The road ahead... the next generation or two
(FIRST DRAFT - WILL BE REVISED AND APPENDED)
In a previous post, I wrote about the Impending Economic Tsunami and laid out some of the history of economic theory and why Doughnut Economics might be the way forward. That post was long and a bit complicated. It also focussed on resource limitation and shortfall, which though critical is not the only potentially existential issue facing a large percentage of the world population in the next generation or possibly two.
- Resource limitation/overshoot
- Resource shortfall
- Population plateau
- Termination of world expansionism
- Initiation of new world order
The Road Ahead was a book by Bill Gates. One of the most significant quotes from that book is that 'people often overestimate what will happen in the next two years and underestimate what will happen in the next ten'. It is too easy to dismiss the challenges facing us globally because we are thinking 'nothing will happen in the next two years' while not addressing those issues which will be very real challenges in the next generation or two. Even if we have died by then we need to plan for our children and grandchildren!
Resource overshoot & resource shortfall
On the Doughnut Economics Action Lab site they express the core idea in the following paragraph:
'The Doughnut consists of two concentric rings: a social foundation, to ensure that no one is left falling short on life’s essentials, and an ecological ceiling, to ensure that humanity does not collectively overshoot the planetary boundaries that protect Earth's life-supporting systems. Between these two sets of boundaries lies a doughnut-shaped space that is both ecologically safe and socially just: a space in which humanity can thrive.'
What is concerning is that the world is in places overshooting the ecological ceiling and failing to provide the social foundation. Failing to provide the social foundation has been a problem for centuries but only recently have we started to overshoot the ecological ceiling.
Population plateau & termination of world expansionism
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| The statistics in the graph are mostly based on publicly available statistics. There has been some extrapolation and estimation done to illustrate the point. |
2000 years ago the population of the world was just under 200 million. By the time I was born it was over just over 1 billion. Now, in 2025, it is 8 billion… but plateauing off to around 10 billion by 2050.
Now bear with me… washing machines were invented around 1850 and the sales of machine machines have grown over the years, obviously way more in the developed world than the developing world, but it is catching up very fast indeed. Eventually, as the population plateaus the sales of washing machines will also plateau as people are replacing them maybe every 10 years rather than buying one for the first time. Sales will no longer increase. This pattern will repeat for all major appliances. Washing machines are just a really good example of how the population plateau will affect pretty much everything on the planet.
The population employed will also peak and then drop. In 2025 57% of the global population 15 and over were employed, which means about 40% of the total global population were employed. This percentage will decrease to possibly around 25% employed as automation and AI take more jobs.
The System of National Accounts (SNA), which was formally introduced in 1953, is the internationally agreed standard set of recommendations on how to compile measures of economic activity. Within that framework we get what we call the Gross Domestic Product (GDP) for a community or country. This global expansion has meant that every country has desired to have an increasing GDP and a decreasing one (recession) is considered bad. The Great Depression (a severe recession) was a severe worldwide economic downturn that began in 1929 and lasted until about 1939. Since that was less than 100 years ago that very bad experience is something everyone is concerned about not repeating.
Rejection of the wealth model we have been following for centuries will not be ‘utterly irrational’ but a necessary direction for the whole globe. These changes will require the oft quoted ‘life, liberty and the pursuit of happiness’ to become ‘life, liberty and the pursuit of harmony’.
Will this happen? It seems highly unlikely since humans are implicitly self centred. But let's step back a moment and go back to first principles.
A simplified economic model
To try to simplify things I am taking a different approach in this post. I am deliberately using mostly different language from traditional economic theory in order to not confuse with some of that theory. I have also over-simplified to try to see the principles and issues at stake:
These physical items are bought by shopkeepers (or wholesalers or other intermediaries) and who further sell them on to people who create intangible items like musicians, actors and others.
In this simplified model we see the tangible creator then pays the intangible creator for their art. The circle is stable and could be dealt without money merely based on barter. Which, of course, is how things happened on earth before money.
Basically rent is someone outside the loop taking a cut on the tangible creator.
But even that is not the whole story. I know life is radically more complicated than this, but for the sake of understanding the issues and a form of language that hopefully can communicate, let's stay with this model.
It's not bad, indeed taxation is potentially very good as it allows communities, all the way up to countries to do vastly more than an individual can do alone. In a well-run society it provides the safety net for security and welfare for everyone within that community.
The system is still relatively stable and was what happened for centuries and indeed millennia.
I almost removed the friction from the path to the Renter as the super-rich seem to be talented at avoiding taxes and other friction in financial transactions. But they definitely should be paying taxes: A lot of taxes!
What globalisation and international trade introduced was an external factor. Other people outside the loop could create tangible or intangible items and other people were transactionally involved. Sometimes extra friction was involved in the form of tariffs and other inhibiting factors.
Suddenly some of the tangible and intangible workers saw their income stream disappearing. They wanted to bring jobs back home! We hear this cry in many places.
Alongside external creation, the external factors now include automation and what we are currently calling Artificial Intelligence. These and other factors are also external factors affecting the stability of the system.
But for centuries the system was relatively stable. It was capitalism. The whole world practices capitalism. In countries who claim to be communist the renters are the state, but the system is still capitalist.
But, we have entered the transition phase to a population plateau and as Kate Raworth states in Doughnut Economics there are limitations to the physical resources which the tangible creator requires. Recycling obviously returns resources into the mix but at the same time doesn't create new value. Recycling is a form of transactional rather than tangible. I could have added loads more arrows to illustrate this but it would have become complex and the idea lost. The point is that no new value is being created. Expansion is over.
Historically some of the external stress was taken up by global expansion -- by that I mean the population of the earth was increasing, indeed over the last century rapidly increasing. So the expansion created more tangible, intangible, transactional and frictional resources and the system was still relatively stable. Of course, the renters loved it and got richer and richer! Over the last two generations we have observed the wealth gap between the very rich and the normal population increased many times over. This has happened in the past and generally ended in revolution and bloodshed.
It is the external factors that create stress within a boundaried planet - limited in terms of a plateauing population and limited in terms of an ecological ceiling. Two boundaries coming together at the same time. But the problem can be overcome if we look not at external factors from the point of view of boundaried communities and countries. If we look at a global planet then the external factors become internal factors. But because of the population plateau each community or country is currently competing for resources, each wants a 'bigger slice of the pie'. This was predicted for the transition phase between growth and plateau, so not unexpected though likely to cause issues over the next decade or two.
AI, social media, fake news and truth
There is an extra problem we face and that is the combined problems of Artificial Intelligence facilitating credible creation of fake news. Though fake news has always been with us the ability to create news that appears to be true but actually isn't is a fairly recent phenomenon. Think of the saying 'history is written by the victors' -- history may have in places been either completely untrue or at least wildly embroidered.
Add this to social media - an invention that has immense benefit but also creates an invisible platform to deny discourse and attack others. It's close to a 'perfect storm'. In other words the ability to dialogue to find a common way forward is increasingly difficult. We often no longer agree on 'facts'.
A new world order
The problem with talking about a new world order we think of George Orwell's 1984 book. Indeed some of what we see today seems reminiscent of that book! The problems we need to address are:
- Providing food, accommodation and a good quality of life for the population of the earth
- Valuing people even if there is no work for them to do and creating life value for them as people
- Caring for the planet as a closed system within the context of Doughnut Economics
- Finding a way to communicate and value objective truth as we face the challenge together
This can all be illustrated in what is known as Maslow's hierarchy of needs. It is often portrayed in the shape of a pyramid, with the most fundamental needs at the bottom. The bottom two layers often provided by the community in which the person lives - safety for example in the shape of an army to protect the nation or a police force to protect the community.
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| Illustration by Hamish Croker - CC BY-SA 4.0 |
The higher layers like esteem and self-actualisation have historically been met through jobs. If jobs are in short supply we need to find different ways to esteem people!
We have within world capabilities to easily provide the physiological needs for the whole world and indeed the safety needs. The love and belonging will likely happen whatever because it's relationship based and humans implicitly build relationships. If esteem and self-actualisation are based upon jobs then we will have a problem. However, experiments with Universal Basic Income (UBI) have shown that if implemented many people do find esteem and self-actualisation within the community doing unpaid work.
So the challenge facing us is how to order our global society in a non-competitive way that provides for everyone. And that is a challenge because throughout history we have had capitalism in one form or another which is implicitly competitive. Some people (myself included) have in their lives stepped out of what was called 'the rat race' and found fulfillment in other ways. But the challenge is to make that normal rather than abnormal.
So the challenge facing us is how to order our global society in a non-competitive way that provides for everyone. And that is a challenge because throughout history we have had capitalism in one form or another which is implicitly competitive. Some people (myself included) have in their lives stepped out of what was called 'the rat race' and found fulfillment in other ways. But the challenge is to make that normal rather than abnormal.
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