Scotland is staring into the face of the 21st Century Great Restructuring. The combination of Covid, climate change, Brexit, and Automation are dramatically disrupting the social, environmental and economic context of our nations.
This transformation both in terms of speed and size will need to be of a magnitude unwitnessed in modern history (including, we would suggest, China’s transformation) if we are to achieve the necessary depth of reconfiguration in time.
Whilst the UK narrative is still failing to recognise the scale of task ahead and seems stuck on the pretence that the future will be a little bit less or more of the same – housing shortage to tech start-ups – in Scotland we increasingly recognise that the solutions to this foundational transition cannot be reduced to such fig leafs.
We cannot hide the structural nature of the challenges we face, from accelerating levels of inequality (be it gender pay inequality or concentration of wealth), psychological health of the nation diminishing, to a growing sense of injustice; from ecological collapse to an escalating economic precariousness (where work is no longer a route out of poverty).
In this context, tinkering just won’t do. This is both a curse and opportunity to find pathways towards a more virtuous economy and society.
Virtuous Economy Forum
We recognise we face a time of Great Transition - environmentally, economically and in the very essence of what it means to be human.
Addressing these challenges requires us to go beyond the symptoms which plague us, focussing instead on their underlying root causes: the deep code errors that have given rise to the chronic catastrophe we face. This we believe is at the centre of imagining and moving towards a radical new tomorrow.
We believe there are 12 Grand Challenges of our time which need bold and transformative new solutions. The Virtuous Economy Forum 2022 will be an opportunity to explore and frame these grand challenges together.
Building on previous years we will collect and share examples of innovative projects from which to inspire the implementation of the Scottish National Performance Framework.
This framework has been built by the people of Scotland and written into statute. It aims to:
The participants of the Virtuous Economy Forum in 2019
Anastasia Mourogova Millin
Gurjit Sing Lalli
Some of the participants of the Virtuous Economy Forum in 2018
CEO of Scottish Enterprise
Chief Economist Scottish Government
Financier, social entrepreneur and author
Tech and Education Jedi
Chair of the Board, B Lab Europe; Board Member B Lab, US
This context, amplified by Brexit, correlates (whether it is causation is up for discussion) with an increasingly likely horizon of shocks emerging which stand to transform our very near future.
1. THE RISE OF THE POST MANAGERIAL SOCIETY
We are witnessing massive technological and organisational disruption of our economy and workplace. Already we know a major European bank looking to downsize from 50,000 to 800 employees, along with new organisations like Buurtzorg (a neighbourhood care organisation) being born – which have 10,000 nurses and only 50 people in HQ.
These are early signals for how the rise of platform, automation and AI economies are driving the demise of the administrative HQ and the birth of the post managerial economy. They are refocusing the added value of human contribution to our economy and society, and fundamentally disrupting the rise of the managerial city over the last 30 years and the value of labour.
2. THE RISE OF THE MONOPOLY ECONOMY
We are witnessing a massive transition in value creation from the means of production to the means of market curation. Take for example Uber: here the taxi driver is a bare commodity and interchangeable. The real value creation instrument is Uber as platform that creates and curates the market. This principle now extends from retail – Amazon – to manufacturing – AliBaba. This reality signals a great transfer of value creation from the relatively distributed means of production to the massively globally centralised and privatised means of market-making and market curation. The implications of this are massive, for inequality and the scaling of precarious citizenship.
3. THE GROWING IMPACTS OF CLIMATE DISRUPTION
Over the course of the next 10 years, we are likely to see the simultaneous need to mitigate and manage impacts along with the structural need to reduce carbon production and consumption by an order as yet un-envisaged. Cities are the epicentre of this transition – both as major drivers of carbon consumption whether food and construction or logistics and travel, and as places seeing direct impacts like climate extremes and public health impacts, the cost of food, and a growing climate related refugee crisis.
How will we democratise the necessary transition, how will we use this transition to create new lead markets and nudge, compel or otherwise invite people to new behaviours?
4. AN URGENT SHIFT IN HOW WE GOVERN AND REGULATE
Technology has not only disrupted how we operate and work but also broken and bypassed how, what and who we govern. Our governance model is broken: we live in a ‘systemocracy’ – a world of massive inter-dependency, yet we are holding on to 19th century versions of governance. This creates the illusion of sovereignty and supremacy – acting as a denial of the complexity we must confront. We need a new governance model which acknowledges our global inter-dependence at all scales & focuses on the quality, diversity and integrity of feedback in all its natures, whilst recognising the future is real- time and negotiatory. For us to move forward structurally, we need massive reform of our model of governance – reinventing it for the 21st century. Traditional regulatory bodies and accountability mechanisms may not be well suited to managing the emerging tensions between industry and society in a digital age. The challenge of propagating innovation while also protecting public goods and detecting new public harms, is not yet solved. In a world where platforms and tech services cut across national borders, products and services evolve rapidly and continuously, and consumer technologies diffuse at incredible speed with large risks of unintended consequences – the pace of analogue regulatory design is unable to keep pace. We need to support and drive governance innovation – experimenting with algorithmic policy; imagining new processes for legibility, legitimacy for algorithmic policy & compliance; building the public infrastructure and protocols for this future. But we must not see as a new means to control but as pathway to accelerate distributed, decentralised, democratised innovation for the civic good and shared accountability.
5. THE DEEP RE-SKILLING OF SOCIETY
Technological disruptions are challenging the fundamental skills of society, but what is being disrupted is not the plumber or craftsmen but the middle classes – the management, administrative and intermediary skills. “Uber did not disrupt the taxi driver – it started by disrupting the cab office”. This heralds a fundamental disruption in human contribution to the future economy and needs us to reimagine our human development institutions, from neighbourhoods and nurseries to adult education institutions – to focus on emotional intelligence, resilience, capacity to learn and unlearn, craft behaviours, creativity, care, complex collaborative skills, and human machine integrated agency.
6. MOLECULAR VIOLENCE AND THE FUTURE OF HUMAN RIGHTS
We are witnessing a shift in our understanding of what being human means, and a new comprehension of violence. We now understand the impact of air pollution as molecular violence, with systemic effects on the health of humans. We can now correlate emotional violence and racism with literally taking years off people’s lives through persistent raised levels of cortisone; and we now know poverty reduces IQ by up to 13 points, and its effects get transmitted biologically across generations. How will cities deal with a growing sense and realisation of such systemic molecular injustice? How will we advance a next generation of human rights and welfare to address these structural inequalities, focused on unleashing the full capacity of all citizens?
7. THE RISE OF THE RENTIER LAND ECONOMY
As our economy shifts from being built on tangible assets to intangibles (as was very well articulated by Jonathan Westlake and Stian Westlake in their recent book Capitalism without Capital), land is an increasingly powerful tool in harvesting the value created.
The correlation between the dramatic increase in the value of land in the UK and its transition towards an intangibles economy is significant and has, ironically you could argue, massively facilitated the capture and concentration of new forms of value by a very old and concentrated class of wealth – subverting the near “natural” democratisation of new value creation, and accelerating the concentration of inequality and driving the economic precariousness we witness around us.
The Scottish transition
The transition we need requires a whole system shift. We need to create and recreate lead markets. We need to shift, transition and redesign existing markets and our governance, regulatory and finance systems themselves. Traditional economic development strategies – focused on place marketing, skills fulfilment, physical infrastructure and start-ups – will no longer work. These strategies were fit for accelerating a more of same world but are not fit for purpose in a new future.
We need to reimagine our learning & development infrastructure to support not innovation by the few but innovation for and by all; remake our means for investing and structuring intangible assets; drive an inclusive & open automation of our economy; prepare a transitionary welfare state so we do not leave whole communities of people behind; redesign our process, practices and institutions for governance and regulation and, perhaps most critically, reimagine the city in this future and start transitioning towards a very different built environment necessary for this future.
This transition due to both its complexity and need for an integrated contextual response will not be led by states but countries, cities and towns. Countries, cities and towns will need full transition “Marshall” plans and strategies: new means of organising focused models of systems financing – which embrace a full systems view and embrace it urgently.
Scotland will most certainly be forced to face this transition. Tinkering and marketing just won’t do. This is both a curse and opportunity to find pathways towards a more virtuous economy and society. Whether we are successful or not, either way at the end of this journey our society will have been fundamentally altered and the era of the great managerial, consumption-based society will be over and a new era will have begun.
"We have incredibly ambitious plans for how we contribute to the evolution of Scotland’s economy and how we make the most of a rapidly changing world.
The virtuous economy forum provides a space for those individuals who are driving change within the economy to transcend the issues that take up our focus in the day to day, and reimagine the pathways for us to build this future. It is a fantastic event."
Steve Dunlop, Former CEO Scottish Enterprise, 2019