Richard Melson

January 2005

The Future

HOW TO THINK ABOUT THE FUTURE

Cambridge Forecast Group

1993

On June 4, 1992, a conference entitled Scanning the Future:

Perspectives for the World Economy up to 2015 took place in The Hague.

A Japanese participant, Chikashi Moriguchi, Director of the Osaka Institute of Social and Economic Research, prefaced his speech by saying, "Scanning the Future is one of the most interesting topics for us Japanese, whose national hobby is forecasting. Jesus Christ said 'Don't worry about tomorrow', and western civilization seems to be observing his teaching; a mass society is preoccupied with enjoying the present. Meanwhile oriental wisdom teaches us (as Japanese) to 'worry about tomorrow'."

On the other hand, an American participant, the American economist, Rudiger Dornbusch of MIT said, "I think anyone who is right on a 25 year outlook either is a lunatic or else is unbearably lucky."

Indeed, the idea of a future that was, in any sense, predictable has often seemed strange to the western mind.[1] After all, the British economist Lord Keynes said, "In the long run, we're all dead" and the classical Greek playwrite Aeschylus said, "You'll know the future when it happens. Until then don't think about it."

Nonetheless, within the last several years, American anxieties about the long term future have begun to mount. More and more American books have appeared which attempt to analyze the long term future. Few of these books, in our opinion, have adequately conceptualized how to do such an analysis. This is not surprising. The last 100 years of American experience make it very difficult to know how to think about the long term future. After all, within the last century, the lives of each new generation of Americans have been totally transformed by radically new technologies, technologies whose existence was unknown to previous generations. Who, in the 19th century, for example, could have predicted television or nuclear weapons? Who, in 1930, could have predicted the transistor? And who, as recently as 1984, could have predicted the existence of high temperature superconductivity? Surely, the future will be heavily influenced, if not determined, by radically new technologies the physics and chemistry of which is unknown today[i]. And, if the natural science of these new technologies is as yet unknown, then, surely, the social and economic implications of these technologies must be equally unknown. In fact, it's almost laughably easy to construct technological scenarios that so change everything as to render forecasting impossible. For example, In The Great Reckoning, 1992, J. D. Davidson and Lord W. Rees-mogg construct the following scenario:

"As unlikely as it may seem, a supercomputer could be possible in a form so tiny that it would fit comfortably in a single human cell. Such molecular computers would make possible the construction of numerically controlled assemblers for manipulating matter at the atomic level - which is known as nanotechnology. ..... Human control over nature at the molecular level implies a new, post-industrial strength magic. Scientists who study nanotechnology believe that within decades self-replicating molecular 'machines' will be able to construct practically any product the heart desires - almost without assistance from human labor. Inanimate objects - from an automobile to a baked Alaska - could be programmed for assembly in much the same way that living organisms are programmed by genetic coding, built cell by cell, or molecule by molecule, from a soup of raw ingredients. Think what that might mean...Those who design nanotechnology will be able to totally control oven physically alter other human beings. Invisible machines, programmed through Artificial Intelligence, could literally force anyone to behave in any way the ...programmer wished. It would no longer be necessary to put a gun to someone's head to force obedience."

The authors use this technological development to forecast "a new feudalism". Their analysis goes like this. In the same way that stirrups and mounted armor allowed landed barons and their knights to "privatize" political and power, so, according to The Great Reckoning, will nanotechnology allow its owners to privatize political power.

A striking scenario, to be sure, but, realistically, how could one even begin to determine when, if ever, such technology will become viable, and what its impact will be when it does? A development like this would foil all previous attempts at prediction. And, of course, one could extend such "techno-fantasizing" forever. One could, for example, postulate an artifical virus that turns all living matter into polystyrene, or a defective "cold fusion" car that blows up the planet when you step on the accelerator, and so on[ii]. The basic point is that, if,

the future = the present + technological surprises which change everything

then, the future is inherently unknowable, since radically new technologies are inherently unknowable. After all, a known + an unknown is also an unknown.

Environmental Unknowns

Another factor that might have enormous and potentially unpredictable effects on all aspects of human life is global environmental change. For example, in the early 20th century, scientists such as Svante Arrhenius, and others, predicted that increases in the atmospheric concentration of carbon dioxide, caused by the industrial revolution, could eventually bring about large changes in the global climate. In the early 1970's, predictions were made that chlorofluorcarbons from spray cans and exhaust from stratospheric passenger jets could eventually cause a reduction in stratospheric ozone and a consequent increase in ultraviolet radiation with damaging health effects. However, up until the mid 1980's, it was assumed that fundamental global environmental change would, if it took place at all, take place gradually, over the course of centuries, or perhaps over the course of generations at worst. This assumption was shattered in 1985 when an enormous hole in the stratospheric ozone layer was discovered over the antarctic. In the next two years it was demonstrated that this hole in the ozone layer was almost certainly due to chloroflurocarbon pollution. Worldwide observations over the next several years showed that the global stratospheric ozone layer worldwide was being depleted at a rate faster than anyone had anticipated, with consequences that have yet to be determined.

In other words, global environmental change, possibly very destructive global environmental change, need not take place gradually, but could come on suddenly and in a totally unexpected way. Therefore, one can never rule out the possibility of a "global environmental surprise" whose repercussions will foil all previous attempts at prediction. And, of course, if one is in a "doomsday mood", it's all to easy to concoct such "world altering" environmental scenarios. Here's an example from The End of Nature, by Bill McKibben:

"Some of the potential feedbacks (of global warming) are so large that they might make us forget someday what caused the original warming. We have already looked at one: the potential release of methane trapped in the tundra and the mud of the sea that would enormously add to the warming blanket around the earth. But methane is a little hard to imagine. It's easier and - and more troubling to me to think about the forest----All told forests, plants and soil (which gives up its carbon more rapidly as trees die) contain something more than 2 trillion tons of carbon, probably more than a third of it in the middle and high latitudes. 'We're working with maybe a million tons that could be mobilized,' says George Woodwell, an ecologist and director of the Woods Hole Research Center. By contrast the atmosphere now contains only 750 billion tons. So even a fairly small change in the forests could substantially increase the amount of carbon in the atmosphere, exacerbating the warming. There are signs - frightening signs - that some of these feedback loops are starting to kick in, that the warm years of the 1980's may be triggering an endless cycle."

One could concoct many examples of such "downward spirals". For example, melting of the polar ice caps could increase the amount of heat absorbed by the earth and thus increase the global warming. A hotter climate could lead to more forest fires which could release more carbon dioxide and thus could increase global warming. Increased ultraviolet radiation from ozone depletion could destroy marine organisms that take down carbon dioxide from the atmosphere and thus could increase global warming, and so on. In fact, anything could happen. (And does happen in the popular environmental literature.) Therefore,

the future = the present + technological surprises which change everything + global environmental surprises which change everything

A known plus two unknowns equals an unknown. The long term future is doubly unpredictable. Worrying about it becomes like worrying about the afterlife. Not the kind of worrying that can form the basis of a rational business plan.

Into an Endless Labyrinth

One attempt to get around this dilemma is to use the scenario approach, in which one asks conditional questions, questions such as: "What will the effect of a longer growing season be on Russian agriculture, assuming that there is a longer growing season?", or "What will the effect of robots with human levels of intelligence on employment be, assuming that such robots are ever developed." One answers these questions with conditional predictions, predictions such as:, "If the average global temperature rise is such and such over the next 50 years, then the economic consequences will be so and so" or "If cheap room temperature superconducting wires become feasible, then the effect on the energy industry will be thus and so", etc.

While the scenario approach might seem like a logical way to analyze the future, in fact it's not. This is because it leads to so many combinations, permutations, and bifurcations, that it ultimately defeats all attempts at analysis.

To illustrate this point, let's look at Prof. Paul Kennedy's book, Preparing for the 21th Century. This book compares the current global situation to the situation in 18th Europe. At that time, Europe was experiencing a population explosion. There were predictions that continued growth of population would eventually result in a "demographic catastrophe" (famines, upheavals, wars, etc.) In fact, this demographic catastrophe was averted by the industrial and agricultural revolutions, which, by vastly increasing economic output, allowed the increased population to be fed and housed. Today, the world as a whole is experiencing a far larger population explosion. In addition (according to Prof. Kennedy) the world is also experiencing two new revolutions; a "new industrial revolution" and a "new agricultural revolution". The new industrial revolution is the use of robotics in manufacturing, and the new agricultural revolution is the use of biotechnology in plant breeding. Will these two revolutions, allow a future "demographic catastrophe" to be avoided? Will they allow a future environmental catastrophe to be avoided?

Prof. Kennedy proceeds by trying to "cover all the bases". What will happen, he asks, if agriculture is replaced by factory production of food? What will happen if manufacturing becomes 100% automated? What will happen to Asia if global warming drastically reduces rice yields? What will happen to Asian rubber growers if in vitro production of rubber becomes a reality? What will happen if the Russian permafrost melts? And so on. The problem with this approach is that it's like trying to play chess by analyzing all possible sequences of chess board configurations. The task it attempts, isn't humanly possible. What then can one expect from the attempt? Obviously this.

"It could be that richer nations with food deficits will embrace the biotech revolution to save foreign exchange on imported agricultural goods, whereas food-surplus countries will restrict the technology out of deference to their farming constituencies. Here, of course, the contrast between Japan's position and that of the United States and Europe could not be more marked. Japan's difficult geography is exactly the sort of terrain that crop biotechnology is designed to enhance, while animal growth hormones would benefit Japan's consumers - now moving towards a meat diet - and contribute to national self sufficiency in food....Such a differentiated response could lead to further tensions over agricultural trade, as food exporting countries like Australia and the United States find that their produce, while needed by developing countries unable to pay for it, is not required by richer nations increasingly able to create their own biotech substitutes at home. Japanese-American relations, already soured by other commercial quarrels, would only worsen if Japan were no longer a major market for American farm exports."

This is an example of what we call the scenario approach. It makes a complicated series of assumptions. It assumes that Japan replaces American farm exports with biotechnology. It assumes that no compensating markets appear in the developing world. It assumes that the Japanese biotechnology industry requires no imports of American goods or services. It assumes that American businesses makes no breakthroughs in biotechnology (as they have in computer technology) which give them an advantage in the Japanese market. And it assumes that no other events materialize to improve Japanese-American relations despite the drop American-Japanese agricultural trade. If you take away the assumptions, you are left with the not very informative statement that, if biotechnology comes to have a significant effect on the composition of Japanese-American trade, it will also have a significant effect on Japanese-American trade relations. Which illustrates another problem with the scenario approach to analyzing the future. The scenario approach tends to lead to a kind of analysis that we call a "reverse anachronism". A "reverse anachronism" is an analysis which projects a complex chain of causes and effects forward into the future, while tacitly assuming that everything else remains constant. The problem, however, is that everything else never remains constant. This is because human history evolves as a totality. There is very little that can be "left to one side".

To illustrate this point further, let's look at another example of a "reverse anachronism":

"Companies in the developed world are investing in new technologies which could greatly harm poor societies, by providing substitutes for millions of jobs in agriculture and industry....If the biotech revolution can make redundant certain forms of farming, the robotics revolution could eliminate many type of assembly and manufacturing jobs...Marvelous though the technologies may be, they neither offer solutions to the global demographic crisis nor bridge the gap between North and South." P. Kennedy, 1993.

In other words, while biotechnology and robotics might have the potential to feed the world's expanding population, they will not actually accomplish this task, because they will make most of the world's people redundant? This statement assumes that people not needed for manufacturing, or for certain types of farming, will, in the future, not be needed for anything. In fact, whatever happens in the future, it's hard to imagine that the task of global economic development for the billions of people in the world, including the production and distribution of goods and services, the construction of infrastructure and housing, the provision of health care services including birth control services, the recycling and disposal of waste, and the restoration of the environment to the extent that it should be necessary, could possibly be accomplished without the efforts of billions of people, even if manufacturing is done by robots, and even if food is produced in factories. It's not going to be carried out by someone sitting at a console. Of course, whether, and to what extent, such global development actually takes place, in what regions of the world, in what manner, and with what effects on the people involved, is more or less the history of the next century, and will be affected by so many factors that one could spend a lifetime just listing them.

This brings us back to our basic dilemma, which is; How does one think about the future, when there are so many variables, and so many interconnections, that any attempt to "reason our way forward" immediately leads us into an endless maze?

In economics, this dilemma is gotten around by means of a device known as a general equilibrium model. A general equilibrium model is a system of mathematical equations which expresses all the interconnections between the relevant variables. What we would really like to have is a general equilibrium model for all of human history. Unfortunately, such a device is about as likely as the prospect of Bill Clinton "growing" the entire world economy by sitting at a console and creating nanotechnological microbes.

History and Prophecy

So where does that leave us? First of all, it leaves us in a position where we just have to accept the fact that, in the future, a technological, or environmental development could emerge that renders all previous predictions pointless. Now, while this state of affairs might seem to make our dilemma insoluble, it actually points the way to a partial solution. The solution we have in mind is this: We will look for as many trends as possible which are as invariant as possible to as wide a range of environmental scenarios as possible and to as wide range of technological scenarios as possible. This will give us a "stable platform" from which to analyze current developments and predict future trends. Our primary goal in this effort, by the way, is not simply to extrapolate from current tendencies, but rather to "see around corners" and to predict future "surprises". We have found, over the past 20 years, that this "stable platform" approach has enabled us to make predictions that are more right than wrong most of the time, and which anticipated many things that people called "surprises".

To begin with, here is an example of a trend that is invariant to a wide range of technological scenarios and wide range of environmental scenarios. It is taken from the World Bank

Development Report of 1991:

"No matter what the outlook in the industrial countries, the world's long-term prosperity and security- by sheer force of numbers - depends on LDC development."

Now this statement might sound like a pious platitude, the kind of pious platitude that is always showing up in World Bank Development Reports, too vague to be of any use in making predictions. On the other hand, it is amazing how many predictions, over the past 20 years, have gone astray precisely on this point. In fact, we can say that the main driving force for change, in the next century, will be the relations between the rich countries and poor countries; the main driving force for change, at present, is the relations between the rich countries and poor countries; and the main driving force for change, over the past 30 years, has been the relations between the rich countries and poor countries.

Now this statement might sound too extreme. However, we will show, in this book, that, not only is this statement true, but that it is also very useful for making predictions. To elucidate a bit, let's quote from our own book, Toward the 21th Century, published in Japan in 1985:

"Here's a helpful way of thinking about the long term future, Suppose you are walking down a path and you want to see into the distance. What can you do? Well, you can go up. You can climb to the top of a tree, say, or go upward in a balloon or helicopter. The further up you are, the further ahead you are able to see. Suppose, now, that we could look at human society in a glance as though it were a landscape. Suppose that we were to get into an imaginary spaceship and go upward ten to twenty thousand miles from the earth and then look at human society as it distributes itself over the surface of the earth. What would we see? We would see islands of overdevelopment surrounded by a sea of underdevelopment! We would see a small minority of the earth's population living in developed, industrial societies, with mechanical means of production, mechanical means of transportation, electronic and mechanical means of communication, with a relatively high standard of living, a long life expectancy and a low infant mortality rate. And then we would see the majority of human beings on the planet living in societies that we would call underdeveloped, societies with high infant mortality rates, with an enormous amount of poverty and in some cases with outright famine and starvation. In fact, if one looks at human society as a whole from a global point of view, one comes to the conclusions that human society as a whole is in a chronic state of underdevelopment.

Now in fact this image of human society from outer space gives one a great deal of information about the long term future. It gives one a great deal of information about what future economic problems and opportunities are going to be like. It gives one a great deal of information about future trends not only in economics finance and politics but also in art, fashion and culture. In other words, we will show that this mental image of human society as seen from outer space is a good place to start in evaluating the future.

For the moment, let's address the present. Certainly this image of the planet as islands of overdevelopment in a sea of underdevelopment, this image of the planet as composed of a developed section and an underdeveloped section, a rich section and a poor section, might seem rather remote from the mind of the average middle class American.

Not so! On a subconscious level, the average American is intensely aware of this mental image and is in fact intensely disturbed by it. In fact, over the course of the last decade, this sub-conscious image in the American psyche of the gap between the rich and poor sections of the planet has been the driving force behind most of the political developments that have taken place in the United States. In this book, we will show many of the issues and fashions in the United States over the past ten years such as neo-conservatism, supply side economics, Reaganism, protectionism, the so-called 'Black/Jewish' conflict, Christian fundamentalism, yuppy-ism, drugs, terrorism, all of these disparate issues are at root nothing other than the so-called 'North/South' problem in disguise.

More generally, looking at the details of any particular political trend or movement gives one a lot of information about the overall structure of human society and, conversely, looking at the overall structure of human society gives one a great deal of new perspective on the details of any particular political trend or movement.

Let's take an example of this from American political life. Certainly everyone is aware of the enormous and voluminous press coverage given to the Arab/Israeli dispute. And certainly almost everybody has wondered why a dispute between the Israelis and the Palestinians, who together comprise a very small percentage of the world's population, should command so much of the world's attention.

Of course, the obvious explanation is that the holy land, Palestine/Israel was the origin of the West's Judeo-Christian heritage and thus would always command the world's attention for symbolic reasons. This explanation, while not false, does not in fact really explain the phenomenon. It does not, for example, explain why the Japanese and Asians are so concerned with this issue, or why this issue is so much more continuously 'on people's minds' than it was in the past. Our mental image of human society gives us the explanation.

The reason why the Arab/Israel dispute has such emotional and symbolic resonance is that it represents in microcosm the cleavage between the developed and underdeveloped areas of the world, the so-called 'North/South gap'. Since 1967, in particular, the Palestinians have become symbolic of Third World aspirations as a whole and the Jews and Israelis have become symbolic of the aspirations of the West as a whole.

When the Palestinian cause is seen to be gaining favor, this is seen as an 'omen' or 'portent' that the Third World as a whole is gaining in status and importance, and that the concerns of its populations will have a greater importance in the future.

Conversely, when the Israeli cause seems to be gaining favor (as after the Achille Lauro incident in '85) this is seen as an 'omen' that the population of the Third World are marginal to the West's long term future.

Thus, the Arab/Israeli dispute is followed anxiously and nervously by many people all over the world because it represents 'portent' of 'where the world is headed'.

So, to reiterate what we are saying, an intense, possibly subconscious, awareness of the North-South divide lies at the root of most of the issues, trends and fashions in American public life today. Many examples of this fact can be given. Let's take one such example and look at Christian Fundamentalism from this perspective.

A while ago there was a lady on the MacNeil/Lehrer show who was objecting to 'secular humanist' books in school libraries. Her basic objection to secular humanism was that if 'Buddha, Mohammed, Christ and Moses were all just religious leaders and all the same' then 'wouldn't those people out there want to come here and take what we have?' In other words, if you accept secular humanism, then how do you justify the gap between 'them' and 'us'. To continue with this example, back in 1984, after Reagan gave a (for him) pro-UN speech advocating more funding for Third World loans, the TV fundamentalist preacher Jimmy Swaggart gave a sermon in which he said, 'The Devil has entered the White House'.

Many other examples will be given in future chapters of disparate issues such as drugs, trade, population, the environment, contras and others in which the underlying issues is the relations between the rich and poor areas of the planet.

Let's go back to our overall mental image of human society as islands of overdevelopment in a sea of underdevelopment. Let's add on another dimension, the time dimension.

What is the time dimension of human society as seen from a great distance? To get this time dimension, let's go back not just ten or twenty years, but two hundred years to the beginnings of industrial capitalism in England. Industrial capitalism had its origins in the textile industry in England. It then spread to other sectors of the economy such as mining, metals, railroads and agriculture. It then spread from beyond its origins in England to other areas of the world. It spread to Europe. It spread to the United States. It spread to Australia. It spread to some regions and sectors of the less developed countries.

So, to oversimplify enormously, the time dimension of our mental image of human society is the spread of industrial capitalism from its origins in the textile industry in England into more and more geographical areas of the earth and into more and more sectors of human activity.

Now let's put the space dimension and the time dimension together to complete our mental image of human society. To do this, pretend that we get into our mental spaceship and go ten thousand miles from earth to look at human society from a great distance. Pretend, furthermore, that an alien astronaut approaches us, points to the earth and says, 'Tell me what's going on down there. What are those billions of human beings doing? And be brief. Tell me in one page.' Here's what our answer would sound like:

The global system of industrial capitalism is trying to expand from its base in the developed economies into the less developed areas of the world. For the past 20 years, the capitalist world economy has been trying to expand into the LDC's and has been constantly running against two barriers to this expansion, namely agricultural and social backwardness in the LDC's and anti-Third World sentiment in the developed economies. The various crises and difficulties of the past 20 years, the oil shock, the LDC debt crisis, the Iranian upheaval, the problems in the Middle East are all due to the shock waves generated by the turbulent expansion of the capitalist system into the less developed areas of the world.

In other words, the various blockages to sustainable development which have historically afflicted the 'peripheral' less developed economies are afflicting the world economy as a whole, creating a global economic crisis of stagnation whose main effects are in the less developed areas of the world, but which none the less has important repercussions in the developed economies as well."

We will discuss these issues in more detail in later chapters. In this chapter, however, we will continue to play "the devil's advocate" and will stress the difficulties involved in predicting future trends. Take, for example, the problem of analyzing the future of a poor, underdeveloped country. Of course, it's easy enough to say that poverty and discontent can lead to violence and upheaval. On the other hand, poverty and discontent can also lead to ingenuity and resourcefulness. Ingenuity and resourcefulness, under the right circumstances, can lead to economic development; and economic development, after all, consists of millions of individual decisions, many of them ingenious and many of them inspired, arrived at by millions of individual people, decisions which cannot possibly be second guessed in advance. And, if we cannot predict human resourcefulness in advance, then how can we possibly predict economic development in advance? And if things are complicated in a single country, then how can they be anything less than a thousand times more complicated for the world as a whole, where we have to take into account all the ideas and inspirations that can come from billions of minds?

And, if this isn't bad enough, what about the role of chance and accident in shaping the future? The Islamic Fundamentalists , for example, believe that chance was the most important factor in human history.

"The (Ummayad) coup d' etat which changed the nature of power (from Islamic to non-Islamic) was the result of an unfortunate chance, if (the Caliph) Ali had arrived sooner all of history would have been different." S. Qutb, 1949.

While this is not the place to get into a long metaphysical discussion on the role of chance in human affairs, it is certainly reasonable to assume that chance and accident do play an important role in shaping history, and, furthermore, they play a role which is potentially decisive, a role not confined merely to random deviations from some sort of a trend. For example, in the spring of 1993, The National Interest devoted a special edition to the death of communism. The main question addressed in this edition was why, with all the scholarly effort devoted to the Soviet Union and communism since the beginning of the cold war, did no one even come close to predicting that communism and the Soviet Union would utterly collapse within a period of three years. The main conclusion reached by many of the authors was that there was a large element of chance in the collapse of the Soviet Union. Specifically, had someone other than Gorbachev succeeded to Chernenko as leader of the Soviet Union in 1985, the Soviet Union could have survived for decades, or possibly for a good deal longer.

"As chance would have it, the 1985 succession brought to office an aberrant figure whose course toward revolution...was not forced on him by an aroused society or by compelling circumstances; it stemmed from his highly individual perceptions and experimental bent, his openness to the ideas of intellectuals..and the erosion of his commitment to Marxist-Leninist ideology and the Stalinist institutions to which it had given rise. The Soviet system of cadres selection was designed to prevent leaders with such political characteristics from advancing in it. That Gorbachev nevertheless rose to its summit, winning the office that enabled him to command the Party's vast personnel and resources, was due to a series of fortunate events that borders on the providential." M. Rush, 1993

 

The historic events now taking place in the eastern bloc countries, the dramatic shift in the global balance of power, the opening of a vast new region to outside investment, the change in the global nuclear threat, the sudden fragmentation in political authority and the radical economic changes in over one sixth of the earth's land area, all these things are having an enormous effect on world politica as a whole. The Gulf war, the war in the Balkans, the European monetary crisis, the conflict between the US and Israel over the settlements, the ending of 12 years of Republican Presidential rule are all related, in some way, to the collapse of communism and the ending of the cold war. Since many of these events were surprising when they took place, a general impression seems to have arisen that world politics as a whole is "chaotic" and unpredictable. This has led to a new "world view", expressed by such books as Out of Control by Zbigniew Brzezinski, and Pandemonium by Senator Daniel Patrick Moynihan, that chaos, chance and political fragmentation are now the order of the day.

This alone would seem to pose insuperable difficulties for prediction.

Nonetheless, we still maintain (and will demonstrate in this book) that these difficulties can be partially overcome. We say this because, despite the inherent unpredictability of human behavior, historical tendencies and processes do exist which have a great deal of "historical inertia". Structural patterns in global society do exist which persist over very long periods of time.

Although E. L. Jones (1994) (in our opinion) overstates the case when he conjectures that "world affairs behave as if propelled by a mixture of deterministic processes, to which we may find some clues by careful analysis, and stochastic (random) ones that are likely to wrench the entire system off course from time to time", nonetheless, we agree that it can be useful to act as though this were true, because it is the search for such historical "deterministic processes" that will enable us to build a "stable conceptual platform", from which to analyze the future for a span of 10 years to 40 years forward.

Our goal in short is to use historical "deterministic processes" in order to predict and analyze future "surprises". Now this might seem like a confusing and contradictory metaphor, so let's explain it.

Historical processes are usually discussed with reference to:

(1) linear trends, i.e. as time passes, technological capabilities and scientific knowledge advance, economic output increases, etc.;

(2) cyclical patterns of a repeating nature, i.e. the rise and fall of dynasties, the "swing of the pendulum" from conservative to liberal, liberal to conservative, and so on; and

 

 

(3) turning points and surprises of the "this changes everything" variety; i.e. the OPEC price rises of the 70's and the fall of communism in 1989 - 1991.

Historical analyses have been used to extrapolate linear trends in order to provide future prognoses. For example: "technological advances have propelled economic growth in the West for the last 200 years and so they will for the next 200 years." Analyses of cyclical patterns in history have been used to provide "lessons of history" which supposedly shed light on current conditions. For example: "Spain declined when it spent too much on the military, and England declined when it spent too much on the military, and now it's America's turn to decline because it spent too much on the military." or "hyperinflation in the Weimar republic led to a fascist takeover and so it will in Russia." However, in analyzing an extreme "discontinuity", such as, for example, the fall of communism, there is a tendency to assume that historical reasoning is of little use, that the effect of the past has been overwhelmed. After the end of the cold war in 1989, for example, there was even talk of the "end of history" (F. Fukuyama, 1989). The point that we want to stress, however, is that it is precisely when such a historical "discontinuity" occurs that historical analysis is most useful in projecting future trends. This is because the same historical "equations of motion" which, at certain times, can produce gradual linear change, can also ,at other times, lead to sudden, drastic, surprising and seemingly discontinuous change, change which can cause conventional forecasting methods, based on some form of linear extrapolation, to "go haywire". To give a physical analogy, let's look at gravitational motion in a vacuum. The same gravitational equations of motion, which cause planets, comets, and asteroids to move in a smooth and predictable way, can also cause asteroids to "tumble" in an erratic, chaotic and seemingly random way.

It's important to stress here that we use terms like "equations of motion" or "linear trend" simply as metaphors. We have no intention of reproducing a fallacy known as historicism (See H. Meyerhoff, 1959), the attempt to divine the underlying causes of history. Our aim here is not to divine the underlying causes of history, but simply to gain enough historical intuition; to enable us, not merely to extrapolate from current trends, but also, as much as possible, to "see around corners", and to predict "surprises" in a way which is useful.

Before finishing this chapter, we would like to deal with yet another potential objection to our approach, which is: Why can't one worry about the future without attempting to predict it? Why can't one simply strive to stay as flexible as possible and to be prepared for any contingency? To answer this objection, we will again quote from ourselves:

"Why not just forget about the long term future, say that it is unknowable, and make no assumptions whatsoever about it, simply stay flexible and 'be prepared for anything'? Indeed, that seems to be a recent approach to managing investments and business, make no assumptions about the future and be prepared for anything.

There are two fallacies with that point of view. First of all everyone, whether they know it or now, makes assumptions about the future. Everyone is born into a certain culture and has certain cultural predispositions which include strongly held beliefs about how the world should work; assumptions which in many cases operate on a subconscious level. So you can tell yourself a thousand times over that you are prepared for anything and that you are not going to be surprised by whatever happens, but the fact is that when the future unfolds you are still going to be surprised and disoriented because one or another of your unconscious assumptions has been challenged.

It is only by an analysis of the overall structure of human society on a global scale that one can free oneself from unconscious and inaccurate assumptions about the future. One of the reasons for the failure of the econometric forecasting models in recent years is that many of them were constructed with inaccurate basic assumptions, assumptions which arose from the cultural biases of the model builders.

But there is another thing wrong with the attitude that says, 'Forget about the long term. Let's just concentrate on the short term.' The long term and the short term are interlinked. Each of the economic and political crises of the last twenty years, the oil shocks, the inflation crises, the exchange rate crises, the protectionist crises, the Third World debt crisis, the Israeli invasion of Lebanon, the American budget and deficit crises, the Iranian upheaval, are intimately interlinked with the overall long term trends in the global political economy. Each of these local crises contains within it a great deal of information about the overall direction of the global political economy and conversely each of them is actually incomprehensible unless one analyzes and understands overall global political and economic trends.

Let's look at an analogy to explain this, Let's compare long term trends to the motion of tectonic plates in geology and short term crises and upheavals to the rumblings and earthquakes produced when the tectonic plates rub up against each other. Obviously, it's going to take a long time for California, say, to separate itself from the American mainland (and if human beings invent some way of controlling the motion of tectonic plates, then maybe it never will) but the process of its doing so is very likely to have very critical short term consequences at some point. The analysis of the long term trends whether or not these trends actually work themselves out in the future is critical to understanding the short term crises and upheavals. One has to know the long term in order to understand the short term." Toward the 21th Century, CFG, 1985

 

 

We conclude this chapter with an outline of the book. In chapters 2, 3, 4, and 5, we will analyze and predict overall socioeconomic and political global trends. In these chapters, we will not make any speculations about future technologies or about future global environmental changes. We will not speculate, for example, about the political and moral implications of transplanting a brain from one body to another, or about what will happen if all the world's land masses turn into deserts. When, and if, such things come to pass, so much else will have changed, that predictions made now would have little relevance. Instead, the methods of analysis we will use will be confined to history, geography, economics and political science. In chapters 6 and 7, we will discuss some widely (although not universally) accepted technological and environmental prognoses, and will analyze their potential impact on the general trends discussed in the earlier chapters.

Chapters 2 and 4 will deal with economics. Our goal will be to see what economics has to say about future patterns of global economic growth. Briefly, in the future, this growth is likely to come from two sources; new technologies and new markets. Therefore, in chapter 2, we will discuss economic theories of technological change, and, in chapter 4, we will discuss economic theories of those regions of the world that will likely constitute the "new markets"; namely the less developed countries and the Eastern bloc countries.

To be more precise, in chapter 2, we will discuss an area of economics known as the new growth theories. The new growth theories, developed in the 1980's, investigate the economics of knowledge, skills, ideas, information, technological advance. These theories were developed in response to the economic events of the last 20 years, and might not be familiar to the average reader of the business and financial press. They are also, controversial, highly technical and not that easy to describe in simple English. However, they are important because much of the economic growth in the recent past has come (and much of the economic growth in the future is likely to come) from the production and exchange of intangible factors such as knowlege, skills, technologies, ideas and information. As Peter Drucker, (1993) says;

"How knowledge behaves as an economic resource we do not fully understand. We have not had enough experience to formulate a theory and to test it. We can only say so far that we need such a theory. Such a theory alone can explain the present economy....So far there are no signs of an Adam Smith or David Ricardo of knowledge. But the first studies of the economic behavior of knowledge have begun to appear."

It is these first studies that we will be concerned with in chapter 2. These first studies are controversial, and there is an essential reason for this controversy. Namely, how is it possible to construct an purely economic theory of knowledge when knowledge depends as much on the laws of physics, chemistry, geology and biology as it does on the laws of economics? In other words, as J. Stiglitz (1990) says, "can one really explain by economic models, the discovery of the transistor, or the laser, or the host of other breakthroughs of the last century?" We will discuss this difficulty further in chapter 2. For the moment, let's leave it to one side, and assume, for example, that knowledge means knowledge based on physical science that is already known. It means incremental improvements, incremental innovations and incremental adjustments to a currently existing base of technology, rather than a radically new, currently inconceivable, technology that could hardly be predicted by an economic theory.

In describing the new growth theories, the Economist (1991) says "economists are developing plausible theories that give technical progess its due weight ". In fact, modern economic growth theories have always given technical progess its due weight. The problem is that economics prides itself on being the most scientific of the social sciences. It tries, to the greatest extent possible, to confine itself to the study of phenomena that are quantifiable and measurable, and to frame its conclusions in ways that are empirically testable. Economics usually treats intangible factors, such as technology, skills, ideas or knowledge in the same way as it would treat, for example, "culture" or "mass psychology"; i.e. as factors which obviously influence economic growth, but which are not themselves explainable by economic laws.

Clearly, however, when technology and knowledge have themselves become economic commodities, then economics has to accept them into its domain of study. In doing this, economics has two choices. It can either confine itself to purely qualitative descriptions (along the lines, say, of J. Schumpeter, 1934). Or it can try to develop mathematical, empirically testable, theories, as was done by the new growth theories in the 1980's.

The achievement of the new growth theories is not simply the realization that knowledge and technical progress are very important sources of economic growth. It is rather the attempt to quantify the importance of these sources and to explain their role by means of mathematical equations which are empirically testable.

Thus, it is very difficult to explain the nature or significance of modern economic growth theories without recourse to mathematics. This is why there are so few explanations of these theories in the business and financial press. In chapter 2 of this book, we provide a survey of these theories which is 98% English. Our survey can be followed by anyone who remembers their high school algebra or who has taken a quantitative business course in college. For those who have more mathematical background, (who have an MBA for example) we provide copious notes and references.

There are also many factors in economic development, (political, institutional, and social factors, etc.), which are impossible to quantify. No mathematical theory, however ingenious, can possibly capture them all.

In order to analyze these non-quantifiable factors, we will examine the the very, very long term historical development of global society. Why the very, very long term historical development? Because, in order to analyze the future, it is not enough simply to know the present or the immediate past. The evolution of world society depends on its entire past history. To paraphrase P. Anderson (1974), a society's past lies behind it, but, in many cases, a society's past also lies in front of it. Anybody who reads the newspapers knows how often the past, even the distant past, will reemerge to play an important role in the present. In other words, (to paraphrase E. L. Jones (1994)), we will need "a very long runway" for even our relatively short "flight into the future".

Our "runway" will start in the middle of the last millennium, when most of the societies that comprise the modern world were already in existence.

"In a primitive cross section, taken about the year 775, ..... the area of (Western Society) is almost restricted to what were then the dominions of Charlemagne together with the English 'successor states' of the Roman Empire in Britain. Outside these limits, almost all of the Iberian Peninsula belongs at this date to the domain of Muslim Arab Caliphate....Let us call.. (Western society).. Western Christendom; and, as soon as bring our mental image of it into focus by finding a name for it, the images of its counterparts in the contemporary world come into focus side by side with it, especially if we keep out attention fixed on the cultural plane. On this plane, we can distinguish, unmistakably, the presence in the world today of at least four other living societies .....:

(i) an Orthodox Christian society in South-Eastern Europe and Russia;

(ii) an Islamic society with its focus in the arid zone which stretches diagonally across North Africa and the Middle East from the Atlantic to the outer face of the Great Wall of China;

(iii) a Hindu society in the tropical sub-continent of India;

(iv) a Far Eastern society in the sub-tropical and temperate regions between the arid zones and the Pacific...It is interesting to note that when we turn back to .... 775AD, we find that the number and identity of the societies on the world map are nearly the same as at the present time. Substantially the world map of societies . has remained constant since the first emergence of ...Western Society. In the struggle for existence, the West has driven its contemporaries to the wall and entangled them in the meshes of its economic and political ascendancy, but it has not yet disarmed them of their distinctive cultures." A. Toynbee, 1959.

The West, the Islamic world, and Byzantine civilization all developed out of the wreckage of the Roman empire. While it is probably stretching it a bit to say that contemporary Russia is a descendent of Byzantium, if we make that connection, we can then say that all the societies of the contemporary world, the developed societies of the West, the transforming societies of the East and the underdeveloped societies of the south, were, from a cultural point of view, already in existence, or emerging, as far back the 8th century AD. At that time, a sort of "critical mass" of knowledge and capabilities seems to have built up in world society, so that the succeeding 1000 year period was to see a series of rapid and explosive advances in different parts of the world successively, the last and most significant of which was the European industrial revolution.

In chapter 3, we will survey the history of the various regions of the world, and the history of their interactions, in order to project the basic, overall global trends that will constitute our "stable platform".

In chapter 5, we will describe, in detail, how, for the past 13 years, the day to day and month to month political and economic changes in this country, and around the world were, to a greater extent than you might have thought possible, and to a greater extent than any time previously, "generated" and "driven" by the overall, long term historical trends outlined in chapter 3. In chapter 6, we will extend this analysis to forecast the medium and long term future.

A word about references. As you will notice, this book is based on an enormous number of references. Each chapter, however, has several main references. These main references were chosen, not necessarily because we agree with their conclusions, but because the authors of these references have the courage (some would say chutzbah) to deal with the very broad topics that this book is concerned with, and because we believe that their expositions are very good. For chapter 1, the main reference was by historian Paul Kennedy. For chapter 2 the main references are by economists Kenneth Arrow, Robert Lucas, Paul Romer and Robert Solow. For chapter 3, the main references are by historians Samir Amin, Perry Anderson, economist P. T Bauer, and historians Marc Bloch, E. L. Jones and David Landes. For chapter 5, the main references are by Zbigniew Bzrezinksi, political scientist David Calleo, supply side economist Lawrence Lindsay and Paul Volcker.

Books about the long term future usually begin with a disclaimer, something along the lines of "this book is not about prophecy but about the changes that must be made if humankind is to confront the awesome challenges.,...etc.,etc.".

For our part, however, we wish to state, by way of disclaimer, that prophecy is exactly what this book is about, in the sense that we are interested, not in advocacy, but in making predictions that are useful, non-obvious, and more right than wrong, most of the time.

HOW TO THINK ABOUT THE FUTURE

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[1]At least it has often seemed strange to the pagan and secular western mind if not always to the Christian western mind.

Although obviously not to all.

The Abbassid Caliphate, the Song dynasty, Tokugawa Japan, and Western Europe.

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Surely, (as much as science has progressed within the last century), there are many facts of nature which remain unknown. The so-called theories of everything are not really theories of all possible natural phenomena but theories of elementary particles, which are the fundamental building blocks of "everything".

Actually, The Great Reckoning is a very cogent analysis of the current economic climate. It has already made a great many very impressive economic and financial predictions, but it has done this primarily by historical comparisons of market behavior throughout the centuries and not by technology forecasting.

At the time of the signing of the Montreal CFC reduction treaty in 1987, it was projected there would be a global average ozone loss of around 2% by the middle of the 21th century. Later studies in the late 1980's revealed that an ozone loss greater than this had already occurred. See R. E. Benedick, 1991.

In fact, many technologies replace labor. Modern plumbing replaces water carriers. Computers replace figure clerks. If a technology is productive, and not environmentally destructive, then it can't do anything but make global development more likely, not less. There are plenty of uses for labor that is freed up by more productive technology. Of course, in many cases, technology can lead to social upheaval. The civil wars in Central America were intensified by landlessness caused by the mechanization of agriculture. On the other hand, history is full of violent agrarian conflict that had nothing to do with the mechanization of agriculture.

Unless, of course, the nanotechnology described by Rees-Mogg and Davies above becomes a reality. Then maybe all 10 billion of us can retire.

With or without biotechnology and robotics, there are many obstacles to development in the underdeveloped countries. We cannot assume, however, that the underdeveloped countries have to follow the same development path as the Asian "tigers", namely low wage manufactured exports to the markets of the developed countries, or that a large population makes development impossible in the absence of labor intensive agriculture. Such an assumption is a "reverse anachronism". A better way to state Kennedy's point would be to say, "an astonishingly large and increasing number of human beings are not needed or wanted to make the goods or to provide the services that the paying customers of the world can afford", which is simply another way of sayng that most of the world's people live in the underdeveloped parts of the world. As R. J. Barnet says, even if all production is automated, "there is a colossal amount of work waiting to be done by human beings". Global economic development would, in fact, constitute the doing of such work.

"'North/South issues' are issues relating to the relations between the developed and the underdeveloped areas of the world. The Iranian revolution and the oil price shocks of the 70's brought these issues into the awareness of the U.S. public but there was a tremendous disinclination to discuss these issues in a systematic way and they remained in the 'subconscious' of the American political climate in the early and mid-80's finding their way in a symbolic form into movies, fashion, cults, and religious and ethnic politics. One of the big reasons for Reagan's popularity is that he was seen as a 'Third World basher'." Toward the 21th Century, Cambridge Forecast Group, Tokyo, 1985.

This is a very common feature of nonlinear dynamical systems, namely a phenomenon of 'scaling' or 'self-similarity' in which the structure of the system as a whole is reflected in any of the details no matter how microscopic, and conversely, each of the details no matter how microscopic can be 'decoded' or 'transformed' into the structure as a whole. (D. Campbell, 1987).

 

Quote taken from S. Amin, 1990.

This "chaos theory of history" is overblown. For example, we ourselves predicted, in early 1990, that there would be an intense conflict between the US and Israel over settlements, a conflict which might end George Bush's Presidency, and that there might be a Persian Gulf crisis, possibly an upheaval in Iraq. However, we were as flabbergasted as anybody when Saddam Hussein invaded Kuwait. Obviously, the decisions of individual leaders are not totally predictable.

A "stochastic process" such as a nuclear holocaust could throw the entire system off course permanently, and a completely "deterministic" future deterioration in the global environment could completely determine all future human history (end it) and still be totally unanalyzable at the present juncdture with the current state of scientific knowledge.

Beyond this time span, the factors of human unpredictability, chance, technical change, (and possibly global environmental change) will inevitably come to the fore, and any attempt to analyze them from the present vantage point would simply be science fiction.

Of course, if some all-embracing, world shaking event occurs which originates from outside of human society, say some revolutionary new technical innovation based on some totally unexpected facts of nature, or some totally unanticipated global environmental disaster, or the arrival of visitors from another galaxy, or the collision of the earth with a large comet, etc; then historical analysis would be of little use. For example, the effect on Russian society of the Tunguska meteor, which slammed into Russia in 1908, had very little to do with the history of Russian society and everything to do with where the meteor landed (in an unpopulated area).

This is why we put the term "deterministic processes" in quotes.

To some extent, we agree with G. Vico's obervation (1725) that, "the world of civil society has certainly been made by men, and its principles are therefore to be found to be within the modifications of our own human mind. Whoever, reflects on this cannot but marvel that the philosophers should have bent all their energies to the study of the world of nature, which, since God made it, He alone knows; and that they should have neglected the study of the world of nations or civil world, which, since men made it, men could hope to know." Of course, Vico was totally wrong about the of ability of 18th century scientists to uncover the mysteries of nature. The mysteries of human historical evolution turned out to be far more complicated than the mysteries of nature. However, at this point in time, he is right in this limited sense: that if one is interested in prediction, an analysis of socioeconomic, political and historical trends is far more productive than speculating about future technological and environmental "discontinuities" (facts of nature) which, while not necessarily unknowable, are not yet known.

By mass psychology we mean "irrational mass psychology" and not "rational decision making under uncertainly", or the market fluctuations caused by everybody trying to second quess everybody else's decisions (so called "sunspot equilibria").

The extent to which these attempts have succeeded is still a matter of intense controversy. Most economists agree that they "ask the right questions".

Fortunately, many of the founders of modern growth theory are excellent writers, and parts of their work can be profitably read by anyone with a quantitative MBA.

S. P. Huntington (1993) maintains that many of the world's future conflicts will occur on the "fault lines" between the world various civilizations (what Toynbee called "societies"). Perhaps the Gulf war can be seen in this light. When the news of the Mongol invasion of the Middle East reached Western Europe in the 13th century, many Europeans thought that an army of Asian Christians led by King David had come to join the West in its conflict with the Muslims. The invasions of Baghdad by the Mongol leaders IlKhan in the 13th century and Timur at the beginning of the 15th century were particularly genocidal and destructive. Shortly after the beginning of the gulf war, President Bush received Mongolian President Punsalmaagiyn Ochirbat in the White House. President Ochirbat told Bush that the United States and Mongolia shared something. They had both made war on Baghdad. One can speculate that the the timing of this meeting, was a form of "civilizational" psychological warfare against Iraq. (New York Times, January 24, 1991).

The Frankish empire in western Europe devolved into European feudalism. The Japanese state created by the Taiko reforms of 646AD devolved into Japanese feudalism. Today's "Eastern Bloc" arose from a synthesis of Byzantine, Western European and nomadic steppe societies.