How the human race will survive the new economy of the 21st century

A definition of the new economy

The new economy we are witnessing in 2014 is, to put it in fashionable terms, a traditional economy “enhanced” by three interrelated phenomena: the globalisation, the digitisation and the financialisation of human economic activity.

Globalisation

In their respective texts for Cultura e Fide, (XII.2014) Winnie Byanyima (OXFAM) and Jose Angel Gurria (OECD) describe much better than I do, the risks and opportunities attached to globalisation. Globalisation is an old phenomenon, already spanning several centuries. It has accelerated at an alarming rate since 1989, with the fall of the Berlin Wall, the end of communism, the conversion of most of the world’s countries to market economies and the spread of the tools, standards and techniques that facilitate global trade and production – free trade agreements, shipping containers, increasingly multinational businesses and management software allowing the standardisation of economic activity and the establishment of a common work language. Let us take a brief look with the help of some figures.

On the positive side of globalisation, we find:
– More than one billion jobs have been created since 1980(2).
– Since 1990, nearly one billion people have been lifted out of extreme poverty(3), as the worldwide production of wealth has quadrupled(4).
– Since 2000, the wealth of households around the world has more than doubled(5).

On the negative side, we observe:
– We are plundering the planet’s limited resources so quickly that, following the predictions of the World Wildlife Federation, 5.5 billion people will be living in regions where water is in short supply by 2025(6).
– Some 2.8 billion people live on less than $2 per day, and 925 million do not have enough to eat(7).
– The richest 1 per cent of humanity possesses more than half of the world’s wealth(8).
Despite growth that should be of benefit to all, inequalities continue to deepen, and a sense of injustice along with them: 7 out of 10 people live in a country where the disparity between rich and poor has increased in the past 30 years(9).

To summarise what has developed since 1989, the world has seen more wealth and more work, but also growing inequalities between countries and individuals, in a trend that seems to benefit very few at the expense of the vast majority. We also have a planet of limited resources, plundered at every turn.

————————————————————————————

2. Does not include agriculture. “When giants slow down”, The Economist, June 2013.
3. Internationally defined as living on less than $1.25 per day (The Economist, June 2013).
4. The gross world product, in purchasing power parity, grew from $28,250bn in 1990 to $101,828bn in 2013, according to the World Bank.
5. Crédit Suisse, Global Wealth Databook 2014, October 2014. It has increased from $113trn to $263trn (Crédit Suisse, Global Wealth Databook 2014, October 2014).
6. “The Human as Bigfoot”, The New York Times, October 2010.
7. United Nations, Resources for Speakers on Global Issues.
8. Crédit Suisse, Global Wealth Report 2014.
9. In the United States, the richest 1 per cent has captured 95 per cent of growth since 2009. Cited in “Working for the Few: Political capture and economic inequality”, Oxfam, January 2014