End of Trends

This blog post is based on an online lecture for Aalto University Digital Business Masterclass. The original topic of the lecture was “Exponential Trends” but I felt that the “End of Trends” was more fitting for our times.

I’ve been working for the last 10 years with various futures topics from health to work to platform economy, about which I recently published a book (In Finnish). This text seeks to use insights from my past futures research on many fields to take a very broad view to the trends of changing society before, during and after the pandemic.

How did we end up in here?

Let’s shrink the history of the planet Earth to 12 hours.

https://unsplash.com/@oceanng

At 12:00 the world is born. In two hours, we see the first signs of life. But it takes five hours more for event the simplest single cell algae to emerge. And it takes two hours more before we see any sexual reproduction, making the evolution of the genes much faster. Still, it’s only at 10:00 when we see jellyfish emerging and at 11:00 we can notice that there are land plants. So it has takes 11 hours to even get to the point that there are plants on land, a fact that is revealed also by the realisation that even though evolution can at times quickly mutate to adapt to changing environments, we still share some 25% of our DNA with trees.

Dinosaurs emerge around 20 minutes before 12:00. And mammals come a bit later. Modern humans, however, of course depending on where you want to count, are on the planet just couple of minutes before 12:00. And they only start building cities some tens of seconds before noon.

Human cities were build all around the world. Humans were able to spread to all continents and establish civilisations there. Some conditions in the East Asia, Europe and Middle East allowed civilisations to develop increasingly complex technologies.

The Chinese and Europeans were able to build large ships. As is widely documented, the Chinese bureaucracy and state power was so absolute that they were able to forbid the use of very large Chinese ships. So instead, it was the Europeans who managed to sail over the Atlantic ocean and meet the native population there.

The encounter in 1492 was brutal. It was especially brutal because of the diseases that were spread to the native population via the immune Europeans, leading to deaths of estimated 56 million people by 1600.

Shockingly, this very large population reduction lead to reforestation of the fields of the native population. This massive reforestation took so much CO2 from the atmosphere that it is speculated (Earth system impacts of the European arrival and the Great Dying in the Americas after 1492) that it was the main cause for a short climate period in Europe called the “little ice age”.

As told in the Philipp Blom’s book “Nature’s Mutiny”, the little ice age, causing famines, civil wars and wars, created conditions where new radical concepts such as liberty and democracy where able to emerge and flourish. There was a revolution in France, and in the way people approached science and technology. New ideas emerged, such as the steam engine and telegram. Societies industrialised, and a new social contract was shaped, where the increase of productivity (“growth”) meant more opportunities for people to participate and gain subsistence (“work”) and thus increase their material wealth and sense of meaning (“wellbeing”).

Growth -> Work -> Wellbeing.

(See Sitra’s work on the Next Era)

This was the basic promise of the industrial era. But it of course also lead to problems. We have good records of massive pollution already in the early stages of the English industrialisation with tales of butterflies changing colors and the London smog. The promise also lead to a historically specific form of development, eloquently described by Marx and Engels, where the capitalists have big incentives to innovate more efficient ways to produce goods to gain competitive advantage, but where also these innovations are quickly copied by competitors and the only sustainable competitive advantage comes from more total control over the employees (both in lower wages and in demanding more productivity). Thus, as put by Hartmut Rosa in “Social Acceleration”, the societies are put in a “Frenetic Standstill”, where “everything accelerates but nothing progresses”.

So new innovations do provide more free time for people working in the innovative companies, but that benefit is only temporal and in the longer perspective productivity grows, but so does the requirement to every employee to work more.

The latest and the only world changing big innovation during the last 30 years is the mobile internet made possible by cheap batteries, fast wireless connectivity and extremely fast processing power. But the potential of this set of technology cannot be realised before a deep restructuring of institutions.

In other words, to get everything out of the new digital technologies, almost all aspects of life need to change: even if everyone has a supercomputer in their pockets these days, almost no one uses modelling to make decisions. Even if we are all constantly connected and know exactly where everyone is, was, and will be going, we still use this information for the most part to sell physical branded goods.

https://www.economist.com/special-report/2003/05/10/paradise-lost

Interestingly, according to Carlota Perez, all society changing innovations have only been able to be fully helpful after a massive crises. So there was the Great Depression that allowed Roosevelt to build highways, finally helping cars to be more useful, and similar stock market crashes and following readjustments can be seen also regarding massively important technologies such as canals and railways.

An external crises such as the coronavirus is a massive possibility to make such adjustments.

So now we are here

If I’ve learned anything during my last 10 years of working with various big and small foresight projects, it is that

  • All trends that cause cumulative growth will find internal or external limits and end
  • A system at limits collapses or changes behaviour
  • It’s (mathematically) impossible to know when a complex system collapses (although there are some promising ideas on the contrary)
  • but it’s certain that such systems will collapse!

We have had many exponentially growing trends that have caused cumulative growth. Population growth, climate emissions and the like all give us the sense that these trends cannot go on forever. We know that climate change cannot go on forever, and we also should have understood that the economic interconnectivity makes some previously considered unlikely events such as rapid global pandemics much more likely (global pandemic was a very likely event according to most foresight specialists I know, but the pace of the pandemic was not as often considered to be an important factor. We now know better).

Let’s look at the some of the trends of the past in environment, politics, economy.

Environment

First, let’s take a look at environment.

While there is no such thing as a peak oil happening any time soon, the best oil that was left on the ground has just been pumped up. There is an economic incentive to do this. The poorer the quality of the oil, the more it costs to turn it into gasoline. Or the less there are copper in the mined ore, the more one needs to dig to get to it. So the extraction of raw materials is constantly getting more expensive.

The most discussed trend regarding the environment is the carbonisation trend. It has been said that the increase of CO2 has caused many external events, such as the Syrian civil war. While it’s clear that carbonisation of atmostphere was not the only reason for the civil war, it did indeed play a role and contributed in the situation. In more general sense, changing climate leads to increased migration both within countries and out of some countries. Currently 3–4 percent of the global population lives outside their country of birth. This might sound a small number, but that is actually not that small, because people leaving many populous countries move often to smaller countries. So for example in Switzerland the migrant population is approximately 25% of the countries population.

Even though it’s going to be a big trouble, there is a severe need for decarbonising the planet. In the IPCC report there is a massive need for decarbonisation. Looking at the graph, it’s obvious that this requires very quick policy actions that are going to be very difficult.

IPCC

So why exactly do we need decarbonisation? Climate change is out of control. To regain control, we need to rapidly end the use of hydrocarbons. Decarbonisation is the process of establishing the grounds for carbon neutral living and societies.

The real problem is not the climate change mitigation. Instead, it’s mitigating climate change while maintaining sufficient level of wellbeing. Currently, it’s unclear how to do this.

Politics

During the last decades and centuries we saw the emergence of a liberal world order, where — while most of the population did not live in free democracies, at least the free democracies were the engines of global progression. They had the biggest share of global value added.

We can learn a lot from the change of world order by looking at the elephant curve graph by Milanovic. This graph is from 1988–2008 and it demonstrates the gains of globalisation for different income groups. In the graph, all the people are divided based on their income, with the poorest people on Earth on the very left side and the richest people on the right side. And you can see a graph that is shaped a bit like an elephant, with a trunk pointing upwards. And the question is: who is there at points A and B.

In point A, the people who have gained most from globalisation during that period. They are the middle class people who live in China, Brazil, Indonesia and other populous countries. They have gained the most.

At the point B we’ll find the lower middle class people in the global North, so Germans, Japanese and people in USA who are not doing white collar work.

This graph has been used as an argument on why there is such a vast populist uprising in these well-off countries. Again, the situation is unlikely so straight-forward (there are populists leaders in countries such as Brazil and India right now), it in any case guides us to look at the change of values in different parts of the world.

And what we see is that the authoritarian regimes are not winning only hearts of the people, but they are also winning in the markets. The combined GDP of autocratic countries has recently overgrown the combined GDP of western democracies.

So there’s both internal and external pressure for the populist uprising. Naturally, the populists have caught this wind, and what we see in many countries is a partial or total collapse of the previous political order.

The political order of the liberal democracies are based on the voting, and limiting strategically voting for some people, e.g. those who were less educated. Fixing this issue is a step to the more liberal direction, but it might have the impact of taking the liberal rights out of the picture entirely.

The old ways of doing politics in established democracies is losing legitimacy. We need new ways for people to participate with the wisdom of the crowds and via social imagination to proactively shape the societies.

So it seems there is a need for new kind of politics.

Economy

Productivity of the industrial world massively increased from the preindustrial world. But there are other outcomes of the new economic order. For example, the physical interconnectedness of economic system (network structure) grew significantly during the intense period of globalisation.

This interconnectivity contributed significantly to the pace of the Covid-19 pandemic. The black death circulated the Europe for 50 years.

The current pandemic is going to impact on economy and politics. The stock market of course is not doing well, but there are other economic implications to come on the whole monitary system. Further, the crises has significant political implications, as weak governments are going to have a lot of explaining to do. And lastly, the crises will have many social implications from daily practices to new ways of working.

It’s still good to remember that the these economic implications didn’t start with the corona virus. Instead, they were well on the way, as illustrated by the financial times cover.

I was actually involved with the fiscal policy conversations in the EU because we suggested in a Demos Helsinki report increasing the fiscal responsibilities of the ECB. Of course, because of the corona virus situation, fiscal policy is now strongly supported and I expect to see all of our suggestions quickly implemented in the policy making.

And indeed, there is a need for new kind of economy on top of new kind of politics. Many modern monetary theory suggestions are now being legitimised. But even more fundamentally, the reorientation of the economy is an opportunity to reconsider what we really want the economy to do. So far, the economy has been successful in cumulating material wealth. But increasing material wealth has diminishing returns. Perhaps we would like to cumulate immaterial wealth as well, such as trust and collaboration.

Technology

Is technology making us all more capable? Does the “trickle down” in technology really work in technologies such as radical aging therapies, CrispR/Cas9 or massive processing power with ML capabilities?

For example the new AI technologies have a feature that the more data one has, the better results one gets. The data rich get richer. There are two interesting viewpoints that follow: freedom of choice and representation.

Is there a freedom to choose if a machine learning system makes better choices than people? And how can we use data not as a tool for control, but instead as a channel for emancipation. What if we need privacy invading technology to mitigate effective pandemia response?

What do we don’t know about the new world?

In the previous part I mentioned some recent collapses:

  • Collapse of previous political order
  • Global pandemic and economic collapse
  • Collapse of Syria and Libya, leading to mass migration and wars

I didn’t mention it, but a good example of an external quick collapse is the seismic event which lead to nuclear plant instability in Japan. It’s nine years since Fukushima disaster.

Because the pandemic was very much a predictable event, I’ll go through some potential future collapses that we should be prepared for:

  • Massive seismic events
  • Quick effects of climate change, e.g. instant sea level rise
  • Massively improved cyber (quantum), autonomous or biological warfare capabilities leading to new geopolitical situation

Massive seismic events

In the coastal northwest USA, there has been a lot of signals that there will be a very big earthquake at some point. The previous large quake happened before the Europeans arrived to the continent, but even without a written history, there still are clear signals of a very large seismic event. The situation in north pacific is a bit different from more active earthquake areas, because in California and in Japan where large earth quakes are expected, there are constantly smaller quakes. The longer the wait, the bigger the quake, and the longer the silence, the more difficult it is to prepare for such an event.

To mitigate this risk, personal preparation is the key. Further, ready made plans should be made for disaster resolution and logistics. But the long timeline is a challenge for the current cost/benefit analysis. The probability for the quake is very small.

Quick effects of climate change

It’s possible that the sea level rise is not slow but actually a quick event. For example, a very large ice sheet rolling from land to sea (e.g. in Greenland) could cause a megatsunami.

Another potentially very quick event would be the release of very large amount of natural gas in Siberia to atmosphere due to a extremely warm summer.

These risks can also be tackled. Rapid climate change mitigation is needed to reduce risks of sudden events. It’s also important to highlight the role of basic research and experiences of old people in critical regions (Siberia regarding natural gas pits, Greenland ice sheet)

New innovations in warfare

Technological change can also at times be very rapid and cause quick changes. Massively improved cyber (quantum), autonomous or biological warfare capabilities can really change the geopolitical situation.

It’s oftentimes not the direct effects of the technologies, but their side effects, that cause trouble. For example, de-escalating an attack by autonomous military units using nukes might reduce the barrier of use of these weapons also agains civilian population.

Goal of diplomacy should be to establish new rules of war together before it’s too late.

What to do?

Times are changing. Digitalisation has revealed opportunities to create wellbeing beyond the simple goal of increasing material wealth. But due to the current rules and structures, we haven’t been able to truly tap into this opportunity. Simultaneously, climate change has made it painfully clear, that we have to find an alternative goal for our economic and political systems.

External shocks cause opportunities to transcend and circumvent current systems much faster. The current lockdown might prove to be a short one, but it also can take a long time. There are already discussions ongoing on how to re-establish social, political and economic systems. Such process need not to be merely reactionary.

The crises offers interesting opportunities for radical policies. Spain and Ireland already nationalised their private hospitals. But it’s even more interesting to think about what to do with the failing companies. I think that government should take shares in them or even nationalise them completely. This is what e.g. Germany is doing.

It’s quite possible to privatise many of these companies after the crises. But there is a catch that has very little to do with the corona virus: digitalisation creates so called market convergence, which means that operating across different industries can yield extra profits. Very few companies can purposefully operate across industries, but governments have assets to do this.

Similarly, this would be a good change to implement the right to subsistence via direct payments to people. It’s not only about making the markets work. Instead, it’s about giving people as much free time as possible to be used what ever way they desire.

As explained by Martin Hägglund, every living being is by definition fragile and temporal. We are temporal, because one day our lives will end. But before this happens, we are fragile, because we need to repeatedly fulfil our physical needs in order to survive.

However, we don’t have to fulfil our needs all the time. We have free time. As humans, we can imagine what to do with our free time.

Every societal, economic, cultural, technological and political structure is an outcome of this kind of imagination. Now it’s the time to reimagine certain aspects of our lives. Let’s seize the opportunity.

There are three takeaways from this text:

  1. All exponential trends eventually end
  2. When this happens, societies change or encounter various sizes of collapses. In both cases, societies are radically altered.
  3. The moment of crises is the moment to reimagine societal foundations. A good reaction to crises does more than just manages the crises itself: it also aims to transcend current tensions to tackle wicked problems: carbon neutrality, resource consumption, segregation, (digital) inequality…

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Researching journalism platforms. Foresight and business model specialist.

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Johannes Koponen

Johannes Koponen

Researching journalism platforms. Foresight and business model specialist.

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