Tuesday, August 31, 2010

Future of the Media

The end of traditional media as we know it is forecast by 2050, with the demise of large media oligarchies, the dominance of ubiquitous personalised web channels, freelance citizen reporting and blogging, automated online news aggregation and analysis, the downgrading of traditional advertising to an entertainment role and the rise of the Global Commons model, combined with the power of the Intelligent Web.

By 2012- most major print media will have been forced to radically adapt towards an online multimedia model. Newspapers are already in turmoil as they switch to a primarily online model with revenues collapsing as traditional advertising revenue streams dry up. Loss of classified and banner advertising is unable to be compensated by online revenues.

New revenue models are already being frantically trialled, with more flagship publications resorting to pay-walls as well as smart phone and tablet PC download apps, using the same model as the music and now book industries. These are having limited success, but as the stream of multimedia news and commentary outlets expands, offering alternate options to the larger publishing oligopolies, it is clear that this strategy will have a limited shelf life. At the same time page layouts, features and editorial are being outsourced, further fragmenting the print media industry.

To boost news gathering and editorial in the face of diminishing returns, both traditional news and specialist commentary sites will simultaneously open up reporting to largely unpaid citizen journalists and freelance bloggers, as is already occurring. This in turn will encourage syndicated commentary. There is also the beginning of a major trend to personalised and hyper-local online reporting by major news publishers, aimed at attracting small community interest groups and advertisers. This trend will also be increasingly reliant on local citizen reporting.

Traditional news media, both local and global, will be rapidly reduced to a stream of headlines with minimal analysis. Special editions and feature articles will continue in reduced quantity, but online short-burst information- text, video and audio streams, will be increasingly popular, distributed via multimedia mobile platforms such as new generation smart phones and tablets, already evident.

By 2020- traditional free-to-air broadcast television channels will have largely disappeared, along with many cable channels, with television advertising similarly caught in the headlight glare of tumultuous change. The switch will be to web channels covering every topic, personalised to individual taste, viewable anywhere, anytime- primarily on mobile media screens in 3D. The personalised channel will be ubiquitous with news and information filtered and customised to cater for every personal whim.

All print media including magazines and books will have followed newspapers to a multimedia model distributed over the web, using almost exclusively new generation multimedia readers for flexible viewing. Terabyte flash memory will be used for offline personal media storage, but will be largely redundant due to the availability of virtually unlimited archival storage utility/cloud sites run by Google, Amazon, Microsoft etc.

Most print and video media will be available via direct ultra-fast wave division multiplex wireless downloads. Bookstores will also convert largely to downloads, already accelerated by Google Edition’s retail alliance with the US Independent Booksellers Association. In turn, traditional booksellers will be forced to compete for download business with coffee houses and other social/cultural hubs, offering additional direct media experiences. These hubs will morph into the dominant local community knowledge and workplace centres of the future (ref Future of Cities). On demand direct 3D retinal projection technology will also begin to compete with download media access.

In addition, the trend towards alternate realities will continue, with media spaces such as virtual worlds combining with social gaming to become the dominant entertainment form. News, entertainment and sport will then become truly interactive, overlapping with gaming and increasingly available within 3D holographic environments for maximum immersive reality effect.

The media will now evolve as differentiated reality streams available from thousands of web hubs, aggregation sites and social networks in three broad forms. First- news headlines and short synopses of current events available online, competing with traditional news feeds and wire services. Second- in-depth reviews and features relating to past events and narratives, merging with traditional book and blog storyline formats. And third- future scenario analyses and forecasts tied to current trends. These scenarios will also feed back into current events creating ongoing news scenario loops.

In addition the number of individual and small group freelance multimedia blogs, twitter-type conversation feeds and wikis, distributed via syndicated web sites, webcasts, social networks, media feeds and aggregation sites, will have grown exponentially, exploring every aspect of societal experience and linked to ubiquitous location-based and augmented reality options. The blurring of professional and citizen journalism via blogging, stream-of-consciousness conversations and automated story generation and will continue to expand.

By 2030- free-to-air networks, except for some public broadcasting, special demographic and dedicated sponsored channels will have disappeared, eliminated by reduced advertising revenue and the ready availability of unlimited web on-demand content.
Public broadcasting will continue to receive strong support from community groups.
Specialised channels covering real-time activities, such as major sporting events, will survive, but increasingly these will be produced by freelance spaecialised groups and directly brokered for distribution to consumer groups on social networks and hubs.

Film and video production will also fragment, dominated by small independent producers and creative groups working on particular projects within virtual teams; marketing their services directly to consumer groups and market intermediaries.

By 2040- all news category coverage including- political, economic, financial, cultural, environmental and technological, will be handled automatically as 24 hr feeds, operating largely independently of human intervention. Analysis will be available as a product of contracted specialists supported by the web- not permanently tied to any particular media organisation.

The web behemoths such as Google and Microsoft will have become the largest media as well as advertising players. However a reverse trend will have begun, with greater acceptance of the Global Commons model- a free sharing marketplace of technology and knowledge, freely accessible for the global benefit. This trend will eventually make tied in-house news-gathering and reporting functions largely redundant.

In addition, traditional advertising models will have become increasingly irrelevant as markets fragment and consumers begin to take control. This will utilise ultra- intelligent media search/knowledge mining agents, allowing consumers to dictate their own in-depth information requirements on a need-to-know basis. Low key informational advertising, embedded within social media and available only on a request basis, will become the last remnant of the original dominant form.

Alternate knowledge and social hubs such as the thousands of Wikipedia look-a likes, controlled by consumer groups, will start to compete with and displace the power of the media and ultra-web enterprises such as Google. These will be forced to cede part of their global knowledge dominance in their own survival self-interest.

The Internet/Web will now be controlled by and open to all people on the planet via the global commons in conjunction with a specially constituted body such as the present ICAAN, finally devolving away from US control.

By 2045 news analysis, as well as its gathering and distribution, will be largely automated and fluid- available independently on demand and on a push/feedback basis; tailored to all net-citizens and ever-changing special interest groups and operating in diverse virtual social realities.

Advertising as we know it will have largely disappeared. Product and service information will be available instead via reliable consumer assessment feedback networks, supported by semantic and intelligent web assessment (ref Future Web) and assisted by a small number of specialised human information researchers; continuously updated, with strictly authenticated information available on demand or pushed to meet personal preferences. The remaining informational advertising forms will have morphed to provide consumer virtual experiences on an entertainment and educational knowledge basis only.

By 2050 the major media organisations will now be extinct, with the last of the media barons and dynasties departed. Instead media generation and dissemination will have shifted to countless creative individuals and small-scale media enterprises operating cooperatively and seamlessly in tandem with the medium of the Global Commons and Intelligent Web.

Future Trend analysis and scenario creation will become the new buzz- increasingly significant to knowledge creation and the largest media growth segment; merging with the gaming and entertainment markets, as humans commit to increasingly virtual and future-based development technologies. At the same time there will be an inevitable loss of direct individual control over media processing, as all aspects of reality event discovery, aggregation, processing, analysis and distribution are automated as a function of the combined fusing of artificial and human intelligence and the rigorous decision capacity of the Web 5.0.

The media will instead become a pervasive medium for recording local and global experience, generating new forms of knowledge and immersive entertainment for human civilisation. This will be facilitated by the automatic collection of events by embedded sensors in every artefact and all environments on the planet- delivered instantly via ultra-fast bandwidth and direct neural/brain connection.
Its role will encompass documenting and projecting the evolutionary progress of all cultural, political, scientific and technological experience of life's existence.

Web 5.0, as a synthesis of human and cyber extended knowledge, sensory experience and intelligence, will merge with and start to take ultimate control of this medium.

Tuesday, February 23, 2010

Future of War

Hyper-aggressive wars and conflicts- that is those not waged directly in defence of a nation or region, cause massive destruction to human life and its environment as well as the lives of future generations.
Therefore it is morally incumbent on all governments and populations to avoid or minimise the horrendous social and economic consequences involved.

In addition, wars are not only destructively immoral in terms of life and property but also illegal under National and International law. At the Nuremberg trials following the defeat of Nazi Germany, aggressive wars were judged to constitute the worst of international crimes, with prevention the major reason for founding the United Nations.

Methods for managing such conflicts and avoiding escalation of violence between major powers have been greatly bolstered since the end of WW2, with the creation of institutions such as the UN, NATO and the EU. In addition, new methods of mediation and diplomacy have gradually evolved in which third party nations and groups are involved in the resolution and management of conflict and peacekeeping processes. Although these methods are far from perfect, there are grounds for optimism that over time, combined with increasing globalisation ensuring the intermeshing of all national interests and cultures, major conflicts between and within States will become impossible to sustain.

Post cold war there have been numerous civil and neighbouring national conflicts, often involving ethnic or separatist groups, creating great suffering and subsequent large flows of refugees. However there is room for optimisim as a study of wars and armed conflict, The Human Security Report: War and Peace in the 21st Century, shows that the number of armed conflicts has fallen by 40% since the end of the Cold War.

Also since its establishment, the UN has played a significant role as effective peacemaker, with a positive outcome achieved in 66% of peace missions. There has also been a sixfold increase in UN efforts to prevent wars from starting, a fourfold increase in UN peacemaking missions to end unresolved conflicts and an elevenfold increase in the number of states made subject to UN sanctions.

A variety of techniques from mediation and peace-keeping to trade sanctions and threat of reprisal, are being applied in order to force warring parties to the peace table. These have been applied with mixed success in Bosnia, Kosovo, Kashmir, Northern Ireland and the Sudan, with Burma a recent success, while high-pressure mediation is continuing in more intractable conflict areas such as Palestine, Somalia, The Republic of Congo and North Korea.
There is no doubt that that we are witnessing the evolutionary genesis of globally mediated methods for permanently maintaining peace across the planet.

But it is now clear that most military analyses relating to the future of war are severely skewed and one dimensional, failing to adequately factor in drivers beyond traditional geopolitical pressures. These future drivers- primarily global warming, globalisation and cyber-culture are now approaching with the force of a tsunami and will overwhelm all other historical and traditional military drivers by mid-century.

Failing to adequately take their consequences into account is to blindside both history and future reality, with the potential to lead to further irrevocable impacts on a fragile world.

Globalisation involves the interweaving of the cultural, educational, legal, economic, political, and technological protocols of all nations in a dense web of dependencies and relationships. China and the US for example are now joined at the hip on trade and economic matters despite ideological disparities and are mutually interdependent. The US needs China’s financial reserves to prop up its massive dollar debt and as an export market, while China needs a strong US dollar to guarantee its investments and US markets for a large proportion of its exports. Although there are moves to disengage this will not happen in the foreseeable future.

These two superpowers are also indirectly connected by the web of alliance and trade networks within the international community as a whole. They are now both too big, too interconnected and too focussed on trying to improve the quality of life of their own populations to become involved in massively destructive global warfare.

The outstanding template for globalisation is of course the European Union, which now links the economies of 27 nations, that up until a century ago warred continuously, with massive loss of life and potential. Now their populations work together, trade together, marry together and share a common currency despite the current difficulties in the Eurozone. The EU is the third force in an increasingly multi-polar world, counterbalancing both the US and China. Emerging economic powerhouses such as Brazil, India, South Africa and Russia make up a fourth force, with other major regions such as the South East asian bloc also exerting an inceasingly powerful influence.

Globalisation is also being accelerated by the Cyber revolution- providing access by all populations to the world’s knowledge base and providing an unstoppable catalyst for democracy, despite short term futile attempts at national censorship. It now mediates civilisation’s social, scientific and commercial progress, with the potential to provide enormous computational and decision power for future global governance.

Simulated war-gaming, involving complex scenarios based on holistic social, cyber and economic factors, will therefore be increasingly applied to pre-evaluate the potential outcomes of waging war. The result will be that military imperatives will play a significantly reduced role in the future. This will be accelerated by the emerging dimensions of cyber and economic warfare, which within the next decade will overtake military systems capacity as key determinants in the geopolitical supremacy stakes.

Cyber warfare in particular will become increasingly common, used as a proxy for direct weapons-based assault. Recent major attacks on 3,000 major companies and Government institutions worldwide, demonstrate the potential for even small groups to wage global computer and economic warfare- cking and hijacking strategic planning data and shutting down critical control systems and infrastructure.

But global warming is the biggest challenge, with its impact the greatest potential threaT ever faced or likely to be faced by our civilisation. By the middle of this century the budgets of all countries, particularly those of the major and middle powers will be focussed on mitigating the massively destructive and disastrous outcomes including- increased frequency and severity of catastrophic events such as floods, droughts, blizzards and hurricanes resulting in massive damage to both the natural and engineered environment, acidification of oceans, loss of biodiversity, scarcity of food, water and energy, disease pandemics and unprecedented refugee flows.

The stresses on all societies will be enormous, but only through global cooperation will anarchy and conflict will be constrained. This will require planning and allocation of resources on a global scale. The budgets and assets of all major powers including the US, China, India and the EU will need to be synchronised and focussed on avoiding this over-riding threat to the future of humanity. National rivalries will be subsumed and military and weapons programs drastically cut.

A timeline on the evolution of this process is as follows-

By 2020- battlefield strategy will evolve towards one that is increasingly fought in covert form – not through the use of large-scale traditional weaponry as in previous wars, with conventional military values becoming obsolete. Most attacks will be focused on subduing increasingly integrated terrorist and criminal groups, military juntas and authoritarian regimes as well as legitimate minority ehtnic groups.

A high proportion of battlefield operations will be automated, with drones and robots operating remotely and eventually autonomously, using satellite and sensor surveillance and the latest Web based intelligence for decision support. Cyber and economic warfare will also play an increasing role, conducted both by governments and criminal and terrorist groups.

At the same time there will be greater emphasis on a variety of peace-keeping and mediation initiatives, involving a range of alliances between Governments, NGOs and military forces such as the new-look NATO, operating at the local level in cooperation with civilian populations. These strategies will increasingly be applied to support failing and dysfunctional states and establish democratic institutions in fragile states such as Iraq and Afghanistan where clumsy US policies have largely failed. This will become the primary template for future military operations.

By 2030- superpower states – US and China, will no longer able to sustain long term conflicts using 20th century arsenals of air, sea and land forces. The US will be forced to abdicate its traditional 20th century role of global military dominance as its resources become spread too thinly and it struggles to maintain quality of life for its population against unsustainable mounting levels of debt.

Similarly China, India and middle power nations will be forced to channel most of their resources to developing infrastructure, capacity and social services. Numerous flashpoints involving quelling local insurgencies and ethnic uprisings will remain. Increasingly the UN and representative government groups such as the present G20 will work together to minimise conflict globally. The EU will be seen as the template for global cooperation and peace-keeping will become the norm for conflict containment.

By 2040 – it is realised by most nations that conflict and wars are increasingly unsupportable on both moral and economic grounds. Globalisation wikk

ll continue to accelerate, with the creation of more complex networks of alliances and treaties binding nations and regional groups. At the same time countries will start to lose their traditional sovereign status, with pressure for more fluid cross border immigration relaxation and economicmanagement as in the EU. The mixing of races and nationalities will ease pressure for conflict, and provides greater accessibility to global health, education, and knowledge resources.
The reality of climate change, with its increasing frequency of disaster events, will force ideological disparities to play a secondary role.

By 2050- all available global resources will be marshalled to overcome the immense problems associated with global warming, with the end of wars between nations in sight.

Monday, February 1, 2010

Future World Order

Three years ago the emergence of a New World Order was a relatively simple outcome of the political process- both to understand and predict. The prognosis primarily involved the rise of Asia in economic terms followed by a relatively orderly transference of political and financial power from the West to the East, resulting in the emergence of a more multi-polar globalised world over the next 30 years.

The signals for such a shift were clear then and still are- up to a point.

Following a rapid period of industrial development, as occurred in Europe after its industrial revolution, Asian nations are now playing social and technological catch up.

The speed of Asia's advance has been breathtaking, Before the West's industrial revolution, Asia accounted for almost 60% of the world's economy. By WW2 this had slipped to 20%. It is now projected to rise back to 60% by 2020. Asia is in the middle of a long-term growth phase, even accounting for the current financial meltdown mark 2, that extends back to the Meiji Restoration period in Japan in the 19th century and the end of Imperial rule in China at the beginning of the 20th century. By 2040 it is predicted that China will be the world’s leading economy, followed by the US and India.

In India and China the middle class now accounts for over ten percent of the population. It is also upwardly mobile in terms of its consumer and knowledge culture. Combined with improved access to education, science and technology, this means the push for political pluralism is now inevitable. It is also inevitable that the new regional Asian grouping- the East Asian forum will begin to play a dominant over the next 5 years, extending the present ASEAN forum to include over 2 billion people in a model similar to that of the EU.

This transition to equalization of opportunity in the east was always a given. Then along came the greatest financial catastrophe of the modern era with the potential collapse of the Eurozone and the contagion spreading throughout the west.

The US is US$15 trillion in debt and counting and the main lender is Asia. China has a US$2 trillion surplus in currency reserves. Within the decade economic power will have passed to Asia, with the US no longer in the drivers seat of the world’s capital markets. Its banking structure is already emasculated and unlikely to ever recover its former glory.

China is now banker to the world.

But creating a new multi-polar and globalised world order has only just begun. It is about much more than Asia’s rise to power. The current economic and political architecture is totally bankrupt and will have to be rewritten in a radical new language- a hybrid of socialism and capitalism with various other ethical and green sustainable strands woven in. And this new architecture will need to have the flexibility to continue to evolve and adapt as the cultural, social and technological landscape around it changes at breathtaking speed.

Tinkering around the edges with an infusion of Government backed liquidity and greater regulation isn’t going to cut it this time around. After all what we are witnessing is at least a 50% write down of the world’s wealth, which among other downsides is going to force a return to poverty for tens of millions in the developing nations.

The US has been living with serious structural deterioration for more than a decade- negligible levels of private savings, chronic balance of payment s deficits and domestic budget shortfalls. Foreign savers have funded these gaps. Half the US treasury bills on issue are now foreign owned, while sovereign wealth funds are diversifying out of US debt and taking influential positions in some of America’s iconic companies. While China’s growth rate has retreated below 7 percent, the West’s growth rate is negative.

And still the world leaders, bankers, economists and investors have no real solution to this cataclysmic disaster, let alone a real willingness to take responsibility for it. It’s as if after a few years and an infusion of a few tens of trillions of dollars the bad news will go away and life will return to ‘normal’ – business as usual again.

When you’ve got the current level of uncertainty in the collective economic and political mind and basically flying blind, you know there is zero probability that this will happen.

But this is just the beginning of a great unwinding of current civilization. The sudden shock to the world’s traditional order will create many unforeseen ramifications- some chaotic and violent. We already see social unrest in China, Russia and Europe. This has the capacity to turn anarchic as the economy continues to deteriorate. Combined with worldwide food, water and energy shortages in a time of global climate change, this shock has the potential to put immense pressure on social norms.

We’ve arrived suddenly and unexpectedly at the beginning of the 21st century at a great impasse, a great disjunction in human affairs.

But there is also a great opportunity to fast track reform of a flawed system from the ground up. This crisis can be turned to huge advantage for all humanity, providing the solutions are applied with great creativity, courage and cooperation.

It’s not a time for more of the same- for more great leaders and hubris. Instead it requires the harnessing of collective wisdom, knowledge and responsibility; extending beyond the false pride and patriotism of the national political process, tangled in its debilitating web of self-interest, delusion and corruption.

We can already see the tentative beginnings of this New World Order- Mark 2.

Pressure to reform unrepresentative voting structures of the UN; moves to establish a more inclusive grouping of middle power decision-making nations- from the G8 to G20; initiatives to reform the IMF and World Bank; the rise of the NGO community as an ethical counterweight to political decision-making; the continued rise of democracy; greater national cooperation supporting global conventions on human rights, conflict mediation, global warming, the sea, trade, health, science, legal and financial protocols etc; and the rise of the internet with its promise of providing equal access for the developing world to the sum of human knowledge.

But time is short. The luxury of leisurely progress toward achieving these critical goals is past. All options must now be on the table and open to radical reform- ideological, economic and social.

After all, nothing less than the future of human civilisation and the well being of the planet’s seven billion inhabitants is at stake.

Future Darwinism

Future Darwinism - Towards a Unified Theory of Evolution

Darwin's year in 2009, celebrating the 200th birthday of perhaps the most profound thinker of the modern era, is also an appropriate time to explore the ramifications of next stage in the Darwinian revolution.

The biological theory of evolution is undoubtedly the most powerful paradigm ever conceived by humans to explain their own existence. Since Darwin's epoch-making treatise, Origin of Species, published a hundred and fifty years ago in 1859, evolution has been centre-stage, universally recognised as the driving force in the emergence of all life, including modern humans, from the genesis of the first cells on this planet, almost 4 billion years ago.

However, despite its ubiquitous brilliance as the jewel in the crown of human intellectual achievement, the notion of Darwinian evolution has never been developed to its full potential. It remains instead largely constrained within its biological cradle, often limited in its everyday connotation to the lowest common denominator of 'survival of the fittest'.

The intention of this and subsequent columns on the Future of Darwinism will be to re-evaluate and explore the future potential of the Darwinian model and to demonstrate that its current scope and application is only the tip of the intellectual iceberg.

By combining its formidable biological principles including the immense field of genetics, with those of systems, network, quantum, complexity and information theory, it emerges as an incalculably deeper and richer model than previously contemplated.

The major thesis currently now being explored by a number of eminent researchers drawn from the spectrum of physical and social sciences, demonstrates that the evolutionary engine that drives biological development also drives all other dynamic adaptive processes at the physical, social, cognitive, economic, political and technological level and is in fact the major dynamic governing the Universe, past present and future.

It is further proposed to explore in future posts the social ramifications of recent developments in artificial intelligence and the immense computational power generated through the Internet, that mark the next crucial stage in human evolution; involving the inevitable symbiosis of vast computational intelligence with the power of the human mind.

These two 21st century conceptual goals - a universal all-encompassing Unified Theory of Evolution based on the original Darwinian model - coupled with the emancipation of human intelligence via the future Web, together provide a vastly more powerful paradigm for exploring the future of Darwinism, life and human potential.

Future Blogsphere

A new force is shaping global political and social culture. The millions of Weblogs or blogs being generated and refreshed daily are now starting to provide a meta-communication platform- the Blogsphere 2.0 of incredible power and complexity.

Information and opinions are now being exchanged, transformed and sifted at a global meta-level in real-time across national and international boundaries and timezones. At the same time traditional blogs are merging with all other forms of media communication- online newspapers, social networks, news aggregation sites and micro conversations on mobile media such as Twitter.

The Blogging phenomena in general provides vast potential for collaborative learning, marketing, public relations, political, social and civic discourse and at the same time allows bloggers to bypass traditional corporate media gatekeepers.

Blogging is increasingly therefore seen as an extension of consumer and political activism. Fifty percent of bloggers express an opinion about a company or product at least once a week. Seventy seven percent of online consumers view blogs as a useful way to gaining insight into products they are looking to buy. And out of the estimated 20 million blogs, over a million feature discussion relating to environmental and ethical issues.

Major enterprises are also beginning to incorporate this resource into their marketing plans, with the accepted model of advertising changing to capitalise on the blogsphere’s connection-shaping influence in both the real and virtual social world. For example larger companies have started recruiting ‘brand ambassadors’ or key social figures in the community, paid to drop brand references into blog comments or background conversations on Twitter.

Future Trends

But the greatest significance of the future Blogsphere 2.0 will be felt at the social level. Blogs are increasingly being linked to social, professional, and political networks. Citizen journalism will flourish as more individuals publish their views and experiences and more information is distributed at both the community and global level. This will reshape the voice of community, civil rights and democracy as more people are exposed to new topics and opinions without the need for third party intermediaries such as politicians or television commentators, acting as filters. Citizen generated media will therefore be free of the restrictions of traditional top-down media and dramatically increase consumer control over media content.

Blogs already allow ideas and innovation to become part of popular culture. Once an idea exists in the online world it immediately also propagates globally in the real world, facilitating knowledge sharing within developing countries. A form of participatory democracy will then emerge, decreasing the elite power of traditional media such as newspapers, magazines, radio and television.

Most importantly, the emerging Blogsphere 2.0 will not just become a major new voice for the global mass media, but the beginning of a significant global consciousness, reflecting the views of all inhabitants of the planet, with the power to shape future opinion and consumer culture.

Future Economics

The recent failure of classical economics to predict and manage the catastrophic failure of the world’s financial system has triggered a re-evaluation of the whole basis of current economic theory, which has been applied to sustain capitalism for the last 100 years. .

By the end of the 20th century traditional economics was dominated by the classical paradigm based on notions of rational consumers making rational choices in a simple supply/demand world of finite resources, with prices constrained by decreasing returns; all driving the economy to an optimal equilibrium point.

Twentieth century economists had finally realised their dream of creating a rational, rigorous and well-defined mathematical model for describing the workings of the global economy. This standard model has been applied by business leaders, finance ministers, central bankers and presidential advisers ever since.

Up until recently classical economic theory has appeared to work adequately by a process of trial and error. In stable times people are generally rational and optimistic and the theory describes reality reasonably well. But in extreme circumstances people panic and the theory fails spectacularly, including the performance of the quantitative risk algorithms beloved by hi-tech stock market traders.

Unfortunately such a clockwork model has proved over the last four decades to be seriously out of synch with reality, as global markets have been roiled by a series of disastrous credit, market, liquidity and commodity crises. The predictions of the standard model have failed to match real world outcomes, generated in succession by the Savings and Loan, Asian, Mexican, Dotcom and now toxic mortgage bubble disasters.

In this ‘mother of all’ excess greed debacles, high risk mortgage loans were repackaged many times over into opaque risk financial instruments, such as Collateralised Debt Obligations or CDOs, which ended up through the unregulated banking system in the portfolios of nearly every bank and financial institution around the world. Because of lack of regulation, members of the shadow system such as hedge funds and merchant banks borrowed scores of times their own worth in cash. When the CDOs finally failed, the losses rippled through the world economy. The banks stopped lending, leading to further business failures and investors were then forced to sell previously sound stocks causing a stock market crash.

But this crash is far more serious- perhaps even more than the Great Depression, as it cannot be contained within borders as easily or so simply solved by mass lending and job creation programs. Now we have the biggest banks, manufacturers, miners, energy suppliers and whole national economies from the US to Iceland toppling like dominoes around the world, under trillions of dollars of debt - with no end in sight.

In fact a number of interdisciplinary thinkers, starting in the seventies, began to question the credibility of the entire basis of the classical economic model, likening it to a gigantic academic exercise rather than a serious science. And it gradually began to dawn on this group that at a number of the key premises or axioms underpinning the existing model were seriously flawed.

As mentioned, the first is the assumption that humans are rational players in the great game of market roulette. They are not. Behavioural scientists have shown that while people are very good at recognising useful patterns and interpreting ambiguous or incomplete information in their decision-making, they are very poor when it comes to performing complex logical analysis, preferring to follow market leaders or flock. This can further amplify distorting trends.

The new theories of behavioural finance argue that during a bubble the rate of buying and selling can become manic, resulting in irrational decisions. Making money actually stimulates investor’s brain reward circuitry, causing them to ignore risk and making it difficult to value stocks accurately.

But perhaps the most critically flawed assumption is that an economic system always reaches an ideal point equilibrium of its own accord. In other words, the market is capable of self-regulation- automatically allocating resources and controlling excesses in an optimum way, with minimum outside interference.

Since the nineteenth century the fundamental principle underpinning economics has been based on the idea that the economy is an equilibrium system- a system that moves from one equilibrium point to another, driven by shocks from external disruptions - technological, political, cultural etc- but always coming to rest in a natural equilibrium state.

The new emerging evolutionary paradigm however postulates that economies and markets, as well as the internet, enterprises and the brain, are all forms of complex adaptive systems in which agents dynamically interact, process information and adapt their behaviour to a constantly changing environment- but never reach a final equilibrium or goal.

In biological evolution, the natural environment selects those systems that are able to best adapt to its infinite variation. In economic evolution, the market is a combination of financial, production, trading, cultural, organisational and regulatory elements which adapt to and influence a constantly changing ecological, social and business environment.

In essence, economic and financial systems have been fundamentally misclassified. They are not perfect self-regulating systems. They are enormously complex adaptive networks, made up of individual agents which interact dynamically in response to changes in their environment- not merely through simple price setting mechanisms, tax or interest rate cuts, liquidity injections or job creation programs. They must be understood and managed at a far deeper level.

Modern evolutionary theorists believe that evolution is a universal phenomena
and that both economic and biological systems are subclasses of a more general and universal class of evolutionary systems. And if economics is truly an evolutionary system and general laws for evolutionary systems exist, then it follows there are also general laws of economics which must be harnessed. This contradicts much of the standard theory in economics developed over the past one hundred years.

The economic ecosystem is now fed by trillions of transactions, interactions and non-linear feedback loops daily. It may in fact have become too complex and interdependent for economists and governments to control or even understand. It may therefore, as several eminent complexity theorists have recently stated, be on the verge of chaos. Too much or not enough regulation can distort the outcomes further- creating ongoing speculative pricing bubbles or supply and demand distortions.

There is now an urgent need to understand at a much deeper level the genie that modern civilisation has engineered and now let loose. This can only be done by admitting the current crumbling edifice is beyond repair and building a radical new model from ground zero; a system that incorporates the hard science of network, behavioural and complexity theory.

A new adaptive evolutionary model is not only essential- it is the only option.

Sunday, January 3, 2010

Future of Energy

By 2015 India and China will both have outstripped the US in energy consumption by a large margin. Cap and Trade carbon markets will have been established by major developed economies, including India and China, as the most effective way to limit carbon emissions and encourage investment in renewable energy, reforestation projects etc.

There will have been a significant shift by consumers and industry to renewable energy technologies- around 25%, powered primarily by the new generation adaptive wind and solar energy mega-plants, combined with the rapid depletion of the most easily accessible oil fields. Coal and gas will continue to play a major role at around 60% useage, with clean coal and gas technologies still very expensive. Nuclear technology will remain static at 10% and hydro at 5%.

Most new vehicles and local transport systems will utilise advanced battery or hydrogen electric power technology, which will continue to improve energy density outputs.

Efficiency and recycling savings of the order of 30% on today’s levels will be available from the application of smart adaptive technologies in power grids, communication, distribution and transport networks, manufacturing plants and consumer households. This will be particularly critical for the sustainability of cities across the planet. Cities will also play a critical role in not only supporting the energy needs of at least 60% of the planet’s population through solar, wind, water and waste energy capture but will feed excess capacity to the major power grids, providing a constant re-balancing of energy supply across the world.

By 2025 a global Cap and Trade regime will be mandatory and operational worldwide. Current oil sources will be largely exhausted but the remaining new fields will be exploited in the Arctic, Antarctic and deep ocean locations. Renewable energy will account for 40% of useage, including baseload power generation. Solar and wind power will dominate in the form of huge desert solar and coastal and inland wind farms; but all alternate forms- wave, geothermal, secondary biomass, algael etc will begin to play a significant role.

Safer helium-cooled and fast breeder fourth generation modular nuclear power reactors will replace many of the older water-cooled and risk-prone plants, eventually accounting for around 15% of energy production; with significant advances in the storage of existing waste in stable ceramic materials.

By 2035 global warming will reach a critical threshold with energy useage tripling from levels in 2015, despite conservation and efficiency advances. Renewables will account for 50% of the world's power supply, nuclear 15% and fossils 35%. Technologies to convert CO2 to hydocarbon fuel together with more efficient recycling and sequestration,along with hydrates, will allow coal and gas to continue to play a significant role.

By 2045-50 renewables will be at 70-75% levels, nuclear 12% and clean fossil fuels 15-20%. The first Hydrogen and Helium 3 pilot fusion energy plants will be commissioned, with large-scale generators expected to come on stream in the latter part of the century, eventually reducing carbon emissions to close to zero.

However the above advances will still be insufficient to prevent the runaway effects of global warming. These long-term impacts will raise temperatures well beyond the additional two-three degrees centigrade critical limit.

Despite reduction in emissions by up to 85%, irreversible and chaotic feedback impacts on the global biosphere will be apparent. These will be triggered by massive releases of methane from permafrost and ocean deposits, fresh water flows from melting ice causing disruptions to ocean currents and weather patterns.

These will affect populations beyond the levels of ferocity of the recent Arctic freeze, causing chaos in the northern hemisphere and reaching into India and China and the droughts and heat waves of Africa, the Middle East and Australia.

The cycle of extreme weather events and rising oceans that threaten to destroy many major coastal cities will continue to increase, compounded by major loss of ecosystems, biodiversity and food capacity. This will force a major rethink of the management of energy and climate change as global catastrophe threatens.

Increasingly desperate measures will be canvassed and tested, including the design of major geo-engineering projects aimed at reducing the amount of sunlight reaching earth and reversal of the acidity of the oceans. These massive infrastructure projects would have potentially enormous ripple-on effects on all social, industrial and economic systems. They are eventually assessed to be largely ineffective, unpredictable and unsustainable.

As forecasts confirm that carbon levels in the atmosphere will remain high for the next 1000 years, regardless of mitigating measures, priorities shift urgently to the need to minimise risk to life on a global scale, while protecting civilisation's core infrastructure, social, knowledge and cultural assets.

Preserving the surviving natural ecosystem environment and the critical infrastructure of the built environment, particularly the Internet and Web, will now be vital. The sustainability of human life on planet Earth, in the face of overwhelming catastrophe, will be dependent to a critical degree on the power of the intelligent Web 4.0, combining human and artificial intelligence to manage food, water, energy and human resources.

Only the enormous problem-solving capacity of this human-engineered entity, will be capable of ensuring the continuing survival of civilisation as we know it