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What is the Heartland and why is it important?

Posted By Kimberly Kay Daniels, Tuesday, January 14, 2020

Kimberly Daniels, a member of our Emerging Fellows program initiates publishing a series of blog posts aimed at envisioning the world power pivot towards the Heartland by 2050. This is her first post in our EF blog. The views expressed are those of the author and not necessarily those of the APF or its other members.


Will world power pivot from the West towards Eurasia’s Heartland in 2050? Given recent events, it is the question many are presently pondering. The question of a world power pivot to the Heartland dates back to a theory by British geographer, academic, and politician, Halford John Mackinder in 1904. Mackinder theorized a shift in world power to, and world domination by, the international power that controls the continental “pivot area” — Eurasia, and to some extent, Africa.


Mackinder’s theory of a world power shift is known widely as the “Heartland Theory”. It reflects the intricate dynamics of and relationships between geography, political power, and military strategy, interwoven with demography and economics. It is these dynamics and relationships, which Mackinder viewed as strengths, that characterize the Heartland and speak to its importance.


Geographically, the connected landmass of Europe, Asia, and Africa, what Mackinder called the “World Island”, is centrally positioned in the world. To Mackinder, this geographic positioning means that as a united force, the World Island could both project power in a way that demonstrates her global supremacy and protect herself against external powers. He viewed the external powers in relation to the World Island as the offshore islands (mainly China, India, Turkey, Germany, and Austria) and the outlying islands (the rest of Europe, Australia, North America, South America, and South Africa). Thus, Mackinder saw three world power systems as competing international forces, with the World Island at the forefront in geopolitical importance.


Mackinder maintained that the balance of global power favored the World Island, owing to her vast resources, including social capital, her distribution channels for exploiting or leveraging those resources to her advantage, and her land mobility. He surmised that her land mobility, 21 million square miles of continuous land stretching across Eurasia, technological changes, such as the continental dispersion of railway and communication networks, and also her social capital, a population size equal to two-thirds of the world’s total population, gave her a strategic military advantage. Countries of the two other world power systems can only advance their global military strategy, and thus, global political power, by sea. The World Island’s resources, demography, and military advantages were important then and now in that it could give her an unmatched competitive advantage in these areas. Mackinder also deemed that her land mobility better supports commerce than does sea power, conceivably giving her a competitive advantage economically.


Mackinder believed that the World Island's combined strengths fortified the Heartland as the pivot region of world politics. He also viewed Russia as the pivot state, because of her central position to assert power throughout the World Island, despite her weaknesses. He felt that historical events leading to Russia’s demographic evolution and widespread expansion engendered her as the logical Heartland pivot power.


Mackinder speculated that control over Eastern Europe would ensure control over the Heartland; control over the Heartland would ensure control over the World Island; and control over the World Island would solidify power over the world. Many have criticized Mackinder’s Heartland Theory for various reasons. However, others are reconsidering its plausibility and ongoing importance today.


The Heartland’s perceived importance often has been reflected in the geopolitics of countries such as the United States, Russia, and China, to name several. These countries have either maintained, expanded, or adapted their foreign policies and geopolitics, depending on their resolve for affirming, reclaiming, or capturing global superpower status. As if playing a game of chess, they are advancing their geostrategies and positioning for a struggle to control, influence, or constrain power over the Heartland.


Globalization, as a growing geostrategy, is closing the gap between international economies. Likewise, the World Island economies could leverage their combined strengths to demonstrate a potentially unmatched power assertion. Hence, the Heartland’s importance also seems connected to superpower positioning and possibly, a power pivot towards Eurasia.


Should we care if world power pivots to the Heartland in 2050? What characterizes the Heartland today? What past and current events might shape Heartland power? Who will influence this power shift? How might it play out? What might be some implications of a power shift? What might signal how the future unfolds? Geostrategic moves over the Heartland are in play today.


© Kimberly “Kay” Daniels 2020

Tags:  Heartland theory  politics  power 

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Is inequality a security issue?

Posted By Martin Duys, Friday, January 10, 2020

Martin Duys, a member of our Emerging Fellows program initiates publishing a series of blog posts aimed at identifying the impacts of inequality on the world order by 2050. This is his first post in our EF blog inspecting inequality through the lens of security. The views expressed are those of the author and not necessarily those of the APF or its other members.


In 2013 Barack Obama described inequality as the “defining challenge of our time”. In 2014 Thomas Pikkety’s academic tome, “Capital in the Twenty-First Century” was translated into English and became a bestseller. In the same year Oxfam published a report claiming that the net worth of the world’s eighty-five richest people was equivalent to that of the poorest fifty percent of the global population. In 2015, in response, the World Economic Forum declared inequality, alongside climate change, as the challenge for its annual meeting in Davos. Inequality is clearly an issue on the global agenda, but is it one that could potentially lead to instability, conflict, or perhaps even war?


Income inequality is generally expressed by using an index of some kind to describe the manner in which income is distributed across a population. The Gini coefficient is the best-known example but can be difficult to understand. Comparing the share of total income earned by the top segment of a population (the top one percent, or the top ten percent) with that of the bottom fifty percent is more intuitively understandable.


Global income inequality has been steadily increasing for the past two hundred years. Only in the past thirty-five years with the rapid economic growth of countries in the Near and Far East has the trend begun to reverse. Between-country inequality has been decreasing recently, but where people are born is still the single largest factor determining their economic prospects, far more than any individual effort on their part. In-country inequality has been on the rise in most countries since the nineteen-eighties, especially in those countries that have followed a strategy of lower taxes and smaller government in order to encourage economic growth.


The trend reversal in levels of between-country inequality could be a source of increased security concern in the medium to long term. As the economies of countries such as India and China continue to grow their share of the global economy, the balance of power between nations will continue to visibly shift. Will it be possible for China to overtake the United States as the dominant world economy without their falling into what Graham Allison describes as the Thucydides Trap? An almost inevitable war between a previously dominant power and the new one.


One of the obvious consequences of between-country inequality is economic migration from poorer to wealthier countries. The effects of uncontrolled migration on the internal political climates of the destination countries have been only too obvious resulting in increased levels of nationalism and xenophobia. Whether in Germany, the United States, the United Kingdom, or South Africa the response to the presence of newcomers by locals is in many ways consistent and comparable.


There is evidence that high levels of in-country inequality may dampen economic growth prospects, but a clear symptom of in-country inequality is the rapid growth of the private security industry. It is estimated that more than fifty percent of the world’s population lives in countries where there are more people employed by the private security industry than by the national police service.


Some argue that that, although the share of the economic pie accruing to the upper echelons has been increasing, this doesn’t reflect the dramatic improvement in the lives of the lowest echelons brought about by the parallel decrease in levels of absolute poverty. The increase in stability and security that results from a general reduction in absolute poverty far outweighs any potential destabilisation caused by rising inequality.


Some level of inequality can also be seen as a motivating factor that encourages individuals to strive towards achieving the economic rewards that could result from further education, or career advancement.


The issue of inequality is very much on the agenda globally. There are some recent examples of security related issues where inequality has been a contributing factor. The Occupy movement after the 2008 global financial crisis had its roots in issues of inequality, as did the protests in Chile in 2019. The role that inequality plays in contributing to future issues of security will depend largely on whether levels of inequality continue to increase, or whether there is genuine movement from discussion to action on the issue.


© Martin Duys 2020

Tags:  economics  inequality  security 

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Why is climate change important?

Posted By Johanna Hoffman, Tuesday, January 7, 2020

Johanna Hoffman, a member of our Emerging Fellows program starts to publish a series of blog posts aimed at knowing how a changing climate will reshape the world order. This is her first post in our EF blog devoted to the importance of climate change. The views expressed are those of the author and not necessarily those of the APF or its other members.


Climate change is arguably both the hardest issue to grasp today and the most important to understand. Depending on location, it can manifest in everything from more violent forest fires to more intense storm seasons, to greater periods of drought. With sea levels slated to rise at least 4 ft. 7 in. (1.4m) meters by the end of the 21st century, coastal urban centers will suffer more flooding, groundwater infiltration, and storm surge. The climatic changes spurring sea level rise - a two-fold process of melting polar ice caps and expansion of warmer ocean waters - will result in greater climatological uncertainty across the board. Our cities will become hotter in summer and colder in winter, storms will wreak more damage in wetter parts of the world, and wildfires will regularly savage drier climates. Previously arable land will become unsuitable for growing crops and formerly perma-frosted regions will transition to breadbaskets. Spikes in particulate matter will make air harder to breathe. The scale of these changes will alter modern life as we know it.


As these events become more severe and more common, governments will face mounting pressures. Those with underdeveloped institutional capacity or thin layers of social capital will have growing difficulty supporting their populations, increasingly the likelihood for political strife and conflict. Numbers of environmental refugees are slated to rise significantly in coming decades, which will place more pressures on other parts of the world.


That climate change is predicted to create such degrees of damage and discord is a result of the fact that the systems supporting our current ways of life have become increasingly interconnected. Economic vitality is dependent on intricate patterns of international trade. Political instability in the Middle East has serious ramifications for policy in countries from the United States to Russia. More and more, access to fresh water, power and digital communications is dependent on cooperation and coordination between diverse and disparate parts of the world.


As such, climate change impacts in one region affect the systems, management and daily life in those of another. If another hurricane takes out power in a global financial center like New York City, as Hurricane Sandy did in 2012, global economies will feel the effect. Researchers have found that the violent civil war in Syria was brought on in part from an extreme drought between 2006 and 2009 that was most likely due to climate change. That war and the associated rise of groups like ISIS has affected life both in neighboring countries as well as those farther afield.


Judging by current strife around Syria, climate change is beginning to reshape our world order. In coming decades, it will likely continue to do so in deepening degrees, from public health to global trade and beyond. Many believe it stands to upend human existence as we know it. When we look towards our future on this planet, we can no longer expect what has been to be a model for what is to come. Understanding more about its potential reach and impact is critical to understanding how we want to respond.


© Johanna Hoffman 2020

Tags:  climate change  environment  policy making 

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What is the BRI?

Posted By Carl Michael, Friday, January 3, 2020

Carl Michael, a member of our Emerging Fellows program initiates publishing a series of blog posts aimed at envisioning the long-term future of the belt and road. This is his first post in our EF blog devoted to BRI. The views expressed are those of the author and not necessarily those of the APF or its other members.


The ‘Belt and Road Initiative’ (BRI) is the most visible manifestation of China’s stupendous economic resurgence, its overwhelming geopolitical ambition and its sense of purpose. The multi-trillion-dollar initiative and its supercharged timeline is the Chinese government’s long-term vision for the future. The BRI, also referred to as ‘One Belt One Road’, covers global engagement, international infrastructure, investment, technology, connectivity and trade routes from China to Europe, comprehensively integrated together in strategic, geopolitical and economic terms. The multi-civilizational and massive scope of the BRI covers over fifty countries, touches about a third of the global economy and over sixty percent of humanity. The Chinese President Xi Jinping officially launched the BRI in Beijing in May 2017 with the stated desire of creating peace and prosperity for participating nations through economic corridors and cultural cooperation.


The ‘Belt’ section of the BRI is the modern incarnation of the historical overland ‘Silk Road’, the ‘Silk Road Economic Belt’. It extends from China to Europe, via Russia, Central Asia and West Asia. The evolution of the Belt and the development of a new balance of power in the heart of the Eurasian landmass will be of key interest over the coming decades. The ‘Road’ section of the BRI refers to the maritime ‘Silk Road’ which has been inspired by medieval Chinese voyages. It links routes, navies and ports into a ‘String of Pearls’. Its Western arm extends from the South China Sea, through the Indian Ocean to Africa and thence to Europe via the Suez Canal and its Eastern arm extends to the resources provided by Australia and New Zealand. These ‘roads’ are vital because the vast majority of global trade is seaborne. In addition to these the BRI has strategically located cross-border ‘corridor’ extensions, including oil and gas pipelines; it also has the potential for an ‘Arctic Silk Road’ to take advantage of climate change and to avoid existing maritime chokepoints. A ‘Digital Silk Road’ comprising the latest cable and wireless network trunk connections and technology standards, a BRI currency ‘Road’ and a ‘Space Silk Road’, could also be considered to be under the aegis of the BRI.


The significance of the BRI cannot be overestimated. It has become China’s overriding national strategy in a similar manner to the significant moves by the USA, UK, and other Western nations post WW2, in setting up the UNO, the World Bank and the IMF. This is the premier Chinese global cooperation initiative and tremendous effort is being expended into its success by both government and non-government concerns, supported by a colossal diplomatic effort. Given the immense demand for international infrastructure and China’s huge production capacity and purposeful commitment, the BRI is bound to leave a significant and lasting mark in the international arena where it has been both welcomed and met with suspicion. It brings to the forefront the need for indispensable partnerships, the need to prepare for strategic shocks, and the ability to address overstretch.


The rapid growth of China’s megalopolises and their existing mesh of connections with the wider world has provided the foundation for the BRI. Building on this milieu of people, capabilities, strategic ambition and commercial interest makes China a key player in the post Vasco da Gama era version of the Great Game, albeit with a much larger game board. The other players, big and small, could end up using this new version of the ‘game’ as their opportunity for addressing inequality and unlocking the potential of their dynamic populations, thus advancing their own interests. The new ‘game’ is reshaping alliances, redefining the internal structure of nations, reformulating worldviews and heightening security tensions. With all of this in mind, it is essential for us to examine what underpins the edifice of the BRI in order to foresee how Pax-Sinica could play out in the arena.


© Carl Michael 2020

Tags:  BRI  safety  technology 

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Who owns capital when capital can own itself?

Posted By Tim Morgan, Thursday, December 26, 2019
Updated: Saturday, December 21, 2019

Tim Morgan inspects the ownership of capital in his twelfth blog post for our Emerging Fellows program. The views expressed are those of the author and not necessarily those of the APF or its other members.


Every layer of social organization has a preferred mode of ownership. Each is more complex and abstract than the last. The fundamental layer is ownership of identity and sense of self. Ownership of personal items is informally recognized by our “tribe” of close relationships in the next layer. In the third, property ownership is formally documented and enforced by institutions of government. The fourth ownership mode is market-mediated, consisting of exchanges using a currency or other standard measure of value.


The last ownership mode is the most abstract. Automation creates shared information flows between interconnected participants. Each node can extract knowledge and use it to further augment the value of the shared information. These networked knowledge transformations create a new form of automation-enabled collaborative ownership. It creates value via synthesis and sharing. The ownership mode is in common. Its form is a Nexus.


Each ownership mode uses its matching social organization form to create value. Institutions formally recognize ownership and control, establishing potential value for the owners. Markets add value via exchanges of ownership. Nexuses generate shared value via its connected relationships and transformations of information into knowledge. A Market determines value via competition. A Nexus amplifies value via collaboration.


We see early examples of this new collaborative ownership mode in everything from Creative Commons licenses to Wikipedia. The new Nexus form exists in tension with older ownership forms. Markets use nexus-like search engines and social media to quietly monetize user data. Institutions of government frequently attempt to impose ideological restrictions on networks. Nexus forms of collaborative information ownership are in their infancy but are developing quickly. The dynamics between each form will shift as they do.


By 2050 automation and networks will be ubiquitous. Computing will be ambient. AIs will be vastly more capable, interweaving with all aspects of life. Government institutions and the Public Sector will still exist to establish order, stabilize society, and govern ownership of property. Markets and the Private Sector will still exist to energetically exchange material value. The Civic sector of families and communities will still focus on the local needs of everyday life. Threaded through them all will be a mature Nexus-powered Social Commons sector.


In its healthy form, the Social Commons will seek to transform abundant information to address both common needs and intractable problems. Capital will continue its relentless fusion with automation, embedding flows of Nexus-derived knowledge into its self-management. Cognified capital is unlikely to have human-like consciousness but will be embedded with purpose and autonomy. It will be trusted to act with the same positive-sum values as its creators.


In its unhealthy form, cognified capital will be used to disrupt the Social Commons. Those autonomous agents will be embedded with the zero-sum values of their creators. The goal will be to competitively advance vested interests at the expense of others. The knowledge flows within and between nexuses will be their battlefields.


Who owns cognified capital when it can own itself? We will. We will own the shared benefits of our collaborations by investing our values within their decision-making abilities. What is uncertain is whether we create positive-sum partners or zero-sum weapons. It all depends on what values we choose to instill.


© Tim Morgan 2019

Tags:  capital  finance  ownwership 

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Will personal liberty be re-defined in the future?

Posted By Ruth Lewis, Thursday, December 19, 2019

Ruth Lewis a member of our Emerging Fellows program checks the possibility of re-defining liberty in her twelfth blog post. The views expressed are those of the author and not necessarily those of the APF or its other members.


For thousands of years, humankind’s generational evolution has been slow and steady, the narrative informed by the wisdom or misdeeds of the past. In the present there is constant change, systemic complexity and uncertainty. This has bred an atmosphere of fear for the future, fear of losing control, fear for our personal liberty, and fear of the ‘other’. People strive to create economic wealth and political certainty, making false assumptions and implementing technological systems without due consideration of the social ethical, environmental, legal or human rights factors. This striving for certainty actually undermines our personal liberty and our individual dignity.


In the future, personal liberty will be redefined by living confidently with uncertainty. Future libertarians will embody Sir Isaiah Berlin’s fox and recognise that true freedom may be unknowable. They will recognise the precarious balance between safety and autonomy, between utopia and dystopia, and will be comfortable in living within the polarities of this duality. They will action multi-scenario plans, each outcome as likely or possible, some more desirable than others. Their anchor point will be to take personal responsibility to define and enact a moral code of values for community, for society and for future generations.


Personal liberty will be to action these individual values now, and not wait for them to evolve through exogenous circumstances. It will be to contribute to the national and global conversation of what global values we have in common. Whether for common land and environmental protection, or for data and privacy, we will act for preservation and against exploitation. Common assets can be owned, governed and enjoyed by the collective, and individual characteristics will be preserved and protected for individuals. Individuals will be able to determine what aspects of themselves that they wish to share, and will have ownership over this determinant.


Citizen governance will promote liberty by forming and shaping polity through consensus according to collective normative values. It will recognise individual liberty is not compatible with capitalism, communism, nor any form of exploitative or repressive regime. It will recognise the equilibrium and duality of the individual and collective assets, encoded in the minds, the hopes and dreams of its citizens. It will recognise and work to overcome bias. With this equilibrium of common moral values, society can look to confidently plan for future uncertainty and societal health, rather than seeking refuge in past tribal structures or domination agendas.


Strategic Foresight bestows us with a unique set of tools and methods to explore future opportunities and landscapes, from the utopic to the dystopic, to experience and play with a multitude of possibilities for the future. It allows us to define our own version of future liberty, delving into wicked, unanswerable systemic problems, holding lightly to our preferred version of the future. It allows us to confidently trust emergence, so that we can develop respect and freedom from fear for ourselves and our fellow travellers through life. Liberty will be re-defined in the future by freedom from fear of uncertainty, freedom to be ourselves within our societies and our communities.


© Ruth Lewis 2019

Tags:  future  liberty  rights 

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Has democracy had its day?

Posted By Robin Jourdan, Tuesday, December 17, 2019

Robin Jourdan, a member of our Emerging Fellows program believes that democratic systems have not solved many problems, but they evolve into the future. The views expressed are those of the author and not necessarily those of the APF or its other members.


To be called democracy, a governing system is made up of basic rules: open and free-will elections, political participation, civil rights, and separation of powers. In a free country, people may speak their minds and shape their own and their children's futures. Threats and weaknesses in democracies are plenty. Some leaders have destroyed the substance of democracy in their country, muzzling the press and imprisoning opponents, while preserving the show of freedom. Deciding to introduce the euro in 1999 was undertaken chiefly by technocrats rather than by popular vote. Distrust in governments and weak leadership push prevalent anxieties.


Trust is a tangential challenge for experts and technology. Often citizens reject experts as an objection to power abuse. Experts must remain servants not masters to the system. Similarly, expertise-christened artificial intelligence may make most people better off toward the end of this century. Wearable and implantable technologies enable people to interact in new ways. Famously, "I think; therefore, I am," was expressed by Descartes. We're not sure if machines think, but as that distinction becomes fainter, our relationship with them will likewise shift.


As an economic system capitalism is a relative newcomer. Sharing periods of global maturation further confuses the system by conflating democracy and capitalism. Indeed, the US Constitution isn't an economic document. It provides for intervention in financial situations when the economy requires regulation. Deeply ingrained in the material, economic liberty is the means to protect occupational freedom. This specificity leaves open the door to alternative financial solutions. Democratic socialism is when the means of production are socially and collectively owned or controlled, alongside a democratic political system. Even the ten most innovative countries are a mix of capitalist, socialist, democratic, and autocratic.


As an alternative model's success, China can't help but represent a challenge to democracy and capitalism. Achievements of the Beijing Consensus include China itself. China has become the land that failed to fail and is on a trajectory to become a viable global, science superpower. Also, these successes create compelling arguments to modify capitalism.


From an ability to marshal vast resources against wicked problems like climate change to nurture long-term thinking associated with complex problem-solving, Brussels and Beijing are tallying up successes. Democracies haven’t yet solved these problems for many reasons including unrelenting political cycles. Such evidence creates a compelling argument and threat to democracy’s hold.


Economics, health, and safety have, at times, held contentious positions. Globally today, nine out of 10 people breathe polluted air. Ignoring climate change and other wicked problems could come at a cost in the trillions of dollars, antithetical to capitalist goals. Threats to corporate profits win little public interest, but businesses can wield power to change the conservation conversation in ways that don't rely on politics.


Has democracy had its day? Changes to democratic systems are likely to continue, as it is bred to mirror the culture it supervises. Whether direct, representative or constitutional, all forms are a dominantly Western construction. That so many people are prepared to risk themselves for this idea testifies to its enduring appeal. Democracy may not exist in any pure form, but we'll miss it if it's gone.


© Robin Jourdan 2019

Tags:  change  democracy  economics 

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Are Social Entrepreneurs the capitalists of the future?

Posted By Esmee Wilcox, Friday, December 13, 2019

Esmee Wilcox proceeds with her review of social entrepreneurs and checks their impact on the future through her twelfth blog post for our Emerging Fellows program. The views expressed are those of the author and not necessarily those of the APF or its other members.


Our 2019 reflections back on the events of Berlin in 1989 help to orient ourselves to our mid-point of 60-years of economic change, out to 2049. This series deliberately stretches our capacity to conceive of shifts in social norms. Sufficient to enable organising models that address the complexity of 21st century enviro-socio-economic problems even over private economic gains. Our exploration has included structural and behavioural power, conceptions of poverty and education, and the influence of resource scarcity and abundance, we turn now to our final question: Will social entrepreneurs be more relevant and influential in our 2049 socio-economic models? If so, will they displace current actors to be the capitalists of the future?


The possibility of being more relevant comes in part from the failure of market and state actors to organise in ways that work with the complexity of present-day problems. Social entrepreneurs might draw on the strengths of occupying a transitional socio-economic space to model how to organise. Translating and convening across communities, state and market actors. Not tied to institutions, nor mimicking the fragmentation that private accumulation drives.


With networked social capital in abundance, social entrepreneurs can influence across essential present-day financial capital with foresight into what is more necessary in transition to 2049. The exchange of creative and collaborative capital. Ubiquitous technologies replicated at minimal costs that enable and encourage networks of simultaneous consumption and production.


Yet if one of the limits to transformation is the ossification of capital’s advantage through profit from gate-keeping. How might social entrepreneurs use what they have in abundance to shape a new capital infrastructure to be accessible to new entrants? Can they use their advantage in creative and collaborative capital to participate faster in and influence the development of 6th wave enviro-technologies? Might new currencies tied to social and environmental outcomes help?


The degree to which current state and market actors may become displaced, and who displaces them, will no doubt be shaped by waxing and waning global influencers, exporting economic and cultural norms. A more collectivist yet totalitarian Chinese foreign policy investing in European zero-carbon technologies might be more concerned with private accumulation than social system benefit. A USA retreating from foreign economic and cultural interventions might focus more sharply on reforming the efficacy of state action in the internal public realm. A burgeoning youthful African diaspora might normalise circumventing enterprise’s reliance on the state altogether.


These questions leave social entrepreneurs with a high level of ambiguity over the shape of the next 30 years. The plausibility of mobilising sufficient creative and collaborative capital towards social system benefit even over the decreasing fit of present-day capitalist models. Yet one lesson from history must be that the absence in 1989 of a consciousness of more effective socio-economic models has been in part responsible for their failure to take hold. Social Entrepreneurs, and their collaborators in market, state and community agents, are more visibly and consciously demonstrating this now. The Capitalism in late 21st century that Generation Z will be leading may be unrecognisable from the fragmented, physically oriented version we utilise now. Nonetheless, the capitalists of the future will be the ones that have the foresight to straddle and mobilise across current and future systems to be the most relevant of our time. Here is the opening to lead into.


© Esmee Wilcox, 2019

Tags:  capitalism  entrepreneurship  social entrepreneurs 

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How will the present trend towards greater inequality be reversed?

Posted By Felistus Mbole, Tuesday, December 10, 2019

Felistus Mbole a member of our Emerging Fellows program believes that reversing inequality by means of taxation or regulating markets is possible, but so difficult. The views expressed are those of the author and not necessarily those of the APF or its other members.


Global wealth inequality has been rising for the last four decades. The trend is worrying and seemingly irreversible. It is unrealistic to expect total equality in a largely market-based society. Yet, the wealthy cannot continue to get richer at the expense of other members of society. Severe inequality hurts both the poor and the rich. The pertinent question is, how will this trend to greater global inequality be reversed?


There has been a lot of focus on economic growth. Understandably, the pie needs to be big for everyone to get a piece. But if the pie is not equitably shared, it will eventually stop growing. A sure way of attaining this is by giving the majority an opportunity to contribute to growing the pie and to proportionately benefit from it. In today’s technologically driven economy, human capital is equally - if not more - valuable than physical capital in production. Unskilled labour is thus a huge disadvantage and the key reason for current income inequality. Governments can address this by creating equal opportunities for all citizens by providing quality education, healthcare, and other public services. Generally, returns on capital outweigh wages. Highly skilled executives are, however, paid a lot more than the wealth they generate for the owners of the businesses.


Closely tied to this is the need to set a minimum wage for workers to meet their basics needs. This will be accompanied by the freedom for workers to associate and lobby for better terms and conditions of work where necessary. Workers shared-ownership of businesses with investors would also enable employees to share in the returns they generate. Representation of employees in the governance of businesses would further ensure that workers’ welfare is taken care off. These measures would collectively reduce the inequalities between workers and the owners of capital.


Taxation as a means of redistributing wealth will be a core tool for reversing inequality. Ironically, the tax rate of the top 10% richest has decreased in many countries while their wealth has multiplied several times. In such states, the promise to reduce tax rates appears to be the promise to win elections. Besides, the rich are the funders of political campaigns. Reduction of taxes has led to deterioration in quality of public services such as education and has deepened inequality. Sustained provision of quality public goods and services can only be attained through wealth redistribution measures such as progressive taxation of incomes and wealth and inheritance taxes. Governments will need to provide safety nets to guarantee minimum standards of living.


Moreover, governments will have to effectively regulate markets. Left on their own, markets will continue to serve the interests of capitalists and not the common good of society. It is the business of government to intervene in the economy whenever necessary. There will be a need for clear rules on what is acceptable market conduct and measures to ensure that all players play by these rules.


The inequality we see today hasn’t suddenly happened. It is the sum of decades of decisions by society. Similarly, the wrongs will not be righted in a day. Yet, action must start now to guarantee the future. Reversing the current inequality trend won’t be easy. It will require foresight – acting for tomorrow rather than today. It will take a very strong political will by governments.


© Felistus Mbole, 2019

Tags:  equity  inequality  society 

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What Is the Role of Finance in The Emergent Future?

Posted By E. Alex Floate, Friday, December 6, 2019

Alex Floate, a member of our Emerging Fellows program believes that the role of finance in the emergent future is made by our choices. The views expressed are those of the author and not necessarily those of the APF or its other members.


2050 – Continued status quo

WNN, the World News Network, announced the closure of the Tokyo, New York, and London exchanges today, citing the owner’s announcement that the exchanges were no longer profitable due to the lack of publicly available stock assets. Finance watchers had been warning for years, even decades of the growing disparity in wealth in all nations, especially those with extensive and politically influential financial systems.


The concentration resulted in privatized holdings that were no longer accountable to public transparency, or hijack by minority investors. Other investment vehicles that the oligarchs could control, and usually skirted many archaic government regulations, were still offered for the masses. The money raised from these token offerings were then used to make the riskiest bets, ones the corporate monopolists and oligarchs did not want to risk their own money on.


The governments overseeing the economy were content with maintaining the status quo of reasonable stability in the broader economy. If the masses were content with meager returns, and a standard of living that allowed them to plug-in to a large selection of neuro-linked content, why not let the rich have their way?


2050 – Transformed by design

WNN, the World News Network, announced the renaming of the Tokyo, New York, and London exchanges. The exchanges now track the true costs and benefits of each company, both private and public, and their social responsibility scores. This allows governments to levy appropriate taxes and gives investors full information on the companies’ ability to create social goods in addition to profits.


Also announced was a unified global taxing and currency structure. This will stop corporations and individuals from using tax havens that reduce tax liabilities in primary markets. The move is aimed at corporations who gain all the benefits of a market without having to bear any of the costs. Additionally, it will restrict the ability to manipulate currency or financial assets in one market for financial advantage in another. These changes deal a blow to the world of ‘paper profits’ and the financialization of markets that enrich a few at the cost of the broader social good.


Present Day – What role do we want finance to play in our future?

The future of finance is dependent on the role we believe it should play in our society and economy. If we decide the status quo is sufficient, we can expect that financial profits will remain the priority of those who earn them, and they will continue to seek power to protect them. We can expect continued attempts to keep profits as private gains, and costs and losses turned into public debt. We can also expect other aspects of life, such as freedom of movement, expression, and privacy, to become luxuries that are priced and sold as commodities. Ultimately, the role of finance in the emergent future is what we make it. It is up to us whether it is our servant or master.


© E Alex Floate 2019

Tags:  finance  future  profit 

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