Three Possible Economic Models (Part II)

BY JAMAIS CASCIOThu Aug 27, 2009 at 11:25 AM



Life in three different economic futures: Resilience Economics, Just-in-Time Socialism, and Robonomics. Where do you want to live?

It may be hard to believe, but there once was a time when Neoliberal Globalized Corporate Capitalism (NGCC) wasn't the only economic model around--and even a time when NGCC didn't even exist! Our current era may seem like the "end of history" to some observers, but the fact of the matter is that economics isn't an end in and of itself, but a means to the end of material comfort and prosperity. When the social, technological, and environmental rules change, economic models change, too, taking advantage of new ways to achieve this goal.
The three possible economic models I suggested last week, and explore in a bit more detail below, should be considered speculations on what the world will look like in the coming decades as the emerging changes to environment, society, and technology take hold. As before, I look forward to hearing your suggestions and alternatives.
One note before I start: if you've read my stuff over the years, you might be surprised that none of the three future economic models are explicitly sustainability-focused. That's because they all are--that is, environmental sustainability is intrinsic to all three of these models, as it will be intrinsic to whatever economic structures function successfully this century. As the next few decades unfold, any economic behavior that doesn't take sustainability into account will fail.
These items are written in scenario form: call it the "anticipatory future."
Resilience Economics
Resilience Economics employs a mix of regulations and norms (i.e., non-regulated but expected behavior) to shift standard business processes away from a focus on efficiency towards a focus on flexibility.
Resilience Economics (RE) emerged out of the realization that Neoliberal Globalized Corporate Capitalism made money hand-over-fist when everything was working right, but was like a rapidly-spinning top--seemingly stable, but if it hit too rough a patch, it went wildly out of control. The RE world, conversely, is less-lucrative during growth periods, but weathers downturns so well that most folks don't even notice when "recessions" hit.
Proponents of NGCC dismissed RE as unable to compete with the 20th century way of making money, and that appeared to be correct up until the Great Retreat of 2017 hit, the downturn that made the 2008-2010 recession pale in comparison. Ironically, most folks figure that it was because we didn't fix the problems in the first real 21st century recession, just offered bailouts and slaps on the wrist, that we got hit by the Great Retreat a decade later.
Three key characteristics of Resilience Economics shape the way we live:
Polyculture markets means that no one economic (or financial) institution ever gets "too big to fail," or so big that it distorts markets the way WalMart used to. This was probably the most politically controversial set of rule changes, but the least visible for most everyday people.
Transactional Transparency upset some politicians and executives, too, but really worked to smooth out markets. All along, economists said that capitalism depends on transparent markets, where buyers and sellers know all the relevant details, but that was always the one aspect of capitalism that most "capitalists" ignored.
Collaborative Flexibility, aka the "Lego Economy." The result of the previous two characteristics, really. Lots of small companies, individual entrepreneurs, even part-time workers able to come together as necessary for big projects.
Is it perfect? No. It's noticeably less efficient than the 20th century model, and a lot of older folks say that they don't feel as "rich" as they did a few decades ago, but it's hard to say how much of that is from RE, and how much is just that we're all trying to deal with adapting to a global environmental crisis.
Just-in-Time Socialism
Just-in-Time Socialism takes advantage of the increased power of digital information systems to provide much more effective demand projection and cost transparency, using just-in-time production and delivery systems to make an evolved form of socialism work.
While the U.S. went for Resilience Economics in the wake of the Great Retreat, Japan took a different path. Two developments allowed Japan to try something radical--well, two developments plus a population already accustomed to heavy automation and a fledgling government desperate to push Japan in a new direction.
Of the two new technologies, the most visibly critical was the development of the Aoki-Marr Prediction Demand AI in 2016. By watching consumption patterns but also tracking demographic, culture, and design changes, Aoki-Marr could predict consumer demand up to a year in advance far better than any brand strategist or B-school graduate. It wasn't perfect, but it was good enough to make Aoki and Marr very, very rich. After the Great Retreat, Aoki and Marr offered the code to governments around the world; Japan was one of a handful that took them up on it. Only Japan has stuck with it, although the model's success there is causing some states to reconsider.
The other technology key to the success of Just-in-Time Socialism was ultra-rapid 3D printing, bordering on nano-manufacturing. This gave the Japanese government the means to start undertaking production across a wide array of markets without having to nationalize industries. More importantly, it allowed for extremely flexible manufacturing: the Demand Prediction AI could spot an emerging trend and get new products to market with remarkable speed.
Critics say that Japan is lucky, because it has a shrinking population. Most folks still work in traditional jobs, but many of these companies are subsidized by the government. The rate at which the just-in-time production system is pushing people out of jobs matches the rate at which the population as a whole is declining. Young people have even fewer reasons to be ambitious--but Japan, as a whole, is pretty happy with the situation.
Robonomics
Robonomics has digital systems doing much of the work, supporting a version of the Basic Income Guarantee model, where citizens are given a basic above-poverty income guarantee and are free to explore education, entrepreneurship, a life of indolence, or even a regular job, one that may pay much more than now in order to attract people who otherwise wouldn't want the work.
The U.S. slowed down, Japan took control, and Europe... well, Europe got wired. Or got weird, depending on your perspective.
On the surface, you still have the same kinds of big companies, same kinds of consumption patterns, same kinds of advertising that you did a few decades earlier. But the twist is that almost nobody works--maybe about 25% of the population engages in income-generating employment, and at least half of that consists of educators, bureaucrats, and the self-employed. Manufacturing, transportation, and most basic services are done with robots, semi-autonomous systems that nobody even pretends have real intelligence, but work well enough to keep the economy humming. Personal service jobs remain in human hands, but those are often performed by recent immigrants, trying to earn the right to a BIG Card.
BIG: Basic Income Guarantee, a ticket to a happy life of reading, travel, playing World of Starcraft II, raising kids, or whatever, all on society's dime. It would have seemed crazy to us at the beginning of the century, but it actually works. In the aftermath of the Great Retreat, unemployment levels were outrageously high, and there were no signs that the reconstituted corporations were going to be able to employ even a fraction of the people looking for jobs. It was the "Uncanny Compromise" (it sounds better in the original French) that solved the problem: the corporations paid huge tax rates instead of payrolls, and everyone got to live moderately-comfortable lives.
It turned out that the percentage of folks driven to start companies or invent new things remained more-or-less consistent--the people who were only looking to make piles of money, so moved away, were made up for by the people who had good ideas but had to spend too much time simply getting by to make them real.
Government employs a good fraction of people, some to keep things going, but quite a few as Climate Mitigation First Responders, dealing with building sea walls, restoring wetlands, installing air conditioning, and the like. These folks are nearly always recent graduates, instilled with a sense of obligation to a society that keeps them fed and happy.
The big problem, though, is that everybody wants in. The EU borders are effectively closed to migration (with a few humanitarian exceptions, and basic "keep the population steady" immigration), patrolled by drones and the military. Every year, at least a hundred people are killed trying to get in. It's like the ultimate gated community, and nobody here likes it--but nobody has been able to figure out another solution.
Some or all of these scenarios may seem unbelievable to you. That's good--tell me why, and what you think will happen instead. And what's happening in the rest of the world?
Here are some useful basics. The scenarios are set roughly in 2030, so the world has had time to get over the Great Retreat. The environment is worse, but not catastrophic. No Singularity is on the horizon, but semi-autonomous AI are commonplace. The Great Retreat hastened the end of the fossil fuel era, now moving swiftly to electric vehicles (with biofuels as the transition in many places).
So... what's happening in China in this world? They're no longer the manufacturing powerhouse they once were--have they gone RE, JiT Socialist, or Robonomic? Or have they tried to stick with traditional NGCC? What's happening in India? In South Africa? In Brazil? In the Middle East?
Where do you want to live?