Look before you leap: how to prepare for the next big economic transition

We are at the beginning of a second big transition. Our economies, our work and our lives will change hugely as we slowly adjust to the new demands of a technological age that could go one of two ways: towards a brutalised form of capitalism, or an inclusive one. It is a massive political responsibility for world leaders, but a neglected one. In Britain, as the May 7 election approaches, UKIP, immigration, and coalition partners define the debate instead.

Politicians have always struggled with the very long term. In December, the UK government released its strategy for science and innovation. This sketched out a useful blueprint, and made financial commitments to 2021, but was immediately undermined by the home secretary as short-term immigration issues designed to win votes took precedence. This is always the danger when devising strategies for the far future, but this is an important time for our politicians to think strategically about how we encourage the inventions, technologies and collaborations which will define us for decades to come.

New threats and opportunities

The first big transition has been with us since the late 18th century, from the start of the industrial revolution and into the modern age. It has seen the West grapple with the advantages and challenges of mass-production, mass-consumption and industrial technology. Mills were built, forges fired, fortunes made; some of us got cheap clothing, cars and abundant food. Innovation was rapid, sometimes fraught, and certainly not carefully guided by government. It has delivered a world dominated by intense energy consumption, and by battles to secure access to natural resources. The second big transition need not be like that.

Global problems.Nattu, CC BY

The risks of drifting down the road of brutalist capitalism are real. We can see the warnings in newspaper headlines of today; from incessant economic crises, to the fear that new generations may be worse off than their parents, to the steep rise in inequality. There has been an employment squeeze on the middle class, in part thanks to a digital revolution which has only just started and whose massive impact is still ahead of us. There is also a slow but steady hollowing out of the traditional powers of the nation state, with many of today’s most pressing challenges beyond the capacity of any single country to resolve.

The key problem is that we rely on old means to fight new problems. The modern way of providing for our basic needs is not sustainable in the long run. We are already causing climate change on an unprecedented scale and it is clear that we simply do not have the capacity to globalise the developed world’s current ways of providing food, energy, mobility, healthcare, and water. These problems will stay with us as economic growth returns, and they will probably worsen as time progresses – risking even more climate change, more profound social turmoil, more tensions and more war.

Oiling the wheels

We need to move away from a costly business-as-usual approach and, in effect, devise a “second modernity”. This is a phrase coined by the German sociologist Ulrich Beck – who died earlier this year – but which is redefined here. In this modernity we keep our ability to innovate, yet also find new ways of directing it towards what you might call a common good. To do that, we need more people on the inside. Not only firms and the state, but also consumers, citizens and civil society.

Bringing innovation into line.Derek Gavey, CC BY

There is a very good reasons for this. It is clear that science and technology are hugely implicated in all these issues; modern society is built upon the idea that promoting “innovation” is extremely positive and will bring many wonderful things that make our lives easier and more productive. But it is also clear that there is a darker side too – new technologies can lead to massive unemployment, the pursuit of resources can lead to more violence and the further destruction of our environment, and the primacy of data collection can impinge on our privacy.

Policy plans

The first point is that policies designed to spark creativity in engineering, technology and science should stimulate investment throughout the entire process. And that means from invention, to development, to re-invention and distribution. We should not only work on the emerging policy areas such as nanotechnology and biotechnology, but also on the redesign of existing technologies to make them energy efficient.

The goal should be to encourage experimentation beyond the boundaries set by powerful corporate or public incumbents. It is understandable perhaps that large fossil fuel companies have built a formidable power base, and that successful early technology companies have quickly scaled up. No surprise either that politicians have sought to foster their success. But it is now vital to challenge the dominant ways of thinking, and invest in alternative community led initiatives.

There are four potential avenues through which to do this:

1. Foresight: Anticipating pressure points and adapting in good time can give voice to a wide range of expectations about the future. It can also help us to orient investment decisions, and prevent investment which might lead to major corporate losses in the future. Companies could create advisory groups with NGOs to shape and prepare their research and development portfolios.

2. Experimentation: We need to allow for bigger experiments, build more connections between them, and focus on experimenting with how they affect society. For example, many cities experiment with new transport services, such as electrical vehicles, buses on bio-fuels or hydrocells, but they do not collaborate much and mutual learning and building to scale simply isn’t there.

3. Collaboration: Innovation policy should also call on state, business, academia and other parts of society. One example is the Climate-KIC which is a European public-private partnership, working together to address the challenge of climate change. It brings together government and business, but could work more with civil society too.

4. Versatility: We need to go beyond specialist career paths and develop a next generation of leaders who understand the need to work in interdisciplinary teams, and combine technological and social aspects in order to innovate. Research councils should set up more programs where they stimulate this kind of collaboration. Big science and engineering funding should always go with a social science component not as an add-on, but as a crucial ingredient.

Johan Schot does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.