The Phoenix Economy, Take 2

John Elkington

February 11, 2010

A central theme in our 2009 report The Phoenix Economy was that the global economy was embroiled in something very different to a normal recession – and that the dynamics had more to do with the sort of deep economic and business cycles that economists like Nikolai Kondratiev and Joseph Schumpeter explored. At the time, even though many comparisons were beginning to be made with the Great Depression of the 1930s, we experienced significant push-back from people who felt we were exaggerating the risks. Well, maybe we were and maybe we are, but today’s Financial Times runs an article by Niall Ferguson that underscores the sovereign-debt-related risks now spreading out from Greece, rattling Spain and Portugal, sending tremors through the UK financial system – and very likely headed America’s way.

I have often used a slightly mutated version of a phrase I first heard many years ago, to the effect that “History may not repeat itself, but by God it rhymes.” I remain convinced that we are going through a period of what will eventually be seen to have been Schumpeterian creative destruction. The key question in my mind is whether we can find the vision, the political will and the resources to drive the processes of creative reconstruction that are so clearly needed.

With December’s COP15 summit signalling the dysfunctions of the current system of global governance in the face of the climate challenge, and the Obama Administration (flagged by the several hundred social and environmental entrepreneurs we polled for The Phoenix Economy as a key reason for hope) in disarray on a number of fronts, we can only hope that there is truth in what they used to say, that the darkest hour is just before dawn.