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Key issues and interactions.

Key issues and interactions.

Substantial workshops and other processes have now defined the key issues under the four categories with which this exercise began: energy, China, industrial development, the capacity of the industrial world to keep developing and and extra category, that of the tone within the international arena.

We list the key issues under these headings at the foot of this document. They will seem somewhat cryptic to people coming to them for the first time, but each heading is resonant with meaning, and many of them interact. Some experienced readers may also find them banal, mais plus ca change....

The "international arena" is generally a lagged, multifaceted consequence of these interactions. The implication of all of the forces that get bundled up together as globalisation is that it is within international affairs that new structures and deep disagreements are likely to express themselves most clearly, whatever their force within local politics. What matters is what matters internationally. Once again, however, it must be emphasised that these interactions will be the consequence of intra-national forces: with how the low skilled workforce of a given country - and its politics - can cope with competition from lower wage, efficient areas, for example.

Events in the international arena will develop in a space that is shaped by two sets of forces, innately linked but nonetheless usefully seen as separate. First, the international environment is itself subject to "development" and it is as prone to institutional failure, arbitrary aggression and the rule of oligarchy as any developing country. As a set of linked structures, it is not sufficiently resilient or complex enough to meet the challenges which it faces.

If these structures are to work - indeed, to find a measure of internal harmony - then powerful players must cede some of their power to them if the system is to be able to manage itself. One important dimension is, therefore, whether - in general, across most issues - such powerful agencies are prepared to cede some power in order to gain greater advantages. If this is not clear, or if the institutions are so untrustworthy as to make this a risk that no such nation can take, then this will set limits to what can be achieved. This issue sets the vertical axis in the figure

The second, horizontal axis is focused on how we make choices, both in the public domain and in private. There are two approaches to this, whereby choices are made essentially by individual people and organisations acting on local interest sand information; or else that grand considerations drive collective decisions that cascade their affects down to individuals. Which of these two approaches will predominate will depend on the narratives which we tell ourselves about governance, liberty and the "right way" to be.

The political tone within individual countries varies, of course, along all manner of axes. For example, the state may be perceived as being there to serve the people, or it may be that the ethos is that the people have a role which is to accomplish great things on behalf of the state or some proxy of it, perhaps religion or perhaps some abstract, such as National Destiny. This said, the current absence of popular Great Challenges or accessible Grand Opportunities mean that the trend is, for now at any rate, plainly set towards the kinds of states which create situations in which individuals reap the benefits of wealth and choice. We have seen that institutions, human capital, physical and social infrastructure, knowledge and the ability to use it are all essential components of these. History has shown us that such factors cannot be managed by an oligarchy or through tyrannical means.

This is not to say that we have reached the end of anything, let alone history. The ethos of government even within the developing powers has wandered from the liberal to the directive and back again in the past century. It may be the politics - and in particular, the issues of the international arena - are though to require directive, prescriptive approaches. It may also be that people see states as no more than an enabling tool kit, and that we shall have to wait to see what emerges from the mix. This dichotomy, essentially the ideas on which "legitimacy" are to be grounded, that makes up the horizontal axis on the figure. On the one hand, it is appropriate that the collective makes up its mind through pluralism and experiment, self-optimisation and enlightened self interest under a minimal rule of law. On the other, overwhelming imperatives exist which make it necessary for the collective to seek a uniformity of approach to these. Religion and culture are under threat! Liberty, the climate or public health are suffering real dangers if rules are not imposed! Or - perhaps - a view emerges amongst the elderly of Europe, for example, that there has been too much experiment: that what we want a settled life, with no more surprises.

The interaction of these forces creates four highly distinctive quadrants, as shown in the figure. Each of the quadrants has its own flavour. It is interesting to plot where the major players sit at present - not shown, here - and to estimate where various overall movements of events and ethos may move them. This procedure is the subject of the next post in this series. China, for example, is certainly to be found on the right of the figure - although much less so than hitherto - and there are fears that it could move downwards upon it. The US is located to the left of the figure, and important components of it have moved downwards in recent years. The US is more socially dispersed and lacking in unity than it has been for many decades, whilst China is also undergoing fast but more unified social change.

Here, however, are the key issues that emerged from the four - now five - issues around which this enquiry has been organised.



Cost of supply: driven by oil demand and investment in ME, impacting development, general growth, political stability both regionally and internationally.

Supply security: Middle East and Russia as the increased focus of supply, with the capacity to use energy pricing as a weapon. Regime change and also security incidents involving WMD a decided possibility. Issue of whether the ME can police itself or will consequently be policed by others.

Carbon emissions and links to climate change is a problem which will not go away. Solutions are unattractive, and the short term political and economic penalties are profound. A major symbol in the emerging international order, or lack of it.



Absolute scale of socio-political and economic achievement remains in question after the current burst of decompression growth. Can China create the institutions that it needs to bring one third of the world's poorest people into prosperity?

A prosperous China implies a balance of affects on industrial world. It will greatly reduce costs to its consumers, but its competitive impact will affect low skilled jobs, manufacturing companies and, increasingly, services. Capital surpluses will continue to be exported and asset prices and premium currencies will be distorted.

China will also impact emerging markets; indeed, has done so. It lies across the normal development path as an efficient manufacturer that will sink new, small-scale activities. Also important to all, but particularly to the developing countries are demand-side impacts, whereby China's growth has direct consequences on energy and mineral prices, and also pollution levels.

There is a profound concern around the ethos in international arena and China's engagement with it. Will we see a triumphalist China hemmed in by tariffs, or an emollient China taking in everybody's workload and re-sourcing it from client developing countries?

Industrialisation and development

Industrialisation and development

The key issue for development is the country's tractability to reform. National and regional narratives have often been excuses for under performance, but reform is viewed as an attack on 'what makes us special'. No nations are inherently special, and those catching up have to be happy to be dull, hard-working and ordinary. What constitute meaningful drivers for institutional reform is not clear: how are elites to be motivated to give up their power? What persuades human capital to stay home when it acquires skills? The answer lies, probably, in individual incentives and the imperatives of business, as they have done everywhere else.

Resource and environmental issues are particularly poignant for industrialising countries. The unplanned and under-resource growth of massive conurbations will be the feature of many poor nations. Political movements will find it easy to suggest that things are getting worse, and that this is being actively caused by foreigners, companies, modernity, a falling from traditional ways.

Choice: rich world development

Choice: rich world development

The key question is what the rich old world has to do to prosper in the world we see ahead. We cannot rely on trade to lower costs if we also try to exclude the competition from those areas. Our relative lead in knowledge is being eroded and our populations are growing old. On the bright side, our companies renew themselves are a breakneck pace and our industrial and institutional structures are uniquely complex and functional.

New capabilities: technological and organisational

Innovation and re-discovering the corporate brain, lost in the 1990s.

Social and mediated networks; knowledge engines made of people and organisations. (Less emphasis on god-like leaders, and more on creating effective structures where people give of their best.)

Redefinition of government reach: what it can do and what it cannot; appropriate and nested decision and policy-making machinery to get the 'right' scale to address certain kinds of problems; separate of the sate from "doing" in favour of causing to be done, regulating, thinking. Above all, thinking and debating. Making the transition from monolithic party politics to something more multi-dimensional, suited to the needs of the electorate rather than the brand-marketing needs of politicians.

Achieving acquiescence to - re-discovering enthusiasm for - change:

To offset the facts of demographics (and through medical technology, knowledge working, will old get more able?)

To create capability pathways, whereby people can perceive, reach, realise many more through lifetime personal development; from social skills to formal knowledge, networks of affiliation and access.

To avoid a populist ethos of comfortable failure - that decline is inevitable, that true solidarity is an equality of misery, that change agents and in fact a part of the problem, not the solution. To find narratives through which people describe to themselves who they are, what they are about and how their society interacts with them that are realistic, empowering and disciplined.

International arena

International arena

As discussed above, primarily the outcome of whether we seek collective advantage or individual national gains; and from the outcome of this, forge institutions which are fit for purpose. Individual interests will tend to block this, and attitude and interest blocks will oppose any common way forward.

The key issues are likely to be trade - specifically, as discussed under China, above - and energy flows. Issues related to security, health, climate and migration are all important, and can become acute in a non-collaborate world. There is potential for a downward spiral, but only for a gradual up-side. Super-powers must work hard to avoid moving towards the spiral.

Also, "events" can catalyze fast movement across the matrix discussed above. For example, a pandemic would make for a more authoritarian and probably collaborative world. A major, lasting energy crisis would make for greater authoritarianism, but also a fragmentation into interests and blocs.

Major interruption to energy ex Gulf

Epidemic: crop, human, computer

Major positive gift from technology e.g. fusion

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