The Journey: Our Current World Order
My previous posts launched a series that will tell the full story of my reimagined future. Described as a journey through the looking glass, the story began with a description of the series title and a look backward in time. The series continues, with each post featuring a piece of our journey. We explored the growth of knowledge in the last post. In this post, I will return to history to explore the role that historical cycles have played in shaping our recent history.
BRINGING HISTORICAL CYCLES CLOSER TO PRESENT DAY
While history provides its lessons, we don’t tend to learn from them. Henry Kissinger said that it is not often that nations learn from the past, and even rarer that they draw the correct conclusions from it. I explored the distant past in my earlier posts, one on tipping points and the other on the cycles of history. In this post, we will zoom in on the period right after World War Two, or the start of the current cycle.
Several factors converged in the post-war period to begin the cycle. The world faced the fear of nuclear annihilation and responded by establishing new entities and institutions. With much of Europe destroyed by war, the world came together to rebuild it. A sense of purpose and global cooperation existed post-war, with a great example reflected in the Marshall Plan. The United States gave $13 billion in aid to sixteen European countries between 1948 and 1952. This funding helped participating country economies surpass prewar levels, including Japan, which received support to foster the structural adjustments needed to transition to a peacetime economy.
To avoid a repeat of the turbulent Thirty Year period that began in 1915, our current world order was established. Institutions like the International Monetary Fund (IMF), United Nations (UN), World Bank, World Trade Organization (WTO), and the North Atlantic Treaty Organization (NATO) were formed. The process of establishing our current world order began when seven-hundred and thirty delegates from all forty-four allied nations gathered in the U.S. in Bretton Woods, New Hampshire from July 1 to 22, 1944. The Bretton Woods Conference aimed to regulate the international monetary and financial order after the war ended, with agreements signed and ratified by member governments. This led to what was called the Bretton Woods system for international commercial and financial relations.
These major institutions were created to forge a more constructive economic and international order. The world came together to avoid the conditions that drove the horrors of World War Two, and the resulting world order has served society in ways that prevented a repeat of world wars and great depressions. Despite an occasional spike in violence, the absolute number of people killed in war and conflict has been declining since 1946. There was a sustained investment in human and physical infrastructure and a focus on the long-term. In this period, governments created effective planning teams that implemented multiyear initiatives in areas such as education, energy, infrastructure, R&D, telecom, and transportation. These were sustained through changes in political leadership and included the expertise of scientists and economists.
This transformational war drove human development to levels the world had never seen before. Average global life expectancy increased from 50 to 72.7 years since 1946. According to data provided by the World Bank, the average global life expectancy in 2019 was 72.7 years, almost 2.3 years more than a decade ago in 2009, and nearly 5.2 years more since the turn of the century. The number of people living in poverty dropped dramatically during that same period, and for a brief time, inequality dropped as well. The policies of the wartime period forced both the scaling of business and the acceleration of innovation. Wartime investments in areas like nuclear energy, rocketry, synthetic rubber, and automotive engineering all had positive spillover effects during peacetime. There was also a consolidation of business in this period that created larger organizations that made sizeable investments in innovative technologies. The stage was set for sustained growth with broad social benefits, as workers moved from lower-paid sectors, such as agriculture, into more productive and higher-paid ones.
In the book COVID-19: The Great Reset, authors Klaus Schwab and Thierry Malleret described World War Two has the quintessential transformational war, triggering not only fundamental changes to the global order and the global economy, but also entailing radical shifts in social attitudes and beliefs that eventually paved the way for radically new policies and social contract provisions. They added that the war could be one of the most relevant mental anchors in the effort to assess what’s coming next. That’s why a focus on cycles is important to our understanding of the future. The convergence of past cycles is happening again. A world war is not a catalyst this time (at least not yet), but other forces are aligning in ways that have many believing a new world order is emerging. The catalysts this time are the speed and scale of innovation, the emergence of new general-purpose technologies, the progression of biotechnology, the societal impact of these advances, and the unintended consequences that are likely spawned. As we watch what is likely a reoccurrence of a world-altering level of convergence, one can only hope that we learn from history. Channel what we got right and avoid what we got wrong.
But today, except for some governments, it seems we have lost the ability to focus on the long-term. Prior to the pandemic, there were already signs that this post-war order was under stress. Anti-globalization sentiment (especially in the West) was running high. This fueled nationalism and xenophobic attitudes, while inequality rose higher, and populism rose with it. Trade wars, an immigration backlash, and a clash of superpowers all threatened to reverse global progress. The formation of global institutions that once created the structures to promote technology sharing, economic growth, and political stability are now under attack. In 1942, a British civil servant named William Beveridge said that a revolutionary moment in the history is a time for revolutions, not for patching. A lesson lies in those words, as we stare into a post-pandemic future. Purpose is again a popular topic, as the world considers a shift from shareholder to stakeholder capitalism.
In the immediate post-war era, there was a belief that business had a higher purpose than generating profits. This somewhat cyclical debate about the role of business is back again. Business in the post-war era served a broad set of stakeholders, not just the shareholder. Early business corporations formed in the late eighteenth and early nineteenth centuries were created specifically to create roads, canals, railroads, and banks. There was a focus on service, not maximizing investment returns. In these periods, business focused on a broad set of stakeholders.
As we explore the future, what institutions help us manage a world of extreme events, rapid advancement in science and technology, and an extreme level of uncertainty? Does the ability to collaborate globally like that post-war period still exist?
First Post in the series: A Journey through the Looking Glass
Second Post in the series: The Journey: An Historical Perspective
Third Post in the series: The Journey: A Growth Of Knowledge
Originally published at http://frankdiana.net on February 17, 2022.