The new power of technical standards

Written by Alexander van Wijnen, september 25 2020

Behind the global “interoperability” between technical systems, the shadow of Western dominance still lurks. This will change, however, now that China is playing an increasingly important role in the development of standards for 5G, blockchain, facial recognition, AI and network protocols. Technical standards are thus becoming the new battlefield of the economic and cosmotechnical power struggle between countries.

Our observations

  • A number of international organizations set global technical standards, such as the International Organization for Standards (ISO), the International Electrotechnical Commission (IEC), the International Telecommunication Union (ITU) and the 3rd Generation Partnership Project (3GPP).
  • A recent paper shows that China’s influence in the most important organizations for technical standards has increased rapidly. A clear sign of this is the number of Chinese in leadership positions. Zhao Houlin is secretary-general of the ITU. Shu Yinbiao is president of the IEC. From 2015 to 2018, Zhang Xiaogang was president of the ISO.
  • Last year, China submitted 830 technical proposals to the ITU – more than the following three countries, South-Korea, the U.S. and Japan, combined. Since 2014, 16 out of the 65 proposals in the ISO and the IEC have come from China.
  • Huawei is working on new internet protocols for the ITU. The Chinese company is proposing a “New IP” model in which the state has more influence on digital infrastructure compared to the TCP/IP network protocols developed in the U.S.
  • Chinese companies such as ZTE, Dahua and China Telecom have introduced standards for facial recognition and other forms of surveillance to the ITU.
  • This month, he ITU approved blockchain standards developed by Huawei, the People’s Bank of China and the China Academy of Information and Communications Technology.
  • Since 2017, SC 42 (subcommission 42), a collaboration between the ISO and the IEC, has been the most important subcommission for AI standards. At its first meeting, which took place in Beijing, the China Electronic Standards Institute presented a white paper.
  • In the book The New Global Rulers: The Privatization of Regulation in the World Economy (2011), the authors note that the decision-making process of the large organizations (e.g. ISO, IEC, ITU) is more political than we think. Oftentimes, there is no optimal technical solution. According to the authors, the key to successfully setting technical standards is to speak with one national voice (companies and governments that are on the same page in their thinking), which might work to China’s advantage.

Connecting the dots

Where does geopolitical power come from? The term “geopolitics” especially connotes armies, capital or energy. These are important, but every age will also create new forms of power. Our age included. The technical standard is such a new form of power, which does not receive much attention. The forcefield around technical standards is changing rapidly and China is already playing an important role. Besides being of economic value, the Chinese technical standard will give China more influence by spreading the Chinese perspective on technology around the world.

In the current system, technical standards are determined by international organizations such as the ISO, IEC and ITU. Many countries participate in these organizations through associations between governments and businesses, and standards are developed in committees with engineer workgroups. One theme has long been central to this system: the worldwide interoperability of technical standards (to improve efficiency, scalability and innovation). At the same time, however, this system has been used by Western countries to exert power. The ISO was established in 1947 and the ITU joined the UN in 1949. In the post-war period, the U.S. and Europe dominated the world and the development of technical standards was part of this. That has begun to change. China has taken great strides in the fields of 5G, facial recognition, blockchain and AI. Moreover, China has created a strong position for itself within the most important organizations.

The question is what the impact this greater role of China will have. Two types of impact are already noticeable. First, China will economically profit from setting technical standards. This became clear, for example, when the U.S. government recently gave American companies permission to continue to collaborate with Huawei in the standard organizations, for fear of being excluded from the international process. In the coming years, Chinese companies will increasingly profit from their current role in setting fundamental standards. Because, for instance, their existing products and competencies meet these standards, which gives them a lead on international competitors. Second, the Chinese cosmotechnics (the Chinese way of thinking about technology) will become more influential – and incur more resistance because of it. Technology is always connected to culture, and this holds even more true in our time of digital technology, in which, for instance, SC 42 is attempting to determine how we should regard transparence and the explainability of AI systems. Modern technology (more so than railroads or electricity networks in the past) is programmed in advance, according to certain rules that derive from cultural values. This has become apparent in the development of facial recognition, which more and more American companies are pulling out of, and Chinese companies have seized the opportunity to set the global standard.

Technical standards are geo-economic (countries become dependent on each other, which can create political pressure) and cosmotechnical (shaped by “foreign” cultural values). There is thus much at stake, especially to a hegemon (the U.S.) witnessing the decline of its influence. This means that the battle over technical standards might harden in the coming years, putting companies in a vulnerable position.

Implications

  • Through the Belt and Road Initiative, Chinese companies will increasingly use technical standards to create lock-in effects in rising countries in Asia and Africa. This applies not only to digital technology but also to industries such as the railway industry and the energy industry.

  • In the battle over technical standards, momentum for open-source platforms could increase. Recently, the open-source chip design platform RISC-V chose to move from the U.S. to Switzerland to protect its appeal in a geopolitical world becoming increasingly strict where technology is concerned.

American soft power is under pressure

Written by Sjoerd Bakker, september 9 2020

The American Dream is showing severe cracks and the U.S. has long ceased to be the country the rest of the world looks up to. The increasing unrest in the United States will inevitably lead to a loss of American soft power. As a result, U.S. hegemony is becoming more dependent on military and economic power display. The Trump presidency seems to be largely responsible for this loss of soft power and a reelection of Trump could have serious consequences for the U.S.’ place in the world order.

Our observations

  • A soft power index from early this year (pre-corona, pre-George Floyd) still put the U.S. in first place, but also indicated that this was mostly owing to the entertainment industry, sports and science and that matters such as (failing) public administration, reliability and international cooperation (on which the U.S. ranks 44th worldwide) are in fact weakening American soft power.
  • Historically, Hollywood and the American music industry have always contributed to American soft power. At the same time, American (pop) culture also expresses frequent criticism of the state of the nation and this denunciation seems to be growing more forceful and more widely shared, e.g. in films such as The Florida Project, American Honey and series like House of Cards. Movies that disparage the American Dream and the utopian image of the suburbs have been around for some time; consider American Beauty (1999) and Blue Velvet (1986).
  • Asian countries now also successfully wield soft power worldwide through their cultural sector. We’ve written before about the role of (Korean) K-Pop and the Chinese TikTok. Moreover, Hollywood is no longer able to make movies solely from an American point of view, simply because it has become too economically dependent on the Chinese market (and censorship).
  • Fukuyama’s thesis of the end of history contained (implicitly at least) the thought that deep down, there is an “American” in each world citizen, who would prefer to live in a democratic, free and economically liberal society. Presently it’s becoming clear that this prototypical American doesn’t exist and that there is a lot of discontent among Americans.
  • The current degree of polarization and corresponding political rhetoric in the U.S. are not associated with a modern and civilized democracy. A president who publicly refers to a conspiracy theory such as the Deep State or congressmen adhering to a conspiracy theory of the likes of QAnon further degrade the country’s reputation.
  • The Black Lives Matter protests, and the responses to them, have painfully revealed how divided America still is. Moreover, the footage of riots and the strongly militarized police forces don’t give the appearance of a civilized state, but rather of an authoritarian-led developing country.

Connecting the dots

Countries’ soft power consists of their ability to persuade or entice other countries to follow a certain course. This as opposed to “hard power”: military and economic means of exerting pressure. In most cases, the degree of soft power is determined by the question to what extent a country is perceived as alluring; act as we do, and experience the same freedom and prosperity.

*Besides this, there is a more explicitly moral aspect; act as we do, and you will be doing what’s Right. The U.S.’ soft power of roughly the past century coincided with its military and economic hard power and was largely generated by the globally visible, often predominant, American (pop) culture that reflected the American consumer lifestyle and “way of life”. Additionally, American brands such as Coca-Cola and Nike, and later big tech corporations and platforms like Apple, have always been important vectors of soft power. Alongside sporting achievements (Team USA), they comprised the most important building blocks of the American Dream; the country where everyone has equal opportunity to become successful and happy.

Today, the rest of the world has gained more insight into the less pleasant aspects of American society. This has gone hand in hand with the decline of American soft power, which rapidly accelerated with the election of Trump, and especially with his battle against Obamacare and his inadequate handling of the coronavirus crisis (and before that, of the hurricane in Puerto Rico).

In addition, and most importantly at present, the world is witnessing the collapse of American society along racial, economic and ideological dividing lines. The antagonizing language of both political camps and the footage of American cities are strengthening this image. Where the anti-racism protests (and earlier, the #metoo protests) are concerned, this could also be explained as a positive step, and “enhancement” of the American project. From its founding on, the U.S. has always presented itself as an “unfinished project”. In that sense, the Black Lives Matter movement could also positively affect the international reputation of America (“the country is working towards equality for all its citizens”). In practice, however, it seems closer to the truth that the BLM movement is showing the world how much structural inequality there still is in society, something we don’t associate with a highly developed and “civilized” country. After all, Fukuyama also posited that equality and freedom are the most important qualities of “post-historic” countries; values that America formally appears to uphold but fails to put into practice.

The decline of American soft power cannot be separated from the relative loss of military and (based on the dominant dollar) economic power since the nineties. First, this loss of hard power means that the rest of the world looks up to America less and the country is losing some of its natural appeal (“when you win, you have friends”). Second, the division in American society can also be understood to derive from the loss of American dominance and, linked to that, a loss of self-confidence. Since the 9/11 attacks and the ensuing protracted wars in Iraq and Afghanistan, and of course the rise of China, the average American doesn’t feel as if they’re living in an unassailable country anymore. The idea of “American decline” has thus become more widespread and forms, along with considerable socioeconomic inequality, a breeding ground for (right-wing and left-wing) populism and is causing a high degree of polarization and societal unrest. The fierce counterreaction of part of (white, male) America to the BLM movement (and before that, to #metoo) could possibly also be understood from this loss of American self-confidence; both abroad and within the U.S., the old image of America is under pressure and people feel as if their culture and values have become unimportant (or even banned in the perceived “cancel culture”). It seems in President Trump’s best interest to stir up these tensions, and to deepen the fear and uncertainty among his voters. Although this might increase his chances of being reelected, it won’t help the U.S. to once again become a paragon to the rest of the world.

Implications

  • The (relative) waning of American soft power is enabling the worldwide emergence of other ideas about the Good Life, citizenship, public administration and international relations. Europe now has the opportunity to take on moral leadership, but there will also be more room for “the Chinese story” and Chinese ideas about democracy.

  • A victory for Biden would likely benefit the U.S.’ reputation in the liberal and multilateral world order and may lead to less domestic unrest due to Biden’s more conciliatory tone. However, it will not change the fact that American society is under pressure and “culture wars” between progressive and conservative Americans will endure.

  • In a world where multiple nuclear powers compete, but “mutually assured destruction” makes armed conflict unlikely, the U.S. will have to continue to actively advertise the American Dream. To do this credibly, enormous domestic investments may be necessary to reinforce the social-moral infrastructure and make the U.S. alluring to other countries again. It can also be expected that the entertainment industry and big tech will be heavily involved in such a project.

The long hegemony of currency

Written by Alexander van Wijnen, september 9 2020

What happened?

As the U.S. dollar has fallen to a two-year low against the euro, there is more and more speculation about the future of the dollar as the global reserve currency. Currently, the discussion is largely based on financial and economic calculations. However, when taking a historical perspective, a clearer picture emerges. The history of hegemony points to the likely future dominance of the U.S. dollar, but leaves room for the emergence of alternative financial ecosystems.

What does this mean?

Financial dominance is the final phase of hegemony, but it lasts for decades. By comparing several elements of hegemony (e.g. military, trade, innovation), Ray Dalio has shown that the power of the global reserve currency is something that outlasts all the other elements of hegemony by a multitude of decades. We have also noted how the Hegemonic Cycle has repeatedly shifted from a phase of “material expansion” to a phase of “financial expansion” of the global economy. Hegemony ends when the hegemonic currency loses its status as the global reserve currency, but such a shift takes a very long time.

What’s next?

Although the dollar is highly likely to remain the global reserve currency for the foreseeable future, other countries, led by China, will build an alternative financial ecosystem. For instance, China’s alternative to SWIFT (the dominant interbank system controlled by the U.S.) is gaining significant momentum. Meanwhile, Chinese financial ecosystems are going global by spreading across Asia and Africa and the Chinese central bank is experimenting with a digital currency. In the long-term, the emerging Chinese financial ecosystem may undermine the position of the dollar in global trade and flows.

The evolutionary impact of the crisis

Many ascribe revolutionary qualities to the corona crisis and think, or hope, that it will lead to entirely new ideas, rules or structures. It is, however, more realistic and useful to understand the crisis from the point of view of a continuously evolving world. In this world, the crisis is the cause of mutation, thus of new variations, and induces (temporary) changes in the selection environment. But there will be no sudden radical changes either on the variation or the selection side. This implies that changes resulting from the crisis may be significant, but not revolutionary, and that they will be restricted to matters directly related to the crisis itself and the way we respond to it.

Our observations

  • From the first weeks of the corona crisis, we’ve been flooded with predictions and ideas about a different, and often “better” world, that would emerge from this period of misery. Of course, many thinkers mainly expounded their wishes or their own hobbyhorses, regarding themes such as sustainability, societal inequality, or our view on technology.
  • Historically, we see that a(n) (economic) crisis rarely leads to a completely different world or radically different outlooks. Inasmuch as a crisis can lead to any significant change in direction, this is a slow process which builds on a motion already initiated before the crisis. In that sense, we must understand a crisis mainly as an event that could potentially, and to a certain extent, contribute to a process already underway, because more actors are supporting it or have stopped resisting it.
  • Tensions between China and the U.S. are rising because of the crisis, but the crisis as such is unlikely to lead to entirely new conflicts. In Europe too, the crisis has resulted in increased tensions between North and South as well as East and West, but none of these tensions are new or solely caused by the crisis.
  • Digital means are taking flight (though that will prove partly temporary as well) and in healthcare, for instance, we’re seeing a considerable increase in the use of telehealth After the pandemic, the immediate need for these applications will be gone, but chances are that doctors and patients will become accustomed to them and come to see their value, leading to rapid improvements in these apps and regulators and insurers taking these solutions more seriously as well (e.g. as a way to keep care affordable in the long-term).
  • The corona crisis has boosted the (hoped-for) decrease in car use. Our car use, historically low at the moment, will almost certainly increase again after the crisis, and it is plausible that the effect of the crisis will ultimately amount to no more than a few percent. Even if this seems puny, such a shift would be enormous compared to the minimal reduction we’ve seen in the past decades. Moreover, a single percent decrease would reduce traffic congestion by three percent and the effect on traffic flows would thus be even bigger.

Connecting the dots

Each crisis entices people to succumb to wishful thinking and parading around their hobbyhorses, but ultimately, changes caused by the crisis won’t be revolutionary and will be limited to matters directly related to the crisis and the challenge of tackling it. The consequences will thus be found mainly in the direct, and largely unavoidable, measures taken in response to the economic problems, changing geopolitical relations and the adoption of new technology during the lockdown. Other forms of change, purposely brought about after reflections on (the causes of) the crisis, are much more unlikely or will only gradually arise in the long-term. It’s therefore best to understand the crisis from an evolutionary perspective; as an event that influences continuous processes of cultural, economic, (geo)political and technological evolution, but that is at the same time rooted in these very processes, which is why it will fail to lead to radical, revolutionary change.

Evolutionary processes are characterized by a continuous dynamic of processes of mutation leading to new variations (e.g. technological innovations, new revenue models, political movements) that may or may not fit into a dynamic selection environment. This environment is made up by the conditions under which something can continue to exist, grow or die. In a societal (i.e. non-biological) context, the process of variation and selection is far from blind or random; actors expressly anticipate possible changes in the selection environment when they develop a new innovation or idea (i.e. quasi-evolution). And selection criteria only adapt when presented with the right variations (e.g. emission norms for cars follow the pace of technological innovation in the industry). This mutual adjustment between processes of mutation and selection limits the possibilities for radical change and leads to path dependence; choices made in the past reduce the number of possible choices for the future.

From this perspective, we may wonder how the corona crisis could be of influence. As stated, this influence will remain largely restricted to the direct effects of the crisis itself and the path-dependent way we’re responding to it. Partly, this will be visible in new (incremental) variations in terms of new technology or new practices. But what’s more important is the way it’s leading to other and new selection criteria that determine which of these new (and existing) variations will be permanent or at least have more momentum temporarily. This of course applies most clearly to working from home and, very specifically, remote doctor’s visits are now suddenly deemed adequate. And yet, these types of changes in the selection environment aren’t radical or stand-alone; they add momentum to existing trends. On the international stage, we see that the crisis is leading to a heightening of the Chinese-American conflict and that neither country really has any other choice, they can’t suddenly view the matter in a different light. After all, this conflict is part of a larger and longer-lasting hegemonic battle and the path dependence within that meta-conflict is much stronger than the corona crisis as such.

The kind of large and virtuous societal change that is widely discussed and written about but that holds no direct relation to the crisis itself, is more difficult to imagine from a (quasi-)evolutionary framework. Ideas about this have, after all, been around far longer and the crisis will not directly result in new, more promising variations on these ideas, because there is no immediate reason that it should. More importantly, the selection environment for these kinds of ideas will not immediately change as a result of this crisis. Like any other crisis, the corona crisis is open to several interpretations and its nature, size and cause will remain hotly debated (politically) for a while to come. Without any clear consensus about this, different groups in society will project their own ideas and interests onto the crisis and it will fail to lead to any radical shifts in (political) ideals or convictions.

Implications

  • Lasting change as a consequence of the corona crisis will derive from a changing selection environment in which new practices (from high-technology to diplomacy) are better able to thrive. First and foremost, this selection environment, and the applied criteria, will be shaped and reshaped by the crisis in all its manifestations. Only in the longer term will our reflections on the crisis (e.g. concerning its causes) actually affect the selection environment.

  • Even temporary changes in the selection environment (e.g. temporary lockdowns) can lead to lasting change. Various solutions (i.e. variations) are given the opportunity to be developed further, thanks to extra means, attention and goodwill, and will in time also be able to survive when temporary selection criteria don’t apply (as much) anymore. For instance, the direct restrictions on working at the office will probably cease, but the ongoing development of applications for working and having meetings from home will eventually lead to working from home being considered a full equivalent to working at the office.

A time of Westlessness

We’re living in a time of “Westlessness”. Within the Western world, oppositions have become so great that our idea of “the West” is not clear anymore. But history shows that we’ve been here before. If the current period of Westlessness creates space for a new liberal project, we may be in the process of building a better world.

Our observations

  • Westlessness is the title of this year’s annual report of the Munich Security Conference (Münchner Sicherheitskonferenz). New power relations are making the world less Western, but Westlessness also refers to the West itself becoming less Western, according to the report. Great oppositions within the Western world raise the question what we mean when we speak of “the West”.
  • In recent years, “illiberal politics” have arisen as an ideological alternative to the liberal idea of individual rights. Illiberalism advocates a closed cultural community with stronger borders. Examples are President Putin and the Chinese state model, but illiberal politics are in fact also a specifically Western phenomenon (as exemplified by the American President Trump, Hungarian Prime Minister Viktor Orbán and governing Polish party PiS).
  • Russian philosopher Aleksandr Dugin describes the universalist thinking of Western man (such as the idea of universal human rights, which should apply to everyone, everywhere equally) as “metaphysical racism”. Dugin considers universal ideas to be attempts to impose a certain way of thinking on the rest of the world.
  • Fundamental tensions between Western countries, a manifestation of Westlessness, are increasingly resulting in international conflict. While the U.S. and the EU clash more and more frequently, the EU itself lacks a unified stance towards the U.S., China, Russia and Turkey.

Connecting the dots

In recent decades, “the West” came to have a certain meaning; a culture in which individual human rights are paramount. But what we understand to be the West has changed with time. The Western world has also always known different forms (e.g. differing democratic systems, forms of capitalism). Our time of oppositions (“Westlessness”) raises the question whether the meaning of “the West” can change again. What comes after Westlessness?

The illiberal camp within the West represents more than populism; it’s also a movement with an alternative understanding of “the West”. To characters such as Donald Trump and Viktor Orbán, the West is defined by cultural, ethnic or religious criteria. Contrary to the idea of the liberal West as a beacon of individual human rights, they see the West as a “closed” (white, Christian) community. This is the source of the illiberal criticism of immigration. In addition, the extremist version of illiberalism is taking shape as the far-right terrorism that wants to protect “the West” from its “enemy” (and kills more than extremist Islamic terrorists do). At the same time, there are moderate variants of illiberalism that are increasingly well-represented in Western democracies.

It should be clear that within the West, criticism of liberal ideas goes back centuries. Liberalism is a school of thought in which freedom of the individual is the highest good. It arose in 18th century Britain, where more and more groups were liberating themselves from the grip of the state and crown. From then on, liberal ideals, from which stems the idea of the West as an open liberal world, have often been criticized in the West itself. Especially German and French intellectuals, as well as international political movements, tried to debunk liberal ideas in the 20th century. Present-day alt-right figures are again rebelling against the idea of the West as an (open) liberal world and speak of “post-liberalism”. What’s unique about our time, is that non-Western voices opposing liberal ideas now also have a lot of influence, which further heightens the contrasts within the West (e.g. Russian influence in Europe).

And yet, our “time of Westlessness” may lead to a better world. Illiberalism, with its alternative understanding of the West, is rooted in the failure of political, economic and social systems. Think of growing inequality, weak social mobility and corruption. This means that the liberal project with new “inspiration”, such as the battle against inequality and climate change (which Europe is already headed for), may breathe new life into the idea of the liberal West. A new “liberal coalition”, for example, between Europe and the United States is a possibility, a coalition to more actively protect liberal values in the rest of th

Implications

  • The Münchner Sicherheitskonferenz report also identifies Westlessness beyond the Western borders. International cooperation between Western countries is becoming increasingly difficult (e.g. between the U.S. and Europe with respect to Russia or China; between Europe and France regarding Turkey). Before a new coalition is established, we will remain in this period of Westlessness.

  • Since the Iraq war, the protection of Western values has become a controversial theme in the rest of the world. It is, however, likely to gain more momentum in the coming years, possibly because of a new American government.

The notion of European sovereignty

What happened?

During the corona crisis, France and Germany have joined forces in setting up a European recovery fund of €700 billion. There is much debate about the design of the fund (e.g. size, grants vs. loans), as well as the discord between member states and the possibility of further European integration. But on closer inspection of the proposal, there’s something else that catches the eye as well. The idea of “European sovereignty”, here imagined as support for industrial champions and protectionism against strategic investments from China, is gaining momentum. How should this be interpreted?

What does this mean?

In the twentieth century, the EU saw itself mostly as a “post-sovereign power” and imagined a world in which international governance (in the form of multilateral institutions) would create a new type of order – a world no longer subject to the power politics of superpowers. However, the idea of European sovereignty, which champions “strategic autonomy” against the U.S. and China, in fact points to a Europe poised to engage more in power politics and partly take leave of its “multilateral dream”. Is the notion of European sovereignty a productive idea for the future of Europe?

What’s next?

It is likely that France and Germany, to provide a lifeline to the EU in light of a deep crisis and hegemonic conflict between the U.S. and China, will launch more initiatives to create European sovereignty (e.g. supporting industrial champions, protectionist policy). However, although this would strengthen the strategic position of Europe, it is highly likely that internal tensions will rise. Smaller EU members will always be vigilant about French-German projects to reform the EU. The resistance of the “frugal four” in the coronacrisis is the writing on the wall. If France and Germany take too little account of the interests of smaller EU members, Euroscepticism will grow in the coming years.

Globalization closer to home

During the corona crisis, fears of deglobalization have been growing. In several ways, there will be globalization closer to home, but instead of a systematic deglobalization, this points to a new type of globalization. A historical perspective teaches us that the current deglobalization is a part of the 21st-century form of globalization.

Our observations

  • The fear of deglobalization we’re currently seeing predates the corona crisis or the election of Donald Trump and Brexit and originated even before the 2008 crisis.
  • Global trade seems to have peaked after the 2008 crisis (trade-to-GDP ratio).
  • The United States and China seem to be “decoupling” more and more, a process threatening to accelerate during the corona crisis. Because of the trade war between the U.S. and China, trade between these countries has dropped to $260 billion, while American trade with Mexico and Canada has increased to more than $300 billion per country.
  • Kishore Mahbubani sees the corona crisis as a sign of the transition from an American form of globalization to a “China-centric globalization”.
  • Elements of deglobalization must be understood within the framework of the form of globalization of our time.
  • The Japanese economy is characterized by “desourcing” (or “build where you sell”). This paradigm exists beyond the dichotomy between “outsourcing” and “insourcing”: a large number of Japanese industrials produce where they sell, diminishing the Japanese dependence on exports.

Connecting the dots

The term globalization refers to economic integration, but globalization has several dimensions. Globalization also refers to the spatial transformation of city and hinterlands, or an idea of progress creating an area of tension in society. Moreover, globalization is always historic by nature. Through time and space, it takes different forms. Since the 16th century, there have been several “waves” of globalization. Take the colonialization of the “New World”, 19th-century industrial globalization or the American globalization of the 20th century. The globalization of the 21st century can also be characterized in a certain way. The rise of the East is creating a new form of globalization.
“Deglobalization”, which we have been warned about for over ten years, must be understood in this context. Three perspectives can help to achieve this:
1). The regionalization of the world economy. Something that prevents economies from increasingly integrating on a global level, is the regionalization of the world economy. Broadly speaking, three large economic systems are emerging: North-America, Europe and Asia. Because they continue to integrate with each other, the growth of worldwide integration has come to a standstill. Take, for instance, rising Asia: already, more than 60% of trade, foreign investment and air traffic in Asia is intraregional – between Asian countries. In Europe, more than 70% of trade is intraregional. Meanwhile, the U.S. may be “decoupling” from China, but American integration with NAFTA (Mexico and Canada) is growing. “Nearshoring”, protectionism or new forms of industrial politics must all be understood in this context. Moreover, regional integration is propelled by new ideas. Think of the mission of the European Union or the Chinese idea of the Belt and Road Initiative. An important question in this respect is which parts of the world will join which system: will Africa integrate more with Asia, or with Europe? Will the United Kingdom mostly remain within the European system after Brexit, or will it be able to join NAFTA?

2). Hegemonic conflict between the United States and China. Some elements of deglobalization, such as protectionism, pressure on trade and uncertainty over value chains, is grounded in hegemonic conflict between the U.S. and China. The American economy is less dependent on trade than most countries, enabling the U.S. to use financial and economic sanctions to pressure strategic rivals. Furthermore, criticism of the idea of globalization stems mostly from the status quo powers of the U.S. and Europe, whereas Asia generally embraces globalization.
3). National forms of globalization. The Japanese example of “desourcing” suggests a typically Japanese form of globalization. In the same way that modernization leads to “multiple modernities”, globalization has different sets of national roots. For some countries (e.g. Germany, China), globalization will be more global in nature, but other countries are more regionally oriented. The rise of the East will create a larger field of different forms of globalization. The Japanese example shows that not all Eastern countries will globalize in the same way, or with the same intensity, on a global level.
Three perspectives indicate the nature of 21st-century globalization. Regionalization, uncertainty over hegemonic conflict and different national forms suggest that globalization will be “closer to home”. Criticism of the idea of globalization may endure in the West, but an alternative form will place globalization closer to home. Technological innovation will play a large role in the next phase of globalization. Consider automation, robotics and 3D printers, which will make it possible to facilitate globalization closer to home.

Implications

  • In the next phase of globalization, (North) America will become the most stable region in the world. NAFTA is least dependent on the rest of the world and the hegemony of the U.S. will stabilize conflict between countries within the region.

  • The more the world economy regionalizes, and the U.S. decouples from China, the likelier Eurasian integration becomes.

  • The next phase of globalization will yield new winners (e.g. Mexico, which profits from NAFTA and the decoupling of the U.S. and China) and losers (e.g. the United Kingdom, which, between NAFTA and the E.U., will be on its own).

  • If the movement of globalization closer to home grows, investments in technologies that facilitate this (e.g. robotics, 3D printers) will increase.

What could a Post Corona society look like?

The Corona pandemic has resulted in an enormous setback and disillusion all over the world. Families find themselves in quarantine, health systems are under enormous pressure, and the level of global economic damage may be without precedent. Regardless of how long the pandemic will last, it is bound to leave a deep impression on societies around the world. Since we can only speculate its impact because there are a lot of uncertainties, scenario thinking seems to be the best tool to imagine how current developments will shape a post-corona society.

Our observations

  • Scenario reasoning is not based on a linear extrapolation of events today, rather it distinguishes factors that are most uncertain (and relevant) on a given time-scale and questions how those factors can shape the world, depending on how they develop in the future.
  • In our scenario exercises, and throughout all of our research, we focus on developments in geopolitics, technology and culture, which form the axes of our scenario models. In this case, the pandemic will impact geopolitics, the technology we develop (and put to use) and socio-cultural trends. By combining these three axes of uncertainty, we produce eight distinct scenarios in each of which a specific combination of (conceivable) outcomes of the pandemic takes effect.
  • While these outcomes are yet unpredictable, current developments inform us about the likeliness of specific scenarios actually becoming reality. As we noted in our previous edition for example, China’s apparent success in fighting the outbreak is likely to contribute to a wider acceptance of Chinese institutions and its use of technology. This, in combination with President Trump’s (supposed) attempt to buy a German vaccine developer, could very well sway geopolitical momentum for China.
  • As millions of people are living in some form of quarantine or lockdown, people are developing and embracing new (or already existing) practices such as teleworking and online education. Some of these are only temporary and can be discarded once the crisis is over, others may last longer and become part of our everyday routines.
  • The crisis lays bare existing problems and (some of) these can become a “target” for society to address in a post-Corona society. These problems can become visible either because they add to the spread of the virus itself (e.g. poor accessibility of healthcare in some countries) or because current measures against further spreading of the virus show us what the world could look like (e.g. clean air in Chinese cities and crystal-clear water in Venetian canals).

Connecting the dots

Once the Corona-crisis is over, the resulting deep social and economic wounds will take time to heal and, afterwards, the world probably looks a lot different from today’s. This does not necessarily mean that a full-blown paradigm shift will take place, but the personal suffering, months of societal disruption and a global economic crisis are likely to shake up geopolitical dynamics, change the way we use technology, challenge our worldview(s) and force us to redefine priorities in order to prevent or prepare for new crisis. In order to get a glimpse of such changes, we can start to think about the factors that are likely to have a major impact on the world as we knew it before the pandemic. We recognize three factors: cause, reaction and solution. First, how we will perceive the cause of the pandemic. For example, will China get the blame as a source of viruses came from there, or will we blame the global economy? The causes of the pandemic will be scrutinized, and possibly acted upon (e.g. specific health and safety regulations or a more critical stance on global flows of people and goods). Second, what happens during the crisis. Think for example about how individuals behave (e.g. widespread altruism or hoarding consumers) or how nations behave towards their citizens and towards each other (e.g. sharing resources or not). Also, we are already witnessing how new, and not-so-new, practices are gaining popularity and we may continue to behave like that in a post-corona world as well (e.g. teleworking and online education). Third, the way the crisis ends and how it ends.  For instance, specific nations, businesses or technologies (e.g. if China is the first to develop an effective vaccine) can save us. The axes in our scenario model express extremes of how the pandemic could change geopolitics, (our use of) technology and sociopolitical aspects. The greatest uncertainties, from our perspective, are whether this crisis will lead to further globalization or rather to (small steps towards) deglobalization, whether technology will be used (primarily) to prevent a new crisis or to be better prepared for the next one and whether people will aspire to an attitude of more individualism or collectivism. From a geopolitical perspective, the spread of the coronavirus is deeply intertwined with globalization. Ongoing globalization is justly portrayed as one of the major causes of the rapid global spread of the virus, as international economic and political interests made it near impossible to isolate it. The pandemic can directly influence global relations, depending on whether countries work together to control the outbreak and develop a solution or whether they choose to go about it alone and,

for instance, refuse to share scarce resources (or medicines) with each other. As a result, a post-corona world may be one in which globalization prevails (or even accelerates) or we may see (different forms of) de-globalization as multilateral institutions fall apart.
From a technological perspective, the question is how this crisis affects the kinds of technology we will develop and how we will put them to use. One outcome could be that we decide to put all of our technological weight behind preventing a new health (or another natural or man-made) crisis. Solutions may include a sensor-based economy for early detection of problems or technology that supports alternative consumer practices (e.g. facilitating meaningful interaction online). Another outcome of the crisis could be that we will focus on the preparation for future crises instead; e.g. the deployment of more scalable infrastructure to facilitate peak-demand or technology that supports autarkic lifestyles and local value chains. This reasoning, of more radical attempt to prevent or prepare for crises could very well apply to other looming crises as well (e.g. climate change or mass migration).
From a socio-cultural perspective, the crisis can lead to changes in world view(s). This can apply to the way we view each other, but also to our relationship with nature or the Earth. Failure to achieve effective social distancing or egotistic consumer behavior, for instance, could lead to further individualization as distrust and moral disapproval of others increases. The perceived human-nature dichotomy, to give another example, is likely to deepen if societies fail to address the pandemic. By contrast, the current crisis may also lead to more altruistic behavior when healthcare professionals and other (underpaid) critical workers are recognized and rewarded, which can also translate into broader attempts to reduce inequality. The result could be a society in which the collective prevails over individuals. As scenario thinking is not a predictive tool but rather a tool to navigate the future, it forces us to broaden our perspective and keep an open mind on future developments instead of, as happened during the Financial Crisis, fantasizing about a utopian world in which all the problems of the past are fixed. At the same time, we can speculate, and thus anticipate, which of the eight scenarios are more or less likely as the crisis unfolds. From a decision-making perspective, we can consider which actions fit best with one or (preferably) multiple scenarios. The above contours are the first sketches of the research model we will explore in depth in the coming period.

Implications

  • When exploring several scenarios about a post-corona society, the challenge is to do so as neutral and unbiased as possible. That is, thinking in terms of desirable and undesirable scenario’s prevents an in-depth exploration of the pros and cons in all scenarios. That is, when a crisis unfolds in a direction that was first perceived as undesirable, one is less capable to spot opportunities. Nevertheless, this is easier said than done as some scenarios seem dystopian at first glance and the most obvious opportunities seem rather cynical.

  • Because this crisis affects the whole world and all layers of society, it will probably be a formative experience for many. The concept of ‘formative experiences’, however, is mostly used in the discourse of generations, in which a worldview is formed by huge events or developments in someone’s youth. However, we have previously explored a different approach, allowing formative experiences throughout a lifetime. This might be a more interesting angle for this particular situation because this event has a deep impact on everyone around the globe, not just the young.

Conceptualizing the Corona Crisis

As the coronavirus rages across the world, we are struggling to understand what our future technological, political and economic systems will look like. Whereas the future of a post-corona society is uncertain, the only thing that is certain is that many things will change. Furthermore, the current coronavirus and its devastating effects should be understood from deeper transformations in the fabric of our societies, having to do with technological innovations, the process of modernization, as well as general cultural dynamics.

Our observations

  • In her book Meeting the Universe Halfway,Karen Barad recognizes agency of the nonhuman realm, based on a relational ontology and agential realism, in turn based on insights from quantum physics. The quantum entanglement means that there is no ontological separation between subject and object, but only intra-acting agencies between “entangled agencies”. As a result, phenomena of various sorts “emerge” between various agents. This relational ontology questions our ideas on causality, individuality, and agency in analyzing these complex phenomena (indeed it draws from insights of quantum mechanics, such as the measurement problem of quantum field theory, or the quantum entanglement).
  • Our world has become much more complex and interconnected in the past two decades, both in a material and more ethereal sense. For example, the number of people crossing national boundaries (measured as the number of outbound tourist departures) almost tripled to over 1 billion annually between 1995 and 2018. Likewise, global trade in merchandise exports almost quadrupled, to $20 trillion. And the stock of international migrants, i.e. people living outside the country where they were born, increased by almost 70% between 1995 and 2019, to 272 million international migrants. But the world has also become much more complex and interconnected from a social and political perspective (measured by the KOF Social Globalization and Political Globalization Index). In a less material sense but in terms of “flows” this holds as well. For example, international capitals flows has quadrupled (e.g. foreign direct investments, international portfolio flows) between 1995 and 2018, while cross-border data flows grew 45 times between 2005 and 2015 and will continue to grow at a rapid pace in the foreseeable future due to the emerging sensor-based economy.
  • We have written before that this integration and increased complexity of the world are driven by a deeper development of the idea of freedom in history and reality. By neoliberal politics, for example, which favors open borders and promotes economic integration between countries to benefit from comparative advantages and heterogeneous endowments of production factors; by digital technologies that help to dismantle borders and break open the small world of traditional societies to the “global village”, or by the end of the Cold War and the concurrent belief in the “end of history” that led to a huge wave of liberalization and democratization in many parts of the world that had thus far been unconnected and isolated.
  • Wicked problems, such as the climate or economic and financial systems, are difficult to define, hard to solve, unstable, multi-causal and have many unforeseen consequences. However, the current reality shows that our social, political and economic systems are not able to induce systemic change to tackle these problems (e.g. financial crises, ecological degradation). As such, we are increasingly in need of complexity thinking. Crucial to this approach is an understanding of the complex nature of the quantitative growth of systems, as well as their qualitative aspect. Fragile systems are those that break in times of chaos and stress, resilient systems are those that can survive negative stressors and absorb shocks, while anti-fragile systems go beyond fragile and robust systems in the sense that they show non-linear responses to crashes and crises by becoming better overall from stressors and shocks.
  • Examples of this are the human immune system, which becomes better when exposed to (small doses) of disease or the body of scientific knowledge, which increases in corroboration when confronted with anomalies. Antifragile design principles have been implemented in many fields, such as logistics, urban planning, software development, AI development, molecular biology, business economics, megastructure engineering.

Connecting the dots

Currently, the world is trying to deal with the coronavirus and its sweeping effects on human lives, the economy, political and social systems, and cultural habits. Indeed, we are in the midst of a full-blown “corona crisis”. Our word “crisis” is etymologically derived from the Greek krinein, meaning to separate and decide. This makes a period of crisis a moment of truth, a decisive moment in which we need to make judgments about what is truly important and what is not, about right and wrong, and about molding the present situation into a brighter and more positive future. As such, a crisis is always a deeply political and ethical period. So what can we learn from our current corona crisis? First, the corona crisis is a “transdisciplinary phenomenon” that is impossible to narrow down to a fixed and stable entity. One reason is that the corona virus is an exponent of our increasingly complex and interconnected world. Originating from China, it has spread rapidly across the world, as China itself has become much more interconnected with the world. Since the outbreak of the SARS virus, which swept across the world between 2002 and 2003 and is from the same corona virus family as the current Covid-19 disease, China’s GDP and outbound tourist flights have increased almost ten-fold, while China’s multi-trillion Belt and Road Initiative with investment and infrastructure projects across the world has made the country a heavily invested actor in global affairs and linkages. This has led to a much quicker spreading of the virus across the world (besides the fact that the current corona virus is more contagious than SARS) due to airplanes, international tourists in China or Chinese tourists overseas. As such, the coronavirus shows itself to be an exponent of our increasingly vulnerable world: as we all become much more dependent on and interconnected with global flows, trade, production systems, and so on, we also become more vulnerable when something goes wrong in any of these sub-systems. Similar to the failed harvests in Russia that led to the Arab Spring, transmitted via accelerating food inflation, a relatively unknown market in the city of Wuhan is now wreaking havoc across the world. Furthermore, the current corona crisis is beyond control and comprehension of a single field of knowledge. Following Barad’s relational ontology, we can say that the corona crisis is not only about the virus itself,  but an interaction of the coronavirus, the effects of COVID-19 on human and non-human actors such as human bodies, nurses and hospitals, our implicit beliefs about fundamental tradeoffs between economic costs and prevention, privacy and surveillance, as well as about national policies, feelings of fear, the state of medical technology, the funding of medical technology, global power politics and so on

This has led to a much quicker spreading of the virus across the world (besides the fact that the current corona virus is more contagious than SARS) due to airplanes, international tourists in China or Chinese tourists overseas. As such, the coronavirus shows itself to be an exponent of our increasingly vulnerable world: as we all become much more dependent on and interconnected with global flows, trade, production systems, and so on, we also become more vulnerable when something goes wrong in any of these sub-systems. Similar to the failed harvests in Russia that led to the Arab Spring, transmitted via accelerating food inflation, a relatively unknown market in the city of Wuhan is now wreaking havoc across the world. Furthermore, the current corona crisis is beyond control and comprehension of a single field of knowledge. Following Barad’s relational ontology, we can say that the corona crisis is not only about the virus itself,  but an interaction of the coronavirus, the effects of COVID-19 on human and non-human actors such as human bodies, nurses and hospitals, our implicit beliefs about fundamental tradeoffs between economic costs and prevention, privacy and surveillance, as well as about national policies, feelings of fear, the state of medical technology, the funding of medical technology, global power politics and so onThis goes against our determination to contain risks and our constant occupation with creating stability and security, or what Ulrich Beck has called a “risk society”. The only way to negotiate both issues appropriately, that of increasingly rapid and ubiquitous intra-acting agents and our risk society, is to take the notion of risk and uncertainty much more seriously. We should do this no longer ex post, but ex ante, by creating design from a precautionary strategy of perspective. This is incompatible with the proactionary principle that has been dominant in our political, economic and social views on systems, such as openness to trade, freedom of innovation, or our belief that the state should not be involved in private matters. We are already seeing the state assume such an active role, for example, in their banning the trade of wild animals and “wet markets” and even putting whole cities and countries on “lockdown”. But going beyond these measures, which are mostly reactionary and containing in nature, we should work on building anti-fragile systems that have enough space to deal with uncertainty, but also have enough feedback loops and intra-acting agents built in to deal with uncertainty in a proper way. Furthermore, containing and understanding the current corona crisis requires a transdisciplinary approach that shows that the subject and object of investigation are highly interconnected. Because this corona crisis will arguably leave a deep imprint on our individual and collective consciousness. As we wrote before, social patterns and cultural habits and norms are shaped by “formative experiences”. As such, the corona crisis is a kind of “shock therapy” for future systems in our increasingly vulnerable, interconnected and uncertain world.

Implications

  • Living in the Information Age, phenomena have a much more “viral” nature, just like the current corona virus. In a negative sense, this increases uncertainty and fragility, but it can also help to quickly contain risks and spread information. As such, a future digital virus can be dealt with much more quickly, with the right cultural, economic, (geo)political and technological systems in place.

  • Being a formative experience, the current corona crisis will induce many new practices, norms and habits, such as social distancing, teleworking, vegetarianism and so on. In a more abstract sense, these developments towards a post-corona society will be formulated in response to the current failures of containing and dealing with the corona crisis.

The EU’s grand strategy of muddling through

Threats from Turkey and Russia, the risk of Brexit, growing Italian debt, defiance in Poland and Hungary: it seems as if the EU is being torn apart. However, by studying the history of the Habsburg Empire, a state that is highly similar to the EU, a different picture emerges. Could the EU survive for much longer than is widely anticipated by “muddling through”?

Our observations

  • For nearly 4 years, the EU and the UK have been negotiating terms for Brexit. Although the UK officially withdrew from the EU on 31 January, negotiations for their future relationship are still in full swing.
  • The European Commission and Italy are locked into conflict over Italy’s growing public debt.
  • Geopolitical conflicts at Europe’s borders have intensified in recent years. Since 2014, there has been violent conflict in eastern Ukraine between Ukrainian forces and Russian-backed rebels. In the Mediterranean, several conflicts are brewing: in war-torn Libya, the Government of National Accord (GNA), backed by the U.S., Turkey, Qatar and Italy, is waging war with the Libyan National Army, backed by Egypt, the UAE, Russia, Saudi Arabia and France.
  • A critical challenge for the EU is the tension between divided member-states and the necessity of pan-European solutions (e.g. European Stack, European Green Deal, European champions).

Connecting the dots

It is no longer controversial to assume that the EU will not survive for very long in its existing form. Critics point to the weakness of European institutions and the growing amount of tension that threatens European unity. However, by taking a closer look at how the EU actually deals with this situation, a different picture emerges. In his book The Grand Strategy of the Habsburg Empire, historian Wess Mitchell presents some interesting ideas to understand the strategy of the EU. That is because there are remarkable similarities between the makeup of the Habsburg Empire, with its heyday between 1700 and 1866, and the EU.The Habsburg Empire was, like the EU, surrounded by several geopolitical frontiers: the Ottoman Empire, the Russian Empire, Prussia and France. It was also one of the most ethnically diverse places in the world with its population of Germans, Hungarians, Italians, Czechs, Poles, Slovaks, Croats, Serbs, Slovenes and Romanians. Indeed, the Habsburg state was actually made up of historically separate polities with their own constitutional arrangements. That is why the Habsburg Empire lacked a centralized, efficient state administration and conflicts between its members were always around the corner. Habsburg rivals, like France and Russia, would attempt to sow division between its member-states. More than a centralized state, the Habsburg Empire was a “common market” of Austrian textile, Hungarian wheat and Czech finance. The legitimacy of Habsburg rule, then, was built upon the belief in the dynasty’s mission to protect fragmented peoples from conflict. Indeed, the comparison with the EU writes itself. The EU too is surrounded by (often the same) geopolitical frontiers, highly diverse with different constitutions which results in a lack of centralization, its rivals try to sow division, it is more a common market than a state, and its legitimacy is built upon a moral mission of unity.

The most important similarity between the Habsburg Empire and the EU, however, is their grand strategy to survive. In On Grand Strategy, historian John Lewis Gaddis explains “grand strategy” as the balancing between means and ends to further your own interests in a global landscape. Grand strategy, then, is the unconscious strategy that emerges from the geopolitical reality of a state. For the Habsburg Empire, to survive in the geopolitical environment of several security frontiers with a weak centralized state (the end), it did not have much administrative or financial power (the means). Consequently, its grand strategy was characterized by “timing” and “sequencing” conflicts: to delay conflicts through any means (whether through diplomatic negotiations or military tactics) and never deal with more than one conflict at a time. Interestingly, the Habsburg rulers eventually called this strategy “fortwursteln” (muddling through). It seems that the EU (necessarily, whether consciously or not) deals with its geopolitical and institutional reality in a similar fashion. The huge risk of one of its most powerful member-states leaving the union has been actively delayed for years. If the EU manages to reach a deal with the UK, it could then focus its attention towards Italy, but not before. By carefully balancing conflicts through timing and sequencing, the EU could survive for much longer than is widely anticipated, just like the Habsburg Empire, whose rivals always thought it was on the brink of collapse.

Implications

  • The EU could survive for much longer than is widely anticipated by its skeptics. Indeed, the Habsburg Empire managed to survive (eventually, in a different form) for much longer in a more dangerous geopolitical environment with even less resources and weaker unity.

  • Moments in which several conflicts heat up at the same time put enormous pressure on European politics, financial markets and economies. That is why European institutions are focused on never attempting to deal with too many risks at the same time (e.g. Brexit, Italy, Poland and Hungary, conflict in the Mediterranean, Russia).