Crisis on the horizon?

Glob­alised

The re­sponse to the emerg­ing economies, such as in China, India, and Brazil, has been a rise in pro­tec­tion­ism, with Trump as the main ex­am­ple, to the point that it makes one think we are at the be­gin­ning of the end of glob­al­i­sa­tion. Yet, not every­one sees it like that. Econ­o­mist, Hugo Rodríguez, tenured sci­en­tist at the CSIC’s In­sti­tute of Eco­nomic Analy­sis, says this sit­u­a­tion is tem­po­rary and all ac­tors are in­ter­ested in hav­ing the largest mar­kets pos­si­ble, in part be­cause of the Fourth In­dus­trial Rev­o­lu­tion, which is about new tech­nol­ogy. “Coun­tries like the US and re­gions like the EU are those that ben­e­fit most from glob­al­i­sa­tion, be­cause they have the most tech­nol­ogy, which needs broad mar­kets. If you make an AI pro­gram, the cost is in mak­ing it the first time, as repli­cat­ing it costs noth­ing. In­stalling it once is the same as in­stalling it a mil­lion times, so the larger the mar­ket, the bet­ter,” Rodríguez says.

That makes this ex­pert think that what the pro­tec­tion­ist poli­cies aim to do is let the re­spec­tive ac­tors build their strength so that when the fron­tiers re­open, they will be ahead of the tech­nol­ogy curve. Will this lead to a du­op­oly of world hege­mony be­tween the US and China, as some an­a­lysts say? It’s not clear. Where tech­no­log­i­cal de­vel­op­ment is con­cerned, there are many other pow­er­ful ac­tors, and what could also hap­pen is that west­ern coun­tries end up con­trol­ling tech­no­log­i­cal pro­duc­tion and the emerg­ing economies de­vote them­selves to goods.

‘Green’ cap­i­tal­ism

Through­out its his­tory, cap­i­tal­ism has shown that it is the most re­silient eco­nomic sys­tem, whether for good or bad, but it now seems that cli­mate change could threaten it. “My opin­ion is that cap­i­tal­ism will em­brace cli­mate change as a new mar­ket with a very high po­ten­tial for growth. It will be­come green de­pend­ing on the in­ter­ests of com­pa­nies: it will sell elec­tric cars, solar pan­els,... There will be a search for pro­duc­tive processes with­out such large en­ergy costs, and that will be the new mar­ket,” sug­gests Rodríguez. So it is pos­si­ble we will be sold the idea that, with new green tech­nol­ogy, we will pol­lute less by con­sum­ing the same. What­ever hap­pens, if we con­tinue with the cur­rent cap­i­tal­ist model, within a few years we will be con­sum­ing dou­ble what we do now.

Cir­cu­lar econ­omy

The cir­cu­lar econ­omy and de­growth are al­ter­na­tives that also raise doubts. Rodríguez sees two lim­i­ta­tions. Firstly, the de­sign it­self: even among its de­fend­ers there are dis­agree­ments on ques­tions such as in­ter­ven­tion­ism by states, the role of the mar­ket, and the im­por­tance of the local in re­spect to the global. There is a ten­sion in re­la­tion to eco­nomic de­vel­op­ment: “How will pro­duc­ers in Africa take it when they can’t ex­port toma­toes and they have to be eaten there?” asks the re­searcher by way of ex­am­ple. This lim­i­ta­tion, how­ever, would be rel­a­tive, be­cause these al­ter­na­tives do have a shared nu­cleus: re­duc­ing con­sump­tion, re­duc­ing work­ing hours, valu­ing the al­ter­na­tive econ­omy... Yet, the real prob­lem and the most se­ri­ous lim­i­ta­tion is im­ple­men­ta­tion: those who are in a po­si­tion to do so are also the ones who have the most to lose with the change.

“What has the sta­tus quo done with the idea of the cir­cu­lar econ­omy and de­growth? Try to change the par­a­digm to de­fend their in­ter­ests. In this sense, spread­ing the idea that the true cir­cu­lar econ­omy is based on re­cy­cling – not re­duc­ing – while tech­ni­cal progress cuts down on the use of re­sources dur­ing pro­duc­tion, so as to con­tinue mak­ing growth pos­si­ble,” he says.

In any case, Rodríguez says a par­a­digm change is not pos­si­ble with­out the in­ter­ven­tion of com­pa­nies and states, and these two ac­tors have no in­ter­est in doing that. Could the so­lu­tion be the em­pow­er­ment of cit­i­zens as con­sumers? “See­ing how in­equal­ity is on the rise in rich coun­tries, we can’t be op­ti­mistic. If in the fu­ture your job is under threat from ro­botic au­toma­tion, you will have lit­tle power as a con­sumer. You will say that you don’t want to hear about the chal­lenges of cli­mate change when you strug­gle to get to the end of the month,” he says. Yet, nor should we be pes­simistic: “We must also keep in mind the lim­i­ta­tions of the sys­tem to be able to de­sign ef­fec­tive change,” he adds.