NEW YORK (TheStreet) -- National sovereignty is an idea whose time has passed.
With capital flowing freely internationally, the reduced cost of transportation, lower prices for oil, the historically massive migration of people, the unstoppable spread of information, and an increasing willingness of many nations to open up trade (see the Trans-Pacific Partnership), nations just cannot remain isolated from the rest of the world.
Supporters of the Greek position, like economists Joseph Stiglitz and Paul Krugman, who are anti-globalization boosters, have argued that Greek sovereignty should reign supreme in the arguments with the European Union and the government of Prime Minister Alexis Tsipras should pursue the anti-austerity program desired by the people who elected him and his left-wing Syriza party.
The other side of the discussion takes the position that the argument is not really about national sovereignty but about competitive global survival. The area of the eurozone, the argument goes, needs to be competitive enough as a community to have the scale and productive capacity to go up against the United States, China, and other countries competing against each other in the evolving new economic era.
And when it came to deciding which way to lean, Tsipras leaned forward, bending the knee to Europe.
Look at China. The current move by China to invest funds all over the world is further breaking down global barriers.
"While China has been important to the world economy for decades, the country is now wielding its financial heft with the confidence and purpose of a global superpower. With the center of financial gravity shifting, China is aggressively asserting its economic clout to win diplomatic allies, invest its vast wealth, promote its currency and secure much-needed natural resources," write Clifford Krauss and Keith Bradsher in the New York Times.
China's reach is not going to be denied and it's changing the world. This intrusion of China into the wider world further ties the world together, reducing the independence of each country and making the more engaged countries of the world interdependent.
The focus on national sovereignty took over the modern world just after the first World War. Before then, the modern world had pretty well acted as a global market.
Going into the 1920s and 1930s, intellectuals and world leaders attempted to create "islands," sovereign nations, within the world community that minimized economic relationships with one another so that each could focus on their own internal problems. Restricting the international flow of capital was a requirement for the success of such an arrangement.
Doing so released each sovereign nation to pursue programs of full employment independently of what was going on in any other nation of the world. In this way, each nation could follow the economic policy its people democratically chose to follow.
After World War II, especially during and after the 1960s, capital began to flow freely across the globe. And this changed the game. Nations tried to maintain their economic sovereignty by letting their exchange rates float.
But, as has been discovered, even floating exchange rates were not able to allow individual nations to keep their economic sovereignty. This is because the policies of credit inflation aimed at achieving high levels of employment impacted a country's productivity, lessening the ability of a country to raise wages and/or maintain its competitive nature within the world community.
What this means today is that the hegemony of the United States is legacy. The separateness of Europe is a thing of the past. And, so is the independence of India, Brazil, Russia, and other nations that seem intent upon pursuing their own pathway.
Greece can separate itself from the European Union, but in doing so it will follow the road taken by Cuba and Venezuela before it.
The U.S. can attempt to pursue the economic policies of credit inflation it has followed for the past fifty years or so and continue to become less productive and less competitive internationally with a continually weak currency. But, this will not allow the U.S. to continue to play in the major leagues.
The name of the game going forward is competitive global survival. What the United States does is not independent of what the Chinese do, or what the European Union does, or what any other major area of the world does.
Stimulating an economy in an attempt to maintain high levels of employment will not work in this world. Other policies will be needed to educate and train people, to promote life-time education, to make it easier for people to shift jobs and fields, and to live in a world where innovation and change are constant.
The economics of the twenty-first century is a world economics. It will not be possible for any nation to opt-out of this world. Economics works and does not stop at borders. In this sense, we are all members of the world and need to plan accordingly.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.