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A Distilled View of Life to 2030.

A Distilled View of Life to 2030.

The Challenge Network has decades of experience in futures. This text distills our current view on the major driving forces that will shape the next decade. We do not offer scenarios, for the same forces can support a range of outcomes.

The text is written from the perspective of the rich nations. However, it notes that their future is strongly entwined with that of the emerging economies. The text begins with a review of these global, structural forces, then turns to the economic responses open to the currently wealthy countries. It then considers the socio-political consequences of their making those responses.

There is, at present, a prevailing theme to the effect that something called the fourth industrial revolution is at hand. This is supposed to destroy jobs, alter society and require a new economic dispensation, as suits the views of the writer. All of this is supposed to stem from artificial intelligence, a technology which most writers use as a narrative device comparable to a magic wand, delivering anything you choose to imagine. The use of the term 'industrial revolution' seems to give these near-fantasies a concrete presence.

The notion of “industrial revolutions” is, at best, a short hand. The first revolution resulted from complex economic, political and military events that ranged from land tenure to a solid currency. Talk of an imminent Fourth Revolution is wildly overcooked. Nevertheless, the world is changing at a great pace, mostly driven by events beyond the old industrial world (OIW).

The global context

The global context

Economic responses from the old industrial world

Economic responses from the old industrial world

Global circumstances mean that the competitive pressure on OIW commerce will intensify. There are only three effective responses to this: upgrading human resource, automation and innovation.

Whilst nation states will try to foster commerce, the most important sectors will tend to exist as trans-national networks. The network of pharma, car making or financial services may tend to dwell between five or a dozen centres of excellence, many of them based in cities and other creative milieux. These will tend to develop independently of any nation, producing a world of elite cities and economic hinterlands.

Attempts by those hinterlands to tax heavily will result in the next wave of innovation passing them by. Any part of commerce that does not keep up – with human capital, infrastructure, regulatory frameworks – will get left behind. STEM is said to double its useful knowledge base every four years. That is the time frame in which a nation can lose an industry. The year 2030 is three doublings away from today. The year 2042 will have 64 times as much knowledge as we have today, scattered across AI-powered global networks.

Socio-political consequences

Socio-political consequences

The OIW has seen increased social division. Low skill tasks are disappearing. Those that remain have suffered falling real terms wages since the 1960s. Middle class wages are now also static or falling. High skilled individuals, by contrast, are better remunerated, reflecting the more productive environment in which they work.

The OIW still guides its social model through a sense of national solidarity, that “we’re all in it together”. Social transfers represent 25-35% of GNP. In the order of half the population are net beneficiaries from the state. This situation has, however, collided with the mounting demographic situation and rising expectations. Many social institutions are under intense pressure. This can only get worse, and the post-war consensus is unlikely to be viable into the 2030s.

This social model is losing traction amongst the professional classes. A doctor or an engineer is a part of a community of practice that owes little or nothing to geography. Few feel real solidarity with a person who has a financial claim on them by virtue of an geographical accident of birth. This division has been expressed as the people from somewhere and the people from nowhere. National populations depend of an international elite which sees them as the source of poor decisions, annoying distractions and endless cost.

By contrast, the emerging economies will have 2-2.5 bn middle class individuals in the 2030s, over double the OIW population. They are unimpressed with democracy, being concerned to maintain stability and social order. Their attitude to inequality and to wealth transfer is at best grudging. This must alter the global narrative, and reinforce the divorce between national and networked populations.

This situation is ripe for populist politics. It is no accident that this has first had its impact in the US, which has inequality and social conditions closer to a middle income country. Elderly, poorly supported populations are unlikely revolutionaries, yet social conservatives are confronted with an incomprehensible pace of change. All across Europe, reactionary political parties are gaining share. All are characterised by a desire to return to high social spending, perhaps public ownership, high taxation and job protection. Technophobia – taxes on automation, bans on worrying technologies such as biology and AI – may well become a part of the general syndrome. That is, of course, a recipe for utter disaster in the world so far described.

As noted, the elites of the emerging world have little sympathy with their nation’s poor. Unions are illegal in the socialist paradise that is China, and are generally less a workers’ movement than a political power base in many other emerging economies. That said, intensifying pressures on workers and the force of modern communications could trigger unionisation in one country or across several. The political consequences of this would involve both populism and nationalism.

The past four decades have seen three billions raised out of poverty. The crucial element for economic and social development is the integrity of national institutions. Africa lacks this, perhaps due to much of it never having been through a phase of settled agriculture. The Middle East has institutions that are strong but of a counterproductive form. Although the transition to democracy is probably irreversible in South America, an equivalent transformation towards probity in public life is lacking. To summarise, there will be billions of people who live in chaotic cities of tens of millions, in which everything seems to be getting much worse. These, too, are vulnerable to chiliastic movements. Terror is a tool used by such movements.

Energy provision is both crucial and a focus of environmental concern. The ten year future is best expressed by one word: gas. Renewables may come to supply 15-20% of world energy, but that will be a stretch for 2030. Future growth in energy demand growth will be focused on the emerging economies, over which OIW concerns have limited sway.

We are clear on what are not going to be major forces within this time frame. Food supply is unlikely to be short, and environmental impacts will be minimal. That is not to say that in the longer run these will not matter, but the period of impact is outside of this time frame save for precautionary actions. Commercial decision taking may, though, be required to act as though these were real, current forces due to their strength in the political zeitgeist.

On the positive side, billions of clever minds will be amplified by improving institutions and exceptional technology. What happens to the less able in the rich world depends on whether their skills can be raised considerably, and how easily the newer technologies are to use. If they cannot engage, then at best theirs is a future of immersion video games, comfortable drugs and gentle exclusion from urban life. Paying for this to happen is problematic. By contrast, populism that is aimed to re-establish the norms of the post war consensus may bring about some spectacular disasters. If these occur, it is likely that electoral systems will adapt to prevent these from happening in future. Majoritarian democracy may not be the leading model for the rest of this century.

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