For the foreseeable future the global economy will be volatile.i Indeed, some would say that the only certainty in the global economy in the coming years is uncertainty. ii The challenge -- for governments, for businesses, for non-profits and for individuals -- will be to prepare for and adapt to enduring volatility and uncertainty. Agreed that there are many certainties: an accelerating climate crisis; demographic changes that will slow growth in the West and China; the increasing digitization of everything with pervasive platforms and the ever-greater capabilities of AI; and the growing economic and geopolitical power of China are salient examples.
But within these certainties are a vast array of uncertainties. There are uncertainties of both time and scale: how fast will climate change disrupt societies and transform economies; how broadly will AI affect the organization of production and work; how much and how rapidly will China’s economic power expand and how will it be exercised; and how will economic and geopolitical competition between the US and China affect cross-border flows of goods, capital and people. Not only are there uncertainties within seeming certainties, but the sequence of disruptions or crises–what economists euphemistically call “exogenous” shocks -is likely to affect the final outcomes. As an example, geo-political conflicts, such as the Ukraine war, which could not be predicted, will influence policy and outcomes in climate, energy security, global supply systems, national policy, and international alliances.
Should we, then, anticipate a long epoch of volatility that will define options for a generation? Or will this volatility prove an interregnum, a prelude to a new era? That era, an emergent global economy “regime”, will not be set by the neoliberal policy preferences of the US. The post-WW2 era was shaped by the US, then the single dominant economy and polity in the West. Rather the emergent order will reflect multi-polar competition, about economic position, about goals, and about international rules. Economic interconnections will persist and expand, but both the existing geo-political and geo-economic orders will be reconfigured.
This period of volatility, of uncertainty, is a time in which projections are difficult, and indeed may be fools’ gold. We can at best hope for insight into the predictable structural drivers, the certainties within which there are numerous uncertainties, and the implications for the choices we make. Faced with fundamental uncertainty, that is uncertainty that cannot be resolved by more information and analysis, what do we do? First, long term plans will need to be continuously monitored, updated and revised. Second, resources will have to be structured so that they can be deployed quickly to address the unexpected. Overall, confronting volatility requires resilience –the ability and the resources to recover quickly from unexpected difficulties.
This essay considers three certainties, each with its accompanying uncertainties.
● The interconnected global economy will be reconfigured: As an ever more interconnected geo-economy reconfigures there will be dislocations and challenges and winners and losers among nations, communities, sectors, and people. The “global” economy is moving away from the neoliberal vision and 1 This essay is forthcoming as part of an Omidyar Group series on the future of the global economy. 2 structure shaped by American economic and geopolitical power to a different structure, shaped by the expanding influence of China, India and the global South.iii
● The digital revolution will continue to unfold, become ever more pervasive and fundamental, with both clearly transformative developments such as AI and perhaps fanciful developments such as Crypto.
● Climate changes resulting from global warming will accelerate. Even if the most drastic outcomes are averted, ongoing climate change will be disruptive to economies and societies around the world. Both mitigation and adaptation will require coordination and cooperation among nations and between the private and public sectors.