Forwardeconomics

With the European Union at risk of fragmenting due to Greek debt, the collapse of the Chinese stock market, and many other financial crises over the past two decades, many people are starting to feel that something isn’t quite right. Events like increased systemic risk, sudden bank closures, and stalled economic growth since 2008 are becoming too frequent to consider as black swan events. According to economic theory, increased education and specialization should result in 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 most advanced technology. Ironically, however, global youth unemployment has reached levels between 30% and 40%. So, the question is, what is really happening? Why aren’t economies booming if industrialized governments have followed the rules? Some scholars argue that capitalism is dying (Paul Mason), or that our global structure is deteriorating (I. Wallerstein), suggesting that sooner or later, the system will abruptly end. Yet, analyzing the past 25 years—considering the frequency of financial collapses in highly industrialized nations, starting with Japan in 1995 and continuing through the recent Chinese stock market crash—along with the stalled global economic growth since 2008, points to a clear conclusion:

“The fall of the old system has already occurred, and attempts to keep it going are only making the problem worse”.

People have felt the real impact of this shift in their daily lives, especially in their vulnerability to systemic risks and sudden job losses. However, governments have remained in denial, trying to apply a ‘one solution fits all’ approach (i.e., attempting to fix a private debt problem by creating more debt). Meanwhile, during the peak of the environmental crisis, we’ve seen the rise of game changers like Uber, Amazon, Tesla, Bitcoin, and 3D Systems, and this is no coincidence; some businesses are finally starting to ‘get it.’ The era of central planning and economic organization around manufacturing and retail is ending, and we are witnessing the birth of a new age,  the dawn of a more liquid society.

This is a completely new organizational structure that, like a liquid, has a defined volume and composition, but whose shape is constantly changing and adapting to its environment. This realization requires no more than observing and comparing the world today to the world 30 years ago in the following terms:

• Hierarchical global organization: characterized by overlapping authority among institutions across different fields that are constantly in flux (states, NGOs, IGOs, grassroots movements, and individual influencers).
• Economic fragility caused by efforts to sustain a rigid system of presumed ‘constants’ that no longer exist.
• Technological advancements in robotics and communication are making labor-based manufacturing nearly obsolete.
• Level of individual global interactions: shifting from the old realism view to a sense of global responsibility. We see this reflected in global aid responses to recent earthquakes and health epidemics.
• Shifts in the dominance of core industries: manufacturing through assembly and retail versus new 3D printed technologies, e-commerce, and the rise of the ‘Prosumer’ industry.
• The decentralization of currency creation through the issuance of virtual, encrypted currency and local time banks.

When examining our level of technological achievement, it’s hard to ignore that the future seems headed in an unknown direction, even if governments haven’t officially declared it. The good news is that, unlike previous regime collapses, there haven’t been any beheadings of the ‘elite’ so far, and there are no large-scale violent riots happening globally. The world system we grew up in is no longer alive. Rapid changes are happening 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 suggests that society has already made a conscious or unconscious decision for a peaceful transition. Although the world is currently divided between those who recognize that change is coming and those who don’t, these are truly exciting times to be alive! Such shifts occur in cycles of 400-600 years, making us both witnesses and active participants in this transformation. 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, expectations for what can be achieved are higher than ever.

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

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

Markets are clearly moving toward a circular economy where the biggest opportunity will be in the service sector, focusing on repairs and replacement parts instead of producing new items. Some visionary businesses, like Levi’s Strauss, have recognized these trends and are preparing for the future; a future where states will play a smaller role in ensuring employment and resource availability. Due to the extreme fragility of centralized planning (both Capitalism and Marxism), caused by flawed rigidity in forecasting and slow response times, it is very likely that national currencies will increasingly coexist with various community-issued and encrypted global currencies. These currencies will enable self-governing communities to fill the gaps left by market failures in a tailored way. Standardization of governance practices will emerge from a combination of law and the organic spread of effective methods. As manufacturing automation advances, people’s needs might best be met through a workweek that combines community-based work, self-employment, and some reliance on external jobs.

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 it used to be 30 years ago, and praying that the past economic framework 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 in a 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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