According to the World Economic Forum’s Global Risks Report 2018, shocks such as the 2008 financial crisis may become more likely.
In the wake of the 2008 financial crisis, we asked ourselves one question over and over again: why didn’t we see it coming?
It rocked the global economy and threatened to destroy the financial systems that we rely on. Ten years on, some countries are still picking up the pieces.
The World Economic Forum’s Global Risks Report 2018 says that, in our increasingly complex and interconnected world, this type of shock may become more likely.
The report explores 10 potential future shocks, including food scarcity, the extinction of fish, technological breakdowns and another financial crisis.
1. Not enough food to go around
Extreme weather events are becoming an all-too-familiar sight. Drought, hurricanes and floods have a major impact on the global food supply chain. Lower yields in crops lead to rising food prices, hitting those already struggling to feed themselves.
The report argues that, if an extreme weather event were to coincide with existing political instability or crop disease, we could see a major food crisis happen overnight.
This is a scenario exacerbated by the inherent “choke points” within the global supply chain. These are the sections within the chain where a large volume of trade passes through. Disruption to any one of these could cause immediate global shortages and price hikes, in turn causing political and economic crises, and ultimately, conflict.
Among the courses of action that could help are increasing crop diversity and stress testing the choke points along with other vulnerabilities.
2. Algorithms shut down the internet
Most fears about artificial intelligence (AI) tend to focus on killer robots or the automation of the workforce.
But this report suggests a different scenario: low-level algorithms – or what the authors call “AI weeds” – that slowly choke off the internet.
As we become more reliant on codes that can write their own code (the crux of AI), we’ll lose the ability to track and control it. The world relies heavily on the internet; the disruption will be massive, says the report.
Among its proposed solutions is the development of norms, regulations and governance structures for AI: “without a robust and enforceable regulatory framework, there is a risk that humans will in effect be crowded out from the internet by the proliferation of AI,” says the report.
3. The end of trade as we know it
Brexit, Trump, protectionist policies, these are all undermining globalization as we know it. Institutions designed to resolve trade disputes have become weaker as a result.
The report argues that the continued march against globalization could lead to multilateral rules being openly breached.
Those further along the value chain could then retaliate, and before we know it the world will be grappling with rapidly spreading trade disputes.
Economic activity, output and employment could all be adversely affected. But these effects will have a far greater impact on some people, fuelling further discontent.
“Whatever the settled position on global trade is to be,” argues the report, “more deliberation and consensus-building would bolster its legitimacy.”
4. Democracy buckles
Democracy is under great pressure. The polarization of politics could worsen, leaving people even further apart ideologically and with less room for compromise. In the worst case scenario, political debate could be replaced by the use of force. Those in opposition could then take up arms, a situation particularly worrisome in areas with ready access to weapons or a history of political violence.
The more that can be done to boost the resilience and responsiveness of democratic institutions, the less likely they will be to buckle under pressure. “We also need to better understand the democratic fissures currently being caused by the economy, by social media and by changing patterns of national identity,” says the report.
5. The extinction of fish
Another big threat posed by AI is the increase in illegal fishing through the use of unmanned ships.
Drone ships could not only deplete fish stocks, irrevocably harming the communities that rely on them, but could cause political instability by veering into national waters. Retaliatory measures by nations might lead to diplomatic or military tensions.
By way of solution, the report identifies targeted schemes such as genetic markers to track fish throughout the supply chain and better vessel observation, as well as new global governance norms and institutions, particularly those with a focus on these emerging technologies.
6. Another global financial crisis
The report outlines concerns that another financial crisis will be more than we can cope with. Whilst systemic collapse was averted in the last financial crisis, if it happens again we may not be so lucky. A similar shock could push countries, regions or even the whole world over the edge and into a period of chaos.
“If financial systems go down, contemporary economies and societies cannot function. Money would stop circulating. Wages would not be paid. Supply chains would break down. Scarcity would begin to become pervasive, and this would threaten to upend the political and social order,” warns the report.
More can be done to enhance the resilience of the financial system, and we need to think about radically changing the way the banking system works. But societies might also want to prepare more actively for worst-case scenarios.
7. The rise and rise of inequality
Scientific research into bioengineering and cognition-enhancing drugs is in its infancy, though not for long. This avenue of experimentation might bring us many benefits, but it could hurt us, too.
For instance, technological or drug-based enhancements are expensive, and will only benefit the rich.
Different countries might approach their uses completely differently, leading to the advent of “enhancement tourism”.
They also have the potential to widen the already-entrenched inequality in our world. This could trigger social instability and conflict between the haves and have-nots.
Controlling who can take enhancement drugs would be impossible, and there may be unforeseen side-effects, triggering a massive public health crisis.
Early and appropriate regulation of enhancement technologies may be more successful than an outright ban. And if they’re proven to be beneficial, there would be a case for universal access, much like vaccinations in today’s world, says the report.
8. War without rules
21st century warfare will not involve guns or bombs, but rather cyberattacks on a massive scale, posits the report.
If a country’s critical infrastructure systems are compromised by a cyberattack, leading to disruption of essential services and loss of life, there would be massive pressure for a government to retaliate. What if they target the wrong culprit? There is no telling where this retaliation might lead.
Governments need to establish agreed norms and protocols for cyberwarfare, much like those that exist for conventional warfare today. This would help to prevent conflict erupting by mistake.
9. Who are we?
The report argues that our need for national identity and self-determination is already leading to violence and constitutional instability. Sometimes foreign powers can weigh in, exacerbating the issue.
States expelling ethnic or religious minorities, national minorities attempting to secure independence, and nation-states extricating themselves from international constraints on their sovereignty are all examples of this.
A stronger promotion and protection of equal cultural and political rights within states would help defuse tensions about national identity. So would the fostering of stronger economic and other links between states sharing contested borders, suggests the report.
10. The break-up of the internet
If cyber attacks become more likely they could end up breaking the internet.
Nations might build digital walls as they seek to protect themselves. But this might not be the only reason. Governments might also choose to do this on the basis of economic protectionism, regulatory divergence, or censorship and repression. If governments felt they were losing power relative to global online companies they might also seek to control the internet.
There would be a barrier to the flow of content and transactions. Technological advancements would slow. While some might welcome this, others would not. It’s likely that there would be plenty of illegal workarounds.
Perhaps most worryingly, human rights abuses would likely increase as advances in international monitoring are rolled back.
Ongoing dialogue between governments and technology companies would help to ensure that internet-based technologies develop in a politically sustainable context of shared values and agreed responsibilities, suggests the report.
The report presents 10 such potential breakdowns not as predictions, but as food for thought and asks the question: What are the shocks that could fundamentally upend your world?
This article was first published on 17 January 2018.