Jean-Hervé Lorenzi and Mickaël Berrebi, A Violent World: Modern threats to economic stability, Palgrave Macmillan, 2016, vi + 182 pp, 1 137 58992 7, hbk, £19.99
The authors’ simple message is that we are at the beginning of an economic crisis the like of which we have never seen before; and that a bundle of constraints, and of attempts to deal with them, might result in some serious conflict. The existing constraints are accelerated financialization, increasing inequality, and a transfer of economic activity from developed to emerging nations. The new ones are an ageing population, the unpredictability of future technological revolutions, and a contraction in savings, which will constrain investment.
To each of the six constraints the authors devote a chapter. The first is on the major breakdown in technical progress ( – innovation is only happening around the edges of existing technological configurations), and an accompanying scarcity of raw materials. Developed nations becoming poorer could result in conflict between them. The second chapter recounts ‘the curse of ageing’ and growing intergenerational conflict. Chapter three suggests that the explosion of inequalities, increasing indebtedness, and the resulting recessions, will result in tensions that trigger ethnic and religious conflicts. Chapter 4 shows how deindustrialisation of developed nations, and a complex pattern of globalising trade and nation state autonomy, are already resulting in currency wars. Chapter 5 shows how the disconnection between the finance industry and the real economy has resulted in a collapse of investment in long term and more risky innovation; and chapter 6 shows how a lack of savings, and the hoarding of what there is, is restricting the options open to younger generations: so intergenerational conflict might again be the result.
The authors’ final chapter outlines a series of measures that might help to ameliorate existing conflicts and avoid those that might emerge. No solution is offered in relation to the problem of technological stagnation, because the authors believe that innovation evolves and cannot be planned. However, solutions are offered in relation to the other five challenges: refocusing the world on young people (for instance, by encouraging gradual retirement); socializing production of rare resources (and particularly of water); converting short-term debt into perpetual debt in order to release resources for investment; a less flexible exchange rate system; and governments shouldering long-term investment risks while private investors continue to cope with short- and medium-term risks.
This book joins a growing list of similar explorations of the challenges that our global economy faces. Paul Mason’s Postcapitalism, Inventing the Future by Srnicek and Williams, and No Ordinary Disruption by Richard Dobbs and James Manyika, are influential examples. A Violent World adds to our understanding, but its scope is limited, and the challenges and solutions discussed are therefore limited. The authors suggest that the disconnection between the financial industry and the real economy is one of the conflict-inducing challenges that we need to do something about, but then most of the challenges that they list, and most of the solutions that they offer, relate to that industry. Where the proposed solutions lie outside the financial industry – for instance, gradual retirement – no mechanism is suggested to achieve the solution. Postcapitalism and Inventing the Future know that a broader approach needs to be taken, which leads them to recognise that action in such fields as welfare provision will be needed. It is no accident that both of those books recommend a Citizen’s Income as one of the mechanisms required.
Not only does A Violent World ignore tax and benefits systems (although it does recognise pensions as an issue), but perhaps rather more seriously it completely ignores what is perhaps the most serious long term challenge facing our economy: climate change. This is strange, because some of the solutions, such as investment in renewable energy, would respond to some of the challenges that they do mention.
While A Violent World is limited in scope, it is still an informative read, and it adds to our knowledge of the challenges that we face and the directions in which we might need to look in order to ameliorate them.