Humans often have difficulty grasping the concept of scale. There is that queasy feeling we get when we ponder the fact that as an individual we are just one of six billion people in the world, and this world is merely one planet orbiting one sun in a galaxy of billions of stars, in an infinite universe of galaxies.
Most of us get a similar feeling when we think of ‘the world economy’. While mortgages, bills, annual income and the nightmare of tax returns preoccupy much of our economic thought, we trust that the broader economic framework is still out there and in operation. As long as Adam Smith’s invisible hand of market competition delivers our electronic goods from north Asia, our luxuries from continental Europe, and exotic foods, spices and flavours from destinations we are not even aware of, then we are satisfied that all is well in the world economy.
It is the scale of the economy that is daunting. So many trillion dollars are exchanged via computer trading on the New York Stock Exchange. So many billions of dollars have been wiped off pension funds; all this trading has led to yet another blow-out in the current account deficit. As an individual, none of this is particularly relevant unless it affects you. Apart from a small stir of patriotism, if the Australian unemployment rate is lower than that of the US for the first time in decades, this is irrelevant if you are still one of the six per cent who are unemployed.
To make the world economy more comprehensible we reduce it to a catalogue of personalities, in the same way we tend to simplify history. Thus the world economy is made up of figures including Bill Gates, George Soros, Warren Buffet, Donald Trump and the Sultan of Brunei. Apart from the Sultan, they are all conspicuously North American, which leads us to the conclusion that this is where the money is, and surely where the sensible architects of the world economy are to be found.
As rich (and consequently as powerful as these figures are), the real players in the world economy are not individuals, but corporate entities. In the realm of trade in goods and services, corporations efficiently harness the talents of individual humans, separating management, control and investment decisions in the pursuit of profit across the globe. In the other main arena of the world economy, the