“NOT ABOUT WHAT IS TO COME BUT WHAT IS ALREADY HAPPENING”.
“THE CATASTROPHE IS THAT IT CONTINUE TO GO ON”.
The Club of Rome commissioned the report The Limits to Growth in 1972 that shifted how we see what humans are doing to the planet. Looking back five decades later, what did we do and not do, what did we learn -if we did-, and what happens now?
Humanity is not dealing with only a single-incident, non-interconnected local or regional crisis. Humanity is heading into a deteriorating and undeclared globalized emergency involving the collapse of its critical global survival and stability systems (such as the trespassing geobiophysical boundaries of the Earth System , the economy, and our political and social systems.)
The world is in the midst of a poly crisis and facing existential risks: ecological deterioration and trespassing geo-biophysical planetary boundaries, increasingly social inequality, unequal distribution of health, income and wealth in a continuously globalizing world, as well as financial upheavals and recurring economic recessions. A unique and extraordinary set of economic conditions is steering the globe toward a crisis worse than any of the stock market crashes or energy shocks of the past 70 years. Signs of ecological crisis include climate change, the disappearance of wild nature, relentless resource depletion, the increasing chemical pollution of air and water, soil loss and degradation, and fresh water scarcity. Evidence of social crisis includes increasing economic inequality, poverty, racism and other forms of discrimination, the rise of authoritarianism, and impacts of rapid technological change (such as automation).
Due to the growth of world population, continued high levels of consumption in the developed world and the rapid industrialization of emerging economies, worldwide demand for natural resources such as raw materials, rare earth elements, energy, water and land is steadily increasing.
We are now witnessing the cumulative effects of globalization without forward-looking governance. This includes a slew of new, growing risks that are particularly difficult to manage, including those which are existential and systemic in nature.
We are in a polycrisis. The word ‘polycrisis’ describes the rare situation in which multiple crises hit society simultaneously. Our ecosystems are on the brink of collapse, our economic system is stressed, and socio-political relations are under pressure, long-term crises simultaneously culminating into a moment of systemic risk, with each one complicating the solution of the others. The consequences of these crises can be assessed more thoroughly, looking through three different lenses: an ecological, an economic, and a social/political lens.
The consequences are increasing uncertainty, lack of progress on the sustainable development agenda and an unstable economy. Policymakers do not know where to start to fix this. And there is no easy fix because we cannot go back to our pre-polycrisis world. That world was fossil-fueled and geared towards efficiency and perpetual growth; it brought us into this position in the first place.
Governance and risk analysis measures fail to address the causal links between multiple existential crises could lead to a situation in which we face a global polycrisis — a single, macro-crisis of interconnected, runaway failures of Earth’s vital natural and social systems that irreversibly degrades humanity’s prospects. Avoiding this fate calls for new types of research and analysis frameworks to understand the causal dynamics that connect systemic risks and to inform actions to generate positive feedbacks. A global polycrisis occurs when crises in multiple global systems become causally entangled in ways that significantly degrade humanity’s prospects. These interacting crises produce harms greater than the sum of those the crises would produce in isolation, were their host systems not so deeply interconnected. Our current set of crises can be described as a polycrisis because self-reinforcing feedbacks between ecological breakdown and social breakdown are strengthening and growing more numerous. These cycles are part of complex systems, or of systems with a large number of highly interconnected elements. Complex systems interact with each other in continuous, multidimensional ways, making them unpredictable and prone to shocks, or unexpected events with severe impacts.
Multiple global systems become causally entangled in ways that significantly and irreversibly degrade humanity’s prospects. These interacting crises produce greater harm than they would have individually, if their host systems were not so profoundly interconnected. Humanity is in the midst of this interdependent, complex, dynamic world in a constant flux of change. How mobilize the information, knowledge, skills and capabilities of a distributed group (intern and extern) to extend problem solving ability. Unfortunately we tend to think in traditional disciplines, and, at best, across traditional disciplines.
The next years and decades will see further dramatic development in society, economy and global powershift driven by fast-paced technological innovation. Artificial Intelligence and neural nets are unleashing exponential increase in autonomous computational power. Humanity will further deepen its imprint on the Earth and create further uncertainties and vulnerabilities for its safe inhabitation.
In the current circumstances, we must find a new way to look at the future of our society and economy. The way out is a transformation, a multifaceted transition. This requires choices from society – policymakers, business, voters, investors: what needs to be broken down, what needs to be converted and what needs to be built up.
Regeneration– the capacity of a system, be it an individual, a forest, a city, or an economy, to deal with change and continue to develop – should be valued more as an essential element in the economic system needed to first shelter against the polycrisis and thereafter as a prerequisite to transition.
The world’s dominating economic system is capitalism. The key purpose of this system is wealth accumulation through profit making. This leads to a sharp dichotomy in society: between those who earn money by selling their labor and those who earn money by making a profit by investing. Both want to increase their earnings. The solution to the conflict between labor and capital is productivity growth: only by working smarter can both achieve their aim. Working smarter means more production per hour worked. With that rising productivity, there is more left to split between profits for employers and rising wages for employees, but also for consumers in the form of lower prices for products. For everyone to have a job, more must be sold, because then profits can be higher, wages higher, and so on. Conflict may have been averted, but at the cost of a growth addiction. Only growth placates the fundamental tension between labor and capital.
According to supply-side economists, the essential growth has merely two drivers: productivity growth and growth of labor supply. The outlook for both is not promising in advanced economies. Labor supply growth is decreasing in most advanced countries and in some countries already declining. Proposed solutions for this, such as increasing retirement ages are only partly successful, while other options such as migration are in most countries politically very sensitive. Labor productivity growth is also declining in most Western countries and hence the ‘growth machine’ falters. This is a fundamental problem in all capitalist economies.
The pursuit of growth created fragility
The solution that is chosen up till now is ‘buying time’ with money. Initially by increasing public spending (resulting in higher public indebtedness), followed by rising private spending and thus indebtedness. Each in turn defused a potentially destabilizing social struggle, but each strategy exhausted itself after roughly a decade. In the process, the tax state transformed into a debt state and finally, today’s consolidation state, where the locus of sovereignty has increasingly shifted to the financial interests of creditors trumping a state’s responsibilities to voters. The first shift was driven by a sell-off of assets: privatization of infrastructure, utility companies, rail roads and postal services. A further deterioration happened when public indebtedness rose on the back of the 2008/09 Global Financial Crisis (GFC), and again when the COVID-pandemic started.
At the same time, private asset ownership concentrated globally in the hands of a few asset managers. Technology, regulation, and globalization were the driving forces of this development. This so-called asset manager capitalism is the most cynical form of capitalism: A few asset managers are universal owners of large parts of the global economy, but they do not care what happens as long as short-term returns are sufficient. Only when returns stall and de-risking is no longer possible, is it in the interest of asset managers to change course. This does not have to include trying to save the assets: if it is better for risk-return to adjust the portfolio of holdings, they will suddenly do so, wreaking havoc to the real economy in the process. Consequently, asset manager capitalism is a very fragile, financialized economic system with financial shocks that have real economic consequences.
The economy has become more financialized than ever, as indicated by liabilities as a percentage of GDP The more financialized the economy, the more prone to boom and bust it is.
POLARISATION AND INEQUALITY FEED UNCERTAINT
Certainly, comparative advantages lead to welfare gains. But one of the side effects is that the wealth gains are not distributed properly, which increases inequality. Using the mobility of capital – and crafting the international regime to facilitate this – capitalists managed to break free from (unionized) labor at the national or regional level and turn it into an international race-to-the-bottom. Greater income and wealth inequality within countries results from the low-skilled in richer countries having to compete with workers in countries with a much lower living standard. Wealth inequality is increasing as overpowered companies exploit their global supply chains and capital flies very efficiently through tax optimization routes into the pockets of the very rich. As a result, social tensions and polarization have increased.
Because of all these developments, global wellbeing is no longer increasing. For the first time in years, progress on the Sustainable Development Goals (SDGs) stalled, while there was even a decline in the Human Development Index.
But inequality does not only affect society: it also aggravates the ecosystem crisis: a concentration of wealth leads to overconsumption and to more emissions than necessary. The bottom 50% of the global population is responsible for 16 of emissions growth over the last 30 years, whereas the top 1% is responsible for 25% of emission growth. In addition to that, unsustainable food patterns (such as too much meat and processed food) are both detrimental to health and the planet.
THE ECOSYSTEM CRISIS IS PARTICULARLY PRESSING.
The potential for rapid destabilization of Earth’s ecosystems is, in part, supported by observational evidence for increasing rates of change in key drivers and interactions between systems at the global scale. The current situation around climate change mitigation as ‘a closing window’. non-stationary trends for ecosystem degradation imply that unstable subsystems are common We are on a path to 2.6 degrees of global warning. It is ‘code red’ on Planet Earth, a climate emergency. We see already the results, in terms of extreme weather conditions and their consequences: droughts, flooding, wildfires, melting ice, ocean acidification. It is not just a climate emergency, however. We are also facing a biodiversity crisis. The nine planetary boundaries are increasingly being transgressed: from four out of nine in 2009 to seven out of nine in 2022 according to recent research. Increasing loss of biodiversity, biosphere integrity in general, land-system change, changing biochemical flows, introduction of novel entities, pollution, water scarcity, are all leading to enormous systemic challenges. There is an urgent need for a new paradigm that integrates the continued development of human societies and the maintenance of the Earth system in a resilient and accommodating state. Despite some natural environmental fluctuations over the past 10 000 years (e.g., rainfall patterns, vegetation distribution, nitrogen cycling), Earth has remained within the Holocene stability domain. The resilience of the planet has kept it within the range of variation associated with the Holocene state, with key biogeochemical and atmospheric parameters fluctuating within a relatively narrow range. At the same time, marked changes in regional system dynamics have occurred over that period. Although the imprint of early human activities can sometimes be seen at the regional scale (e.g., altered fire regimes, megafauna extinctions), there is no clear evidence that humans have affected the functioning of the Earth System at the global scale until very recently. However, since the industrial revolution (the advent of the Anthropocene), humans are effectively pushing the planet outside the Holocene range of variability for many key Earth System processes.
There are the non-negotiable planetary preconditions that humanity needs to respect in order to avoid the risk of deleterious or even catastrophic environmental change at continental to global scales. These thresholds are defined as non-linear transitions in the functioning of coupled human–environmental systems and are intrinsic features of those systems and are often defined by a position along one or more control variables. Trespassing thresholds -tipping points- trigger non-linear dynamics at the lower scales and this non-linear changes, from a desired to an undesired state.
The complex of ecosystem crises is culminating, and tipping points are near. The path to a ‘sustainable Anthropocene’ is getting smaller every day we continue to go on the same footing.
In the midst of a polycrisis it is too easy to say that systems have to change, that a radical transformation is required. In the midst of chaos – also a typical element of a transition – it is also good to work on system resilience. But the balance is important here. If we invest too much in redundancy, diversity and adaptability, the much-needed transformation would probably not take place: we would only strengthen our current system. We would make it less efficient in an economic sense, less profit making in the short-term, but we would shield it from breakdown.
This is a time that calls for new attitudes and behaviors. Strategies that seemed to make sense before the polycrisis, such as efforts to grow national economies, will need to be replaced by different ones, such as efforts to build resilience. Fortifying resilience at the community level will be especially important: as global supply chains grow brittle and shatter, humanity will depend more upon local economies for survival and opportunities to thrive. Cooperative strategies to ration scarce resources and reduce inequality will also be required so as to defuse conflict and ensure optimal outcomes for as many as possible. A preventive mindset, revolves around the idea of taking preventive actions that support sustainable developments, conservation of species and bio-diversity conservation, measurements for dealing with climate change and so forth. This mindset will lead to a transformation and shift the way we consider value: We will put the condition of the planet as the most import value, prior to our own aspirations and needs.
If humanity descends into blame and desperate efforts to maintain a status quo that by its very nature cannot persist, the future looks dark indeed. Our longer-term message to society, business should be aligned with the principles of anti-fragility, transformation and long-term value creation instead of short-term risk-return profiles. In the debate sessions we produce a long-term outlook, we will dive into the nature of the global polycrisis, resilience, transformation and regeneration. Creating a more anti fragile society to make the necessary transformation towards regeneration is now more critical than ever. It is time to make a giant leap forward.
If we work together now to build a truly sustainable way of life, maybe future generations will have at least some reasons to thank us.