'Speculations on the exits into future'

Reflection on the RISE Talk given by Dr. Jiachen Yang, NEOMA Business School, France.

The second RISE talk (Resilience, Innovation, Strategy and Ecosystems) took place virtually on 21st October at Durham University Business School. Dr. Jiachen Yang, Assistant Professor of Strategy, at Neoma Business School, France drew upon the last thirty years of world development (the post-Soviet era) and presented overarching scenarios of the future through four possible processes of change: ‘the day after tomorrow’, ‘revolutionary breakthrough’, ‘anthropological transformation’ and ‘gradual evolutions’. The talk began with a lengthy debate with regard to ‘the world is in a state of crisis’ vs. ‘the world has never been better’. Undoubtedly, there are many achievements in the history of humanity, including the lowest rate of violent deaths, an improving capacity to feed more population, and a higher level of general education and abundance of opportunity for self-development, amongst others. These impressive achievements, however, are increasingly overshadowed by alarming developments, which can no longer be ignored. By incorporating a wide variety of reports from the United Nations, the World Economic Forum, and the Club of Rome, the first part of the talk presented pressing challenges faced by humanity and society in several areas.

Economically, the world is in a debt crisis coupled with a growth crisis. The subprime collapse and the subsequent meltdown of the financial markets have given impetus to unprecedented credit issuance by all major central banks. Meanwhile, statistics show that the growth of national economies in many places has extensively fuelled by debt, rather than genuine productivity. The dire financial situations are aggravated by unfunded liabilities in the forms of social security obligations, medical obligations and pension issues. The COVID-19 pandemic has made these existing problems worse, providing a new and very powerful impetus to the governments and taking the challenges to a whole new level. With regards to growth, even countries who used to grow very quickly, such as China, are experiencing problems.

Furthermore, ‘money creation’ in the economy has reached $4 trillion since the foundation year of the Federal Reserve in 1913. In 2021 alone, the figure then sharply increased to $6.7 trillion. This has raised a big question in terms of where those money will go and what kind of goods and service it will be exchanged for.

As Peter Thiel pointed out, since the 1970s, the world has achieved great progress in the ‘world of bits’ but very little progress in the ‘world of atoms.’ For example, market capitalization of the US top internet companies (e.g., Amazon, Alphabet) runs into trillions of dollars, whilst the global top biotechnology companies (e.g., AbbVie, Novo Nordisk) are only in the billions (below 200). What accounts for these differences? As management scholars, we may want to investigate the reasons and processes behind the gap between the development of bits and atoms. Alternatively, we may want to investigate how we could accelerate the rate of progress in the world of atoms, including investigating how to boost innovation in the areas of energy, biomedical science, new materials, new modes of transportation, new ways to recycle. Research on these questions could buy us more time before we run out of resources.

Relatedly, there is an accelerating growth of inequality in wealth and opportunity for future generations, as well as regards life quality. A report from Oxfam shows that the world’s 26 wealthiest people own as much as the bottom 50% of the world population (3.8 billion people). The Occupy Wall Street movement happened precisely 10 years ago remined us that the political and social polarization resulting from wealth inequality is tearing apart communities and driving nations into tribal mindsets.

Geopolitically, crisis is being brought on by increasing disagreements on some core problems that are viewed as zero-sum games. Partially, this is because the great financial crisis has shifted attention and resources of major geopolitical players from global to national issues. The stepping-back process generates a great level of uncertainty for the future. The conflict between major geopolitical forces will likely result in a series of local armed conflicts involving non-governmental organizations and networks of higher capacity teams of operators in the field and in their cyberspace. Statista (2021) shows the result of a 2018 public opinion in the UK, in which close to 60% of respondents expected a world war in the next quarter of a century.

Demographically, the world is poised to experience profound changes in its population and in many places, these changes are already happening. Changes may happen as regards geography, age, cultural and historic heritage. Many people are having to move from their home land to other countries, as a result of what crisis they are experiencing locally. When looking at the demographic makeup of the world, there are places where you have more people who are older and places where they are much younger. Ultimately, these places with younger generations may experience more growth. Governments need to start looking into how they can incorporate new people settling into their country to have a positive impact on their demographics. Aspects such as entrepreneurship, micro-skilled business ventures, integration of children so they can fully realize their potential and the future of their new homes are all vitally important. Overall, the world’s population has grown by around 1 billion people in just over ten years, but the rate of growth has been decreasing. The second problem we face in terms of people moving is aging. Developed countries which have older populations could be a focus of researchers, considering how to deal with the aging problem in these places by leveraging the acquired wisdom and experience? How can human and machine labor work together in achieving the desirable outcomes?

Ecologically, for many years, we have not experienced anything as threatening as we face today. The problems can be traced to two major sources. The increasing demand for resources and the continuous prolongation of life expectancy will keep putting pressure on the resource stream far into the future. The question is how to manage the limited resources we have and how to prolong them for future generations. There is too much waste for the environment to handle. Pollution has reached critical levels in the water, air, biosphere, and the land. Carbon emission and climate change promise to bring even bigger problems in the future and further displacement of people. When people’s lands become depleted, without further intervention, they may need to move. As management scholars, the questions that we could investigate include: how to design, build and maintain a system to regulate the emission of carbon dioxide and reduce carbon footprint? What could be the accounting systems for monitoring carbon and other types of emission? What will be the governance of firms of corporations and what would they look like in the age of so-called zero carbon? What would consumption look like in the New Age?

What are possible processes for us to exit from crises?

Although there are many other scenarios, Dr. Yang’s talk has focused on four scenarios of future derived by the juxtaposition of two axes: pessimism vs. optimism and radical change vs. gradual change (see Figure 1).

Figure 1: Four Scenarios of Future

Source: Yang (2021)’s presentation at the RISE Talk

‘Revolutionary breakthrough’: There will be new sources of energy, which are environmentally sustainable, economically viable and safe for mass scaling. These are very difficult criteria to satisfy unfortunately. Creating these new sources of energy will create more products and waste to dispose of while they’re being built. Mass scaling is important because there should be general abundance in a revolutionary breakthrough. Perhaps, a new form of organizing and governance (e.g., social organizations) may emerge in better supporting human activities for sustainable development.

‘Anthropological transformation or transition’: This is a process in which things are gradually running into pessimism. For example, in terms of society, we may see increasingly inequality, which can continuously polarize the society, threatening the stability of the society.

‘Gradual evolution’: Existing technologies should improve continuously (e.g., more efficient engines, more efficient electric devices, more efficient delivery networks). The social system will adapt to be more sustainable and humane. There will be more allies, rather than technology breakthrough powered by scientific breakthrough. More reliance will be on social engineering of policies. However, competition between people, governments, and companies is unavoidable, due to a finite resources and infinite desire.

‘The day after tomorrow’: This may be the worst of exits because the damage happens, for example, the degradation of water, air, soil, and the catastrophic reduction in biodiversity, destruction of habitat.

Hypothetically, all four scenarios could happen in some way in a combined general scenario, which looks like the most probable one. There exists a fundamental conflict between the unboundedness of human needs or desire, and the finite availability of resources and energy on Earth, assuming that humanity and its absolute majority will remain on this planet. Attempting to continue to raise the standard of living for all in an indiscriminate fashion spells disaster for all. Thus, preventing the unbounded consumption by all which spells disaster in the future for all, appears to be eminently reasonable and necessary to meaningfully inform consumption. Inhibiting the consumption of individuals and corporations and governments can be done either indiscriminately or discriminately. Indiscriminate capping of consumption will lead to distortions and incentive schemes: those who can to contribute more will not be granted the anticipated rewards through consumption, a big incentive in itself, at least in today's framework of understanding about ‘what’s good’ and ‘what’s bad’.

On the other hand, discriminate capping of consumption is more interesting and holds more promise. There could be different schemes for differentiated current consumption, depending on the contribution of individuals or corporations or governments. Hopefully, there would be a more equitable system of consumption. Evidently, discriminate capping of consumption must allow for inclusivity. To this end, although, there would be caps on consumption, the lower bound at which consumption starts should be lowered to allow more inclusivity.

What are strategies to exit?

One of the central arguments in Dr. Klaus Schwab’s work is that we will never go back what was done previously. There are likely to be profound changes in the future but they will most likely happen gradually. The driving factor behind these changes will be individual behavior, which serves as the micro-foundation of the change, and this will be facilitated by digital technologies in terms of how these changes will be enacted.

Economically, workforces can and probably will be automatized. Unavoidably, there is a risk of large job losses in the economy. You could account differently with the part of the black economy such as drugs and weapons, by considering legalizing them. Another way is to monetize happiness and fulfillment as being economic output. Among the harder solutions will be to build economic solutions that are focused on reuse, repair, and recycling (e.g., the circular economy) instead of constant production of new products and services and the disposal of products that are broken. Perhaps, it’s time to consider the de-growth agenda in order to make a progress, thus balancing between the economy and nature. Progress is not necessarily equal to the growth in GDP and consumption of outputs.

Socially, inequality will grow and divide people into at least two categories. This type of division for consumption will reduce the strain on the environment, as less people will be able to afford newer products. This will probably result in continuous social disturbances by the poorer half of the population but the revolts won’t happen, as long as there are still things to lose. Once they start to question how to stop them - violence or sedation? Governments will have to cooperate with organizations to develop sustainable solutions to the problems faced by society. More involvement from the private sector is expected in the coming decades in terms of public affairs.

Geopolitically, there will be a “tri-lema”. Countries can choose 2 out of the following 3: democracy, globalization, and national sovereignty. We'll have the rise of regionalism in countries as well based on cultural similarities and familiarity. We will probably start to see an increase in trade wars that escalate into technology wars, and then geopolitical wars followed by capital wars that focus on currency. If things are not resolved in these smaller wars, we’ll see them turned into full blown wars with weapons. Decarbonization is the way to go in order to help reach pollution targets. In lockdown, we saw a massive decrease in air and water pollution but many people lost their jobs and the economy suffered. There needs to be a compromise in arriving at techniques that will see a collective way to help lessen the environmental impact that humans are having. Perhaps, management scholars can imagine consensuses or compromises to leverage technology to achieve them, such as the Industrial 4.0 centering on the fusion of the biological with the non-biological.

Finally, to cap consumption, there will have to be money pouring, surveillance, and control. For corporations that will take on a large role in governance, they will be more resourceful and sophisticated in terms of modern technology. People will be asked to do transactions and interactions in more contactless ways such as online as part of efforts in reducing carbon emission. It is likely that there will be a de-densification in terms of socialization and then behavioral conditions (more virtual and less real). This direction, however, may increase or intensify social issues such as mental health, which negatively affect productivity.

How to cite: You, J. J. 2021. 'Speculations on the exits into future’. RISE Talk, 16 November [Blog]. Available at https://www.jacquelineyou.com/post/speculations-on-the-exits-into-future

(Accessed date).

This blog expresses the author’s views and interpretation of comments made during the talk. Any errors and omissions are the author. Dr. Jacqueline You is an ESRC Postdoctoral Fellow at Durham University Business School, UK. Her interdisciplinary research focuses on organizational resilience and disruption in the context of business ecosystems. Prior to entering into academia, she worked for multinational corporations, primarily in the department of global supply chain networks and strategic procurement in China, the US, Canada and France and then, as an international entrepreneur based in the UK.

RISE Talk (Resilience, Innovation, Strategy and Ecosystems) is an academic initiative funded by the Economic and Social Research Council (ESRC) and hosted by the Centre for Innovation and Technology Management (CITM), Durham University Business School, in partnership with the Global Citizenship Programme, Ustinov College.The aim is to facilitate an interdisciplinary discussion and exploration of how conventional theories inform our understanding of the phenomenon of RISE and how the role of RISE can help to address the pressing and complex issues faced by business and society, including governance and systems for sustainable development.