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Business and Finance

Scenario 2050: a long view of urban economies

Gill Ringland
What is happening to cities and what does this mean for power structures? A futurist explores global finance scenarios for 2050 and the implications for nation states, cities and individuals

You may have heard that by 2050, 70% of the world’s population will be living in cities. Perceived by some as polluted, overcrowded, high stress environments we nonetheless need to understand cities’ potential and actual contributions to wellbeing.

There is evidence that concentrating people in one place increases economic activity, return on infrastructure investment and social vitality. If the population of a city is doubled, there is an average 15% increase in the wages and patents produced compared with two cities of the original size. There is also an inverted effect in terms of infrastructure: if the population of a city doubles, it needs 15% less physical infrastructure than two cities.

Join us in a thought experiment as we take you through four possible global scenarios for 2050.

Scenario 2050

Scenarios combine what we can anticipate with an exploration of uncertainties. There are two possible threads in this essay. One is a network of global cities, with city states replacing many functions of the nation state. Alternatively, connections, and therefore markets, could be global and thus largely virtual, replacing geography with other organising structures such as affinity groups.

Those threads then lead us to four scenarios, which provide a framework for thinking about the context, role and shape of cities.

In describing the evolution of the scenarios, we take into account the recent financial crisis in the western economies. In the narrative, for simplicity, we introduce a hypothetical event – where severe weather or another natural cause creates global food shortages – in about 2030. In two of the scenarios, this event causes the collapse of the current world order, i.e. the Washington consensus.

Imagining the world beyond the Washington Consensus is challenging since so much of our infrastructure, both physical and governance, is based on western values and management.

The Second Hand scenario

The Second Hand scenario posits a world in which democracy is still valued, western values and institutions are still part of the global business environment and capitalism is still the dominant paradigm, as part of the Washington consensus. It is a world in which geography – in the form of the nation state – still matters, though with weaker powers than today. It is a ‘muddle through’ scenario in which international structures decay as they do not reflect the relative wealth of the BRIC countries and other industrialising nations such as Turkey.

The cost of defence and border controls will cause regional concerns. Cyber attacks will be commonplace. Nation states will have reduced capability to provide services for their citizens, leading to the lack of a safety net and severe inequalities in health and education.

Immigration will be essential to help regions with ageing populations, such as China, Japan, Europe and the United States, cope with the problems posed by a declining workforce. Africa, India and Latin America will have young populations but making a success of these economies will need all their people, though they may travel for gap years or to get extra language skills.

The Visible Hand scenario

The Visible Hand scenario refers to a world in which the current political, social and economic regimes are still recognisable. The world will have evolved after the financial and fiscal crises, responding to population and resource pressures and taking advantage of new technological capability. It will be more educated and well fed but at the expense of ‘rugged individualism’, with a pervasive global culture. This pervasive culture will lead to extreme volatility and will break down into a Long Hand or Many Hands scenario by 2050.

1. The Long Hand

In the Long Hand scenario, the financial crises in the early years of the century will have been followed by a complete melt down in many western countries. State budgets will have become overloaded, causing a drop in state expenditure, consumer spending power and overall consumption. As a result, virtual connections which span geographies and are based on ethnic and religious affinity groups will become the main global organising structures.

The path to this scenario is various resource crunches and environmental concerns which will combine to push prices up and reduce the consumption of physical goods, especially for poor people, with a crisis in food supply following a year of extreme weather.

Society will break down, with near-famine conditions for some years, and people’s lifelines will be their affinity groups. This experience will reinforce the attitude that such affiliate groups are the only dependable source of security and welfare for their members, and they will rapidly become the mainstay of the new paradigm of ‘who you trust’.

The perceived life experience of most people (the ‘feelgood factor’) will not have been adversely affected. They will discover they can enjoy rich and fulfilling lives with less physical consumption by using the entertainment and social capabilities of the web.

In this scenario, the role of national or regional governments will be to enforce geographically-based property rights through defence against physical or cyber attacks and to keep law and order.

Communities across geographies and cities

Communities will have a heightened dependence on virtual infrastructure. New global governance mechanisms will arise, based around a loose network of affiliate groups with differing organising principles but a common need to tackle global concerns – ecological, environmental or related to energy.

Cities that will thrive will be those that can provide physical security and virtual infrastructure for a range of diverse communities.

Individuals

People will form their principal social interactions through work and social networking (often the same institutions), with other people who share the same interests, language and ideological or religious perspectives. Affiliation to these cyber groups will become more important than loyalty based on geography or nationality.

2. Many Hands

The Many Hands scenario sees a world which has declared globalisation to have failed, democracy to be too unwieldy and western value systems to be inadequate. The concept of the nation state as provider will have disappeared. In its place, a multitude of city states will emerge, in some cases replacing completely a failed state, in others co-existing (occasionally awkwardly) with a state whose role and authority will often be substantially reduced. Mobility across states and between cities will be the norm. The city state communities will have very different strengths, weaknesses, wealth levels and brands.

One of the main drivers will be the progressive failure of globalisation to deliver its promised advantages and benefits beyond a restricted circle of countries. The desire of countries to protect their economies in a time of protracted difficulties and resource scarcity will see a growth in trade barriers and protectionist measures. At the same time, the widespread crisis of confidence and trust – towards the state and its institutions, but also towards the private sector – will fuel malcontent and secessionist aspirations.

Extreme weather events will plunge the world into a heightened state of insecurity from which it will not yet have emerged in 2050. Supply chains will be rethought and credit will be realigned to available resources. Cities on flood plains (river, sea) with over two billion of the world’s population between them will be the worst affected areas. Food and potable water supplies will be severely disrupted. The global population will have fallen by a billion people due to food scarcity, epidemics and wars, although the world will appear by 2050 once more to be on a growth path.

Role of cities

City states will represent fortresses where individuals seek protection and order. It will be very much an 80/20 world where inequality is high, both within and amongst cities. Cities will have distinctive brands and the strongest will be able to pick and choose their inhabitants, leading to positive feedback and wealth reinforcement. Control of immigration and wars for resources will mean that successful cities have armies consisting of robots; unsuccessful cities will have armies of disenchanted youth, while some city states will have failed and disappeared. 70 percent of the world’s population will live in city-states and the top 50 city states worldwide will form the C50, replacing the G20. 25 of the C50 will be in Asia and 10 in Africa.

Cities will not assume all of the ‘old’ state responsibilities, particularly welfare and financial protection although they will collaborate with whatever survives of the nation state to provide security and defence against physical and cyber attacks.

Effect on individuals

Individuals will protect their personal identity, credit ratings and parking spaces at all costs. There will have been a collapse of traditional monetary/cash systems. Social networking will have empowered the middle classes in particular. Intelligence gathering will be a key source of competitive advantage for corporations and the ability to maintain trust and reputation will be fundamental.

Gill Ringland is well known as an author, consultant and trainer on scenario planning and strategy. Since 2002 she has been CEO and Fellow of SAMI Consulting which specialises in decision making and implementation based on views of the future, “robust decisions in uncertain times”. Clients include many financial services organisations. A fuller discussion of the basis of the scenarios can be found in the report In Safe Hands (pdf).

 

 

70%

of the world's population will live in cities by 2050

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