of Iraq and Lebanon is negligible; the Palestinians represent a net drain on the world economy, as consumers of subsidies. If space aliens were to transport all of them to another planet Tuesday next, world markets would not notice. By the same token, if the Sunnis and Shi'ites of Iraq and Lebanon were to eat each other up like the Gingham Dog and the Calico Cat, and the Palestinians of Gaza were to annihilate one another, the impact on the world would fall below the threshold of observation. I do not mean to suggest that this would be a good thing, for human tragedy never is a good thing; I mean only to state the obvious, that it would not be a matter of material importance for anyone else.

In a unipolar world, what happens to the perceived benefits of the Pax Americana as a public good, except that the perception of the marginal benefit goes to zero?

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