Just at the moment we are in the middle of some very major changes to economic fundamentals and also some very major changes in the prevailing ideology. Some of those changes are going to be driven by the next phase of science and technology. The increase in scientific understanding of organic processes and our ability to manage and control more of them via sophisticated and powerful computing techniques is one of those changes. Another is the development of an internet of things. But by far the most important economically is the ability of scientists and technologists to find ways of doing more and more things using less energy, using renewable energy and also of generating that energy more sustainably and storing it for longer. We are moving away from a world economy dominated by fossil fuels and into a world of renewables. Anyone who thinks seriously about the long term future knows this is the case. The only question is how quickly that future will arrive and how long old fashioned ideology and technology will cling on. My own bet is that the powerful self interests of those who wish to cling to the past will be very quickly overcome by those who recognise the potential of the future technology. It is rare for an out of date technology to hold back the arrival of a technological breakthrough for long. It is even rarer for that to happen when governments are actively trying to foster the new one. It is however not rare for reactionary forces to fight a hard rearguard battle with vicious determination. One of the reasons we are encountering such strong reactionary forces at the moment is that people can feel in their bones that the world is changing and quite of lot of folk get very scared by change.
Fierce and unpleasant reaction is also only to be expected over the major change that is taking place at the moment in economic forces. The most dramatic economic event of any of our lifetimes is likely to be the creation of a world economy. We are in the middle of a dramatic and rapid move from a world where only a few rich and powerful countries could produce technically complex consumer products to one where they can be produced anywhere in the world.
Looked at from the perspective of the third world there are mainly gains from this. It may be very hard to work under dreadful conditions in a factory in China and there has been horrible damage to the environment but the vast majority of people in that country would say that they had gained enormously from the development of so much successful industry. Well over half a billion people have been lifted out of poverty in China alone. Looked at from the point of view of a rustbelt redundant factory worker in parts of the US or in Stoke on Trent things don't look so good. New competition isn't altogether welcome even if it also means new customers. So we can expect the former third world to embrace the change with enthusiasm. The key question for the future is what attitudes will dominate in the former First World Countries.
I believe that three main stands of thinking are now battling that out. Reaction and fear is the most dangerous of those strands. Not for the first time in history countries that have done very well out of one phase of technology are struggling to adapt rapidly enough to the next one both physically and psychologically. When change happens the temptation is to try and deal with it by shutting out the rest of the world. Build a wall and make the Mexicans pay. Pull out of as many free trade agreements as you can and put up tariff barriers. This approach can be made to sound very attractive when economic forces are in danger of leaving you or your community behind. It is an approach that cannot possibly succeed long term as the rest of the world will continue to progress and change and your country will just be left even further behind. But it is an approach that usually works for a couple of years and which builds a demand for even more protection and isolation.
Another of the major stands of thinking is the failed orthodoxy of the past 40 years. Extreme free market zealots won the ideological battles of the 1970s. As a result we have been told again and again that things will get better if you rely on market forces and remove all protection from them. Since market forces can be very useful this approach had a lot of successes for a period of time. Since there isn't a magical hidden hand that makes markets always do the right thing the approach has in the end led to very visible failure. Setting the bankers free from meaningful controls resulted in a huge and very dangerous crash in 2008 which has resulted in unemployment of over 25% in countries like Spain and reductions in living standards for the majority of people in the UK and the USA. Selling off publicly owned housing stock and relying on market forces to decide what gets built has left the majority of young people unable to buy or rent homes they can afford. Loose controls over where taxes are paid have resulted in a race to the bottom where companies and high earners keep an ever larger share of incomes whilst choosing the country in which they pay the lowest possible rates of tax. As a consequence the welfare state has begun to appear unaffordable and a lot of people who were brought up expecting a decent safety net have a very weak one that is being eroded further by the day.
One of the key reasons why the forces of reaction have been on the march forward in the West has been that this failure of the ideology of the so called 'liberal' elite has so evidently failed ordinary people. Yet a reactionary belief that you can make the world go away by closing off your borders and looking after number one is an even more sterile economic option.
There is, however, a much simpler and more effective solution to the economic problems of the West. Don't look back but look forward. Invest in the latest technology. Invest in skills. Use the power of conscious state planning to improve the economy. Modernise and change the most disadvantaged regions.
In the end the people of Western countries face a choice. We can opt for reaction and watch whilst our countries decline economically and socially. We can go back to the idea that we must leave everything to the all wise markets and our elected governments can do nothing to help us. Or we can opt for trying to understand the changes that are taking place in technology and using conscious government planning locally, nationally and internationally to take ourselves forward to a successful future.
I know which I prefer.