By Alasdair Keith, Richard O’brien and Michael Prest, Outsights On, 2009
The four scenarios are structured around the interplay of technology and the model for the allocation of resources, as described in the matrix.Each axis represents a spectrum of possible outcomes and the two axes together create four main future economic environments. The vertical axis - technology - captures the speed and extent of innovation driven by technology: will technology still be a major force for change, through fast innovation, connecting the world, creating new possibilities, or will it be stifled? The horizontal axis - allocation of resources - examines the future of the economic model of distribution. Will resources - natural, human, financial and knowledge - be allocated through market forces as in recent years, or will an alternative process of control over distribution and allocation develop?
Planned progress
Sustainability. Electorates' response to climate change and resource availability is the initial trigger for central control over the allocation of resources. Resource availability is mainly addressed on the supply-side by governments investing in major programmes to improve energy efficiency and to introduce new technologies - "Manhattan Projects" for energy – and mandating the use of carbon sequestration technologies.
People. There is central government control over the labour market. Government Departments for Manpower Planning enforce very strict visa policies linked to skills - people flows are allowed to promote innovation and make up for skills shortages. There are fierce "wars" for talent. Education is geared to targeted training rather than general education. Technology leads to increased productivity, helping to mitigate the challenges of strained dependency ratios in countries with ageing societies.
Technology. R&D is controlled by the state and the military with massive investment in solutions-based technologies and the picking and backing of winners. Investment in science is aimed at finding practical solutions rather than blue sky research and there is tight control over the development of what is regarded as "consumer trivia". Intellectual property is restricted, for example by technology transfer rules. Borders still matter in the physical world and inhibit markets from further integrating through ICT.
Political models and stability. A new social contract emerges to meet the 21st Century challenges of energy, food, water and climate change, with people ceding power to central governments - akin to emergency powers under wartime. Intense fuel efficiency is mandatory - hybrid, electric, hydrogen and other technologies replace petrol and diesel. This model resembles China today: the Chinese government would find it much easier to mandate the use of energy efficient light bulbs overnight than would any democracy. A Board of Nations, with greater powers than the UN, agrees on carbon caps which emerging economies do not perceive as growth inhibiting. Liberties are restricted for the public good.
Riding the tiger
Sustainability. The market delivers solutions. As spending on energy and food rises there is an incentive to develop new clean technologies. Innovation comes from "garages", leaving incumbents in the energy industry blindsided. The price of wind energy, solar power and marine energy fall and renewals become a competitive alternative. Desalination programmes increase the amount of drinking water available. Resource availability is addressed and there is a fall in commodity prices. People look back and wonder why all the fuss about rising energy and food prices.
People. Borders are further eroded - improvements in ICT make virtual working a reality. People can work "overseas" from their office at home. The world flattens rather than being "spiky" and characterised by hubs. Both skilled and unskilled labour flow freely. There is a huge movement of "bare branches" away from China to a booming India. IVF and better ways of balancing work and family push up fertility rates and redress demographic imbalances in the West. "Personalised medicine" is a reality but with inequalities in health outcomes.
Technology. The free market fosters an entrepreneurial and innovative culture with step changes in technology offering solutions to the challenges of the day. There is a second "Green Revolution" based on GM to overcome food shortages. Developments in virtual worlds and the blurring of the distinction between the virtual world and the real world lead to further integration of markets. Consumers can purchase goods direct from the manufacturing country - people often pop down to the shops - which are a "virtual mall".
Political models and stability. There is limited but effective government. Suitable multilateral fora exist to govern global spaces - in the physical world addressing climate and resources, and in the virtual world governing the Internet. Whilst challenges are addressed with mixed success, relative stability is achieved because nations and people feel that their voices are being heard.
On hold
Sustainability. There is a slow, blunt policy response from governments in addressing resource availability issues. Until 2015 there is no marked increase in average global temperatures, leading electorates to discount climate change as a pressing matter that needs addressing.
People. Unskilled and skilled labour move freely around the globe. Hubs remain important - a "spiky" world. The global working age population is stable and large migration flows redress imbalances in ageing societies. European governments develop short-term migration systems - gastarbeiter for the 21st Century. Climate migrants leave the new drought zones - southern US, Australia and Mediterranean countries – for Canada, Russia and Scandinavian countries.
Technology. Slow technological growth entrenches conventional thinking e.g. the rise of conservative religion. Even if the technological solutions exist, they are not adopted because societies are risk averse. As economic growth stutters there is less money for R&D, which makes the unpropitious climate for innovation worse.
Political models and stability. Governments are weak and frustrated. Lacking the necessary multilateral architecture to address the linked challenges of resources and climate change, this is a world in which the "tragedy of the global commons" really plays out. Failure to address these issues makes the world inherently unstable and there is a very significant risk of aggression between nation states. Disagreements and conflicts develop over access to resources.
Life in the slow lane
Sustainability. The response to climate change and resource availability issues is strongly nationalistic. This leads to rationing to overcome resource constraints. State-controlled "multinationals" dominate resource extraction and distribution in resource-rich countries. Others are either beholden to the world's state energy companies or "colonise" resource-rich areas as in the "new scramble for Africa". China has plans to buy farm land in Africa. Gulf state investors are buying land in Pakistan.
People. Human resources are rationed through tough population controls similar to China's one child policy. Populations tolerate this as controlling the number of children is perceived to be the only way to ensure an equitable distribution of finite resources. Pessimism about climate change lowers fertility rates. Population control causes tension in countries facing demographic challenges, as technology does not lead to the required productivity improvements and closed borders mean that migrants do not fill the labour shortfall. Agriculture moves towards subsistence farming and people adopt much simpler diets.
Technology. Government regulation limits technologies to existing, simple ones. This gives today's incumbents a huge advantage. Concerns about cybersecurity lead to far greater control over the Internet and consequently it is no longer an innovative space.
Political models and stability. Nations respond to the challenges by turning inward and becoming more nationalistic, creating a nationalism of climate change. After the crisis of free markets there is strong anti-globalisation sentiment and governments introduce ad hoc controls over flows of goods, services, people and capital. These measures are accompanied by a wave of rhetoric claiming that they will protect citizens. Many industries are nationalised and the state keeps a close watch on mutuals, which have re-emerged - in the wake of increased distrust of private companies.
