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Introducing the new scenarios

Introducing the new scenarios

We have retained the 2001 scenarios on this web site because their validity is firm and strong. Readers may ask, therefore, why we have issued new scenarios. The answer is that the 2001 scenarios were focused chiefly on the industrial world. They remain valid for the key issues which affect these countries. However, the industrial nations account for something over one billion people in a world which, by 2025, will contain around eight billions.

Reviewing the previous scenarios.

Reviewing the previous scenarios.

The 2001 scenarios essentially focused on a single dichotomy, summarised in the figure.

In Renewed Foundations, economic forces faltered during an extended period of asset price deflation. Political issues around welfare and age became acute, but without the funds needed to palliate them. Activism and resistance to further erosion of the status quo led to something approaching institutional paralysis in many of the larger nations, and to gross discontent with the processes of governance almost everywhere. Exceptional were the small, inclusive and expert nations, which evolved a style of public governance which, whilst extremely time-consuming, represented a way through the thicket to acceptable government. This style spread out through peer nations with some speed. The astonishing technical capabilities provided an additional stimulus to healthy (but extremely distinctive) economic activity after 2010. In this newer world, choice and identity are chiefly exercised at sub-national levels and in bands of expertise which extend across political frontiers Nations and national identity are, nevertheless, strongly retained. The aim of most coherent entities - of major cities, distinctive sub-national regions, economic clusters - is to generate an identity which attracts resources, and which supports and extends a speciality in a coherent and simplifying manner. Regions which are unable to establish a viable 'brand' find themselves at great disadvantage, much as today's rudderless public companies are deprecated by investors.

In Pushing the Edge, economic and integrative forces run without check. There are many of these factors, reviewed in detail under 'enablers of adaptation', 'pursuit of the best', 'connectivity'. The essential point to take from this analysis is that all of the factors which accelerate change are things which are individually desirable, such as low cost goods, high quality and wide choice. We want the best returns from our savings, and we want to connect to anything or anywhere on demand. The upshot of having these capabilities in place is that commercial systems are driven faster and faster to keep up with the many demands on them. As such commercial systems integrate across political and other frontiers, so each is swept up in the pursuit of the global, rather than the local measure of best practice. Small-scale activities often cannot compete and are so swallowed into chains, franchises, focused conglomerates and value chains, or else driven out of business. Activities that commanded a scarcity rent - that were new, and so gained a premium price - last for shorter and shorter times before they are 'commoditised' by the entry of may competing producers. Issues of intellectual property - and of making use of knowledge within diffuse networks of partnership and employment - lie at the heart of both success and rivalry.

In such a world, social change lags behind events. There is a 'tearing' in the social fabric which once held together communities of geography, and a melding together of groups that are bound by interest, ability and power. This process points up areas of weakness - of ability, of connectivity, of adaptability - and this throws acute challenges to national cohesion and to national and international institutions. In essence, these are being asked to police something completely new, whilst simultaneously addressing the anguished, trailing issues of the old form of organisation. Politics are fragmentary, insofar as there are few coherent groups for political parties to address. Institutional weakness leads to a general slowdown after 2010, during which time the lessons of Renewed Foundations are at least partially absorbed.

Extending the scenarios

Extending the scenarios

Once-isolated systems are being 'heated up'. They are also being connected together. Both processes are causing old social systems to melt, to elide and - for the most part - to weaken. It is, therefore, impossible to continue to ignore the processes by which this happens, or fails to happen. Reaction to change has shown itself through dramatic instances of terrorism. The weakness of international institutions has shown itself in many ways, and it would appear that little of much significance can happen without US initiative. Capital market machinery appears to be at best undamped and poorly poorly overseen.

As systems become connected together across national boundaries, so transnational mechanisms of policing and scrutiny become necessary. Life in a given nation could once be visualised as a stack of groups and activities piled neatly on top of each other, and all confined largely within a geographical border. Picture, if you will, a somewhat untidy heap of pancakes, all heaped up on a single plate. Political, economic and social issues were played out in this stack. National governance applied to all of the different domains of activity - to each pancake in the same way.

Two fundamental changes are occurring in this model.

More people with more capital, more insight and better connections will draw on the huge pool of knowledge and capability which are being developed in order to ride an accelerating system. There will, therefore, be both faster innovation and faster commoditisation. Accelerating commercial change will bring with it yet more social change, and yet more challenges to governance. The risks of instability in weakly overseen financial systems have already been demonstrated many times, but without much improvement being put in place. We have already discussed social 'tearing' and reaction to this.

The forces which bring "the World's quarters together" also connect many negative features, which were once held at arm's length by the facts of geography. Issues such as pollution, crime, disease and political turbulence will also cease to lie like neat pancakes on their respective national plates. In that fast change is likely to trigger increased political churning, it is almost predetermined that the effects of this will sprawl across political boundaries. Much the same is true of crime, exploitation and other sources of misery. Commercial friction will also transcend boundaries. In an environment in which intellectual property is both so valuable and so easy to steal - or where the integrity of a supply chain is so important to the management of financial and physical risk - the need for enforceable contracts and transparent systems is paramount. The temptation to default is and will remain strong. It may cost billions to create an effective molecule or piece of software, but little to replicate it for sale in areas where regulatory remits do not run.

New situations demand new rules. As populations became urbanised, so new laws were needed to manage the facts of crowded life. These rules were negotiated chiefly amongst the powerful, and then imposed upon the rest. Liberties were surrendered - often in an unequal manner, but ultimately to the communal good - so as to gain new freedoms. Much the same is true of current international agreements. An elite deals with an elite, usually for what seem to the public to be very abstract reasons, and with what are effectively invisible consequence to them. It is plain, however, that international forces will begin to impact on average lives in sharply tangible ways. Reaction to this may be strong, and - paradoxically - may take a form which seeks to lessen international agreements, not to strengthen them. Protests against the WTO are an example of such reaction. Successful protests will not affect the forces of change, but will ensure that they are not managed.

Sovereign states may anyway be reluctant to give up their sovereignty to sweeping agreements with their peers, and to such agreements heavily pressed on them by the major powers. It is more than possible that reactive politics will spread out from the few current isolationist nations to a cadre of countries which actively oppose such measures, seeing them as the incarnation of 'modernisation' or at least as an intolerable intrusion. Nevertheless, it remains the case that integration demands more and more systems of international management, probably of a somewhat lopsided and often imposed or unilateral nature: nations which wish to trade with the major powers must comply with this or that requirement.

This brings us to the second dimension which it is necessary to introduce into the scenarios, The figure retains the horizontal axis from the diagram given above. The two 2001 scenarios have been shifted slightly.

The figure suggests complex, possible and often difficult worlds in each of its quadrants. The two earlier scenarios do not, however, fully occupy this space or much react to its dynamics. This is plainly unsatisfactory. For this reason, new scenarios are required.

The time-based dynamic of this this evolving system is extremely important. A snapshot does not capture the richness of what is happening. A further paper in this section reviews the time line of events. In brief, however, our views are summarised by the spiral dynamic suggested by the following chart:

The two former scenarios as shown as faded on this figure, as they plainly represent an early phase of the overall development. (Indeed, one key critique of these scenarios is that they happened too slowly: many felt that the situation which we described for 2020 would in fact be mature by 2010. We have taken this on board.)

As has already been mentioned, we have named and further developed these timelines in a separate paper. However, it is worth taking two thoughts from what we have so far. First, extremely rapid economic integration will almost certainly lead to at least some, and possibly a great deal of international tension. This friction becomes such as events progress along the "red" time line - to the 'Pushing the Edge' case - that it is impossible to progress further without major institutional reform.

Second, economic gradualism, as was imposed on the Renewed Foundations case by asset price deflation and by an overvalued dollar, does indeed provide a space and motivation through which to bring the rest of the world along with eventual integration. This case imbues in the wealthy world with the habit of institutional upgrade. It is institutional weakness that holds back many developing nations, and it is in the vacuum of international institutions that many difficulties may arise. The habit and experience of these undertakings at home makes it far easier to find ways to generalise these elsewhere. The blue trajectory owes much to this, and to the active thrust from the wealthy world towards inducing such innovations elsewhere. This improvement shows itself in a return to fast growth which is now coupled to smooth international integration, to the management of externalities such as the global environment and to the management of instabilities in the system as a whole.

These benefits come at a cost, however, which is the surrender of sovereignty at many levels. In addition, there is a vast drag on the wealthy world which comes from meeting some of the needs of the poor nations whose collaboration is needed. Such processes are not, however, directly equivalent to the democratisation and income redistribution that began in the wealthy nations in the 1880-1930 period. A much better model is that of state-funded education, whereby the public invest in the capabilities of the next generation, and create the means by which they can become self-supporting. A solid, evidence-based and flexible "technology" of social and economic development is quietly taking shape throughout this period, and its active propagation is a central plank of the foreign policy of the developed world.

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