This is the autumn of our unchanging change

The incident reminded me why the generations think very differently – the old are burdened with legacy memories, good and bad, and can’t change that easily. The young have ideals, and no fear or respect for the past or their elders. They are reckless about their future but they are both inheriting and changing the world.
With Ebola spreading, ISIL taking more territory, tensions over Ukraine, Hong Kong protests and then the Ottawa shootings, something profound is obviously happening. But no one is sure precisely what is it is and what will be the outcome.
The news was negative enough to create a mini-setback for the financial markets just as central bankers and finance ministers met in Washington for this month’s World Bank/IMF Annual Meetings. The IMF predicted slower growth for all, and as European sovereign debt spreads began to widen again, both bond and equity markets took a hit.
There is an unspoken agreement that the world is entering a long recession, as almost no growth drivers are in sight.
I had the privilege in Washington of listening to Financial Times columnist Martin Wolf offer his explanation of what’s happening and also read from his new book, “The Shifts and the Shocks”, about what we have learned and still have to learn from the financial crisis. This was a tour de force, one of the few analyses that go beyond economics into a global framework for the analysis of the ongoing crisis. Wolf argued that the fundamental drivers of instability are excessive debt creation, global imbalances and inequality. These challenge the orthodox view that life always reverts back to equilibrium, finance (like freedom) is limitless and that inequality is inconvenient but inevitable.
Martin compared the euro-zone crisis and the world economy to a bad marriage, with the choice of a destructive divorce, continuing in the bad marriage or creation of a good one. The young think that they can throw a tantrum and everything will go their way. The old think that throwing them a few crumbs means life will go on like before. The Chinese call this an Autumn of Worries, because the word “worry” is the character Autumn weighing on the character “heart”. To paraphrase Shakespeare, before we entered the winter of our discontent, we had a glorious summer (or honeymoon) but we now need to go through a trial of many fires.
Wolf argues that the Western elite failed in three areas. The first is that they misunderstood the consequences of headlong financial deregulation, because they thought finance was self-stabilising. The second is that the globalised economic and financial elite that benefited from liberalisation became detached from the countries that produced them. Such inequality weakened “the glue that binds democracy”. Third, the Europeans took European integration too far, destroying the accountability of the winners (Germany and the Eurocrats) for the losers in the rest of Europe.
Taking the long flight back across the Pacific, I reflected on Wolf’s thesis, since many of the rich and powerful Asian elite are also part of that emerging global 1 per cent that is increasingly alienated from the other 99 per cent. The recent Asia-Pacific Wealth report indicates that Japanese high net worth individuals increased their wealth 24 per cent after Abenomics boosted stock market prices, at a time when many ordinary Japanese face an uncertain future with an ageing population and stagnant growth.
The world is in deep trouble because the intellectual thinking that we use (mostly Western science) is inadequate to explain the complexities of an ever-changing global scene. In trying to predict the future of Asia and Asian finance, I also made the same mistake of making projections based on past trends. By that analysis, somewhere between 2025 and 2050, Asia would account for half of world GDP and half of world financial assets. That is neither inevitable nor pre-ordained.
The failures lie in partial and linear thinking. Partial thinking assumes that we can live independently of everyone around us. Population doom-monger Malthus and the Club of Rome’s infamous “Limits to Growth” report are examples of linear projections without understanding that technology and lifestyles can change the game. Life is not like a plane taking off smoothly towards a distant rosy horizon – there are also turbulence and crashes. This is a system-wide problem that only mutual understanding, cooperation and compromise can resolve. We simply have to be more humble in understanding our environment, how we interact and cooperate (or fight) with each other.
Another issue is what the English philosopher Isaiah Berlin called the “Hedgehog Versus the Fox” view of the world. The fox knows many things whereas the hedgehog knows only one “big” thing. The young are like hedgehogs – they believe that democracy is the most important thing in the world, but the fox understands that once you have democracy, it is not the end. Democracy is only the means to an end of a fairer world.
“Hedgehogs” can achieve great things because they believe in what they do, even if most people think they are wrong. “Hedgehogs” think that if the world would only follow their theory-of-everything, it would change for the better. For example, many Western-trained intellectuals think that there is an ideal solution for global imbalances – that if you allow floating exchange rates to be determined by markets, the world will be more stable. Maybe, but only if markets are not manipulated and there is good enforcement of laws at the global level.
This top-down approach is not practical, because we have already moved from a unipolar to a multipolar world. The globe is changing because there are too many views and interests that we need to factor in for good decision-making, any of which is more likely to be wrong than right.
So far, we need both “hedgehogs” and “foxes” to create the diversity that allows Darwinian evolution to occur. This is a dialogue of change that is the only constant. Beyond this confusing autumn, winter will come, but many more autumns too. We have to accept the reality of change.

Andrew Sheng is working on a book on global change from an Asian perspective.