Responses to the Global Crisis

Doing this will impose radical restraints on how some businesses operate, and cost structures in general. It will also mean a growing intervention in economic affairs by governments, at least initially, because government is the only institution with the necessary authority to oversee major structural change.

For instance, whether by direct action, a cap and trade system or taxation, any attempt to bring greenhouse gas emissions to safe levels will totally transform energy usage and many other commercial and social activities.

So how do we get out of this trap of an eroding material basis for economic development?

The answer lies in the other two areas – organisation and popular perception.

As pointed out, we have already seen amazing shifts in organisational capacity and wealth production utilising ideas like economies of scale and standardisation. However, this was accompanied by huge increases in fossil fuel usage, especially coal and oil. We somehow need to continue, even accelerate organisational improvements without increasing, indeed for a while decreasing, energy usage.

Is this possible? Well, that’s the big question, but I’ll make a case here that it is.

There are three arguments that give us hope: firstly, economic analysis for some decades has pointed to technology as the main driver in better productivity and growth; second, digitisation has really just got under way; third, many of the constraints on change are cultural or political and so can be readily affected.

The great organisational innovations of industrialisation, such as economies of scale and standardisation, were actually very wasteful in terms of resource usage and waste, but they effectively exploited what was a then critical information capacity. The key was investment in ever-larger hierarchies to control ever-larger scale and more complex operations. We can now completely recreate production and distribution systems to work much more efficiently through the application of more powerful digital control systems and networks.

The ongoing effect of Moore’s law, which says computer processing doubles every 18 months or so, means that we can continue to expect ongoing development of digital technology, and since information systems are now the core of almost all technology, in technology generally.

Perhaps most importantly we can use information technology to decrease energy usage. For instance, all energy conservation measures ultimately rely on enhanced information capacity, such as metering resource and energy usage or pollution levels, and associated costs. Since claims of up to 40 per cent cuts in energy usage through conservation alone in some activities have been made, this is potentially very important.

Because we can anticipate growing digital processing capacity at ever less cost – and we have already seen the phenomenal growth of the Internet, mobile phones, iPads – there is an enormous capacity for people, business and governments to use these technologies to do things more efficiently (i.e. use less energy).

So far, we have just assumed we can have both, the new technology along with old – email and air travel, mobile phones and SUVs – and we have mostly used cyberspace for mass-distraction. We need to start using this incredible capacity for world-wide, 24 hour interpersonal communication and processing power to live and work very differently.