Low Trust Globalisation

I have indulged myself somewhat in recent posts with my thoughts on the Open Doors and Flags scenarios developed by the Shell scenarios team in 2005, in which they explore possible future worlds in 2025.

To complete the picture, the third scenario they imagine is ‘Low Trust Globalisation’. This scenario is perhaps closer to a representation of the world as it is today, and less idealistic than ‘Open Doors’ and less fatalistic than ‘Flags’.

These 3 Shell scenarios were developed through a process of exploring the results of trade-offs and choices that can be made in managing the interplay between powerful forces that exist in the global business environment. The forces derive from a drive for efficiency and the power of the market, the need for security (in the broadest sense) and the consequent push for coercion and regulation, and the push for social cohesion that arises from the human need for community.

So, while the Shell team emphasises that these three forces will continue to shape our world for the next number of years, it is the business choices and political trade-offs that will impact on the balance of these forces and lead to the scenario alternatives. So ‘Flags’ represents a world where the balance is found between the needs of security and community, with free markets playing a less significant (but not absent) role. ‘Open Doors’ emphasises the balance between community (social cohesion) and the market, with less concern about security and higher levels of regulation. And the ‘Low Trust Globalisation’ scenario is a world that finds itself concerned primarily with market efficiency and security, and in which community power and the drive for social cohesion struggle to make as big an impact.

The current global economic ‘crisis’ has had interesting consequences, with western ‘capitalist’ governments effectively nationalising banks and propping up the motor industry. It was Karl Marx of course who in the Communist Party Manifesto called for the nationalisation of the commanding heights of the economy. Come back you Reds – all is forgiven!

And it seems to be agreed, amongst economic commentators in the Western media, that much tighter regulation is needed of the banking system and the behaviour of senior banking, auditing and other financial directors and CEOs.

If this represents a fundamental shift away from the values of the market, it could lead us towards the ‘Flags' scenario, in which national interests take precedence over the globalisation trends of the last 30 years. My sense, however, especially after following what has been happening in Davos, is that the leading economic powers will seek to re-establish the power of the markets as drivers of economic growth and that Western governments will have little appetite for running banks for very long, even if new regulatory systems are negotiated and put in place.

The prime challenge facing those who see the need for a more environmentally and ecologically sustainable world system at peace with itself then remains. As the forces of globalisation reassert themselves, how can companies, organisations, communities and governments, especially those in the developing world, create innovative, practical and dynamic products, services and initiatives that stimulate more sustainable ways of living and lift people out of poverty?

We certainly live in interesting times, and the world and South Africa seem to change markedly even in the time between my blogposts! But these times are times of great opportunity and optimism, even as we face deep and sustained crises of one kind or another. Seamus Heaney, one of Ireland’s leading poets, wrote of the time when ‘hope and history rhyme’:

from The Cure at Troy

Human beings suffer,
they torture one another,
they get hurt and get hard.
No poem or play or song
can fully right a wrong
inflicted or endured.

The innocent in gaols
beat on their bars together.
A hunger-striker's father
stands in the graveyard dumb.
The police widow in veils
faints at the funeral home.

History says, Don't hope
on this side of the grave.
But then, once in a lifetime
the longed for tidal wave
of justice can rise up,
and hope and history rhyme.

So hope for a great sea-change
on the far side of revenge.
Believe that a further shore
is reachable from here.
Believe in miracles
and cures and healing wells.

Call the miracle self-healing:
The utter self-revealing
double-take of feeling.
If there's fire on the mountain
Or lightning and storm
And a god speaks from the sky

That means someone is hearing
the outcry and the birth-cry
of new life at its term.

~ Seamus Heaney ~

Open Doors

As we move into 2009 should we be optimistic or pessimistic? There are plenty of reasons for both perspectives, in South Africa and elsewhere. The ‘credit crunch’ and associated market impact has left millions of middle class people around the world feeling anxious and uncertain, not least about their savings and investments for retirement years. Those millions of poor around the world, who have little to start with, are less vulnerable to the immediate impact, but are likely to see a slow-down in whatever development assistance may have reached their communities.

Conflict, in Africa, the Middle East and elsewhere continues to stand in the way of prospects for democracy and development and in many ways appears to become more intractable. We face significant environmental and security challenges globally, and HIV and AIDS, TB and other diseases ravage families and communities particularly in southern Africa.

But there are signs of hope. We have a new President in the US who seems committed to multilateralism, signalling a possible break from the policies of George W Bush (now the most disliked US President in American history). A withdrawal of US troops from Iraq and the closing of Guantanamo Bay would be a good start.

Zimbabwe is still in crisis, but is probably moving into the end-game phase, with Mugabe slowly losing his grip on power and signs of disaffection within the military and his own Zanu-PF party.

In South Africa, we have a new political party (the Congress of the People) that, while it still has to articulate some policy directions that differentiate it from the ANC, offers hope that a realignment of the opposition can offer prospects of a credible alternative government in the future. We have a general election in 2009 from which a changed political landscape will emerge, and while the ANC will likely be the winners, we will also see a more ‘normal’ political dispensation coming about in which people cast their votes less along historically determined racial lines of allegiance, and more to reflect real political choices.

For now, the government led by Motlanthe, has shown prudence and caution in managing the country and the economy. The Minister of Health, Barbara Hogan, has won support from civil society and the media for her commitment to seriously addressing HIV and AIDS and moving away from the denialism of Thabo Mbeki and her predecessor.

But these are really just straws in the wind! In 2005, Shell produced a set of Global Scenarios for the year 2025, continuing a 30-year process of developing future scenarios for the global and business environment. The 2025 scenarios were developed as a consequence of changed thinking on global questions following 9/11.

Exploring issues of market efficiency (or lack thereof), social cohesion or disconnects, and global security (defined broadly to include terrorism, poverty, environmental degradation etc), and the trade-offs that will have to be made as the world grapples with these issues, the Shell scenario team identified 3 possible scenarios: Low Trust Globalisation, Open Doors and Flags.

Low Trust Globalisation is characterised by legalism, increasing regulation, intrusive controls and oversight – a kind of ‘big brother’ scenario. Open Doors envisages increasing cross-border integration, voluntary regulation, a growth in public-private partnerships, and global networks addressing policy issues. Flags offers a retreat into nationalism and ‘laagers’, conflict over values, ideology and religion, and a break on globalisation.

These scenarios are offered as likely trends in a global ‘jet stream’, that recognises the existence of localised ‘weather systems’ in which particular parts of the world may gravitate more to one scenario than another, and which also recognises the potential for different ‘navigation’ strategies.

The scenario team worked with economic forecasting units in Oxford and Washington to project economic growth rates under each scenario. The Open Doors scenario provides the highest likely growth rate of 3.8%, leading to 40% higher levels of economic prosperity under this scenario than in Flags, and 17% higher than suggested by Low Trust Globalisation. While these are not forecasts, they nonetheless provide food for thought and a degree of incentive for anyone concerned with creating a better world.

The Shell Scenarios recognise the particular challenges in Africa as well as the opportunities that exist here. Institution building is identified as a critical variable for Africa if resources are to be effectively harnessed to development. This means building government capacity and accountability, improving donor-recipient engagement, and improving the prospects for public-private partnerships that can contribute to development.