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Facing global challenges: is Malthus back or Schumpeter passé? Pascal Petit University of Paris Nord UNU Merit conference 26-28 november 2014

Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

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Page 1: Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

Facing global challenges: is Malthus back or Schumpeter passé?

Pascal Petit University of Paris Nord UNU Merit conference 26-28 november 2014

Page 2: Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

Facing global challenges

• Risks tied to changes in environment • That will affect all countries and more severely

those poor countries in tropical zones • New imbalances regarding food accesses and

health conditions (spread of new diseases) and abilities to cope with natural disasters: floods, droughts, storms,…

• Not withstanding disasters stemming from toxic products or processes (nuclear) which could be tracked ….even if in some cases they were objects of scientific controversies

Page 3: Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

Malthus revenge

• Luc Soete stressed the difficulties for mankind to face these threats when he was working with a study group on the future of Europe in the world of 2025.

• Engaged in a similar exercise and cooperating with this expert group, I appreciated the reference to what Luc callled the revenge of Malthus

Page 4: Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

Though considering…

• The threats had gained new dimensions and raised issues sligthly different , where knowledge and uncertainty had acquired a new role.

• All of which led me to take another perspective, partly complementary, where it was the schumpeterian credo (more especially the vulgate that diffused around the 80s and the neoliberal turn of our economies) that had become over the past three decades passé.

Page 5: Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

Two kinds of risks

• For sake of clarity • Let us bluntly distinguish two kinds of risks: • - security risks (where the question of access

to some vital products or processes is raised) • - and safety risks ( where some uncertainty

remains as to the qualities of the product or process under view) (going beyond Knight distinction between risk and uncertainty)

Page 6: Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

Malthus revenge

• Malthus contention was that the growth of the population was bound to raise an insuperable security risk.

• Continuous improvement in efficiency of production processes and increasing product innovations led over two centuries to think that Malthus was wrong

• The fact that the survival of mankind was becoming an issue again did appear as a revenge of Malthus.

Page 7: Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

• We had escaped so far Malthus malediction • First by successive global governance schemes

where States and markets played different roles (with a strong part for defence and war issues) to deliver finally « three decades of golden years of capitalism »…for the western world. It seemed to come to an end with the crisis of the 70s …. But somehow seemed to have been overcome from the 1980s onwards with a world wide wave of liberalisation and internationalisation of the economies.

Page 8: Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

• This adhesion to what we shall call a crude schumpeterian credo (be it Schumpeter mark I or II ) was kind of relaying the previous governance scheme to escape Malthus malediction. Liberalisation was the motto across the (continuously) enlarging board of countries involved.

Page 9: Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

• Two things got not enough attention: • - first the warning on the limits to growth

(1972) , pretty alarming though..and stressing the waste beyond the Golden years

• -second the fact that the financial sector was the most rapid player in liberalising and internationalizing, rapidly building a global network of corporate control (with financial corporations at the core)

Page 10: Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

• After all, this financial sector (branding a schumpeter mark III ?) could very well have been the leader of a new efficient global development , managing the deployment of powerful generic technologies such as ICTs (see the rise and the fall of the VCs).

• But the East Asian crisis on the periphery of this financial network and the dot.com crisis at its heart (New York) ….let the global financial network to turn to its own (highly speculative) innovations in the years 2000s!

Page 11: Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

• which led as expected by the actors themselves, (as in any Ponzi venture where one cannot pull out alone) to the global financial crisis of 2008,

• Retrospectively the collateral damages are enormous :

• - 1) a world of big businesses largely stuck in the straight jacket of financialisation ( short termism, share holder value priorities , only tempered by large CEOs bonuses and other extravagancies)

Page 12: Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

• 2- reduction in the power (and legitimacy ) of most of the states , unable to check the rise in inequality, and led to reduce social protection (and its rising needs in ageing economies) to cope with the extra costs brought by the crisis (supports to increased unemployment and bailing out of firms). …with national political scenes deeply transformed in the process……..all of which masks the advantage of a catching up among countries ….;and of a consumer surplus brought by trade

Page 13: Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

• 3 Little reactions of « empeached » States and Markets to the unveiling of major safety risks.

• Beyond the toxic financial assets, development of knowledge and disasters are pointing to major safety risks of products and processes : be it nuclear production, GHG emissions, new generation of viruses, hazards of new technologies and products (nano, MGOs, biotecs…….)

Page 14: Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

emergency

• Time is running short • For the IPCC the rise in temperature should

not exceed 2° by 2050 to avoid major disasters • It implied a division by 4 of 1990 CO2

emissions • Difficult to achieve but which ,due to the

inertia of such huge transformations of modes of production and consumption, should be on tracks by 2030!!

Page 15: Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

Is it feasible?

• Little chance for the present asymetric duo of States and Markets to reform and succeed such deed. In each case , many reasons:

• 1: for the « Markets » (eg big international businesses):

• A) They have captured a lot of the regulatory power (norms and standards) and the trend is to claim for simplification (when safety risks are calling for more).

Page 16: Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

Markets won ‘t reform alone • B) Financial reforms on their way exemplify the barriers to

reform. • C) The structure of IPR is another (sector specific) straight

jacket where open access claims are difficult to promote… • D) Fiscal loopholes allowing fiscal optimisations reduce

incentives to changes. • E) The big business has tried to take on board some

« external »issues and risks with the CSR (corporate social responsibility) but here again progress has been very slow and did not get much at the last stage of MRV (Measure/Report/Verify) which would have allowed « external civil society » stake holders to check that commitments of firms were effectively enforced

Page 17: Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

States in rather weak positions

• With Markets stuck in the present formatage of competitiveness , States have little room for manoeuvre:

• A) loss of legitimacy with the degradation of social fabrics and the past « praising » of actions of private entreprises.

• B) no way to lead citizens in a top down manner to undertake efforts of the magnitude required (factor 4).

Page 18: Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

Way out of this impasse ?

• Can any global governance structure help to face the new challenges ?

• Presently, global governance is not the only result of States and Markets balances; new actors namely International Institutions (IIs) and Civil Society Organisations (CSOs) have emerged , first in the post Bretton Wood era and second with the renewed process of internationalisation of the last three decades.

• A possible way out could be to increase their role in global governance to face the contemporary challenges

Page 19: Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

• International Institutions (Iis) have already been promovers of actions to check climate change and poverty( MDGs).

• CSOs are more diverse , mixing NGOs and lobbies.

• IIs have started certifying and formating interventions of CSOs. States and Markets have still a long way to go

Page 20: Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

Towards more accountability and social innovations1

• What is required is a deep transformation of the organisations of our societies in all aspects (production, consumption, leisure,..)

• It is definitely partly beyond the dichotomy between public and private activities

• But many forms already exist : be it revival of « commons »on a large scale , of cooperatives, of all the practices of share economy that are already developing

Page 21: Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

Towards more accountability and social innovations 2

• In that respect we may go beyond the Schumpeterian perspective that we had forged in the last decades of the 20th century,

• entreprises would still exist but in a context where stake holders of the civil society will have their say, where norms and standards will clearly contribute to face the new safety risks while meeting in new ways the security needs.

• ,

Page 22: Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

Towards more accountability and social innovations 3

• A new perspective that could really take full advantage of the potential of the ICT technologies

• All the social innovations that we implied (from the development of commons , share economy practices, new social links and solidarity to new production processes, …) could be chanelled by innovative uses of ICTs. This revolution is already on its way (see the CAPS2020 projects for instance). A clear transformation of the global governance could help to give to this transformation its required momentum.

Page 23: Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

Towards more accountability and social innovations 4

• Social innovations : to tap the potential of the ICTs to renovate:

• - depressed segmented Labour markets into multiforms of citizens activities

• - shrinking social protection systems into closer and more adjustable to local needs patterns of protection and solidarity

• An objective of a Copernician revolution that our community can help to achieve

• …..and which will have to be evaluated in terms of well being improvements …

Page 24: Facing global challenges - UNU-MERIT · Facing global challenges • Risks tied to changes in environment • That will affect all countries and more severely those poor countries

• Thank you

• For your attention