The Post-Great Recession World: Four future views

A new term has entered our vocabulary, “The Great Recession”. A period of turmoil and shock that started, at least publicly, with the demise of Lehman Brothers on 15 September, 2008. Whether of not we are still in the grips of the Great Recession depends largely on where you are located.

But before the Great Recession I would argue that we (at least those of us in the so-called developed economies) broadly assumed two things:

(1)That globalization would continue, unchecked, and bring wealth to all.
(2)That the emerging economies, including China, would eventually come around to accepting Western-based definitions of capitalism and eventually democracy.

The Great Recession has done more than just economic damage, it has brought these two fundamental assumptions into doubt. Great doubt.

Global businesses have been built on the back of these two assumptions. Now that these assumptions are crumbling, we need to look carefully at what the future post Great Recession business world might look like.

The purpose of this post is to start building a framework for seeing what forms this future world might take.

Two competing perspectives
In the years immediately before the Great Recession, the business world appeared to be largely separated from events on the global political stage. Despite conflicts in Iraq and Afghanistan, the pace of globalization and the spread of capitalism seemed just to accelerate, reinforcing the view that the world would gradually accept democracy and a Western-based form of capitalism.

Now things have changed. Capitalism’s credentials are tarnished.

We have now entered a period when events on the global political stage will be, I propose, the major driving force for change. Now traditionally accepted drivers of change, such as technology and even climate change, will pale in significance.

Interestingly, an article in the current issue of International Affairs[1] can help us to identify the range of possible outcomes that we could face. Professor Buzan concentrates in this article on the future of international society and I will attempt to summarise the propositions and conclusions here. I will also add some of my own inferences too.

The broad question to be answered is:

Can a global society that is made up of a number of different cultures develop and unify in a stable manner?

Interestingly, there is no clear answer to this question from the literature examined in the above article and this observation therefore demonstrates that globalization is currently very much in untested waters.

If we look at the literature in this field, there are two broad views as to how international society (i.e. globalization) could develop. The first view (called Vanguardist), assumes that to provide stability, an international society has to accept a common culture or set of values. For globalization to progress peacefully, we need to accept some common cultural norms. If we do not have these shared cultural values then international society will only be weakly integrated. The emergence of common cultural values is now required to encourage the onward march of globalization. If it doesn’t appear, then things could get unpleasant.

The second view (called the Syncretist view), assumes that different societies can co-exist and can in fact rub along quite well together, learning from each other in the process. But even within this apparently benign approach there are potential problems. These problems appear as societies progress and change from natural states (where power is centralised and there is very limited tolerance of those who don’t want to comply) to what Buzan describes as open access societies. Open access societies are where power is spread to all. I would suggest that a good example would be Europe, with its particular emphasis on a society that stresses the rights of the individual.

The problem is that natural states can find a move to open access societies quite threatening:

But since the transition from natural state to open access order remains difficult and dangerous, resistance to this mix in natural states is perfectly rational.

And Buzan goes on to provide an example:

The great experiment in China, where a natural state has, up to a point, embraced the market, hangs in the balance: will the market destabilize the natural state or enable it to make the transition to an open access order?

So, even taking the more benign Syncretist view, we could be in for a bumpy transition.

Importantly, Buzan ends the article by proposing four potential paths and I have applied my own labels and commentaries here:

Scenario 1: One World
This scenario is based on the Vanguardist view – that globalization requires one unifying dominant culture. This is a world where we see a resurgence of capitalism, possibly fuelled by a rapid and sustained job creating economic recovery. Here we see a progressive spread and acceptance of Western-based definitions of capitalism and business practices. This also is a world that evolves peacefully into a series of liberal open access societies.

Scenario 2: The G4
This is a world where different attitudes and approaches are shared and respected.  Capitalism evolves to embrace the views of the emerging economies (the G4 in the title refers to the US, China, India and Brazil as being the dominant influencers, but there could be others). Again, progression and absorption takes place in an orderly manner.

Scenario 3: The Jigsaw
I have used the title from one of my earlier scenario sets to describe this outcome. Here, divisions appear, especially as the economic and political power of the West declines and a vacuum appears. Disparate economic recovery rates with Asia forging ahead and the West foundering introduces tension.  A series of new iron curtains descend. Protectionism rises.

Scenario 4: Flash Points
This represents a complete breakdown with different cultures exaggerating their differences. Communication deteriorates at the international level and conflict ensues.

These four future worlds are illustrated below:

Four Future Worlds
Fout potential future worlds

My future writings will expand upon this scenario set and the business implications. As a first step, my next major posting will focus upon the implications of the emergence of the mooted “L” shaped recession.

[1] B. Buzan, “Culture and International Society,” International Affairs, vol. 86, 2010, pp. 1-25.

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