THE STAGE FOR THE 21ST CENTURY'S EPOCHAL CONFLICT

Sorry for the slowdown in posting. I'm thinking through the implications of our current situation and the process is slow going as I run it through my frameworks. Here's some early thinking that you may find useful (or not):

Setting the Stage

The prolonged economic and financial crisis of the 1930's (the Depression) forced the development of the modern nation-state. To mitigate the effects of this crisis, the nation-state learned to mobilize and manage national economies on a scale never seen before. Inevitably, the process used to extend control wasn't uniform, it took three different ideological routes -- government control, corporate control, and a corporate/government market mitigated symbiosis. This eventually yielded a fight for dominance that resulted in both WW2 and the Cold War. One approach eventually won.

Unfortunately, it's growing increasingly clear that we've entered another prolonged economic and financial crisis, which may become the Depression of the 2010's. So, if we follow the historical pattern (important: while history doesn't repeat, it rhymes), we will likely see new organizational solutions develop that mitigate the effects of this crisis. If this is true, it's very useful to identify what's different between this crisis and the last:

• Global and not national. Unlike the previous, this potential Depression will be global -- aka HUGE, FAST, and COMPLEX -- and not national. This means that the solutions needed to mitigate its impact will only occur on the global stage.
  
• Systemic disruptions. The second difference is that we will continue see numerous systemic shocks on a global scale. These shocks will increase in frequency as the dynamic instability of the global system becomes acute. Organizational structures that aren't resilient will be washed away.
  
• Post-ideological. Mass movements and ideologies are dead. Global markets and social fragmentation now rule. This means that we can't expect a repeat of the 20th Century solution set.
  

The question now becomes, what will these "solutions" that mitigate the effects of the "coming" Depression look like? The natural reflex is to assume that our nation-states will formulate a response. However, that doesn't appear to be a well founded assumption since this global problem is MUCH bigger, faster and more complex than they can handle. Further, nation-states have been in decline for nearly 35 years as they gradually ceded elements of sovereignty to a now dominant global marketplace (which was built to help America's ideological solution triumph over Communism during the Cold War). As a result, we can expect that moves by nation-states to prop up a global scale problem won't work. Worse, many states will likely go broke in the process,* well before the problem is mitigated. Instead, we can expect -- and this is purely speculative since the real responses won't be truly visible until well into the next decade -- three potential solutions to emerge (how they fight and who is likely to win is the most interesting aspect of this emergence to me). More on this in a later post.

*Will many nation-states go broke? Almost inevitably. For example, the US national debt went up 5%, or $574 billion, in only one month (October 2008). That is likely only the start of vastly more red ink. Why? The debt overhang for America, is estimated to be 370% of GDP (a combination of public, private, and corporate debt). This equates to $30 Trillion in debt over the long term sustainable level of 160% of GDP. That excess $30 Trillion in debt will need to be reduced to $0 before we can be restored to any semblance of fiscal health according to the existing model (in the last Depression, we went from 260% debt/GDP to 140%). There is a similar vulnerability to excess debt in many of the world's nation-states.

**Note that there is now, for the first time, a robust market for Credit Default Swaps (a financial product that allows you to bet on bankruptcy) tied to the solvency of the United States government