The End of Yesterday, The Future is Well Underway

This year will see over 80 countries, representing half the world’s population, choose their leaders via democratic elections. Nearly four billion people, across eight of the ten most populous countries in the world – Bangladesh, Brazil, India, Indonesia, Mexico, Pakistan, Russia, and the United States – will be eligible to vote.

Throughout much of the West, National Populists are promising voters that they can reverse the wrongs of the world by stopping the future. Their policies aim to stop the growing flows of people, investment, technology, clean energy, and geopolitical power across the world. They promise to bring back old fashioned societies, with manufacturing jobs and oil and gas guzzling lives. They assert that somehow, they can make their nations great (again) by going back to the past. However, the evidence shows that this era is long past, and that any reversals will only be at the margins, and to the detriment of many, if not most, people. Politicians in the East, populists and mainstream contenders, while many still prone to playing cultural differences, recognise the future is an opportunity and generally stand on platforms offering development.

Understanding the nature of the change that has occurred in the world requires examining the key dimensions of yesterday's civilization and how these relate to the emerging one, as well as the implications (at least directionally) for multiple global flows.

This month’s Sign of the Times draws on the work of the Capital as a Force for Good report1 and briefly looks at what happened to yesterday, what is happening today, and what it might mean for the future.

 

Today, the World is on the Precipice of a New Era

The world as we know it is undergoing a seismic shift, ushering in a future defined by sustainability, artificial intelligence, and a new geopolitical landscape. This transition, while promising a future of inclusivity and prosperity, is being challenged by a breed of conservatives, particularly in the US, that have replaced the Reagan Republicans, and the neocons of many decades’ past. This new breed of conservatives, National Populists, are overtly nationalist, nativist, isolationist and transactional in their approach, and moreover see these characteristics as their core virtues. The question for others is can the U.S. conservatives, should they come to power, actually derail the transitions underway. These transitions are away from the industrial era and its power structure and pose critical questions for both these National Populists and their opponents across the West. How will they navigate the end of the fossil fuel era that drove its rise, and the resulting decline of Western dominance? How will Western countries maintain relevance in the rise of a multipolar global order? And importantly, what are the implications for their nations of the resulting shifts in the global flow of capital, goods, people, information, and energy?

 

Yesterday's Civilization and What Defined It

The civilization of the past few centuries was marked by several key features: the dominance of fossil fuels as the primary energy source, Western economic and political hegemony with unipolar American leadership, the value of labour in economic creation, contained populations, the exploitation of key resources, rising income inequality, a Western-centric security order, and a lifestyle oblivious to its ecological footprint, signifying the primacy of the physical world in a pre-digital history. This era, fuelled by the Industrial Revolution, saw an unprecedented growth in global population, the economy, and CO2 emissions, but it also set the stage for the environmental, economic and political crises we face today.

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The data (Figure 1) shows that yesterday’s civilization is being unravelled and is in terminal decline. The broader context of this shift is as follows:

 

  1. Decline of Fossil Fuel Dominance. Fossil fuels have been pivotal in global energy, population growth, and economic expansion for over two centuries. However, their era is ending in the face of CO2 emissions that threaten planetary level systems that provide sustenance in the form of water, air and food.

  2. Shift in Global Power Away from the West. The 200-year reign of Western economic and political supremacy reached its peak in the aftermath of the Second World War, but has been diminishing gradually over time, measured as their percentage of global economic output.

  3. Transition Away from American Unipolarity. Since the dissolution of the Soviet Union in 1990, the United States has held a singular global leadership role for a generation. This is now transitioning to a world characterized by multiple influential power blocs, reflecting a shift in global power dynamics.

  4. Depletion of Natural Resources. There has been a relentless extraction of natural resources, with mines now spanning 100,000 square kilometres of the earth’s surface, leading to ever more desperate (and damaging) methods of extraction2.

  5. Widening Income Disparities Despite a decline in income inequality between countries since the end of the Cold War, the gap within countries is widening, with intra-country inequality now accounting for a significant portion (c.70%) of total income disparity3.

  6. Erosion of Western Security and the Normalization of Conflict. The notion of perpetual conflict is becoming a recognized aspect of global society, with a year-on-year decline in global peacefulness (nine years thus far)4.

  7. Environmental Crisis and Lifestyle Overhaul. The cumulative impact of human activity is pushing global ecosystems to their limits, with record-breaking temperatures, sea-level rises, and threats to biodiversity with over 10,000 records set globally related to heat and rainfall in 20235.

  8. Global Demographic Changes. The world's population is expected to grow to nearly 10 billion by 2050, with an average age increase of 11 years and a projected rise in urban residency, accompanied by 1.2 billion migrants6.

  9. Transformation of Economic Value. The value of production of goods and the labour associated with it has continued to decline steadily.

  10. Ending Primacy of Physical World. The integration of digital technology across various sectors is accelerating, ending the dominance of the physical world.

Essentially, we are seeing the end of an era defined by fossil fuel dominance, Western supremacy, American unipolarity, traditional economic value systems, and the separation of digital and physical realms, alongside witnessing significant global demographic shifts, natural resource depletion, widening income disparities, the erosion of Western security with normalized conflicts, and an environmental crisis demanding draconian lifestyle changes in the absence of breakthrough innovations.

 

The Rise of Tomorrow

The decline in yesterday’s civilisation is the result of innovation at a global scale and adoption of technology enabled changes by billions of people around the world. As a result, the world is already transitioning to a future that promises to redefine the very fabric of civilization. This future is characterized by the end of fossil fuels, replaced by renewable energy sources; the shift of the world's economic centre of gravity to Asia, bringing diverse forms of capitalism, politics, and social orders; a multipolar geopolitical landscape with numerous power blocs; the integration of digital technology across all spheres of life, blurring the lines between the physical, digital, and biological worlds; the transformation of economic value creation towards intellectual property, creativity, and services; an increase in global population and urbanization, accompanied by significant migration; the necessity for alternative renewable resources; and a pressing need to address income inequality, perpetual conflict, and climate disaster.

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The data (Figure 2) shows that along each of the dimensions of decline (from Figure 1), there is a rise in a replacement.

Taking a broader view along the ten dimensions of decline, innovation and adoption is driving the rise of a new world with the following characteristics:

  1. Renewable Energy Sources. As the dominance of fossil fuels declines, renewable energy sources in the form of solar, wind, and hydro are on the rise, offering sustainable alternatives to meet global energy demands.

  2. Asian Economic and Political Influence. With the shift in global power away from the West, Asia's economic and political influence is rising, bringing diverse forms of capitalism, political systems, and societal structures to the forefront.

  3. Multipolar World Order. The transition from American unipolarity is giving way to a multipolar world order featuring the EU, China and India alongside the US, reflecting a more diversified global power structure.

  4. Sustainable Resource Management. In response to the depletion of natural resources, sustainable resource management practices including the circular economy are gaining traction, focusing on renewable resources and environmental conservation.

  5. Efforts to Reduce Income Disparities. As income disparities within countries widen, policy reforms, social welfare programs, and economic inclusivity initiatives have become the norm for stability and votes.

  6. Peace-Building and Conflict Resolution Initiatives. In the face of the erosion of Western security and the normalization of conflict, peace-building, international cases against warring states are rising, aiming to establish a new peace paradigm.

  7. Sustainable Lifestyles and Environmental Conservation. The environmental crisis is prompting a shift in awareness among the global public towards sustainable lifestyles and environmental conservation, with the EU leading the way in regulating for change.

  8. Urban Planning and Migration Management. With significant global demographic changes, politicians are seeking radical measures to prevent migration with weaker strategies focused on disincentives and more visionary strategies beginning to realize the importance of making the homelands of migrants more stable and prosperous, the UN-inspired climate compensation funds being an early example.

  9. Innovation in Intellectual Property and Services. The transformation of economic value towards intellectual property, creativity, and services is driving innovation in these areas, fuelled by advances in technology and AI.

  10. Digital Enabled Lives and Virtual Worlds. The rise in everything digital realm driven by connectivity, online commerce and media and in particular AI adoption is set to change every aspect of human life and how it is governed.

In effect, the decline of the old is being replaced with the rise of renewable energy sources, Asian economic and political influence, a multipolar world order, sustainable resource management, efforts to reduce income disparities, peace-building and conflict resolution initiatives, sustainable lifestyles and environmental conservation, urban planning and migration management, innovation in intellectual property and services, and digitally enabled lives and virtual worlds, marking a transformative shift in global dynamics across various sectors.

 

The Implications: The World is Flowing in a Different Direction Already

This radical fall and rise is leading to a dramatic shift in the global landscape, with five critical flows depicting the critical nature of the transformation underway, each providing its own narrative of change, challenge, and opportunity. These flows — geopolitics and demographics, capital, population, information, and energy — are not only reshaping global trade but also redefining the contours of power, prosperity and partnership across the world.

  1. Geopolitics and Demographics Reshaping Global Trade Flows. The magnitude of change is profound, with global trade projected to quadruple from US$25 trillion in 2020 to an astounding US$100 trillion by 20507.This seismic shift is propelled by the decoupling of US-China economic ties and the ascendancy of the Global South, which together are redrawing the axes of global trade.

  2. Global Capital Flows Aligning with Macro-economic Growth and Geopolitical Power. Global financial assets under management are set to more than double, swelling from approximately US$190 trillion8 to around US$432 trillion. This expansion is driven by regional shifts in macro-economic growth and the burgeoning geopolitical clout of Asia..

  3. Global Population Flows Driven by Demographics, Development, and Environment. Annual migration flows are expected to quadruple, surging from 281 million individuals today to up to 1.2 billion by 20509.This dramatic increase is fueled by urbanization within countries, cross-border migration driven by income disparities, and the movement of climate refugees.

  4. Global Information Flows Driven by Universal Connectivity and Digital Technology. The number of digitally connected individuals is set to increase by 1.7 times, from 5.7 billion today to approximately 9.5 billion by 2045, essentially achieving universal connectivity10.

  5. Global Energy Flows Reshaped by Renewables and Demand Growth. T5.Global energy consumption is expected to increase by 1.5 times, from approximately 400 quadrillion Btu in 2021 to around 600 quadrillion Btu by 205011.The transition from fossil fuels to renewable energy sources, coupled with demand increases driven by the industrialization of the Global South, is at the heart of this shift.

 

Conclusion: The World is on a Path That Cannot be Reversed

The world is already deep into the rise of a new future, one that holds the promise of a functionally superior world that is more secure, sustainable, and capable of generating unprecedented levels of global prosperity. Drawing on the work of Force for Good12(Figure 3), captures the extraordinary growth that the coming decades will potentially unlock, if we manage the transition to the imagination age. The scale of this transition will require fundamental changes in how the lives, works and creates value.

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The National Populists can win over populations rightly in fear of the magnitude of this change if other leaders cannot manage the transition and provide a safe landing to their people. While this will only delay the transition, and likely only for countries that are beguiled by the story of stopping the future, it will cause disruption and potentially lead to these countries declining in their ability to lead the future.

Interestingly, the US has within it strong groups of innovators that have innovated to create and dominate industries related to the future. As a result, the US still leads the world in almost every meaningful way across most critical assets that determine global power and leadership in future-oriented industries. China, however, appears to have caught up with the EU across many dimensions of power, innovation and industrial might, with a similar share of global GDP (17% vs 18%), trade (14% vs 13%), market cap (15% vs 14%) and wealth (19% vs 23%)13. It clearly has its sights on the US, which would be more likely if the US were to continue to be mired in the type of internal conflicts that led to the attempted disruption of its democracy on Jan 6th, 2020. So, while America may become embroiled in internal conflicts, other countries will see an opportunity to to strive towards a future defined by the rise of new technologies and innovation, addressing the challenges of the times.

The transition ahead is a difficult one with disruptions and dislocations, and a discontinuous nature. While the challenges are immense, so are the opportunities. The winners define a new world order. In this order, the end of the last civilisation’s energy source, fossil fuels, the decline of Western dominance, and the emergence of a multipolar global order are not just endpoints but signposts on the journey to a new world system.

 

Endnotes

  1. Please see 2024 Capital as a Force for Good report
  2. Source: An Update on Global Mining Land Use (2022), Scientific Data (Springer Nature)
  3. Source: World Inequality Report
  4. Source: 2023 Global Peace Index
  5. Source: National Oceanic and Atmospheric Administration
  6. Sources: United Nations, World Population Prospects (2022), UN DESA, IEP
  7. Source: UK Department for Business & Trade, Global Trade Outlook – Feb 2023
  8. Source: CapitalIQ, GPC Research
  9. Sources: United Nations, World Population Prospects (2022), UN DESA, IEP
  10. Source: Cisco, Based on 2018-2023 historical growth rates
  11. Source: US Energy Information Administration
  12. Please see 2024 Technology as a Force for Good report
  13. Sources: World Federation of Exchanges, SIPRI, Bloomberg, MSCI, IMF World Economic Outlook, WTO Stats (WITS), Worldometer, World Population Review, European Commission, Enerdata World Energy & Climate Statistics Yearbook 2023