Chapter 1429 Potential Crisis
After discussing the general direction of financial industry development, the government's agenda shifted to business, or more accurately, domestic consumption issues.
Ernst said: "I believe everyone knows that since the middle of the last century, with the development of economies around the world, especially against the backdrop of the world's second technological revolution."
"More and more countries have completed industrialization or are making great strides towards industrialization, and correspondingly, competition in the international market is becoming increasingly fierce."
"All countries are actively developing their own industries. The increase in production has caused total supply to constantly exceed total demand, leading to frequent economic crises."
"This is also the root cause of the wave of colonialism in the late 19th century and the outbreak of world wars. It can be seen that before a new international order is thoroughly established, the world economy and political situation will inevitably continue to experience frequent shocks."
"If we want to solve this problem, one of the important keys lies in the issue of distribution, which includes both the reshaping of the status between countries and the reshaping of the relationship between enterprises and workers."
The so-called reshaping of the status between countries mainly refers to the redivision of labor among countries in the global market, just like the various economic crises that frequently broke out from the late 19th century to the early 20th century.
The emergence of these crises is largely due to the market's inability to simultaneously withstand the explosive growth of industries around the world in a short period of time.
For example, the industrialization of Germany, the United States, East Africa and other late-developing countries has had a huge impact on the world economic structure under the old international system dominated by Britain and France.
From the perspective of the British and French in the past, as the first industrialized countries in the world, they certainly did not want any competitors. It would be best if others could just serve as their markets and suppliers of raw materials.
At that time, except for a few countries such as Britain and France, the industrial development level of other countries was extremely low, and the military hegemony of Britain and France was very stable. Naturally, they could only honestly abide by the international order established by Britain.
The turning point occurred in the mid-to-late 19th century, when the Industrial Revolution expanded throughout the world. Especially under the Second Industrial Revolution, other industrial countries emerged one after another, which shook the economic foundation of the international system originally established by Britain and France.
As other countries completed and developed their industrialization, their military strength also increased significantly. Therefore, from the late 19th century to the present, the international community can be said to be in turmoil.
In order to end this turmoil, a new international order needs to be established. For example, the United States and the Soviet Union in the past were the two most important builders of the new order. It was only after the collapse of the Soviet Union that the United States became the only superpower from the last decade of the 19th century to the early 21st century.
If a new international order is established, it means that for countries that have not yet joined the train, it will be much more difficult to achieve industrialization, and they may even have to wait until the next collapse of the international order to have a chance to turn things around.
This is also the commendable reason why the Eastern powers were able to achieve industrialization relatively independently in the past. After all, the Eastern powers were accelerating their industrialization at a time when the United States was at its peak.
Although the international environment was chaotic from the late 19th century to the early 20th century, it also meant many opportunities. East Africa seized this opportunity and rose rapidly.
As for why the Far Eastern Empire did not make good use of this opportunity, the reasons are rather complicated. In Ernst's opinion, it was because the ship was too big to turn around. Apart from other things, the change in thinking made the Far Eastern Empire lag far behind the so-called late-developing countries of this era.
In fact, the efficiency of the Far Eastern Empire has never been low, but in the past its ideological system mainly served the agricultural society. After the mid-18th century, with the completion of industrialization in Britain, the world has entered the industrial age.
However, in the previous life, when the Far Eastern Empire completed its overall transformation of thinking, the new international order had been re-established, and it had missed the dividends of the previous round.
Assuming that East Africa reshapes the international system in the future, it will inevitably close the door and block the advancement channels of most countries. This is what happened to the United States in its past. In the international system constructed by the United States, countries around the world can be divided into three categories, namely consumer countries, producer countries and resource countries.
However, under this system, an outlier, the Far Eastern Empire, emerged. Relying on its strong size and institutional advantages, it gathered almost most of the world's production activities, thus having the potential to break free from the control of the United States.
Of course, the issue of international division of labor is not something that can be decided by East Africa, an important world power today. Even the world hegemon, Britain, cannot do this.
Ernst emphasized the latter more, that is, issues concerning enterprises and workers.
He said: "With the frequent turbulence in the world economy, it is impossible for us in East Africa to remain completely immune. Therefore, the empire must be prepared for danger in times of peace and strengthen its economic foundation."
"One of the key links is the distribution of social wealth. Therefore, it is very important for us to continue to improve the social security system during the Sixth Five-Year Plan."
"Especially now that the activities of the International Labour Party are becoming increasingly rampant, if we don't handle this issue properly, then Tsarist Russia will be a lesson for the empire."
"At the same time, doing this will also be conducive to the long-term stable development of the empire's economy, enhance the empire's ability to cope with economic crises, and thus avoid political crises."
"The specific approach is to protect the rights and interests of workers to the greatest extent possible without affecting economic operations, such as enforcing local minimum wage standards, regulating working hours and intensity, strengthening labor welfare benefits, and establishing various labor insurances."
"These are all things we need to explore in the future. After all, if we don't take the initiative to do these things, then the Labor Party will definitely do it for us, and will kick us out and hang us on the street light."
Only when faced with external and internal troubles can the bureaucrats in East Africa be better motivated. Therefore, this is the significance of the existence of the Soviet Union. As long as it stands there, it is a spur to the governments of other countries in the world.
Ernst went on to say: “At the same time, this is also to better stimulate domestic consumption. Only when people have money in their hands will they be willing to buy more goods, thus promoting the economic cycle.”
"In today's era when tariff barriers are becoming increasingly serious, we must continue to consolidate the empire's economic moat and further improve the domestic circulation."
"Even in the most critical moments, we may have to revive some of the policies and measures from the era of comprehensive planned economy."
Obviously this is not alarmist, because from the mid-19th century to the beginning of this century, the frequency of economic crises in the world was too high, almost every few years.
In the last century, East Africa was able to remain isolated because it implemented a national policy of isolation and did not actively integrate into the world market system.
However, this is obviously no longer possible. Since the full opening up of East Africa, after more than a decade of development, East Africa has been deeply tied to the world market. East Africa is now the world's largest industrial country. This also means that if a global economic crisis occurs again, the East African economy will inevitably be affected and become one of the main victims.
Under the current circumstances, if East Africa wants to shift the crisis abroad, there is only one way, which is to expand its economic sphere of influence. This is actually no different in essence from the continuous expansion of overseas colonies by Europe and the United States in the past.
However, now that the world's spheres of influence have been divided up, any country that wants to continue to expand its economic territory has only one way, which is to "rob."
The last country to do this was Germany, but it failed in the face of a frenzied counterattack from Britain and France.
The war potential in East Africa may be much greater than that of Germany, but war is undoubtedly the last option.
Ernst said: "Today, when we compete with other countries, what is more important is to compete on basic skills, that is, greater social stability, a more solid economic foundation, more high-end industries, and a higher ability to resist risks."
"This requires us to increase investment in scientific and technological innovation, continue to improve our domestic industrial chain and industrial system, pay attention to the basic guarantee of our people's lives, improve various economic and political systems, etc."
"As long as we can outlast other countries when they encounter an economic crisis and finally have problems, it will be a huge victory."
Looking through Ernst's speech, we can find that all the issues he talked about point to one direction, which is to deal with the possible global economic crisis.
This is normal. After all, it is already 1925, which means that we are getting closer to the time node of the world economic crisis in 1929 in the previous life.
The seriousness of this crisis can be seen from the name alone. In addition to the qualifier "world", we must also add "big". In the global economic crisis, no country can be immune.
The same was true of the United States in its previous life, except that Americans "survived" the most dangerous period, waited for the outbreak of World War II, and took this opportunity to successfully land and become the new leader of the world.
Ernst had a premonition that in the time and space where he lived, the world economic crisis might come earlier and more rapidly.
After all, as Ernst mentioned before, the collapse of the world's economic order today is largely due to the fact that the world's industrial development is too rapid, which has exceeded the market's tolerance.
Therefore, from this point of view, the world economic crisis in this time and space will most likely become more serious and more destructive because of the emergence of East Africa.
After all, East Africa has completed initial industrialization with half of Africa's population of over 100 million, and the increased total industrial output is greater than in the previous life, which has also led to more intense international industrial competition.
Therefore, Ernst had to remind: "During the 'June 5th' period, the world may experience an unprecedented economic crisis, and if this economic crisis breaks out, it may directly lead to a major reshuffle of the world structure ahead of schedule."
"Furthermore, the empire's economic development in the next few years should be based on this premise. We should make all kinds of preparations and increase our bargaining chips. We can't wait until the crisis breaks out and then act in a panic without any plan."
Such remarks undoubtedly served as a warning to the East African officials present, but no one questioned the Emperor's inference, which was the personal prestige Ernst had accumulated over a long period of time.
So, an official asked nervously: "Your Majesty, if according to your speculation, we really encounter this world economic crisis during the Sixth Five-Year Plan, should the formulation of the Sixth Five-Year Plan be more conservative?"
In this regard, Ernst said: "The formulation of the Sixth Five-Year Plan should be arranged according to the actual needs of the empire's economic development."
"After all, if it is true as I expected, then no matter how hard East Africa tries, it will be impossible to avoid the next global economic crisis."
"Therefore, we can only respond more actively, such as what I have repeatedly stressed, improving the market system, building a large domestic economic cycle, and investing in scientific and technological innovation, etc."
"These economic policies themselves have the function of responding to economic risks. Therefore, during the Sixth Five-Year Plan, we should continue to maintain the spirit of the Fifth Five-Year Plan and adjust the country's economic development."
"That is, to stimulate industrial upgrading and development, find new economic growth points, and enhance industrial competitiveness."
"Of course, during the Sixth Five-Year Plan, we not only have to do this, but also make efforts in other areas. Therefore, compared with the Fifth Five-Year Plan, the Sixth Five-Year Plan focuses on industrial upgrading and adjustment, while paying more attention to the distribution of the national economy."
"And distribution involves raising the basic wage level, ensuring employment for the people, vigorously developing the tertiary industry, and so on."
There is no doubt that the tertiary industry can provide more jobs. After all, with the development of industry and the improvement of production efficiency, some corresponding enterprises, especially factories, may lay off employees for the sake of economic benefits.
For example, due to the improvement of machine performance, it used to take two workers to produce a product, but now only one is needed. Then the whereabouts of the remaining worker becomes a new issue.
The more developed the industry is, the fewer workers the factories need. This is the problem that the secondary industry needs to face, and developing the tertiary industry is one of the solutions to this problem.
The secondary industry has created a large number of new material bases, which also provided conditions for the development of the tertiary industry.
For example, East Africa now needs to vigorously support the development of the financial industry. The prerequisite for the development of the financial industry in East Africa is that East Africa's economy and industry must develop to a certain level before it has the foundation to develop the financial industry.
Simply put, the location of the world's financial center must be a region with a very developed world economy, which requires a material foundation as a basic guarantee.
Of course, the financial industry is only a part of the tertiary industry. Other industries such as catering, tourism, entertainment, film and television, etc. will all be important areas of advancement in East Africa during the Sixth Five-Year Plan.
The rapid development of these industries is based on the premise of the rapid industrial development in East Africa in the past few decades. Industry is the secondary industry, and the primary and secondary industries provide the material basis needed for the tertiary industry, that is, the service industry.
At the same time, the primary and secondary industries cannot fully absorb the employment problem unless East Africa can obtain more overseas markets and colonies. However, for an industrial country of East Africa's size, the markets and colonies required to fully meet domestic needs are unimaginable.
(End of this chapter)
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