Home/Online news / Blog/An inflection point: tragic or enticingly promising?

by Anthony Kefalas

The world is at an inflection point. It is not the first time, of course. But never before was it at a point where disaster looms one way and an entirely brilliant new world beckons the other way. Unfortunately, my personal odds favour the former rather than the latter. Here is why.

To start with, our global society is already faced with the results of a colossal institutional failure. In the throes of the digital revolution, we have come unprepared although amply forewarned. In terms of economic dislocation and social upheaval, the digital revolution resembles in nature, structure and form the two industrial revolutions. Of course, the digital has more extensive implications and impact than the industrial one. We knew, though, that there would be negative as well as positive results; that it takes time for the latter to overcome the former and, in the meantime, both society and economy are sharply divided between those who thrive as a result of change and those who find themselves thrown overboard.

The institutional failure is primarily a failure of leadership foresight. The rapid pace of technological progress and the inability of large swaths of society to absorb it had been identified as early as the late 1960s. Futurologists (as was the de rigeuer term at the time) like Ferkiss, Toffler, Khan, Bell, Mumford had described the benefits and identified the dangerous upcoming problems. Unfortunately, to no avail. Inebriated by success, wrapped up in our own vanity, we failed miserably to inform and educate. We failed to prepare.

Today, while we have not even managed to master the digital science, we are already casting our sight further afield, pinning our hopes on one more coming revolution — quantum computing — to solve the problems we have neither the will nor the knowledge to deal with. We look to science as an independent player, a substitute for the failure of our human institutions. Yet, humans will either subject science to their own will and ends or science will predominate. This is not a science fiction story — it is a realistic prospect. And in any case, it has been shown that, more often than not, science fiction is more realistic than human foresight.

The main factors that make for a bleak future may be set out as follows. The pandemic is still with us. We failed to control it effectively. We have allowed the largest portion of human society to remain uninoculated. And we still do not understand its long-run implications. At present, we can discern that the labour market has been affected in terms of its composition (male and female), knowledge (digital and analogue), size (observable reduction) and loss of health (long-run Covid). In addition, schooling has suffered as a result of restrictions. Combined, these developments have negatively impacted on productivity hence, potentially on both short-run and long-run growth.

Economists remain at a loss on how to deal with the crisis. Most of them are still mired in their monetary orthodoxy and, though afraid of inflation, appear willing to risk stagflation. Keynesianists of all sorts do not have the definite answer but are more willing to choose the lesser of two evils: inflation and growth simultaneously. The result of this disagreement is that present day (1985-2020) capitalism is still subject to wild fluctuations and the system is still unable to deal with the bane of our times — widespread inequalities of all colours and hues.

International finance has taken the reins of the world economy and no government or state, no person or institution seem capable of bringing it under control. Yet, banks have suffered through the 2008 financial crisis, smaller but successive bubbles and the economic downturn due to Covid. Today, their balance sheet is weak, their personnel disheartened and the competition intense. They appear unable to function as the conduits of funds between those who supply them and those who demand them, thus undermining the prospects of an even weaker recovery.

These inequalities combine with the fear and distrust that large portions of society exhibit towards modern science and lead to social unrest. The international Monetary Fund’s (IMF) Reported Index of Social Unrest (RISU) shows a significant increase, month to month over the last six-month period. Unrest does not augur well for growth and employment. It also brings up the dilemma of choice between authoritarianism and democracy: the allure between less personal freedom and more guaranteed bread on the one hand and the rights of the individual and the lack of effective social welfare on the other.

The energy and food crisis exacerbate the problem of inequality. Climate change exacerbates the food crisis. The digital revolution creates the prospect of a new divide — between those who will learn how to go with it and those who will be left behind because they will not have the knowledge to use it. This worsens the problem of inequality. It is a merry-go-round of crises that feed into each other, each round ending up at a point that at best is stationary with respect to the past and at worst represents a further retreat from the potential solution.

As a society, we are prone to try and find solutions by committing lots of money to the search. One might argue that this is the correct path and brings up Covid vaccine as proof. What might be missing from this argument is the short termism it exhibits. It may have been a stop-gap measure and a necessary one at that. But, even now, when the search is on for a permanent vaccine, we only look at the problem from the point of view of the western world and western medicine. Personally, I cannot judge the efficacy of Sinovac. But it is clear that a combination of western and eastern knowhow would have led to a possibly better vaccine. It is clear that the spread of Covid and especially its ability to mutate would have been significantly reduced if vaccines had been made available to the entire world population. And it is clear that none of this is likely to happen any time soon.

Short-termism is the order of day. It permeates every aspect of our life: from personal relations to jobs; from the life of a product to the stock market. It is a system doomed to fail. How can it survive when it is subject to wild gyrations, capable of adding or subtracting huge swaths of wealth from day-to-day? Of creating or destroying widespread corporations within weeks? Of throwing large numbers of workers into the bin of unemployment or bringing up shortages in the labour market that send remuneration into space within a couple of weeks? How can it survive when it is incapable of providing milk for the newborn, the babies and the toddlers?

Geopolitically, the picture is bleak. It would be a blessing if it simply involved the return to an era resembling the gone Cold War. However, just as in the interwar period a dictator rearmed Germany and led it into World War II with the tacit encouragement of another dictator named Stalin, so today a dictator in Russia supported by one in Turkey and tacitly accepted by another one in Hungary, all risk to lead the world into a nuclear holocaust.

It will take a change in mentality, essentially the adoption of a new mindset, in order to deal with these multiple and self-feeding crises, all interrelated and all dangerous. These world challenges that are subject only to world political will and world solutions are brought about by a new system of international governance. Humanity has tried twice along these lines, each time after a world war. The first effort failed miserably, the second is in the process of ailing with honour. If there is a third, either it succeeds or it leads to disaster.

However, at present, even this third option is not in sight. Hence my personal odds.

This article is published in the May/June 2022 issue of Greek Business File, available here. 

By |2022-07-10T16:18:46+03:00July 10th, 2022|Online news / Blog|

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