Planning for two economic futures

Just gave a talk on the future of the economy for the NORA summit. NORA (Northeast Oklahoma Regional Alliance) a regional economic development planning group and my task was to help them think about their economic future. It was challenging to come up with what might be useful for them to think about. I offered the organizers a few variations and we settled on an approach the described nine characteristics of the emerging economy. Thought I might share some of those in a series and maybe take the points in some different directions.

The first characteristic is that it is “transforming.” In the Houston Foresight program (and other futurists as well) we often use archetypes to describe patterns of change in a “system” (in this usage, roughly translated as “the way things are currently done), and “transformation” is one of four archetypes. Let’s briefly review:

I began by characterizing the economy as a system and then introduced four archetypes for system change:

• Continuation: The system moves forward along its current trajectory. This is the “official future” and usually considered most likely.
• Collapse: The system falls apart under the weight of “negative” forces.
• New equilibrium: The system reaches a balance among competing forces that is significantly different from the current balance.
• Transformation: The system is discarded in favor of a new one with a new set of rules

The message I delivered was essentially the current economic system, conceived at Bretton Woods and hitting its stride in the 1980’s as the so-called Washington Consensus, is essentially broken, and that a new, transformational economic system is trying to emerge. So, planners are living in two worlds: the “dying” world of the current system and the emerging world of the new, which hasn’t quite found its footing yet.  No easy task for planners!

The Great Recession almost brought the system down – it was met with a classic new equilibrium approach of taking drastic action to save itself. But I’d argue that the changes made didn’t address the root problems of the systems and put some Band-Aids on the problems. Thus, it’s a matter of time until the next crisis hits.

I think it’s helpful to note that one could say that current system did its job in terms of providing economic growth and material wealth. The problem is that system no longer fits the needs of our present circumstances in affluent countries. As we noted here in many posts about changing values captured in ConsumerShift, priorities have shifted in the affluent countries away from material goods consumption to a search for meaning, experiences, wellness, sustainability, etc.  Sure we still need a productive economy, but one that balances economic, social and environmental needs. It requires, if you will, a re-boot, or a transformational.

One caveat on the re-boot is the potential for shale gas discoveries (and ability to recover economically) could provide the cost-effective energy for a generation or two that could extend the life of the system longer than we think – it could be a long, slow death. Next, we’ll talk about ideas on what to call the transformed economy. Andy Hines