By Mark Triffitt, University of Melbourne
As world leaders gather in Brisbane this month to tackle an increasingly fractious global economy, let’s cast our mind back exactly one hundred years.
In 1914, the world was about to plunge into a period of unprecedented disruption. The disruption, global and bloody, saw old empires torn asunder by forces outside their control.
Alliances of great powers with quaint names such as the Triple Entente tried to stem the tide, seeking to preserve 19th century ways of thinking and doing.
With the benefit of hindsight, we wonder why they bothered. Why didn’t they see the inevitability of a new order replacing the old?
After all, new modes of economic production as well as new social and political movements – too nimble, different and diverse to be controlled by the old, static order – were emerging for all to see.
Fast-forward a century and we are experiencing a similar, if not more profound disruption. And we’re witnessing a similar level of disconnect in the way the G20 – the 21st century’s version of the Triple Entente – is dealing with it.
Behind the G20’s external trappings of fanfare and pomp hides a deep inability to shape, or even understand, this radical transformation.
We’ve already had a foretaste of it.
Two decades of globalisation and the internet have underpinned an exponential curve of change in how economic activity is created, valued and exchanged.
This transformation has initially occurred in industries like publishing, communications and retail that have been more amenable to digital transformation.
And the disruption is just beginning…
But as digital-driven change migrates big time into other areas like manufacturing, the disruption we’ve seen to date will be nothing compared to that likely to emerge over the next 20 years and beyond.
The signs are already there. Drones delivering goods to our doorstep. Cars and other complex products being manufactured at home by 3D printers.
Algorithms writing complicated market reports and legal briefs that prove more accurate than those penned by humans. The emergence of “localised” modes of currency exchange such as bitcoin.
On their own, they seem like quirks. But collectively they speak to a world that increasingly operates on the principle of “free” rather than scarcity, where iron laws of supply and demand are being upended, and barriers to market entry rapidly eroded.
They speak to a world where conventional production chains are rapidly fracturing, and where whole professional classes will be replaced, sooner not later, by intelligent technology.
Significantly these “quirks” speak to a rapid and radical power shift away from governments and corporations.
This relegates to little more than a hopeful dream the idea that the G20 has the capacity to steer macroeconomic policy toward desired ends, like “commanding” an extra 2% in global growth.
So it should be of little surprise that the G20’s agenda for Brisbane seems so “vanilla” and disconnected.
Ignoring the obvious
When the contours of the current economic disruption become clearer in a decade or so, historians might well ask the following:
- Why did the G20 not focus on managing this next wave of disruption, when it was obvious this posed a major risk to economic and social stability?
- Why was tackling growing extremes of global wealth and poverty not extensively discussed when it was clear it was undermining sustained growth?
- Why no talk of clamping down on the exotica of financial markets to cage their increasing volatility when it was obvious this could have avoided the next financial crisis and yet another prolonged period of global stagnation?
The same historians may also note that if there ever was a sign of the G20 being tied to shibboleths of the past, it was the forum’s signature plan to kick-start global growth through infrastructure building.
Wasn’t this the same policy prescription deployed by governments to lift stagnant economies following the Great Depression in the 1930s? And why did the infrastructure plan proposed by G20 involve just roads, rail and so forth?
Certainly a good plan to stimulate growth for 19th and 20th century industrial–age economies. But for the 21st century digital age?
Like so many other elite forums in the 21st century trapped in the amber of old 20th century thinking and hierarchical structures, small victories at the G20 summit will be fashioned into great triumphs.
A lot of hype will surround persuading a handful of global corporations to pay their fair share of tax. But getting 21st century companies such as Google and Apple to obey 20th century tax structures is not a vision for the future.
Rather it is just a compliance measure – one likely to unravel in a few short years as digitisation increasingly frays the net of national-based tax structures.
In essence, the G20 meeting in 2014 will come to symbolise the death throes of 20th century capitalism.
It will underline the futility of employing an increasingly outmoded economic paradigm to control and corral the new, centrifugal forms of a rapidly changing economic order.
Very little will result from the hoopla because very little can.
But at least in Australia we will have a ringside seat on the fading away of what might be more aptly named the “G20th century”.
This article was originally published on The Conversation and has been co-published with www.G20Watch.edu.au Read the original article. Mark Triffitt 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.
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