Global Polycrisis as a Pathway for Economic Transition
This article is part of an ongoing collaboration between the United Nations Development Programme (Bureau for Program & Policy Support’s Strategic Innovation Unit & the Inclusive Growth/Chief Economist) and One Project. The purpose of the collaboration is to connect expertise in new economics with an emerging understanding of the global polycrisis. In this first article, we synthesize existing work and identify potential connections between these two fields. We seek to identify economic alternatives that provide systemic and proactive responses to the global polycrisis and propose potential supporting roles for development organizations like the UNDP.
Zack Walsh, Polycrisis Transition Consultancy, is credited with writing this article
© 2ragon / Adobe Stock
Part 1: Global Polycrisis is the New Normal
Today’s global problems are not just the result of a pandemic, an invasion, or fossil fuels. They are driven by the very economic systems upon which our societies currently depend. There is now ample evidence suggesting that the global economic system is facing terminal problems, creating social and environmental crises it cannot resolve in its current form. These crises are now so severe as to compromise the health and integrity of not just the economic system, but social and environmental systems writ large.
The global rate of growth has steadily declined for decades, and as growth stagnates, the system slows and becomes increasingly vulnerable to social and environmental stresses. These stresses have been gradually accumulating due to the collective, unaccounted costs of economic development and the degradation of the commons. As social and environmental stresses reach critical thresholds, they pose systemic risks that can lead to breakdown and collapse.
The 2007–8 financial crisis and the COVID-19 pandemic illustrate how, in a complex, inter-connected world system, risks can spread quickly and cause cascading failures of critical life-support systems. If left unchecked, multiple social and environmental stresses can produce inter-related systemic crises that drive a multi-systemic crisis. This combination of interrelated, compounding crises has been referred to as a state of ‘polycrisis’.
Former President of the European Commission, Jean-Claude Juncker, used the term to describe the challenges facing the European Union in the mid-2010s. More recently, the chief of the World Trade Organization has warned that what we now face is a global polycrisis.
One definition of a global polycrisis is when:
“…crises in multiple global systems become causally entangled in ways that significantly degrade humanity’s prospects. These interacting crises produce harms greater than the sum of those the crises would produce in isolation, were their host systems not so deeply interconnected.”
The interacting effects of COVID-19, climate change, and Russia’s invasion of Ukraine have in turn brought about supply chain disruptions, energy and food shortages, spiraling debt, rising inflation, increasing migration, civil instability, and the rise of anti-democratic populism.
The use of the term ‘polycrisis’ has grown exponentially and it became a buzzword in 2023, reflecting its increasing relevance in describing today’s situation. Discussion of polycrisis has recently appeared in blogs by historian Adam Tooze, the New York Times, the Financial Times, the Polycrisis journal, the World Economic Forum, UNICEF, and the UNDP. Several organizations are further developing the concept, including the Cascade Institute, the Omega Institute, Polycrisis Transition Consultancy, and the Liminality Network– an emerging forum hosted by the Post Carbon Institute and Anthropocene Actions.
As with any buzzword, polycrisis risks becoming an empty signifier for people to use however they want. Progressive uses of the polycrisis concept must include an understanding of its drivers and the unjust power relations constituting them, lest the term’s abstraction obfuscate and reinforce those structures of power.
Part 2: Drivers of Polycrisis
If global polycrisis is the new normal, how will it shape the future of economic development? Mainstream politics remains largely focused on conserving unsustainable economic systems through some incremental changes rather than transforming them. As a result, many societies are becoming increasingly vulnerable to systemic risks, because they are not adapting quickly and deeply enough to absorb mounting social and environmental pressures. In the extreme, there is a real danger that amplifying positive feedback loops between interlocking crises can precipitate a catastrophic failure of entire systems, even at the global scale. The most common way to anticipate these “critical transitions” is to measure a system’s ability to adapt to crises. Successive waves of crises progressively diminish a system’s or a society’s adaptive capacity, making them less and less resilient over time. If they take progressively longer to recover, then they are nearing a bifurcation point — a point of no return after which society enters a protracted period of breakdown, even collapse, and reorganization.
Instances of the severe destabilization or even collapse of societies are not historically unique and often occur for the same reasons. Though triggers of breakdown and collapse are nearly impossible to predict, they are usually precipitated by a combination of social and environmental stresses that can be reliably measured and managed. The study of societal dynamics, including developments in cliodynamics and multipath forecasting, integrates disciplinary understandings of breakdown and collapse in a theoretical framework that can be empirically tested. Current literature reviews produce a number of common social and environmental drivers of breakdown and collapse (1, 2, 3, 4, 5). Four prominent drivers that are particularly relevant to today’s global polycrisis are summarized below:
OVERSHOOT
The scale of the economy and the amount of stress it places on the environment is a function of the number of people multiplied by per capita consumption. Overshoot occurs when people consume more resources than what can be renewed.
INEQUALITY
The decoupling between rising profits and little or no improvement in real wages has created widening inequality. Rising inequality undermines democracy, leads to poor health and social outcomes, destroys trust and social cohesion, contributes to environmental degradation, civil unrest, and revolutions.
COMPLEXITY
As society innovates technological solutions to problems, it becomes more complex, but over time, the benefits afforded by increasing complexity diminish relative to the costs of maintaining them, and so society can collapse under its own weight.
UNIFORMITY AND INTERCONNECTEDNESS
The increasing uniformity and interconnectedness of today’s societies can in turn make them more rigid and unable to address underlying stressors. When stressors reach critical levels and overload systems, they also spread more rapidly via cascading failures.
Considering relevant data and interactions between these four factors illustrates just how likely breakdown and collapse are. In many places, it has been ongoing. Indigenous peoples have experienced the cumulative effects of social and environmental degradation throughout centuries of colonialism and capitalist globalization. The global polycrisis may be seen as a broader and deeper manifestation of such persistent patterns of exploitation and growth at a scale and intensity that fundamentally challenges modern civilization, given shifts to basic parameters in the human-Earth system. The global economy has been in a state of overshoot for over half a century, gradually diminishing its resource base and its capacity to regenerate. Globally, it has surpassed six out of the nine planetary boundaries that delimit a safe space for societal development. It is facing critical challenges to its survival due to the prospects of diminishing net energy and raw materials. As the costs to maintain society increase, the availability and quality of energy and resources needed to maintain it are decreasing. Meanwhile, greater centralization of wealth is continuing to produce rampant inequality and injustice. All the while, society is increasingly susceptible to systemic risks and catastrophic failure, because the globalization of capitalism dismantled many viable economic alternatives, making people dependent on global markets that maximized efficiency at the cost of sustainability and resilience.
Part 3: Future Scenarios of Economic Transformation
In the past, destabilization or collapse was followed by periods of societal transition and regeneration, allowing well-being to eventually recover. Yet today, the global interconnectedness of economic and social systems means that destabilization and collapse could cascade globally, impacting all societies and impairing their ability to recover.
It is not certain that societies could fully recover from catastrophic collapse given their dependency on energy dense fossil fuels for most of their functioning. Even though there will remain fossil fuels and minerals in reserve, it is becoming increasingly uneconomical to extract them, owing to the higher costs of extracting deeper reserves, and it is ecologically untenable to continue doing so, since it drives unsustainable losses in biodiversity and climate change. Although in all likelihood, humanity would adapt and survive, it would do so without the energetic and material potential it once enjoyed.
We should therefore see the remaining global carbon budget as a limited resource to support a global transition to sustainable societies that can fully recover from destabilization and collapse. This is the difference between two broad recoverable vs. unrecoverable global scenarios:¹
🔥 “Catastrophic Collapse”
The interrelated destabilization of environmental and human systems becomes so severe that societies as currently constructed cannot fully recover. Humanity eventually adapts but in a diminished state, as the breakdown and collapse of social, economic, and environmental systems has permanently reduced the overall carrying capacity of the planet and aggregate levels of wellbeing.
🌍 “Global Transition”
Societies undergo a sustained, managed, economic and socio-political transition, re-organizing themselves to a point of stabilization at a lower level of complexity to ensure higher levels of human and environmental wellbeing within social and planetary boundaries.
The following image represents these two scenarios:
© Zack Walsh / Polycrisis Transition Consultancy
An unprecedented amount of effort and coordination is needed to reconfigure societies for a global transition. Current approaches to development cannot adequately respond to present-day crises and often exacerbate them. The UN’s latest Human Development Report shows that global human development has declined for the first time and for two years straight. The report examines the uncertainty and risks underlying today’s intersecting crises, warns of impending global catastrophe, and calls for radically new approaches to development.
Although current crises are already driving shifts in economic policymaking, these shifts are nowhere near commensurate with the scale and depth of those needed to address the global polycrisis. Mainstream approaches to sustainable development do not sufficiently challenge the growth imperative at the heart of today’s unsustainable system. Current green growth decarbonization pathways assume sustained growth and rely on improbable rates of decoupling material growth from ecological impact, based on the implementation of unproven, unscaled, and hypothetical negative emissions technologies (1, 2).
Within the current system, environmental impacts have typically been reduced after a country has developed enough to outsource its heavy industry and manufacturing, and sufficient absolute decoupling at the global scale simply has not happened (1, 2, 3, 4, 5, 6, 7). Although technological advancements improve efficiency, they do not substantially reduce resource use; on the contrary, efficiency gains from technology usually increase the absolute amount of energy consumed. Moreover, the two dominant negative emissions technologies (BECCS and DACCS) require massive amounts of land, water, and energy, placing environmental systems under greater stress, leading to further overshoot (1, 2).
The limits of renewable energy are also well-documented. Renewable energy has a lower energy return on investment (EROI) than fossil fuels, requires building an alternative global energy infrastructure with the necessary storage capacity to provide reliable coverage and service, and requires increases in mineral extraction that will raise emissions and put pressure on biodiversity and indigenous communities (1, 2, 3, 4, 5, 6). Though renewables have been more widely adopted, this success story is overshadowed by growth in global energy production and consumption, leading to greater net emissions.
When mainstream approaches to sustainability fail to challenge the growth imperative, they provide limited, even false solutions to today’s crises. We have already committed to CO2 concentrations beyond the 2°C threshold, assuming growth in energy demand continues to outstrip the rate of decarbonization due to persistent scaling effects from past innovations to growth. The transition to renewables is not a silver bullet, nor are efficiency improvements or negative emissions technologies– a more profound reduction in global demand will be needed to reach global goals.
Part 4: Systems Change Models that Provide Alternatives to Development
The transformations now required are more fundamental than those implemented during past periods of crisis. As the UN Environment Programme recently concluded, the transition cannot occur through incremental reform; transformational change is required. The long term success of global development efforts depends on innovations that fundamentally transform the economy to reduce the risks and severity of breakdown and collapse, while ensuring a successful transition. The context of global polycrisis thus calls for greater attention to be paid to aspects of systems transformation, beyond efforts to improve resilience and adaptation within the current failing system.
The aforementioned four drivers of polycrisis (overshoot, inequality, complexity, uniformity and interconnectedness) are the direct result of a development model underpinned by the globalization of capitalism. As a system, global capitalism organized societies around the goals of maximizing efficiency, private profit, and growth, and in doing so, it led to the accumulation of social and environmental externalities which now pose systemic risks. The unprecedented expansion of social and economic development, often referred to as The Great Acceleration, was based on an economic model of exponential growth on a finite planet. Now, we need systems change models that can improve quality of life in a post-growth environment.
In contrast to green growth scenarios, post-growth scenarios provide more realistic and feasible decarbonization pathways that both reduce inequality and overshoot, though they are as yet largely unexplored by governments and the IPCC (1, 2, 3). A modeling study that examines collapses caused by overshoot and inequality shows that risks can be reduced by equitably downscaling or simplifying the global economy to sustainable levels. To accomplish such a transition, the very purpose of the economy has to shift from a focus on growth to a focus on sustainable wellbeing– defined as sustaining quality of living above the threshold for a good life within social and planetary boundaries. This shift coincides with the call for a new eco-social contract where people and planet thrive together.² Even while accounting for population growth of up to ~10 billion people, it is theoretically possible for everyone to enjoy high living standards if consumption is equitably distributed. This implies inclusive economic growth for the majority world while lowering material and energy use among high consumers in the rich world.³
UNRISD’s 2022 Flagship Report explores intersecting crises as opportunities for re-envisioning development using new economic models beyond green growth. They cite the social and solidarity economy (SSE), the commons, post-growth and degrowth, and just transitions as promising alternatives to incorporate in a new paradigm beyond growth. To this list, one must add essential contributions from the majority world, including post-extractivism, post-development, buen vivir, ecological swaraj, the rights of nature, and ecological civilization.⁴
The New Systems Reader is another resource presenting an overview of systems change models, and although they differ in emphasis and strategy, they generally advocate for a democratization of the economy, re-embedding it in society and nature, while equitably distributing wealth and decision-making power. An expanded definition of economic democracy includes three pillars: “individual economic rights, collective and democratic ownership and more deliberative and participatory economic practices.” By ensuring that structural transitions are inclusive and equitably managed, economic democracy can fairly distribute the costs and benefits of structural transitions and prevent disenfranchisement leading to rising polarization and authoritarianism.
The paradigm emerging from such visions is of a world system composed of many systems operating on a democratic basis; or, as the Zapatistas say, ‘A World Where Many Worlds Fit’ (‘Un Mundo Donde Quepan Muchos Mundos’). Taking a pluralistic approach to development encourages autonomous and participatory social innovation, and overturns the long-standing colonialist legacies of the Western-led development agenda. A rich tapestry of alternatives to the current development paradigm has in fact always existed. Such alternatives are differentiated to better account for local needs and cultures, and by enhancing diversity and modularity, they in turn improve resilience, especially in times of crisis. The best way to deal with shocks is by combining diverse responses.
© rashmisingh / Adobe Stock
Part 5: The Role of Multilateral Institutions in the Transition
Many characterize the current moment the world is in as one of geoeconomic fragmentation– where capital flows are decreasing, corporations are tightening control of their supply chains, and countries are erecting barriers to trade, cross-border migration, and technology transfers. The interconnected global system is beginning to break apart and be reshaped by various interest-aligned blocs (G7, NATO, V20, G77), as the polycrisis ushers in a polycentric world order. This raises fundamental questions about the identity, role, and relevance of the multilateral system that, having emerged after WWII, has struggled to renew its purpose in a rapidly changing world.
While some see this as a threat, others find it to be fertile ground for spreading economic alternatives that transform systemic breakdown into breakthroughs. A shift toward greater regional and local autonomy and sufficiency can potentially improve sustainability and resilience. However, if effective multilateralism is not in place to ensure cooperation, peace, and security, there could be increased risks of isolationism and inter-state conflict. A Fortress World of elites protecting their wealth is also possible. Given this dual reality, multilateral institutions should work to ensure that increasing divergence between development models supports, rather than detracts from international cooperation. Voluntary cooperation of nation states remains essential both to solve collective action problems, and to avoid the specter of international anarchy and totalitarianism.
The fragmentation of capitalist globalization could provide opportunities to positively re-envision development for a global transition. Although there are ample alternatives to development, there does not yet exist the appropriate political, legal, and financial structures to catalyze and connect otherwise disparate alternatives within a civilizational project. As Gills and Hosseini argue,
“The trillion-dollar question that movements in the pluriverse of alternatives face today is how to create transformative and sustainable alliances across multiple differences that would result in an inclusive movement for (global) civilizational change… The organizational bonds between these diverse projects are not going to grow naturally unless integrative plans are designed and implemented.”
One strength of multilateral institutions is how they facilitate coordination between globally determined goals and locally determined pathways to achieve them, which could help build coalitions and a shared agenda that strengthens the coherence between economic alternatives so they present viable civilizational alternatives.
Renewed international cooperation will, however, require building cohesion and trust within and across countries, which will in turn require transforming systems to redress historic inequalities and injustices. Multilateral institutions that govern and regulate the global trade and financial architecture (e.g. International Monetary Fund, the World Bank, and the World Trade Organization) could consider structural reforms to redress systems of unequal exchange between countries while prioritizing investments in a green transition beyond growth. The Bridgetown Initiative is a good first step illustrating how multilateralism can partially redress ecologically unequal exchange by enlisting advanced economies in the financing of an eco-social transition in low-income countries unfairly burdened by climate disasters. Much more needs to be done beyond current efforts, however, to reconfigure financial and trade policies for fairness and sustainability. Some additional interventions could include: providing debt relief and improving the credit rating system for low-income countries, eliminating corporate tax evasion, developing robust ecological taxes, supporting public investment in the transition, and allowing greater access to technology.
As the polycrisis weakens the Bretton Woods system, there should be positive opportunities to create a more equitable multilateral system, akin to the UN General Assembly resolution for a New International Economic Order (1, 2, 3). Though the global trade and financial architecture is already being reshaped by China, and by regional cooperation in Latin America, for example; a democratic system of global economic governance is needed to ensure international cohesion and cooperation in the face of competing national interests. One idea that has emerged is to create a multilateral clearing union that replaces the Dollar standard and its privileging of U.S. economic and political interests with a monetary unit denominated as a weighted average of national currencies. Such systemic transformations, it is argued, could allow developing countries to emerge from the polycrisis on a more equal footing, while guarding against risks to international peace and stability.
Part 6: Facing Challenges Head On
The tremendous challenges of implementing a global transition should not be underestimated. Successful systems transformation requires parallel shifts in worldviews, institutions, and technologies that are embedded within and adapted to a “full world.” Currently, no country succeeds at providing its citizens’ basic needs on a sustainable basis (1, 2). Furthermore, large-scale socio-economic restructuring will create many of its own risks and hazards, so careful planning and adaptive governance is required. Social movements will also need to be mobilized to generate the political power needed for widespread systems change. Yet a global movement for a just transition cannot be expected to emerge until associated political projects and alliances are built in response to the needs and values of frontline movements and the majority world.
As the global polycrisis worsens, transformational change will be significantly encumbered by crises, breakdown, and collapse scenarios. Such scenarios present very dynamic and unstable conditions, presenting high degrees of uncertainty and risks that reduce the likelihood of interventions successfully leading to positive outcomes. Crises have always presented “windows of opportunity” for transformative change. However, existing power centers that precipitate crises often leverage them to consolidate power and control. As destabilization and collapse grows, systems changing alternatives fit for a post-growth world should be implemented to replace maladapted economic systems.
In a forthcoming second article, we will explore how the UNDP and other development organizations might collaborate with others to help build the field and seed projects that can address the challenges of the global polycrisis. We will explore the diversity of economic alternatives oriented toward the global transition and apply what we have learned to case studies that illustrate future directions for research and action.
FOOTNOTES:
[1] Catastrophic Collapse and Global Transition are differentiated on the basis of whether or not a global polycrisis leads to an “irreversible and catastrophic degradation of humanity’s prospects” in correspondence with scenarios D and E respectively in Figure 3 of Baum and Handoh (2014).
[2] See also the Pacto Ecosocial del Sur initiative.
[3] The convergence range for global sustainable resource use is within the bounds of a high quality life for everyone, and given the decoupling between income and wellbeing in this range, reductions in consumption in advanced economies can in fact be welfare enhancing if policies prioritize wellbeing over “uneconomic growth.”
[4] Many more transformative initiatives are collected in Pluriverse: A Post-Development Dictionary.
