There are two forces in incredible socioeconomic conflict in the world today. On the one hand we have this sense of overshoot, with many increasingly convinced that we need to find ways to back away from the ledge of raging first-world consumption. Here, for example, is Keynes biographer Skidelsky paraphrased from an OECD meeting last week:
Robert Skidelsky echoed many of Mr Kaletsky?s views on the different historical stages of capitalism, and how the first period of market-led capitalism “succumbed to the crisis of money” in the 1930s, state-led capitalism “succumbed to the crisis of power” in the 1970s, and that the current crisis is bringing to an end the resurgence of market capitalism and its “intellectual butlers”, the Chicago economists, since the 1980s. “Now the pendulum is swinging back again, although it never reaches equilibrium – it always swings too far”. Whatever the next phase of capitalism, he predicts that “the dominance of finance will come to an end” Mr Skidelsky is nonetheless cautious about viewing history in terms of cycles, and prefers the metaphor of a “spiral staircase”, with opportunities to learn: „what we have learnt is that both states and market can fail… we need to find a middle way…we won?t succeed but we must try…This is the quest for our generation.” Mr Skidelsky also argued for a return to moral philosophy, citing evidence that suggest increasing wealth does not necessarily make people happier: “What is the purpose of wealth? How much is enough?…We have to reinsert moral philosophy and ethics into the subject of wealth creation”.
At the same time, however, there is the rapid (attempted) rise of the rest of the world to first-world status. It’s not just Asia, or the BRICs, but it is Africa too, all of which understandable aspire to the level of wealth seen in the OECD and elsewhere. There is a new Goldman Sachs report out showing this in graphical terms:
Which force wins out? Does the increasing first-world sense of austerity give the rest of the world room to grow into middle-class status? If so, we need to find a few Saudi Arabias worth of oil to fuel their ensuing energy needs, and that seems unlikely. Or will we all meet in the middle somewhere, with declining resource requirements increasingly hard-wired into our makeup, the way it is already. happening already in Europe and elsewhere? Check the following figure for German water consumption to get a beginning of a sense of what that might look like:
Are these kinds of changes even possible? Desirable? I’m curious how people feel about the resurgent global tension amongst economic development, resources and energy.