The first time I saw an article headed “State Capitalism and the Crisis” in McKinsey Quarterly (free, but registration required) I thought I had slipped into an alternate reality. But even when I pinched myself it was still there. In it, the political risk analyst Ian Bremmer argues that one of the results of the financial crisis is a resurgence of political economy (although he doesn’t use the phrase). Markets are now far more influenced by national politically influenced decisions than at any time in the last thirty years; this is not a temporary phase but a permanent shift; and as a result the ‘globalised markets’ paradigm is no longer the dominant model, even if some politicians and corporations haven’t caught up with this yet.
When we worked with Foresight last year on their scenarios for the future of Sustainable Energy Management and the Built Environment, one of the scenarios, “Green Growth”, described a world where large scale international investment in renewables enabled a transition away from the fossil fuel economy. One of these large projects was the ‘solar desert’, in which solar energy was piped north to Europe from the scenario. Such a project is now being promoted by a German consortium headed by the world’s largest reinsurance company Munich Re. An article in Open Democracy looks at the reasons – and the obstacles.
Last week’s speech warning of the triple crisis looming by aout 2030 by the British Government’s Chief Scientific Adviser, Sir John Beddington, represents a moment where an issue has moved from the edge into the mainstream. In a speech at SDUK 09, Beddington described a confluence of population growth, water, food shortages and energy shortages – exacerbated by climate change – where there are huge uncertainties which could further worsen food and water issues. Some columnists discounted the speech because Beddington mentioned the 18th cventury economist Thomas Malthus, whose pessimistic population predictions turned out, famously, to be wrong. Don’t speak too soon.
The conventional wisdom has it that the recession is the result of the toxic loans which caused the credit crisis leaking into the rest of the economy. As a story it’s always had a bit of a hole in it for me; the length of time between ‘debtonation day‘ in August 2007, when the banks stopped lending to each other, and the start of the recession a year later. The economist Jeff Rubin has suggested that the recession was caused instead by the high oil prices earlier this year.
In summary, he argues that election day represents a unique conjunction of the end of three long-run cycles: economic, political, and generational.
The idea that the globalising wave of the last quarter of a century was mostly built on cheap energy and easy money is one that we’re now getting the opportunity to test. So far, the hypothesis is holding up. In particular, according to a story in this week’s Daily Telegraph, high energy costs seem to be having a significant impact on China’s low-cost manufacturing sectors. At the same time, Paul Krugman has been niggling away at the underlying economics. After all, as the French are supposed to say: That’s all very well in practice, but how does it look in theory?
Just as we’ve got used to the idea that the moment of ‘peak oil‘ might be upon us (at the moment 2005 is the year of highest oil production) new figures suggest that the figures for world coal reserves might have been inflated. The widely held view that we are sitting on hundreds of years’ supply of coal may be wrong. This could be good news for climate change.
I blogged last week about the potential impact of expensive energy on the future shape of the internet. Now it turns out that Sun has already started changing the design of its computer systems to favour efficiency rather than performance because of energy costs. It seems to have moved them to a different market space from their competitors.
One of the most consistently interesting thinkers online about the long-term future of industrial society is John Michael Greer, who takes an impressively long-term and wide ranging (if also pessimistic) view of civilizational change. In his recent post Back Up The Rabbit Hole, he speculated on the way in which the ‘ultra cheap energy’ of the 1980s and 1990s had shaped US technology development – in particular the shape of the internet.
I’ve just noticed an interesting article on the recently re-launched ‘History & Policy‘ site which suggests – by looking at the historical evidence – that our chances of reducing energy consumption without sanctions or limits being imposed is, frankly, wishful thinking. Even though we have in the past achieved the energy efficiency gains needed now to reduce CO2 emissions dramatically, energy consumption has kept on increasing.