Predicting The Coming Quarter Century

Tuesday, 6 December 2022, 1:41 pm
Article: Keith Rankin

On 29 October 2022, the New Zealand Listener published 10 Billion reasons to be cheerful, an article by Greg Dixon summarising "futurologist" Hamish McRae's 2022 book The World in 2050: How to think about the future. (Note also the accompanying article, A blast from the past; and the letters responses.) The headline was somewhat worrying; I am sure many readers would have wanted there to be rather fewer than ten billion reasons for McRae's optimism. Dixon's article incongruously followed an editorial by Nigel Roberts, Back on the Brink, with the following highlighted "In 1962, I didn't think the missile crisis would result in a nuclear war. Of today's crisis I'm not so sure". In addition to the Listener story, McRae gave this interview on RNZ (4 October 2022): The World in 2050: How to Think About the Future.

An important bit of context is that Hamish McRae had in 1994 published The World in 2020, in which he seems to have got many predictions correct (though not the coming significance of the internet, and social media). It should be noted that McRae's focus was as a business and economic futurist, in the context of a world economy made up of 'countries', rather than a global economy of 'people'. Thus, the achievement of having lifted many people out of poverty is based essentially on the economic success of nations (in the conventional sense of per capita average incomes) rather than of people, with the supposition that the success of a country translates to the success of its people.

A contrary point of view would point to the appalling day-to-day air quality in cities such as Beijing, New Delhi, Lahore, and many other large but smaller and less well known cities. At best, the success of 2020 vis-à-vis 1990 is that environmental poverty has displaced income poverty. Taking a more realistic view of the world in just before 2020, when looking at matters of inequality and debt entrapment within nations, not all was as rosy in 2019 as he perceived, in McRae's improved middle-class world.

Nicolai Kondratiev

Helpful to thinking about future history in quarter-centennial chunks, is the (fate of, and speculations of) Russian historical economist Nicolai Kondratiev (1892-1938). Kondratiev was murdered by Josef Stalin, it is said, because he believed that the 1930s' crisis of western capitalism (the Great Depression), would be temporary; the west would eventually recover. More important for us is that Kondratiev in the early 1920s had predicted the great 1930s' crisis of western capitalism; a crisis which, if we include World War 2 (as we should), can be argued to have lasted from 1926 to 1946.

Kondratiev is best known for his long wave hypothesis, which suggested there has been a fifty-year economic cycle characterised by alternating downswings and upswings. That would mean, in each century, there would be two of each type of cyclical 'swing'. (Kondratiev's work was taken up by Joseph Schumpeter – mentioned in my 30 November essay How do Left-Wing Elites Make their Money? – in his 1939 tome Business Cycles.)

Conveniently perhaps, the century years may be cusp years for this cycle, or at least for our thinking about it. Thus, possibly back to the sixteenth century (or before), we can consider world history (or, realistically, European history given the hegemony of Europe over the world from that century) in 25-year chunks. For each century, the first quarter-century was one of optimism and progress, albeit laced with large doses of inter-kingdom violence. The second quarter-century would be a period marked by deep crisis; crises which would bring about profound change, including significant technological and intellectual advances. The third quarter would be much like the first (another upswing), though probably not as violent. And the fourth, a downswing like the second, but not as revolutionary.

From my point-of-view as a political economist with an interest in economic crises, we may see the core decades of socio-economic crisis as the 'thirties' and the 'eighties'. (In that context, we may understand the history of New Zealand becoming the country it is today as being rooted in the 1830s, a decade most definitely not associated with the expansion of empire, hence the reluctance of the British crown to take us on; and certainly the then reluctance of the British Treasury to commit money to the cause of what would later come to be seen as the 'Britain of the South'.)

So, my prediction – in line with Kondratiev – is that the 2030s in particular will represent a turning point for humanity; a kind of prediction that Hamish McRae's methodology restricts him from making. (Turning points are notoriously hard to predict, but the hardest part is to predict the 'what', then the 'when'; the 'whether' is comparatively easy to forecast.) Probably the 'what' will not become apparent until around 2050. The nuclear-risk notwithstanding, my sense is that we are looking at an implosive rather than an explosive crisis.

If the post-crisis world-orders are not clarified until the end of each crisis period (eg 1850, 1950, 2050), then the Kondratiev crises themselves have usually been clearly signalled – in bits – in the early 'twenties' of each century (and also in the 'seventies' of each century). We have had enough rumblings just in the last three years – indeed a 'perfect storm' of pre-shocks – to suggest that the future will not be a predictable extension of the past.

While Kondratiev 'cycles' should not be treated as in any way deterministic, or even that any historical turning point will happen on cue, they are useful as a way of warning us that the medium-term future will most likely not be a case of the 'linear progress' as suggested by McRae's form of 'futurology'.

Hamish McRae

One point to note is that Hamish McRae belongs to what I call here the 'Pollyanna generation', born 1935 to 1945. The progressive gains of the twentieth century fell into their laps (especially the post-depression post-war socio-economic reforms established by their parents' and grandparents' generations); then that generation largely dismantled those reforms. (We may note here David Thomson's 1989 book Selfish Generations?, in which he argues that the twentieth century welfare state had its own implicit sunset clause. And note this review in the Social Policy Journal of New Zealand, by Ann Reeves.)

McRae is a socio-technological optimist who sees the wellbeing of peoples as closely tied to the economic success of the nation states they belong to (and presumably hold allegiance to). In that sense, I feel that the underlying globalisation of the 1990s and 2000s – with its detachment of many people from their nation states, the creation of an effective global citizenry (English-speaking; though, for most, not as their first language) – has not been well understood. It means that the present phase of the reassertion of nation states is much more fraught than he understands. Far from being the vehicles for beneficent growth, nation states and their rigid rules-based structures are becoming barriers to non-elite human development.

Despite his emphasis on nation states, McRae uses the word 'we' a lot. I heard the same use of 'we' a lot in the third episode of Brave New Zealand World (on artificial intelligence). The 'we' in these contexts, I understand to be 'humanity' (as a single collective). But it really means 'elite humanity', with the sense of each nation being a different delivery system for national elites cloned from a supra-national 'liberal' template; a template highly infused with the largely outdated western 'progressive' assumptions of the Pollyanna generation. These values of economic growth are not the values of today's progressive young.

An interesting quote from McRae in the Listener article is: "[One of] the two most important of these [technological challenges] will be productivity in the service sector." He is thinking firstly about productivity in services such as health, education, and journalism; this is the techno-visionary utopian view that forever-improving high-tech will raise life expectancy (due to more and better medical interventions), will create more and better 'human capital', and will enable 'us all' to be better informed. (My guess is that we will see retrogression on those laudable outcomes; technology in those industries can also have retrograde consequences.)

But what about the other service industries? In my Using the Sex Industry to Critique Textbook Economics, I looked at 'personal services', with the sex-industry as my principal example. In this case, it's very hard to increase productivity in the way McRae means. Some of these services represent 'retreat-industries', occupations people go to when they are casualties of productivity increases in sectors more amenable to technology. As well as the sex industry, this probably includes the 'street-retail' sector ubiquitous in the 'third world' cities where so much of humanity lives. These industries are generally characterised by overcapacity (especially excess labour capacity); they become more productive when overcapacity reduces, their 'marginal product of labour' is typically zero.

The 'elephant in the room' however is 'producer services'. These are often well-paid services – especially financial, management, marketing, public relations, and other overlapping professional business services – performed by businesses and consultants for other businesses, for governments and for government-dependent entities. Not producers of consumable services, these are the service industries to which elite labour migrates; these are 'problem solvers' who market their services in part by upplaying the competitiveness problems of their potential clients. 'Producer services' is a sector with significant predatory elements. (As a very current example, we may note the destructuring of AUT University, where a capricious management is tithing that institution's academic wing; see 'Huge distress': Post-grads students feel impact of AUT staff cuts, RNZ 6 December 2022.)

In today's world, the problems of non-elites represent income-earning opportunities for the new service-sector elites who work not by solving these problems, but by profiting from them, and perpetuating them.

This exchange in Kathryn Ryan's interview (27' 15") with Hamish McRae is instructive:

Ryan: "One final point, I think you just touched on it when you said 70 percent of the economy being services … are we going to see, are we already seeing, a significant shift from manufactured goods and consumer goods which we binged on in the second half of the twentieth century, to economies built on services, and many of these services being 'problem-solving'? And I raise these because of the crises of climate change and environmental degradation, population explosion over the last 100 years. Might many of our economies be built on services, and might many of those services be about solving our problems? Is that too optimistic?

McRae: "no you've put your finger exactly what I'm trying, on one of the themes I'm trying to say. I suppose, I'll plead guilty to being an optimist … a service-based economy inherently uses less resources than a manufacturing-based economy. Once you've got one decent car you can't drive another one at the same time. True it would be nice to travel more, but maybe we'll spend longer where we are and travel less frequently. So I think that a world where we try to live better, live more orderly lives, have a nicer time, eat well, is actually not a bad world, rather than one that insists on absorbing more resources in ways that are not much fun; I don't really want to drive around in a big American truck, I'd much rather have my Prius and my vintage car."

See the Pollyanna problem! What planet are they on? Both interviewee and interviewer paint a world economy piloted by problem 'solving' elites as utopian; an economy dominated by elites who make money off the problems they cannot solve, and have no interest in solving. If that's 100 million elite global citizens and another billion technicians providing ancillary services to them, that leaves 89% of the world's population in 2050 in dire straits. The expansion of marketing and marketed services – from public relations to sexual relations – will prove to be more dystopian than utopian. (We may also note that 'people smugglers' represents the bottom end of the same market that has 'immigration consultants' at the top end.)

'Piloting' our way out of trouble like this is not likely to work; especially when the pilots have already crash-banged-walloped the world into the problem-state that it is in. (Useful reading: The Shock of the Anthropocene, 2017, by "scientific historians" Christophe Bonneuil and Jean-Baptiste Fressoz. See reviews in The Guardian and New Scientist, with the latter referring to the piloting issue as "raising the spectre of a new self-selecting scientific geocracy" of problem solvers.) It's fitting that the new Oxford 'word of the year' is Goblin mode (Guardian, 5 December 2022).

Hamish Macrae sees a better future arising from both higher productivity and a continuation of labour expansion into these understudied service industries; occupations and industries in which the assessment of productivity is extraordinarily difficult. How do we measure the productivity of elite problem-solvers? Further, if the future world is dependent on problem-solving services, what happens if the problems are actually solved? What does a successful post-problem-solving economy look like? Might it be even worse than an economy with a multitude of unsolved problems? (Obviously, such an economy need not be worse! But we have no well-enunciated vision of what a problem-solved economy looks like.)

We should also note that problem-solving has always been central to economic life. Many services presently purchased by the poor are to a large extent 'problem-solving' too. Personal services are either pro-pleasure or anti-pain; all the latter fit the 'problem-solving' moniker.

And a final note on McRae; his disparaging views about the future of Russia. If the global-warming scenarios are as bad or worse than widely-predicted today, Russia may be sitting on some of the world's most promising (and underpopulated) real estate. The hitherto inhospitable territories of Russia may become some of the most attractive for immigration; whether by liberal means or by conquest.

The Surveillance, Propaganda and Geopolitical Dystopia

We should be aware of just how prescient George Orwell's 1984 has proved to be, in 2022. (In an important sense, Orwell was not making a prediction for the year 1984; though that did prove to be a prescient year in New Zealand's history. Rather, he was making a commentary about post-war life in 1948, and the concerns about how his experiences of World War 2 might be projected forward into a tri-partite cold war era. The story I heard was that 1948 was the provisional title of that book.)

In 2022 the propaganda war is between Orwell's 'Oceania' and 'East Asia', whereas today's physical war is between 'Oceania' and 'Eurasia'. In 2022 the geopolitically-contested territory is Ukraine; in the 1960s it was Vietnam. There is a fourth geopolitical contestant, symbolised by Iran (and by the concept of 'caliphate', and, before that, Samuel Huntingdon's 1996 Clash of Civilisations thesis); a contestant which has played an important role in late-modern times only since 1979, so which did not figure in Orwell's book. In the post-Orwellian narrative, we may call this still-divided geo-bloc 'West Asia'.

While bloc geopolitics was an important part of Orwell's dystopia, it is the ubiquitous role of surveillance and propaganda today that may be especially problematic in affecting non-elite human life in the next quarter century. While Orwell emphasised propaganda from official sources, today we are subject to prominent cultural narratives from both pro- and anti-government sources. We in 'Oceania' (ie 'The West') can see how authority-sourced propaganda is stressing out 'East Asia' and 'Eurasia' (and 'West Asia'). We find it harder to see, from the inside, such direction of information in our own bloc; that was, of course, George Orwell's main point.

Macroeconomic Dystopias

In its essence, the capitalist world economy depends on the production of mass-produced 'wage goods' (which include those consumer services which accompany a mass-consumption society); indeed, that's how the post-industrial-revolution captains-of-industry past-and-present made their fortunes. The problem now is that we need a massive edifice of consumer debt in order to support such spending. If we attempt to unravel that edifice in the next 25 years, the resulting deflationary depression will make The Great Depression seem rather innocuous.

If the working-class cannot afford to buy wage goods, it's not only the human producers of wage goods that become redundant; it's also the machines – the robots, if you like – whose main purpose (we understand) is to produce wage-goods more cheaply. This constitutes a deflationary technological dystopia; widely feared also in the 1820s and 1920s.

On the other hand, higher wages – starting to happen today – if uncontained, can lead to a cost-inflationary spiral; a process of competitive access for resources that could be exacerbated by elites wanting to spend or restructure their savings before they become worthless. This constitutes an inflationary dystopia.

If we move away from a global economy based on wage-goods to a global economy based on elite-goods, then we regress into an eighteenth-century-type world of extreme privilege, servitude, drug-assisted-ennui, and criminal desperation. Haiti, anyone?

Or we could move into the kind of capitalist world Karl Marx foretold, in which austere capitalists would keep building capitalist unconsumables until the whole edifice collapses under its own weight. (There were anti-capitalists in the 1920s' Labour Parties who promoted pro-capitalist policies in order to bring forward the date of capitalist collapse.)

Other Candidates for Coming Revolutionary Crises

I avoid the phrase 'existential crisis', because, in history, Kondratiev crises have always given way to better times.

In Aotearoa New Zealand, we have just seen a locally-made television series Brave New Zealand World. It looks at these topics: nuclear war, climate change, pandemics, biological warfare, and artificial intelligence. The last two of these topics (and indeed the first) might better have been characterised as 'artificial evil'; as such the final programme gives an unintended insight into why (at least until 2020) we – and especially the political left – never trusted 'scientists'. Another interesting theme of the series is the idea that global elites – such as those from Silicon Valley – are eyeing up this South Pacific archipelago as a bolt-hole from which new beginnings might be possible; indeed, scheming another round of colonisation. (On bolt-holes, I cannot help but think of the final scenes from Don't Look Up!)

Interestingly, there was no episode on socio-economic catastrophe. Maybe that's now seen as too mundane; or maybe the new catastrophists struggle with the nuances of economics' discourse? Perhaps we need a follow-up to Don’t' Look Up, called Don't Look Down? Kondratiev and Schumpeter were socio-economists, who instinctively looked to socio-economic history. As such, demography and epidemiology fall into that socio-economic brief. So does the intellectual bankruptcy of Stalin's Soviet Union and its socialist offshoots; a bankruptcy that has, for example, made nuclear exchanges thinkable. Further, top-down politics has created (and exported) what I think of as AU; 'artificial unintelligence'. It's not so much humanity being displaced by robots; more it is humanity becoming robotic.

My underlying Kondratievan optimism, however, is reflected in this parody: 'You can roboticize some of the population all the time, and all of the population some of the time; but you cannot roboticize all of the population all the time.' We become hidebound by rules, and the ruling elites who make and enforce those rules. Humanity finds a way out, however, and we are only just seeing a bit of this in China (and in Iran) these last two weeks.

In my view the essential economic threat is liberal mercantilism, which represents a fusion of 'nationalism', the 'sovereignty of exclusive property rights', and growth as 'the accumulation of wealth'; where wealth is conceived (in a financial sense) as being 'money, combined with many types of tradable assets'. Liberal mercantilism is indeed the root cause of the previously mentioned 'existential' threats – threats that result from the linear growth mindset: climate change, trickle-down inequality leading to heightened pandemic risks, and the AU idea that new technology can always come to rescue economic growth. (Also see my Northern European Mercantilism and the Covid19 Emergency, Evening Report, 9 April 2020; and this reference to "individualistic mercantile capitalism" in The Shock of the Anthropocene review – a crisis centuries in the making.)

Dialectic

I would however argue that an even bigger danger than capitalism in its present form is anti-capitalism, including some of the sentiment from the 'occupy' movement of 2011/12. This is where anti-establishments went wrong in the 1920s, 1930s and 1940s; we still have the legacies of anti-capitalist totalitarian states which formed in those decades. The challenge is to move away from the blunt primitive capitalism which our older elites still take for granted, and to address the three components of liberal-mercantilism: nationalism, an absence of inclusive public property rights (of economic democracy), and the equating (throughout the now 500-year-old modern era) of wealth as money.

Maybe, following the formal dialectic process, we need a synthesis of capitalism and anti-capitalism; a synthesis that evolves liberalism, dumps mercantilism, and develops democratic structures more local, more global, and less national.

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Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

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Keith Rankin

Political Economist, Scoop Columnist

Keith Rankin taught economics at Unitec in Mt Albert since 1999. An economic historian by training, his research has included an analysis of labour supply in the Great Depression of the 1930s, and has included estimates of New Zealand's GNP going back to the 1850s.

Keith believes that many of the economic issues that beguile us cannot be understood by relying on the orthodox interpretations of our social science disciplines. Keith favours a critical approach that emphasises new perspectives rather than simply opposing those practices and policies that we don't like.

Keith retired in 2020 and lives with his family in Glen Eden, Auckland.

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