JOURNAL: Tightly Coupled Futures

The global financial and economic system is in broad failure. Hoarding, at least among the wealthy and the corporate, is rampant. Trust has evaporated. Worse, western nation-states (from the US to Ireland to Russia) are following historical patterns of response -- massive bail-outs of the financial sector. Unfortunately, this crisis is ahistorical (a black swan). Why? The global financial system is much LARGER, FASTER, and COMPLEX than the nation-states that are trying to bail them out. As a result, nation-state intervention won't return things to the status quo. What it will do, however, is tightly couple western nation-states to the now inevitable failure in the financial system (this is akin to lashing a dingy to the Titanic to prevent it from sinking). The rampant proliferation of bankrupt and hollow states is now likely inevitable.

Comments

[Calabane]

Hi John,

I have been a reader of your blog and writings for a while now, but this is the first time I have commented. Some friends and I were discussing this weekend how this whole financial crisis is a hugely positive turn of events for the International Islamist/Jihadist of the ilk of Al-Qaeda as it will eventually ripple through enough to reduce the U.S. ability to effectively wage war against anyone and support regimes that are their true targets.

I am not saying that they in anyway caused this, it was caused mainly by our own society's greed and flawed economic model, but don't you feel non-state actors across the globe will benefit greatly from this by, a) having more hollow states in which to operate in b) having less opposition from functioning nation states, and c)being able to pick-up more recruits and adherents as the legitimacy of the state is destroyed through their inability to deal effectively with this crisis?

Thank you for all the insight you have offered.

[kcarruthers]

Interesting perspective. It almost seems as if there are so many interconnections that the feedback loops are shorter and more fierce. Thus all feedback is amplified by the system. But is it not likely that supra-national solutions will come to the fore as a result? Must be about time for a new League of Nations (and it worked so well the last few times)!

[John Robb]

Calabane, Exactly right. International adventures are over. Small and often violent groups will proliferate, rapidly growing the shadow global economy (already huge). Our problem is that we will likely see the rapid growth of violent and crime-fueled domestic groups -- many will find common cause with external groups against the government.

Kcarruthers, let's put ideas of global governance into the dustbin (to join technology manhattan projects, marshall plans, etc). Unfortunately, it's legacy thinking. Nation-states are too weak to act effectively, so a collection of weak actors isn't any better.

[Calabane]

Then by that rationale, wouldn't it be safe to say that logistically and organizationally, the already established non-state actors have a leg up on everyone else as their sources of income rely less on the financial markets and more on the shadow economy which will be on an upturn. For example in pressing financial times there is typically a drug usage increase, so those involved in that area would benefit as more people lost their jobs and their savings, thereby giving them more resources to challenge the authority of governments and their local law enforcement. So maybe the oft toted futurist's dystopian vision of the corporations vying for power against criminal syndicates or some hybrid of both, isn't that far from the truth.

[Orleano]

John,

Also a frequent reader and first time commenter. I get the impression I am a bit younger than most of your audience, so bear with me if I am not as well informed. My question is concerning the optimistic possibility of supranational governance structures.

What is your take on the formation of some "league" based not on the nation state, but rather the metropolitan or regional scale? It would seem to me that since these geographies are actually the engines (phsyically owning either commodities, means of production, etc.) of the global economy, rather than the regulators of it, they would have the most vested interest in preserving it. I realize this is somewhat similar to what your are talking about when you describe "resilient communities", but you don't seem to be suggesting that they can confederate in any meaningful way to maintain levels of trade in valuable but unevenly distributed goods seen in modernity.

Do you consider the american city/metropolitan area a viable primary loyalty, even if the current built environment of those metropolitan areas isnt sustainable?

It would seem that if they are, there is enough common cultural and business values to avoid major conflict and support some semblence economic integration, despite what i assume will be skyrocketing costs of transportion and infrastructure maintenance.

Again, i apologize if my questions are not clear, or have logical gaps. There is much to flesh out. Thank you very much for your perspective.

AW
-NOLA

[kcarruthers]

John - was not suggesting international global governance solutions would actually work. They never have before! However, it is the usual response when nation states realise problems are to big for them to fix alone, then they will take a while to work out that it's not working. I actually suspect it's back to the dark ages (similar to the end of the Roman Empire) for us - meaning local solutions with varying degrees of success.

[John Robb]

I suspect it isn't back to dark ages, but it is going to be VERY difficult in developing/poor countries. China may, given that it won't be able to deliver growth, be able to stay together. We are going to see lots of relative decline, mostly in reference to our previous lifestyles. The real question for most people, given the risks that are piling up around them, is:

Do I stay the same and risk a decade or more of declining incomes/wealth/opportunity - or - do I go resilient and help develop the means to radically improve my quality of life over the next decades?

[adam]

John,

"I suspect it isn't back to dark ages, but it is going to be VERY difficult in developing/poor countries."

I agree completely. In fact its going to be bloody. A combination of economic, environmental, and military factors will mean that there is every prospect of it being very grim outside of the industrial nations. To put it another way ethnic cleansing because we're bastards is something for the good economic times, but this will be ethnic cleansing because we're desperate - for resources, food or water, which is another issue entirely. An analogy - sometimes a drowning man will push another underwater to stay afloat.

"China may, given that it won't be able to deliver growth, be able to stay together."

Here I am not so sure. China has held together pretty darn well over the last two and a half thousand years through some amazingly awful times. Its one of the reasons that they are annoyed with Taiwan (formerly Formosa) which really is part of China. Its worth mentioning that the Chinese civil war from 1906-1949 remains one of the longest and toughest on the books.

In fact pretty much every form of popular entertainment in China is ultimately about the horrors of national disunity. Lets take, say, the film Hero - which was something of a hit in the West - wherein the argument is made that for keeping 'one land', meaning China, anything including a repressive dictatorship is acceptable.

Its worth mentioning at the moment that people connected to the Alaskan Independence party are running for Vice President this year, whilst pro-Confederate thinking remains the norm in part of the US. That means that the US is hardly immune to the same factors.

"We are going to see lots of relative decline, mostly in reference to our previous lifestyles."

I agree completely. The last time that the US completely covered its expenses (balance of trade) was in 1970-ish, about 40 years ago. That means a lot less consumption, which means different lifestyles. The good news is that they won't necessarily be worse lifestyles, there is very little evidence that people that own lots are happier than those that don't - just different.

"The real question for most people, given the risks that are piling up around them, is: Do I stay the same and risk a decade or more of declining incomes/wealth/opportunity - or - do I go resilient and help develop the means to radically improve my quality of life over the next decades?"

A loaded question...leading the witness m'lud.

Even so that is a harder question than you might think. Firstly a person can accept a decade of hard times provided that the basics remain available. Beyond the basics requires radical change now, before the emergency really hits, and as you note there is a timescale of decades which is pretty long term thinking.

[l.blissett]

in an attempt to soften john's hard question and give a counterpoint to alan's analogy, i would like to ask 'us' to consider whether it is possible to create a community (or -ties) so that improving 'my' standard of living and improving 'your' standard of living do not have to be mutually exclusive.

in other words, sometimes a drowning person understands that by connecting with the other drowning person and creating a spontaneous symbiosis between the two of them gives them both a better opportunity to return to the surface together and both live to see another day.