Economic theory

It's really funny how naïve the economic concepts of our politicians are: They still measure a nation's economic success by its trade balance! ... and it has to be positive. – What does that mean? Well, the country is only happy if it sells more goods to other countries than it buys from them. That's what every economic effort has as its goal.

That concept—which interestingly is, or certainly was, identified as Nationalökonomie in German—works well, sort of, if the country in question is comparatively small and its neighbors are large, that is, the effort of the small country doesn't have a substantial effect on the economies of those neighbors. They can accommodate their negative trade balances with the small country if each has a positive trade balance with its other neighbors. But what happens if one wants to generalize this concept to all countries that exchange goods with each other? If there is a finite number of countries that all share a finite space as each one's economy tries to achieve a positive trade balance, then there must be at least one country that will have a negative trade balance. That country absorbs all the trade surplus of the other ones.

Obviously, there is a fundamental problem if one wants to generalize this approach as the correct economic theory for all participants in a global economy. It cannot be the long-term goal of any one player to maintain a positive trade balance. It works, of course, over short periods of time, namely until the effect of one country's positive trade balance has made itself felt with all the other trade partners who then implement countermeasures designed to turn their own trade balance positive. The time over which local economic success spreads becomes ever smaller as global trade is enabled by nearly instantaneous communication of actions between trade partners, currently due to the internet and World Wide Web being globally available.

So I am really surprised that politicians still use this unrealistic measure of success in their arguments for political power. It is similarly surprising that the economists have not come up with an adequate concept – or theory or paradigm – of how a modern global economy should be set up. What are the goals that can be generalized for a global market and that make an industry, or an economic sector, successful?
And it can't be derivatives and such things which have brought down the financial sector down. It has to be based on values generated by those economic sectors. They are, of course, the several industries and services like electronics, transportation, agriculture and food, health, etc., to the extent that hey have a global aspect.

It should, however, be also considered for local efforts whether a controlled growth under a generalizable concept would not be much more adequate than growth at all cost and unlimited increasing profit. There must be a different definition of what "being successful" means, something where size, growth, and work environment, style, are adequately tuned to each other.  Ultimately, growth can only be possible on a global basis, that is, only if values increase for all and everyone equally, worldwide.  Each country (if national borders for economic purposes actually still made sense) must change (possibly both ways!) only adiabatically, in unison with its neighbors which means globally.  This quasi-static behavior of each entity involved requires a business model for the economy that is very different from what we see today.  Also, I don't see any theoretical approach as yet to such a new set of goals and maxims.