Forwardeconomics

With the European Union at the risk of fragmentation by Greek debt, the Chinese stock market collapse, and so many other financial crises happening during the last two decades, many are beginning to feel that something is not quite right. Events like increased systemic risk, sudden bank closures and stalled economic growth since 2008 are becoming too common to be labeled as a black swan occurrence. According to economic theory, an increase in education and specialization should lead to higher productivity and employment. Based on this theory economies should be booming because industrialized nations have “the highest rate of college graduates in history” (White House Report on Millennials. P.3) and the best technological advancements. Ironically, global unemployment among the young has reached levels between 30% and 40%. So the question is, what is really going on? Why aren’t economies booming if industrialized governments have followed the rules by the book? Some scholars argue that capitalism is dying (Paul Mason), or that our global structure is deteriorating (I. Wallerstein), proposing that sooner or later the system will come to an abrupt end. However, the analysis of events from the past 25 years: the frequency in financial collapses of different highly industrialized nations, (starting with Japan in 1995 and continuing all the way to the recent collapse of the Chinese stock market), added to a global stalled economic growth since 2008, should lead to an obvious conclusion:

The collapse of the old system has already happened and efforts to perpetuate it are only aggravating the problem.

People have experienced the reality of this shift in their everyday lives, in their vulnerability to systemic risk and sudden job losses. However governments have remained in denial, trying to apply the ‘one solution’ fits all problems model (i.e. trying to correct a private debt problem by creating more debt). Meanwhile, at the height of the environmental degradation crisis, we see the rise of game changers like Uber, Amazon, Tesla, Bitcoin and 3DSystems, and this is no coincidence, some businesses are starting to ‘get it.’ The time for central planning and economic organization around manufacturing and retail is over, and we are witnessing the birth of a new era; the dawn of a more liquid society.

This is a completely new organizational structure that like a liquid, it has a defined volume and composition, but whose shape is ever changing and adjusting to its environment. This realization takes no more than looking around and comparing the world of today to the world 30 years ago in the following terms:

• Hierarchical global organization: played out by overlapping authority of institutions in different plane fields that are constantly in flux (states, NGOs, IGO’s, grass roots movements and individual influencers)
• Economic fragility created by attempts to perpetuate a rigid system of assumed ‘constants’ that no longer exist
• Technological advancement in robotics and communication, that are making labor based manufacturing nearly obsolete
• Level of individual global interactions: that are shifting the from the old realism view into a sense of global responsibility.  We see this reflected in global aid response to recent earthquakes and health epidemics.
• Shifts in the dominance of core industries: manufacturing by assembly and retail vs. new 3D printed, e-commerce and the rise of the ‘Prosumer’ industry
• The decentralization of currency creation by the issuance of virtual encrypted currency and local time banks

When observing the level of technological sophistication we have achieved, it is hard to ignore that the future is headed towards an unknown direction, even if governments have not made it official. The good news is that unlike previous regime collapses, so far, no beheading of the ‘elite’ have taken place and there are no violent riots going on at a global scale. The world system that we grew up in is dead. The rapid changes are unfolding in a rather ‘fluid’ way and this should be something to celebrate. New industries are replacing old ones and people are trying to adapt. This attitude implies that a decision for a peaceful transition has already been made by societies, in a conscious or unconscious way. Although the world currently stands divided between those who understand that change is coming and those who don’t, these are very exciting times to be alive! This type of shift happens in cycles of 400-600 years and that makes us both, witnesses and protagonists of this change. The millennial generation has the “unique opportunity to shape how the next 400 years of our civilization will look like” (White House Report on Millennials P.3); and with the highest percentage of educated people in history, it raises the expectations of what can be achieved.

Although the future may seem very uncertain today, tiny changes are creating new trends that provide a hint of what the liquid society will look like in the in the next 30 years or less. The world has entered into the digital era, and just like it happened during the industrialization era, the biggest shift will occur in the way we interact and organize our societies. The advent of mobile devices combined with ‘off the grid living’ technology and environmental conservation will shift economies from centering on unlimited growth models towards minimalist ways of achieving high living standards.

The combination of modular architecture with ‘off the grid pods can give birth to mobile cities that will naturally disassemble when large percentages of the population relocate their pods to other markets, eliminating ghost towns, and waste of infrastructure.

Markets are clearly headed towards a circular economy where the highest market opportunity will reside on the service sector, and the sale of repairs and replacement parts instead of producing new items. Some visionary businesses, like Levis Strauss have read the trends correctly and are gearing up for the future; A future where states will play a smaller role on ensuring employment and availability of resources. Due to the monumental fragility of centralized planning (Capitalism and Marxism), caused by flawed rigidity in forecasting and slow reaction time; It is very likely that national currencies will begin to coexist more frequently with a variety of community issued, and encrypted global currencies that will allow self-governing communes the flexibility to fill the gaps left by market failure in a customized way. Standardization of governing practice will come from a combination of law, and the organic spread of best practices that work. As manufacturing automation continues to advance, it is possible that people’s needs will be best satisfied by a work week combination of community based work, self-employment and some external job dependency.

In light of the overwhelming evidence surrounding us, there is a choice to be made, one can either choose to remain in denial, continuing to wait for the world to regress to what is used to be 30 years ago and praying that and will magically fall from the sky when governments figure out how to control systemic risk and reverse environmental degradation. The other option is to accept that we are headed towards a completely new direction and become active participants in shaping the next wave of social and technological disruptions. When the winds of change blow, some build walls while others build windmills. Make your choice wisely!

Photo Sources:

cmra.com/crises.php

fastcodesign.com

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