The Quiet Revoluation

In the four decades since 1970, the world has undergone a “quiet revolution” characterized by profound economic and financial transformations in advanced and emerging economies.  This revolution may not have been as visibly disruptive as the first industrial and political revolution of 1789-1848, but its economic, social and political ramifications may be just as important.

These ramifications are threefold.  First, the exponential growth in the intensity of financial globalization and the deep structural changes in the international financial system have created unprecedented systemic risk to which most regions of the world are exposed.  Second, the emergence of regional supply chains has likely increased the synchronicity of economic cycles between developed and emerging economies, at least within regional supply chains.  Finally, the spread of information technology and the decimation of communication costs have tremendously increased humanity’s ability to disseminate information, much like the multiplication of the number of synapses in a nervous system.

In addition to these transformations, we are currently witnessing modern societies’ inability to supply three critical public goods: containment of environmental disruptions; international financial stability; and containment of nuclear risks. The inability to provide these public goods is arguably one of the most significant collective action failures of our societies.