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The ten trends that have shaped the last century, and that will shape the next

April 18, 2012

Ten forces have defined how we have lived our lives during the last one hundred years, but the “rights” revolution is at their core and will shape how we live the next hundred years.

Daron Acemoglu, the MIT labour economist and co-author of Why Nations Fail, begins a recently released paper on a very personal note: “I write this as I await the birth of my second son.”

Could there be a better motivation to write a paper called: “The World our Grandchildren will Inherit” ?

At the top of Acemoglu’s list of the major trends defining our social, economic and political lives is the “rights revolution”, the continuing and unstoppable quest for citizens to govern themselves. The others are:

The sweep of technology

Unrelenting growth

Uneven growth

The transformation of work and wages

The health revolution

Technology without borders

War and Peace

Counter-enlightenment in Politics

The population explosion, resources and the environment

The challenge in forecasting what the next century holds is, of course, to understand the relationship between them. “At the center of my interpretation,” writes Acemoglu, “is the idea that technological change is at the root of economic growth—but that political institutions shape the nature, pace, and spread of technological change.”

In an important way economics gives ground to political science: the development, spread and use of technology depends on institutions.

Technological change and economic growth flourish under inclusive institutions that protect property rights, but also offer a level playing field and public services that together promote the incentives and participation of a broad majority of the population.

The last 100 years have witnessed an important move to these types of political institutions, and this is why the rights revolution is the core trend driving all the others. Important breakthroughs in technology would not have been possible otherwise, and as a result sustained growth, the shift of work from agriculture to services, and a revolution in better health and higher life expectancy would not have occurred.

But there are two sides to this coin: technological changes arising from development of inclusive institutions in some parts of the world can be harnessed in others as a force for war as much as for peace, as the cause of inequalities that limit democratic dialogue, and as a threat to the environment.

And the prospects for our grandchildren?

The rights revolution will continue to spread, perhaps in fits and starts, and in spite of important roadblocks—the most important being the growing socio-economic inequalities in the United States that have given the monied excessive political voice in a country that is the standard-bearer of democracy.

But if the thirst for democracy underlying the Arab spring is the root cause, then Acemoglu predicts that without political reform China’s economy will eventually run out of steam before reaching even half the per capita GDP of the United States.

He predicts that we will not run out of innovations. Every new technical change poses new problems and opens the door to another wave of innovation, and as a result the steady state predicted by many economic theories will be avoided: with technical change comes continued economic growth.

He also predicts there will be less inequality between nations as a result of this growth. Poorer countries will converge to the standard of living in richer countries reflecting the continued move of workers from agriculture to manufacturing. Inequality within nations may continue and grow, but there is no reason that the US cannot introduce institutional reforms to reverse the huge inequalities that are not necessarily evident, particularly with respect to the share of income accruing to the top 1%, in other rich countries. It is important that it does.

He predicts our grandchildren will be healthier and live longer, as will the grandchildren of those currently living in poor countries. “The biggest threat to the health revolution comes from the status of the rights revolution.” It requires continued democratic reforms in sub-saharan Africa, Asia, and a continued commitment from the rich countries.

He predicts globalization and international trade will slow as low-wage labour becomes less important as a source of comparative advantage, something that is already happening.

He predicts more peace, more enlightenment, and a decline in the role of religion in politics because of the continued spread of the rights revolution. And at some point in the next century he also predicts that global population will plateau.

But he has a nagging concern.

“The most vital question concerns climate change and our fossil fuel consumption, partly because the damage our fossil fuel emissions create is a textbook case of the tragedy of the commons: unless we introduce appropriate carbon taxes and other regulations, the damage each of us creates on the environment is not priced, and we will collectively continue to emit fossil fuels even as this habit threatens our planet.”

The problem of climate change is inherently a problem reflecting a generational divide, one that pits the present against the future.

As such it is a problem rooted in a place that the rights revolution cannot go, or at least not perfectly. Our grandchildren are not here to exercise their right to vote, we deny that right to even our children, and in this very important way we collectively continue to discount their future even as we individually marvel at the wonder of their birth.

Though Acemoglu does not explicitly state as much, this nagging concern in a sense proves his point—that the rights revolution is indeed at the core of the world our grandchildren will inherit.

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