THE PRINCIPLE OF THE INVISIBLE ECONOMY IN INTERNATIONAL ECONOMIC RELATIONS: A NEW MECHANISM FOR THE EMERGENCE OF INTERNATIONAL CONFLICTS
DOI:
https://doi.org/10.37332/Keywords:
principle of the invisible economy, international economic relations, international conflicts, economic interdependence, geo-economics, economic coercion, global economic order, asymmetric dependenceAbstract
Sokhatskyi O.Yu. THE PRINCIPLE OF THE INVISIBLE ECONOMY IN INTERNATIONAL ECONOMIC RELATIONS: A NEW MECHANISM FOR THE EMERGENCE OF INTERNATIONAL CONFLICTS
Purpose. The aim of this article is to provide a theoretical substantiation for the principle of the “invisible economy” as a mechanism for transforming international economic interdependence into an asymmetry of economic power, which creates the conditions for the emergence and escalation of international conflicts.
Methodology of research. The methodological foundation of this study consists of general scientific and specialized methods of inquiry. Systemic and structural-functional approaches were applied to elucidate the nature of economic interdependence in international economic relations; methods of theoretical generalization, analysis, and synthesis were used to develop the author’s concept of the “invisible economy” principle; comparative analysis ‒ to examine the characteristics of geo-economic rivalry between the United States and China, the transformation of Russia’s economic relations with Ukraine and European countries, as well as the European Union’s policy of strategic autonomy; and logical modelling ‒ to construct a conceptual model of the emergence of international conflicts resulting from the accumulation of asymmetric economic dependencies.
Findings. The principle of the “invisible economy” is substantiated as a conceptual mechanism for the covert accumulation of economic power within the system of international economic relations. It has been established that international economic interdependence, in and of itself, is not an unambiguous factor in either stability or conflict; its impact is determined primarily by the level of asymmetry in interdependencies, the concentration of critically important resources and technologies, control over financial and logistical channels, the availability of alternative partners, and the ability of states to adapt to a potential breakdown in economic ties.
A conceptual model is proposed, according to which formally voluntary international economic interaction can gradually give rise to hidden dependencies that, under certain conditions, transform into instruments of economic and political influence through the use of sanctions, export restrictions, financial blockades, trade barriers, and investment control mechanisms. A comparative analysis of contemporary geo-economic processes has revealed various manifestations of this mechanism in the context of global economic competition and intensifying strategic rivalry among the leading centres of the world economy.
Originality. The principle of the “invisible economy” has been developed and theoretically substantiated as a conceptual approach to explaining the mechanism by which international economic interdependence transforms into a hidden system of asymmetric economic power and strategic vulnerability. Unlike traditional approaches, in which economic interdependence is primarily viewed as a factor in deepening international cooperation and stability, the proposed approach emphasizes the uneven distribution of potential losses in the event of a cessation of economic interaction. It is argued that it is precisely the asymmetric nature of critical dependencies that creates the conditions for their use as instruments of economic and political coercion, thereby posing additional risks to the economic security of states.
Practical value. The practical significance of the obtained results lies in the possibility of applying the proposed approach to the timely identification and assessment of international economic dependencies that could pose threats to the economic and national security of states. The main provisions and conclusions of the study can be used in the formulation of state policy in the field of economic security, the development of strategies for diversifying foreign economic relations, and the identification of critical dependencies in the trade, financial, technological, and logistical spheres. Furthermore, the proposed conceptual approach can serve as the foundation for analytical tools to monitor, assess, and forecast geo-economic risks, as well as for early-warning models of potential international economic conflicts.
Key words: principle of the invisible economy, international economic relations, international conflicts, economic interdependence, geo-economics, economic coercion, global economic order, asymmetric dependence.
References
1. Godłów-Legiędź, J. (2019), “Adam’s Smith’s concept of a great society and its timeliness”, Studies in Logic, Grammar and Rhetoric, Vol. 57, pp. 175-190, DOI: https://doi.org/10.2478/slgr-2019-0011
2. Coyle, D. (2023), “Economic progress and Adam Smith’s dilemma”, National Institute Economic Review, Vol. 265, pp. 5-11, DOI: https://doi.org/10.1017/nie.2023.21
3. Wakatabe, M. (2025), “Opulence and Freedom: What Adam Smith could teach us about the future of capitalism”, Social Philosophy and Policy, Vol. 42, pp. 516-545, DOI: https://doi.org/10.1017/S0265052525100447
4. Boettke, P.J. (2024), “Why read Adam Smith today?”, GMU Working Paper in Economics, no. 24-15, DOI: https://doi.org/10.2139/ssrn.4741993
5. Kovalenko, Yu. and Sobolieva, A. (2025), “The Wealth of Nations” by Adam Smith and free competition and trade in the 21st century”, Problemy i perspektyvy ekonomiky ta upravlinnia, no. 4 (44), pp. 9-17, DOI: https://doi.org/10.25140/2411-5215-2025-4(44)-9-17
6. Grampp, W.D. (2000), “What did Smith mean by the invisible hand?”, Journal of Political Economy, Vol. 108, no. 3, pp. 441-465, DOI: https://doi.org/10.1086/262125
7. Kobayashi, N. (1996), “Adam Smith and the ‘invisible hand’”, Transactions of the Japan Academy, Vol. 50, no. 3, pp. 163-186, DOI: https://doi.org/10.2183/tja1948.50.163
8. Ganem, A. (2002), “Economia e filosofia: tensão e solução na obra de Adam Smith”, Revista de Economia Política, Vol. 22, no. 4, pp. 670-684, DOI: https://doi.org/10.1590/0101-31572002-0952
9. Kurz, H.D. (2016), “Adam Smith on markets, competition and violations of natural liberty”, Cambridge Journal of Economics, Vol. 40, no. 2, pp. 615-638, DOI: https://doi.org/10.1093/cje/bev011
10. O'Donnell, R. (2026), “Invisible and visible hands. What kind of economist is Adam Smith, and why is he still relevant?”, Review of Political Economy, Vol. 38, no. 3, pp. 1084-1108, DOI: https://doi.org/10.1080/09538259.2024.2335751
11. Hurtado, J. and Paganelli, M. (2026), “Whose interest? Conflicts with the invisible hand”, History of Political Economy, Vol. 58, no. 5, DOI: https://doi.org/10.1215/00182702-12636620
12. Hearn, J. (2018), “How to read The Wealth of Nations (or why the division of labor is more important than competition in Adam Smith)”, Sociological Theory, Vol. 36, no. 2, pp. 162-184, DOI: https://doi.org/10.1177/0735275118777010
13. Matthews, P.H. and Ortmann, A. (2002), “An Austrian (mis)reads Adam Smith: A critique of Rothbard as intellectual historian”, Review of Political Economy, Vol. 14, no. 3, pp. 379-392, DOI: https://doi.org/10.1080/09538250220147895
14. Astuti, A.W., Hasibuan, Z., Harefa, W.N.S.B. and Purba, B. (2024), “Kajian Teori Pemikiran Adam Smith dan Relevansinya Terhadap Perekonomian Masa Kini” [A study of Adam Smith's thought theory and its relevance to today's economy], As-Syirkah: Islamic Economic & Financial Journal, Vol. 3, no. 2, pp. 472-480, DOI: https://doi.org/10.56672/syirkah.v3i2.153
15. Garnett, R. (2019), “Smith after Samuelson: Care and harm in a socially entangled world”, Forum for Social Economics, Vol. 48, pp. 125-136, DOI: https://doi.org/10.1080/07360932.2019.1601122
16. Forsgren, M. and Yamin, M. (2010), “A commentary on Adam Smith and international business”, The Multinational Business Review, Vol. 18, pp. 95-112, DOI: https://doi.org/10.1108/1525383X201000006.
17. Underhill, G. (2003), “States, markets and governance for emerging market economies: private interests, the public good and the legitimacy of the development process”, British Educational Research Journal, Vol. 79, no. 4, pp. 755-781, DOI: https://doi.org/10.1111/1468-2346.00335
18. Goldsmith, A.A. (1995), “The state, the market and economic development: A second look at Adam Smith in theory and practice”, Development and Change, Vol. 26, no. 4, pp. 633-650, DOI: https://doi.org/10.1111/j.1467-7660.1995.tb00568.x
19. Lawson, G. (2020), “States and markets: A global historical sociology of capitalist governance”, in What in the World? Understanding Global Social Change, Bristol University Press, Bristol, UK, pp. 177-194, DOI: https://doi.org/10.2307/j.ctv1c5cskn.15
20. Walter, R. (2011), “States and markets”, Review of International Studies, Vol. 37, no. 2, pp. 691-713, DOI: https://doi.org/10.1017/S026021051000094X
21. Copley, J. and Moraitis, A. (2020), “Beyond the mutual constitution of states and markets: On the governance of alienation”, New Political Economy, Vol. 26, pp. 490-508, DOI: https://doi.org/10.1080/13563467.2020.1766430
22. Cahill, D. (2020), “Market analysis beyond market fetishism”, Environment and Planning A: Economy and Space, Vol. 52, pp. 27-45, DOI: https://doi.org/10.1177/0308518X18820917
23. Seddon, J. (2021), “Market self-organization and the invisible hand of politics in global risk-trading”, Review of International Political Economy, Vol. 30, pp. 98-126, DOI: https://doi.org/10.1080/09692290.2021.1972434
24. Eser, Z.E. (2025), “The economy disembedded: Property and development today from a Polanyian perspective”, Politik Ekonomik Kuram, Vol. 9, no. 4, pp. 1816-1832, DOI: https://doi.org/10.30586/pek.1791710
25. Desai, R. (2015), “Introduction: The materiality of nations in geopolitical economy”, World Review of Political Economy, Vol. 6, no. 4, pp. 449-458, DOI: https://doi.org/10.13169/WORLREVIPOLIECON.6.4.0449
26. Mariotti, S. (2024), “‘Win-lose’ globalization and the weaponization of economic policies by nation-states”, Critical Perspectives on International Business, Vol. 20, no. 5, pp. 638-659, DOI: https://doi.org/10.1108/CPOIB-09-2023-0089
27. Roloff, R. (2024), “Goodbye globalization? Hello ‘Fragmentegration’! The world economy and strategic competition”, Connections: The Quarterly Journal, Vol. 23, no. 2, pp. 191-202, DOI: https://doi.org/10.11610/Connections.23.2.02
28. Guan, H. and Qian, P. (2021), “The comparison and contrast between protectionism and free trade in England”, in Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021), Advances in Economics, Business and Management Research, Atlantis Press, pp. 1455-1460, DOI: https://doi.org/10.2991/assehr.k.211209.237
Downloads
Published
Issue
Section
License
Open-access articles (open-access journals)
Authors whose articles are published in open-access retain all rights to the content of the articles.
Open access articles are committed to be published under Creative Commons Attribution (CC BY) 4.0. This license allows others to distribute, edit, correct and build upon your work, even commercially, as long as they indicate your authorship. Detailed information at Creative Commons site: https://creativecommons.org/licenses/by/4.0/
Permissions for open-access journals
If the article is published in open-access under CC BY 4.0 or CC BY-NC 4.0 (which was possible till the 15th of December, 2018) licenses, users may reproduce it in accordance with their terms.
Additionally, if the article had been published under CC BY-NC 4.0 (this license authorizes others to download your works and share them with others as long as they indicate your authorship, but they can’t use them commercially in any case.), the use for the following commercial purposes requires permission:
– reproduction of content in a work or product intended for sale;
– reproduction in presentations, brochures or other marketing materials used for commercial purposes;
– distribution of the content to promote or market a person, product, course, service or organization;
– text and data mining for the purpose of creating a saleable product or product which benefits from promotional or advertising revenue;
– use of the content by a commercial entity or individual for the purposes of remuneration, directly or indirectly through sale, licensing, promotion or advertising;
– linking to the content (in an email, webpage, portable electronic device or otherwise) for the specific purpose of marketing or advertising a person, product, course, service or organization for commercial benefit.
For further details and permission requests, please contact.
