Economics

La era de la adaptación

Feb 19, 2015 Klaus Schwab

GINEBRA – El mundo debe dejar de mirar atrás. Desde la crisis financiera de 2008, hemos desperdiciado demasiada energía intentando volver a la época de la rápida expansión económica. La errada suposición de que los problemas del mundo posteriores a la crisis eran sólo temporales ha sustentado políticas que sólo han producido recuperaciones deslucidas, sin abordar problemas fundamentales como el elevado desempleo y la desigualdad en aumento.

La época posterior a la crisis se ha acabado y ya tenemos aquí el “mundo posterior a la época posterior a la crisis”. Ha llegado la hora de adoptar un nuevo marco de soluciones realistas que fomenten una prosperidad compartida dentro de la economía mundial de ahora y del futuro.

En esta nueva era, el crecimiento económico se dará más lentamente –pero de forma potencialmente más sostenible– que antes de la crisis y el cambio tecnológico será su fuerza motriz. De hecho, así como la Revolución Industrial transformó el potencial productivo de las sociedades en los siglos XIX y XX, una nueva ola de avances tecnológicos está remodelando la dinámica económica e incluso social actual. La diferencia radica en que las repercusiones de esta revolución serán aún mayores.

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0 Comments on this paragraph, 16 Comments on this article

Sumair Sayani Mar 3, 2015

Thanks Mr. Schwab for a great article that provides a lot of moments for reflection.
In my humble view, in a World where Millennials and Centennials are soon going to form majority of consumers, demand for an equitable economic system is going to increase.
There will be demand from corporates to adopt a Triple Bottom Line approach, i.e. Financial, Social and Environmental and governments will be forced to adopt policies that promotes active reduction in income inequalities and inter-governmental bodies that reduce protectionism and trade barriers.
World has and will continue to face new challenges, some natural, most men made, human race has always found a way to overcome and survive.
Our overall consciousness led by the millennials and centennials will see us through. Technology, social entrepreneurship and responsible capitalism would be the order. and that's how I see the Age of Adaptation playing out.
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David Jed D. Schwartz Feb 26, 2015

Mr. Schwab,
Are you quite certain that the right people are always receiving their "just deserts?" Is this just sour grapes, or are some of the deserving few being overlooked?
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Zsolt Hermann Feb 22, 2015

I copy-pasted a few sentences that are in my opinion the keys to this important article:

"...It is time to adopt a new framework of realistic solutions that promote shared prosperity within the global economy of today and tomorrow...
...The pace of change has been accelerated by the interconnected nature of today's world. Technological progress is occurring within a complex and deeply integrated ecosystem, meaning that it simultaneously affects economic structures, governments, security arrangements, and people's daily lives...
...In order to prepare a country to reap the benefits of rapid, far-reaching change, policymakers must account for the entirety of the ecosystem in which it is taking place, ensuring that government, business, and society all adjust to every shift...
...Change may be frightening, but it is inevitable. And, in fact, it is an important source of opportunity to improve our systems, our strategies, and ourselves."

So as the writer rightly described we find ourselves in a completely new, globally interconnected and interdependent human system which we need to adapt to.

I think this adaptation will require a bit more than simply using new technologies, or relying on our technological capabilities alone.
I think first of all we would need to understand what this new paradigm truly demands from us, how we need to change our attitude towards each other, how human interconnections would need to be viewed and applied in practice.

And here is the main problem, here is the reason why we find it so difficult to find solutions for our global problems even now. The new global, integral system would demand from us to start building mutually complementing interactions instead of the exclusive and ruthless competition we have been using so far.

But building such interconnections, making every calculation for the sake of the collective before self-serving calculations is against our inherent nature.
Thus first of all we need a completely new education program that changes our inherent "operating software", helping us with immediate positive feedback, positive motivation so we can smoothly transition from the self-destructive old paradigm to the new paradigm offering us qualitatively higher level of existence.

When we changed our mindset, how we relate to each other, how we make calculations, based on those new foundations we can build a new political, economical and social structure that will be better suited to avoid future crisis situations.
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Gary Palmero Feb 22, 2015

I understand the general good will of those who approach the subject of capital and labor and, usually, the liberal bias towards labor. But this does not negate the follow:

a.) labor works for capital, not the other way around

b.) capital can usually call forth labor but the reverse is much less likely to occur (individual labor is limited in scope while capital is highly fungible and transferable)

c.) virtually every able bodied adult can provide labor but much fewer have excess capital to invest...this is why wealth tends to be concentrated more than most liberal social planners would prefer)

d.) the relative advantage of labor (compared to historical norms) in the 1946-73 period was an anomaly, not the norm owing to the effects of the Great Depression and World War II, effects that dwindled over time.

The major critique against government is that the educational system is slow to adapt to the new reality because of entrenched interests and short term thinking.

It is up to the worker to be innovative and to anticipate. If he does so, he will prosper...if not, depending on the government to write the alleged wrong is not an optimum strategy.
- M A J Jeyaseelan Feb 25, 2015
  
  Of course, financial capital is in a commanding position vis-a-vis human capital in the current economic scenario. This however does not mean that this is how it ought to be or will be in future.
  
  Financial capital is certainly more mobile and fluid and it can also be created within a shorter time span as compared to human capital thanks mainly to the banking system. As a result, financial capital is commanding higher opportunity cost based rewards than human capital.
  
  It is not as if human capital cannot call forth financial capital. All innovators and start up entrepreneurs already do that. Also, it is not as if financial capital flows primarily from wealthy persons. In fact, bulk of the capital in the economy is created by the banking system in the form of long term loans.
  
  Banks create long term credit using the deposits, which they receive from both the rich and the poor. But only the rich get access to the long term credit because of the collateral/guarantees, which they are able to provide to the banks. The rich mainly act as the agents of the banks. But in the process are able to fleece the economy.
  
  However, Internet has brought about two major changes, which would gradually eliminate the stranglehold of financial capital over human capital.
  
  First is the democratisation of technologies. This process is already disrupting the fortunes of even mega corporations. This list will only get longer in future.
  
  Second is the democratisation of financial capital, which is taking place through crowd funding. Once this phenomenon gathers momentum, it will be new economic paradigm, in which ownership of financial capital would cease to command higher opportunity cost as compared to human capital.
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- Robert Goldschmidt Feb 22, 2015
  
  Just as in 1933, a day a reckoning will come when wage-based demand fails to sustain our economy and we are facing a downwards economic spiral. The rapid mechanization of the 1920's threw many workers in farming, construction, auto production and mining out of work and the stock market soared on the profits that were created by reducing the cost of labor. Henry Ford had the right idea after the 1929 crash when he raised worker pay from $5 to $7 a day, but he was alone in the wilderness. If the government had mandated wage increases across the board, demand would have recovered and the economy would have been healed.
  
  When the day comes where the most wealthy and influential realize that their assets will become worthless or illiquid for decades, they will come around again as there will be nowhere to hide in the world economy.
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Robert Goldschmidt Feb 22, 2015

The primary and overriding task of CEO's has always been to maximize profits. Since the early 1970's, the information technology revolution has enabled them to maximize profits through reduction of labor costs by means of automation and outsourcing. Unfortunately this works at the micro but not the macro level as it is those very wages which fuel our economic engine by creating wage-based demand for goods and services.

Since 1972, US wages have fallen from 52% to 42% of GDP. This represents a diversion of $1.5 trillion per year of gross profits from workers to stockholders. The central bank encouragement of personal credit growth, in order to bolster flagging demand,is at best a stop-gap measure.

It is becoming increasingly clear that government intervention will be required to restore demand, if our political/economic system is to survive in the face of rapid technological evolution. The real question is whether intervention should take place using taxes or wage regulation.

Personally, I much prefer payroll regulation as, if properly implemented, it preserves corporate flexibility and worker self-esteem. One possible payroll regulation scheme would work like this:

The goal: to restore US payrolls to 50% of GDP

Using W2 and Earnings filings over the past 5 years, determine each company's ratio of earnings to payroll (E/P). This would be calculated by excluding any worker remuneration beyond $250,000. This value of E/P would be used as a cap on that ratio going forward. A company would be fined 100% of any earnings in excess of this ratio. Then, over time, these caps would be reduced proportionately by 1 % or 2% a year until wages once more reached 50% of GDP. Imports would require US payrolls equal to that needed to manufacture them in the US and, of course, we would expect US exports to be treated similarly by other nations.

Wages were equal to 50% of GDP during our healthiest growth period between 1950 and 1972. It is not necessarily true that growth will remain limited by natural resources as our economy is becoming ever more digital. It does not take many resources today to distribute movies, iTunes, electronic books etc. and our electric vehicles should last at least a factor of three longer,during which time there may be many generations of software updates. In addition self-driving cars will be less accident prone and operate with higher efficiency while increasing the capacity of existing roadways.
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Sergio Reuben Soto Feb 21, 2015

The “new normal” is less people working more or equal time, with better wages, when it should be more people working less time with equal or minor wages. Who is interested in the idea follow http://www.escudrojo.wordpress.com (in Spanish)
- M A J Jeyaseelan Feb 21, 2015
  
  If at all Keynes was right about anything, it was his prognosis about technological progress. He was of the view that technological advancements will progressively reduce the need for people to work more and more. What most economists and politicians have never bothered to understand is the real intent of this forecast. Induction of new technologies must lead to reduction in working hours and not reduction in employment.
  
  Currently, people are made to work longer hours and yet are not getting their due share in the productivity gains because of the adverse terms of trade, which the workforce suffers vis-a-vis capital.
  
  While capital is completely mobile and can tap in to any opportunities in any sector, labour has very limited mobility. Therefore, capital is able to demand a higher opportunity cost than what the workforce can do.
  
  While capital is completely fluid and can be used in exact quantities, the extent to which workforce can be utilised is determined by the production processes. People get paid only for that part of their ability, which the concerned production facility can make use of.
  
  While capital can be created these days so very easily by just making a promise to provide a return, it takes decades to accumulate the working skills, which production processes demand
  
  The global economy cannot achieve sustainable progress unless the unequal exchanges, which characterise modern economies are done away with. Factors of production must be rewarded on the basis of the net value additions that these make to the economy and not on the basis of opportunity costs, which result in unfair and unequal exchanges
  https://www.linkedin.com/pulse/root-causes-inequality-jeyaseelan-m-a-j?
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M A J Jeyaseelan Feb 20, 2015

Surely, past is relevant only to the extent of lessons it leaves for the future. And the key lesson that economists and politicians will need to bear in mind is that they really have no idea of the solutions that the world economy desperately needs. It is time that they accepted that it has been their idiosyncrasies, which have been the major source of most problems. it is time for intellectual honesty at all levels. Unless these gentlemen accept their ignorance, there will be little hope for the emergence of realistic solutions.

It is not as if technologies are going to be the key drivers of growth only from now on. Since industrial revolution, technological advancement has been the saviour. It is technology, which ensured net progress in spite of the profligate sins of governments and businesses.

The challenge of the future is not technological advancements per se but the rapid democratisation of technologies. The rise of China and the newly industrialising countries in recent times is very much part of this technology democratisation process.

The distinct change that will bring about paradigm shifts in future will be in the form of technologies escaping the clutches of capital. So far, commercialisation of technologies have depended on the extent of funding support available from venture and private equity funds. Crowd funding has already become a phenomenon. It will dramatically change the ways in which technological advancements get funded in future.

Democratisation technologies will eventually wipe out the role the role currently played by capital hoarders. It might sound too evangelistic but, this is what is certainly in store for the future.

Speed is not what the future needs. First mover advantage stands repudiated in quite a few cases. In fact, latecomers have done far better in many fields. Even agility has proved to be a reactive model. So, the real challenge would be to anticipate disruptive technologies, even while the going is good and bring about changes in the direction of ongoing businesses, even at the cost of foregoing current profitability.
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Yoshimichi Moriyama Feb 20, 2015

Let's forget the time before the 1870s. The time after that has been one technological innovation after another and one adaptation after another and one fundamental change after another in our habits, interests, and worldviews. Have we got closer to freedom, happiness, and security, and farther away from angust and irrationality?
- Yoshimichi Moriyama Feb 20, 2015
  
  PS
  What is the meanig in technological innovation when it is done in a most Darwinian civilaization? I learned the Japanese abaca as a boy. it was a very productive skill, doing computation very quickly; you could find a job with a bank. You could earn some handsome money and live a leisurely life, enjoying every moment of life.
  
  That skill is still very competitive if compared with doing the sums on a piece of paper. But you cannot expect to earn money in accordance to that competitive edge the skill still retains over a piece of paper. This can be said of every skill and technology. The rocket that sent man to the moon in 1969 is very productive even today, but of course you do not expect to earn money with that rocket today, because it has lost competitiveness to a newer craft. If this sort of thing goes on as Mr. Schwab expects, it would be competition from cradle to grave. It would be a Brave New World
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de Lafayette Feb 20, 2015

{failing to address key problems like high unemployment and rising inequality.}

Rising inequality, some of us like to think, it because there exists too high a level of unemployment. Tis true, but not nearly as true as the lack of adequate upper-income taxation - as in the US, where anyone in this bracket (in the US) does not pay more than about a third (Net After Deductions).

Imagine the motivation such a low rate of taxation gives to particularly those in finance willing to take risks (with other peoples' money) in order to make a Quick Megabuck. Which is precisely the why and how the Toxic Waste Mess was born that triggered the Great Recession of 2009, exported to Europe.

From which both the US and Europe are exiting slowly, slowly, ever so slowly ...
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Peter Cullen Feb 19, 2015

Sir, whilst I agree that we are wasting time and energy in trying to re-establish a form of rapid economic expansion which operated within a System which was incapable of operating efficiently enough to deal with that rate of expansion.

I don't agree that we should completely stop looking backward, there are valuable lessons that can be learned from history, as I am sure you would agree.

One lesson that was learned long ago has to do with Free Trade Between States within a single Economic Trading Block. There must be rough Parity of Wage Labour Rates between the States and it makes Financial sense to have a Single Currency with a Central Banking System that acts as a Lender of Last resort to the Individual Member Sates and to the Federation of States as a Single Unit. The Central Bank operates to Satisfy the National Needs For the Nation to be able to Invest in its own Future. Time and space doesn't permit more of an expansion on these aspects.

Those two Issues - Parity of Wage Labour Rates - and - A Central Banking System that operates as a Sovereign Lender of Last Resort - and handles the Intricacies of Dealing with "National Debt" Defined as being "The Debt That a Nation Owes to Itself for Investing in its Own Future"

There are Failures in the Organisation of those Fundamentals within the EU Trading Block and within The Globalisation Trading Block.

The other Problem that has beset the World Economy is that the Rapid development of Technology and Technology Driven Changes in Manufacturing has not had a similar effect on the Systems that are used by the Developed Economies to Regulate, Monitor and Tax the ever increasing Rates of Transactions that are taking place within those National Economies; and in fact one of the major problem areas is actually caused by the Disparity of Wage Labour Rates as controlled by International Currency Exchange Rates, particularly because the Rapid growth of Globalisation has been driven by that same Disparity that is Both the Source of the Profits that led to the successes of the Global Corporations, and the source of Globalisations Downfall, The process of adjusting the tariff rates that are to be applied on Articles manufactured with components coming from different countries with different currencies and different wage labour Rates that vary on a daily basis with and caused by the fluctuations in currency exchange Rates Manipulated by Forex Traders and the Mega Market Makers National Central Banks, with other Major Banks also Participating.... An Area that needs must be analysed and re-regulated, along with considerations on how to best achieve Parity of Wage Labour Rates.

To say that it will require a short period of time to arrive at the solution and to then Implement it would be a big mistake. The problem is complex not only in Economic Terms but also Politically, it will not be easy to achieve even with the best will in the world; and given the Human tendencies for Error and Greed etc. etc. it will be exceedingly difficult and frustrating.

The one really important factor working in everyone's favour is that Humans work most effectively when they are under the greatest threats... And that is certainly where we are sitting at the moment! We also have the benefit now of really fast computing technology and the means of gathering Big Data with increasingly small transmitting Sensors.... The threats are Major and Two Fold (at Least!) Global Climate Change, and Social Upheaval due to the Failing Economic System; both of which crises unless tackled as an absolute priority will lead inevitably to International Distrust, and Warfare... which would be a disastrous outcome.

It is time for Governments and Big Business to come together and solve these two Major Problems - I would love to participate in some of the discussions, I'm sure they will be very challenging.... But alas, I am just an individual Global Citizen suffering like most others at the moment from Austerity imposed not so much by decree, I suspect.... But imposed by the slow collapse of the Global Economic Trade system.

As you say in your piece, The post-post-crisis is upon us. It is time to adopt a new framework of realistic solutions that promote shared prosperity within the global economy of today and tomorrow.

I just hope that the Global Heads of State and the Captains of Major Mega Global Corporations as well as the smaller contributors can all recognise the Threat to our Planetary Survival, and work together to achieve those solutions.
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Stanislaw Korta Feb 19, 2015

Nie jestem naukowcem ale ten artykuł jest fantastyczny chciałbym przeczytać więcej na ten temat.
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