Seize the Opportunities Offered by a Turbulent World

It is by no means a given that the current decade will be another decade of growth. It is no longer enough to merely go with the flow of global events and economic convergence. To take advantage of the opportunities opened by the current turbulent conditions, we need new competences, including a good understanding of the times we live in and smart social and political choices.

A Friendly World of the “End of History”…

As the USSR was collapsing at the beginning of the 1990s and China was increasingly opening up to the world and introducing market mechanisms at home, it was quite common to believe, as Francis Fukuyama claimed in The End of History, that our civilisation found a point of optimal equilibrium. It consisted of: (i) the unique position of the United States as a superpower and guardian of the global order, (ii) the dominance of the Western narrative based on three pillars: liberalism, democracy, and globalisation, (iii) a sense of control over economic processes, corroborated by an era of high global growth and low inflation, and (iv) eco-optimism expressed in the belief that “we still have time” and that technologies will emerge in the meantime enabling a seamless transition to a green economy.

A development highway opened up before Poland, which in the early 1990s became part of the West, gradually joining its structures (OECD, NATO, EU). Poland benefited from trade liberalisation and the free flow of capital and technology, while the global which and the resulting sense of security allowed it to focus on the economy. Finally, traditional Polish entrepreneurship could be put to good use, and the favourable demographics with a young population compared to Western Europe created conditions for a sustained increase in consumption.

One goal shared by the vast majority of the population and political parties was extremely important: membership of the European Union. It ensured that the adverse impact of the inability to build broad political consensus was mitigated over the years. All it took for an institutional solution or piece of legislation was to be required for the harmonisation: that put an end to any discussion. At the same time, the solutions that were adopted made up an infrastructure of institutions, greatly enhancing the credibility and the agency of the state.

...From Which a “New” World" Emerged Unwhichiced...

The world of the “end of history” did not last long. We tend to forget that, as described by D.C. North in Understanding the Process of Economic Change, the world is a dynamic system and human actions are constantly changing it. Therefore, it should come as no surprise that we live today in a very different environment. For one thing, there are many more of us: the world’s population has grown from 5.3 billion in 1990 to 8 billion today, and two continents account for 85 percent of the growth: Asia (+1.5 billion) and Africa (+0.8 billion). Asia is now home to almost 60 percent of the global population, compared to less than 15 percent in North America and Europe combined. Africa, on the other hand, is by far the youngest continent, with a median age of 18 years, which contrasts sharply with the rapidly ageing societies of the West (median age for Europe is 42 years, for North America 38 years).

Second, the economic balance of power has shifted dramatically. On the back of globalisation combined with demographics, the combined share of China and India in global GDP (in purchasing power parity) has risen from 7.5 percent in 1990 to 26 percent now. At the same time, the weight of the EU has declined (from 23.5 percent to 14.5 percent) as did, to a somewhat lesser extent, that of the USA (from 21.5 percent to just under 16 percent). China’s rise in recent decades has been particularly spectacular: it has become not only an economic but also a military power and is increasingly contesting the global leadership of the USA. The growing demand for raw materials linked to the expansion of the global economy has in turn allowed Russia to rebuild its military potential, opening up the way for the return of imperialism. This has led to Russia’s growing military involvement outside its borders, culminating in its growing aggression against Ukraine. From the geopolitical perspective, the world increasingly seems to be moving towards Samuel Huntington’s vision: a clash of civilisations.

Changes in the balance of power have been more than merely geographic. New power holders have emerged, to quote Zygmunt Bauman: global corporations and mass media. The emergence of the latter is largely an offshoot of technological development; the rise of the former was driven by a change in antitrust policy: faced with globalisation, states tolerated the consolidation of power in the hands of corporations to support the “home team” in the economic division of the world. As a result, large corporations have expanded beyond the jurisdictions of states and, in the absence of proper international regulation, eagerly exploited the loophole, not least for tax optimisation. Another important consequence has been the growing interdependence of governments and the new power holders, leading to a range of adverse structural phenomena, including the squeeze-out of small and medium-sized companies, imbalances between capital and labour, growing inequalities, social polarisation and, last but not least, manipulation of society.

Third, the belief that economic processes can be controlled has been undermined. The liberalisation of financial markets leading to over-financing triggered a global crisis originating in Western countries. In turn, the flaws in the construction of the eurozone and the resulting crisis forced the EU to focus on internal problems for many years, significantly reducing its involvement in mitigating the growing global challenges. And then there is inflation, currently at levels unknown for decades.

Tensions have also emerged over the rising dominance of a new technological and economic paradigm. Business models associated with the green knowledge-based economy are increasingly displacing the fossil-fuel-based model of mass production. This is accompanied by a migration of good jobs (within countries, as well as globally) and changes in the competences needed in the labour market (their erosion is increasing).

And that is not all. There is a growing conviction that the processes involved in exploiting the biosphere and climate change are no longer under control and that it is no longer possible to curb the temperature increase to meet the best-case scenario.

Tensions are also mounting at the interface of humans and technology: the largely uncontrolled development of technology has opened space for more or less subtle abuses, and it is difficult to draw clear lines between what is “good” and “bad”. Not to mention flagrant cases of abuse, such as the use of consumer data without their consent, the manipulation of voters, the rise of surveillance, and much more.

…In Which One Has to Find One’s Bearings

As the impact of all these changes is multi-layered and generates many different tensions, the times we live in could be described as a “time of transition”. It is not “a crisis” but a time of diverse turbulences, which usually accompanies the emergence of a new order that brings with it new winners and losers at all levels: states, companies, and individuals.

These processes are manifesting themselves in various types of partial crises (financial crisis, energy crisis, political crisis, etc.) and increasing internal and external tensions, including armed conflicts. In a world of multidimensional connectivity, a concept popularised by Mark Leonard in his book The Age of Unpeace, and advanced technologies, a great deal of damage can be done. The contemporary world can once again be merciless to the weak.

Such a world poses much bigger challenges. As history shows, “times of transition” are periods when much can be quickly gained but also lost. This is because they cause a rupture with linear and continuous processes, prevailing hierarchies and rules. Sooner or later, routines fail and adaptability becomes the key to success.

In the context of global advancement, in addition to improved productivity, it becomes crucial to be anti-fragile, a concept coined by Nassim Taleb: under turbulent conditions, a country which is anti-fragile can advance, as it were, on the backs of those whose socio-economic structures turn out to be fragile and pull them down. In practical terms, this is apparent in the flow of capital: investors prefer stable economies with strong foundations.

It is at times like these that the factors identified by Ray Dalio in Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail begin to play a key role. In a summary of his observations and studies of societies and economies, Dalio describes the parameters that determine the ability to succeed, or even survive, in times of turbulence. Key among these are characteristics which seem less prominent in quiet times: the quality of political elites, the commonality of purpose, the degree of social unity.

In turbulent times, when confrontation in its many forms replaces cooperation, it is instrumental to pursue policies that are anticipatory in nature, rather than simply putting out fires; policies that can build international alliances, ensure access to key raw materials and markets, and build broad political compromise.

Many Arguments Speak in Favour of Poland, but...

In order to succeed in times of breakthrough, one has to skilfully leverage one’s strengths and take advantage of opportunities. At the same time, one needs to find solutions to overcome weakness and fragility.

Poland has the potential to be among the winners that gain from the current situation in the medium to long term.

The arguments in favour are primarily related to the structural strengths of Poland’s economy. Among other things, this is due to a high degree of self-sufficiency when it comes to staple products (thanks to an extensive production base, including both agricultural and industrial production); industry diversification without strong dependence on one or two sectors; and a competitive labour pool with good education and engagement. Geographical location is also important and has become an even greater advantage in the era of friend-shoring and the shift from just-in-time to just-in-case.

And then there are factors closely linked to the current situation. Poland has become a front-line country which, looking at Israel or South Korea, may be a stimulus for the development of infrastructure and intensify the absorption of advanced technologies. Poland may also benefit from regionalisation and attract a new wave of manufacturing investment of both European and Asian companies.

Another strength of Poland is its managers, who are unique in the world with their combination of experience from different corporate cultures and the specific Polish ability to adapt and, when necessary, improvise. The capacity of citizens and businesses to self-organise, which proved to be crucial during the pandemic and the inflow of refugees, is instrumental under such conditions and in the long term expands social capital (trust, cooperation), which has for years been the missing link in a modern economy.

Clearly, remaining a member of NATO and EU is a prerequisite for the best-case scenario to materialise. NATO membership is a key deterrence factor. Without the EU umbrella, single European countries are but pawns on the global chessboard. As the world is being divided anew, Poland’s continued preferred access to the EU as the world’s largest market is a matter of strategic importance. All the more so as there is a real opportunity to take an active part in shaping the EU, whose profound reform seems inevitable in the context of the many crises and a changing environment.

...More Is Needed in Times of Breakthrough

However, the strength of the economy is not everything in times of breakthrough. As Dalio points out, social and political factors are growing in importance. They are also becoming crucial for another reason: Poland has exhausted its simple development reserves. Further productivity growth requires more sophisticated actions and policies (strategic rather than reactive thinking) and a renewed consensus on key issues, as in the days of applying for EU membership. Otherwise, it will not be possible to implement the deep and urgently needed changes, including the energy transition needed to provide industry with access to clean energy. Deep and consensual change is also required as regards health care, science, culture, immigration policy (without which Poland will be pulled down by unfavourable demographics), and an efficient state. With regard to the latter, Poland must stop the erosion of institutional arrangements and democratic processes evident in recent years, as indicated by many international comparisons and rankings (Worldwide Governance Indicators, V-Dem, World Justice Project, etc.).

In the current circumstances, it is impossible to succeed if politics continues to play the tune of social polarisation and revert to models that have brought Poland to its knees on more than one occasion (modern forms of troublemaking and infighting). As such, a change of leaders may be the key to success in turbulent times. Just as the “end of history” has come to an end, so too should its local representatives step down on both sides of the political stage. They are mentally stuck in the past and in the conflicts that it produced. In times like these, we need to bet on new people who are forward-looking visionaries, give voice to those who do not rely on fears and social divisions but on courage to unite and seek what is common. We need to enter the new global game as a community that knows what it wants and has its own clear vision of where it is going. The year 2023 should bring a decisive step in this direction. ©℗

Clearly, remaining a member of NATO and EU is a prerequisite for the best-case scenario to materialise. NATO membership is a key deterrence factor. Without the EU umbrella, single European countries are but pawns on the global chessboard