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The Shape of the World to Come
Part II: The Key Challenges Facing the World

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We live in the apparent paradox of our world being both on the path of rapid economic, social, security and geopolitical progress while also facing an increasing array of complex challenges which threaten this very progress. An earlier version of the Sign of the Times[2] examined the positive trends that have shaped our world which include the rise of political freedom, the decline of crime and armed conflict and the rising chances of victory against global hunger and poverty. Despite these positive forces however, there are several perplexing issues that cannot be ignored.
As a result, political freedom and democracy have given rise to isolationism and xenophobia and enabled revolutionary style coups to be launched in some of the world’s most advanced and established democracies, questioning the very values of the people of these nations and endangering the world order that underpins our times. This month’s Sign, the second in a three-part series, examines the most pressing challenges that the world faces today, evaluating their potential impact over the next decade. A further paper, the final part of the series, will seek to combine the impact of the long-term trends and current challenges to put forward a perspective on the shape of the world to come.

 

Context: Progress Interrupted – Global Risk Factors to Continued Development

Over the last two to three decades, significant global progress has been made across a wide range of economic, social and technological areas. Global wealth has increased by c.4x from US$20tn to US$80tn between 1980 and 2015, while during the same period global trade has expanded from c.US$2tn to c.US$16tn, life expectancy has improved from 62 years to 70 years and more than half of the world’s population today have regular access to the internet. There have been substantial and positive advances all over the world, and there is compelling evidence that the world has been on a long run trajectory to become more free, less violent, better educated, more prosperous, and increasingly technologically advanced. quote-political-freedomHowever, events in 2016 have laid bare a set of challenges in some of the most developed economies that could potentially derail overall global progress over the coming decades. These challenges will require world leaders to reassess their approach to global development and indeed the nature of the world order itself. As discussed in last month’s Sign of the Times[3], the US and UK have experienced revolutions against the status quo driven by broad dissatisfaction on large parts of their populations with the world order that their nations had done so much to create and promote over many decades and this has called into question many elements of an order that the world had come to take for granted, including globalisation, free trade and multilateralism. This has, in part, been spurred by rising income inequality, brought about by the loss of jobs in the west due to technological advances and the migration of production to low cost countries. The backlash that this has created threatens the very model of internationalism that is required to address many of the other pressing challenges facing the world today that no one country can solve alone, including poverty, climate change and cross-border terrorism.

The core challenges facing the world today can broadly be grouped into four overlapping categories of challenges: economic, environmental, security and social and human values. As was the case with the long-term mega-trends for positive development that were outlined in the first part of this series, the data on the validity of these challenges also appears to be self-evident, and incontrovertible.

 

Ten Challenges that the World Faces Today

Economic Challenges

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Environmental Challenges

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Security Challenges

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Social and Human Values Challenges

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Conclusions: A Challenge of Leadership

Collectively, if left unaddressed, these challenges pose an increasing threat to global development and stability and much of the progress the world has made in the past decades. Moreover, these risks are interdependent, with any one being caused or exacerbated by another and in turn causing a third. The diagram below charts some of the causes and effects that create a vicious cycle of risk and instability in the world.

 

Interdependency and Exacerbation of Global Risks: A Vicious Cycle

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In the context of these challenges, it is clear why large masses of the global population no longer believe that we live in the ‘best of times’, despite the objective longer-term increases in freedom, health, development and prosperity that have taken place in the world. Importantly, the world’s challenges in many cases are direct results of the positive trends: accelerated economic growth has made increasing income inequality possible, quote-the-worlds-issuesjust as increased development has driven pollution and decreased mortality has driven population growth and thereby resource scarcity. Additionally, freedom in the West has driven the growth of consumption, wealth creation and expectations, that when not delivered, have resulted in support for revolution.   The world’s issues are a result of its successes and so the two as constructed today seem intrinsically inseparable.

The result, in other words, is a series of interlinked challenges that cannot be tackled in isolation. Trying to address one or two challenges in isolation is not only untenable it shows a lack of understanding of the system of the world and how it works. quote-trying-to-addressThe first step in forging a way forward must be the acknowledgement of the issues. Donald Trump and the ‘Leave’ camp in the UK have acknowledged some of the issues, such as income inequality, employment dislocation and terrorism, but the solutions that they campaigned on such as isolationism or national primacy, if implemented, risk failing to solve these issues while exacerbating others by creating unemployment from protectionism, environmental risk and potentially stimulating long term refugee flows by undermining the viability of poorer and fragile states. The world clearly cannot solve today’s major issues without recognising both the underlying problems and their interdependency.

Further, many of the challenges of our times have global roots and impacts, and are bigger than any one country can handle on its own. A core challenge for today’s divided world leaders will be to establish a set of shared values as the basis of building the future world order. The events of 2016 suggest that the current model of capitalism, driven by free trade and underwritten by the Pax America, will need to be replaced by one that can continue to produce freedom, security and prosperity in a more equitable fashion in the decades to come. quote-the-core-challengeOf course, a key line of enquiry will be to determine to which extent a new model can do without the excesses of the old and still be successful, recognising that often the extremes and excesses produced breakthroughs. The second key challenge will be to manage the trade-offs that any complex system will likely require. Unless they can create non-zero sum solutions for every single challenge, leaders will need to weigh potential trade-offs between issues such as security and freedom, between short term growth and long term stability, between the benefits of technological innovation and its dislocations, and between income inequality and overall economic growth. States will also need to determine equitable trade-offs between each other, balancing their ‘wins’ against other countries’ resulting ‘losses’. This will require societies to re-examine many of their core societal values.

Finally, the West has championed values that include human rights, democracy, free trade, capitalism, diversity and tolerance, united action to protect people as universal values. However, if these were values that were only to be supported while it perceived a benefit itself and abandons now that it feels that these do not meet its needs, then these were clearly not universal values; they were tools of policy. The recent elections have seen popular support for leaders that reject some of these notions. The US and UK’s recent electoral decisions beg the question whether these notions are the true shared values of the West. Unless societies can agree on a set of truly universal values, a new sustainable world order cannot be forged in a ‘civilised’ manner. In which case, one will emerge from the chaos of competition and conflict that accompanies the collapse of the existing world order.

The final part of the series on the shape of the world to come will look at the potential paths open to the forging of a new world order.

 

 

Income Inequality | Employment | Trade | Protectionism | Climate Change | Food Security | Terrorism | Cyber Crime | Migration | Hate Crime

2 November 2016, The Shape of the World to Come – Part I: How the World is Progressing
3 December 2016, We Live in Revolutionary Times: The Prelude to the New World Order
4 In 2012 share of the top 10% in gross income in the US crossed 50%, a number last reached before World War I. From the 1940s to the 1980s the number was below 35%, Source: UC Berkeley Econometrics Laboratory
5 Unemployment in the EU averages 9.8%, but individual country unemployment varies from over 23% in Greece to 4% in Germany
6 For example temporary positions suffer a 17-47% wage cut vs comparable permanent positions; Source OECD
7 Sources: Cook, John et al, (2016) “Consensus on consensus: a synthesis of consensus estimates on human-caused global warming”; Verheggen, Bart et al. (2014). “Scientists’ Views about Attribution of Global Warming”; Powell, James Lawrence (2012), “The State of Climate Science: A Thorough Review of the Scientific Literature on Global Warming”; William R. L. Anderegg, et al. (2010). “Expert credibility in climate change”
8 Sources: Chinese Ministry of Environmental Protection, China Water Resources Ministry, World Bank
9 Source: Science Advances: Accelerated modern human–induced species losses: Entering the sixth mass extinction
10 See the July 2013 Sign of the Times: Cyber Attack, Defence and Security in the Making and Preserving of Superpowers
11 Source: United Nations
12 Source: Guardian
13 Source: National Police Chiefs’ Council