The days of national economies are basically gone. It’s debatable how controllable they ever were. We live in a world of interconnected financial systems, global trade and transnational corporations. Of course, no politician will readily admit that they have almost no control over the economy. And I’m talking about the national politicians of most countries.
There’s a quote that goes around on Facebook from time to time, stating that if UK MPs believe in performance related pay for public sector workers, that their pay should be tied to the economy’s performance. It’s pithy and amusing, and it speaks to a truth that although UK politicians are elected every 5 years, their re-election is not always a testament to their abilities or performance.
Let’s look at the financial crash of 2008. The diversification of financial instruments for debt created a wide enthusiasm for debt in general; with financial institutions, governments and ultimately the consumer believing they were contributing to a long economic boom.
We know now that this was a recipe for disaster and the consequences rippled around the world like dominos falling. A global recession ensued as everyone stopped spending and no more debt was offered. Once that was set in motion – once the dominos started falling – there was absolutely nothing any set of politicians could do. The markets had been deregulated over time, all the institutions had grown more and more interconnected, the regulators and ratings agencies hadn’t seen the problem coming, and the politicians could only try and minimise the scale of the disaster. It is interesting to note, that to do so they needed to work together, across national boundaries.
This is systemic complexity, and it is how our economies operate and by and large politicians in most countries are unable to manage their economies any more. You won’t hear them say this, as they still make economic promises to their respective electorates, but it’s the truth.
And, importantly, their electorates already know this truth at some level. It may not be explicitly in the minds of the electorate but you need only look at the direction of politics today to see that people know that their politicians are no longer in control, and they don’t like being lied to about it.
Politicians reacting to people’s fears
Look at the UK and the Brexit debate – ‘take back control from Brussels’ is a central theme of this debate, with the population knowing their politicians are no longer in control. The logic (for the Leave campaign) goes that our issues will all be solved if we can have our own laws and control our own borders as we suspect that these immigrants and refugees are perhaps the cause of all of our woes.
Look at the US elections – Trump will make America great again by withdrawing from internationalism, building walls, removing people from the country, being protectionist in trade. Across Europe we see the return of the hard right (France, Austria, etc.) and they respond directly to people’s fears that somehow we need some strong leadership to bring things back into control and those people out there (not us) are probably to blame.
The sad thing is that this move, whilst understandable, will probably just make things worse.
Dealing with systemic complexity
The truth, which is unpalatable to many, and unspoken by politicians, is that we have constructed an interconnected world, where our economies are interlinked. Trump speaks from another era, of economies which compete against each other, but we don’t have economies, we have a global economy. If you go down, I go down – we are linked and your pain will be my pain, economically speaking. This is a much more complex world in which to operate.
We all have a limit to our capacity to deal with complexity. We all have those moments where it’s all a bit much and it feels overwhelming. It feels easier to retreat from the complexity and we return to a more simplistic answer, much as large chunks of our politicians and population are doing currently. Some of us may freeze in the overwhelming nature of the complexity we face.
Dealing with such complexity requires a different leadership. Individualistic ‘strong man or woman’ leadership will not move us forward. Retreating from internationalism will not change the nature of the global economy; it will only limit us and the role we can then play in that economy. It will diminish us and make us smaller, and that may make it easier for politicians to have a greater sense of control and manageability of the economy, but only because it is smaller. Withdrawal will only weaken us all.
What is needed is engagement with international structures and bodies, and probably a significant reform of them. Our systems of governance across the world have not significantly innovated or changed in the past couple of hundred years, whereas the world has changed dramatically. An international connected economy requires an international system of governance.
A different kind of leadership is needed
It requires leaders who are able to engage with systemic complexity and be able to engage their electorates when what’s best for all of us may be unpopular at home. It requires leaders willing to stand up to their electorates, to educate them (and themselves), and to help them to be able to hold greater levels of complexity.
Looking at the significant problems we face in the world today – e.g. climate change, or antibiotic resistant bacteria – these will not be solved by one country on their own. Current newsworthy issues such as tax havens and corporation tax avoidance is enabled by precisely the inability of our current politicians to engage effectively on the international level. These issues all require internationalism and the ability to engage in complex systems.
This generation of politicians faces immense challenges – they will need to admit that they don’t have control any more, they will need to face an electorate which is already in reaction to this unarticulated truth and seek to engage them in a different political reality. They will need to take action in the face of complexity that they find overwhelming, and also to take leadership in the face of that complexity, and they will need that to be collective leadership with other politicians from around the world. They will need to recognise that we share the pain and gain of a global economy and that we need to work together for the benefit of all.
This is not that different to the challenge facing many organisations. It’s not uncommon to see senior managers grappling with being immersed in complex systems. How many times have you seen managers apply simplistic ‘sticking plaster solutions’ on major challenging systemic issues only to get promoted before everyone realises the problem hasn’t gone away? It’s all too common in my experience.
Forge coalitions, listen deeply and work across systems
The world we now live in requires a different form of leadership from the individualistic heroic leadership often portrayed in the media. It also requires that we measure the success of managers and politicians less on their ability to be strong individualists proposing solutions, and more on their ability to forge coalitions, to listen deeply, and to work across the systems to enable the emergence of solutions which work for all. This is a performance related pay for politicians that I could buy into!
NB: the political views expressed in this post are personal to the author and do not represent Future Consideration’s collective view. The need for a different form of leadership however, is entirely consistent with how we all feel at Future Considerations.