System Transformation

1. System Transformation New Approach for Achieving Stable Growth, Shared Prosperity, Secured Peace & Sustainable Planet Suvit Maesincee Sasin Institute for Global Affairs (SIGA)

2. Grand Challenges • Global Dynamics • Thriving in the 21st Century • Food for Culture

3. Grand Challenges The 20th Century Challenges The 21st Century Challenges • Four terrible global tragedies • Two brutal WWs • A global pandemic • A worldwide depression • Global Economic Crisis • The Eurozone Chaos • The Arab Spring Uprisings • Consequences of Climate Change • Cyber-Attacks • Pandemics • The Nuclear Worst Case Scenario in Fukushima Source: Divided Nations

4. Interaction Between Nature & Humanity From Order to Disorder Entropic Flow Nature Negative-Entropic Flow Humanity From Disorder to Order

5. The World of Imbalance Nature Human-Nature Imbalance Human-Human Imbalance Humanity Humanity Nature

6. The World of Rebalance Human-Nature Rebalance Nature Human-Human Rebalance Humanity Humanity Nature

7. Global Dynamics

8. Global Dynamics Geo-Political Change Demographic Change Climate Change

9. Global Dynamics Geo-Political Change Demographic Change Climate Change

10. The Rise of the Rest The Rise of Asia The Rest of the World The Triad The Transition of Power Global GDP % World Economic Structure 75 Developed Countries 50 Developing Countries 25 1820 70 1913 50 73 2005 Source: The Economist

11. The New USA

12. The Rise of the Asian Middle Class Sector In the year 2000, the middle classes in East Asia and the Pacific region were estimated to be around one sixth of the total global middle class (approx 72 million people or 1.4% of the global population) In 2030, the World Bank predicts this proportion will rise to nearly half of the total global middle class , approx 600 million people or 8.9%, accounting for 7.7% of global income Source: Bussolo, Maurizio (2007) World Bank, Australian Government

13. Global Dynamics Geo-Political Change Demographic Change Climate Change

14. The World Population Growth 1950 1975 2000 2025 2050 2.5 bn 4.1bn 6.1bn 8.0bn 9.2bn • Shortage of Foods • Shortage of Energy • Shortage of Water Resource Constraints Source: UN, FAO, BBC

15. The First World of the Aging Industrialized Nations • South Korea • It’s total population is projected to decline by almost 9% by 2050 (from 48.3 million to 44.1 million) • Its working-age segment is expected to drop by 36% (from 32.9 million to 21.1 million) • The number of citizen aged 60 and above will increase by almost 150% (from 7.3 million to 18 million) Developed Countries The First World North America, Europe, and Asia’s Pacific Rim The Second World The Third World Developing Countries Aging Society Dynamic Young Society

16. The Third World of fast growing, young, and increasingly urbanized countries with poorer economies and often weak governments • Today, roughly nine out of ten children under the age of 15 live in developing countries • Over 70% of the world’s population growth, between now and 2050, will be concentrated in 24 countries, all of which are classified by the World Bank as low income or lower-middle income Developed Countries The First World The Second World The Third World Developing Countries Aging Society Dynamic Young Society

17. The Second World of fast growing & economically dynamic countries with a healthy mix of young and old inhabitants Thailand’s Potential Supportive Ratio 7 6 The First World 5 4 3 Brazil, Iran, Mexico, Thailand, Turkey, and Vietnam 2 The Second World 1 0 2000 2020 2050 Source: KuaWongboonsin The Third World

18. Global Dynamics Geo-Political Change Demographic Change Climate Change

19. Asean countries are likely to face more severe consequences of the climate change than the global average due to limited adaptive capabilities

20. Local Climate Change Action parallel to Global Action Renewed Local Government Climate Roadmap to 2015 Warsaw Local Climate Action Durban Adaptation Charter Durban The Global Cities Covenant on Climate (Mexico Pact) and the carbon Cities Climate Registry Cancun Agreement Copenhagen World Catalogue of Local Climate Commitment Copenhagen Accord Level of Complexity and Integration Local Government Climate Roadmap Bali action Plan Global Climate Action World Mayors Council and others Kyoto Protocol Voluntary climate action UNFCC 1990 2005 2007 2009 2010 2011 2012 2013 Governing for Sustainability, p. 157

21. Food and Fuel Security • Focus on climate change mitigation or resilience plan • Improve farm productivity through education and other supportive measure i.e. land utilization, irrigation system, infrastructure and technology etc. • Offer incentive to attract more investment on food production • Form a collaborative network with other countries to do R&D on food security issue Food • Improve energy efficiency • Encourage on renewable energy • Classify and separate type of food base on purpose i.e. food for hunger and food for energy and formulate plan focusing on the purpose of each type of food • Form a collaborative network with other countries to do R&D on energy issue Fuel

22. Offshore Farming The 1st Wave The 2nd Wave The 3rd Wave Manufacturing Services Food & Agriculture Resource wars – the world will demand 70 percent more food by 2050, outstripping population growth Cash-rich Arab and Asian governments are buying up arable farmland all over developing world - Chinese businesses are investing in South America and Africa, not only to gain access to commodities, but to get in position to profit from sales to the emerging middle class - China is also buying up large tracks of land throughout Africa to produce biofuels and to produce food - India's companies have formed a consortium to invest in corporate farming of oilseeds in Latin America, most notably Uruguay and Paraguay

23. Thriving in the 21st Century

24. The Systemic Transformation Framework • Human life is mirrored in nature, and vice versa • Balance the infinite growth imperative & the finite resources of Planet Earth • Bridging technology & real needs of society • It is not high-tech or low-tech, • but appropriateness and • sustainable solutions • Capitalism with social and environmental balance Nature Systemic Transformation Technology Capitalism Humanity Sustainism is the New Modernism, Leading from the Emerging Future

25. In response to environmental imbalance & social inequality, we see a shift from the current Age of Postmodernism towards a New Age of Sustainism Modernism Postmodernism Sustainism • Make it • Use It • Revitalize it • Machinelike • Environment • Socio-Technical • Environment • Mirroring Nature in the Digital Environment * Modified from Sustainismis the New Modernism

26. From Neo-Classical Paradigm to Ecological Paradigm Modernism Post-Modernism Sustainism Business Planet Economy Society Society Economy Planet Business Neo-classical Paradigm The Earth as a subsystem of the Human Economy * Ecological Paradigm Human Economy as a subsystem of the Earth’s Ecosystem * * Meme Wars : The Creative Destruction of Neoclassical Economics

27. Change in Economic Development Models Centralized State State-Driven Mercantilism Modernism State-Market Free Market-Driven Laissez-Faire NGOs NGOs Post modernism Stakeholder-Driven Social-Market Economy State State Market Market Eco-System Driven Sustainable Economy Sustainism Modified from Leading from the Emerging Future

28. Primary Societal Challenges • Stability • Expansion State-Driven Mercantilism Modernism • Growth • Distribution Free Market-Driven Laissez-Faire Post modernism • NegativeExternalities • Inequality Stakeholder-Driven Social-Market Economy • Green Society • Inclusive Growth Eco-System Driven Sustainable Economy Sustainism Modified from Leading from the Emerging Future

29. Driving Mechanism State-Driven Mercantilism Commanding: Hierarchy Modernism Free Market-Driven Laissez-Faire Competing: Markets Post modernism Stakeholder-Driven Social-Market Economy Negotiating: Stakeholder Dialogue Eco-System Driven Sustainable Economy Co-creating: Conscientious-based Collective Action Sustainism Modified from Leading from the Emerging Future

30. You cannot have well humans on a sick Planet* We are seeking for • New ways to coexist with the planet • New ways to deal with people • New ways to secure profit *Thomas Berry, Cultural Historian

31. The New Ways to Coexist with the Planet Imagined the Limitless Creative Power of Limits Planet Perishable, Disposable & Expendable Renewable, Reusable & Recyclable Nature as Resource Nature as Source People Profit The Search for Autonomy The Quest for Embeddedness Sustainism is the New Modernism

32. The New Ways to Deal with People The Power of Shared Knowledge The Power of Knowledge You are what you share You are what you have Planet Rewarding Cooperation Rewarding Competition Inclusiveness Exclusiveness Open-Source Exchange Appropriation People Profit An intention to serve the well-being of all* An intention to serve the well-being of the few Sustainism is the New Modernism *Leading from the Emerging Future

33. The New Ways to Secure Profit Scale & Scope Scarcity & Proportionality Planet Control Supply Chain Engaging in the Open Collaborative Network Productivity Generativity People Efficiency Sustainability Profit Utility Stewardship The Third Industrial Revolution, P.225

34. Malthus Vs. Smith • The tension between the bad news and good news today resembles what the world has faced before, at the onset of both the first and second industrial revolutions • That tension boils down to the worldviews of two scholars, Thomas Robert Malthus and Adam Smith, both of whom wrote in the late 1700s • Malthus argued that the growing population would overwhelm the world, leading to widespread famine. Smith argued that businessmen could adapt and innovate rapidly enough that productivity could increase faster than consumption • Where Malthus saw “Disaster,” Smith saw “Opportunity” • While over time there have been eruptions of famine and shortage in different parts of the world, Smith was right. As the first and second industrial revolutions unfolded, opportunity has trumped scarcity • We believe that history is repeating itself and that Smith will be right again Resource Revolution

35. Fundamental Logics of Resource Revolution • Finding opportunities to substitute away from scarce resources • Eliminating waste throughout the system, from production though end use • Increasing “Circularity” –upgrading, reusing, or recycling products • Optimizing efficiency, convenience, safety, and reliability • Moving products, services, and the processes that develop or deliver them out of the physical world and into the virtual realm Resource Revolution

36. Three Strategic Thrusts • Combining information technology, nano-scale materials science, and detailed understanding of biology with industrial technology ad infrastructure yields substantial productivity increase • Embedding high productivity economic growth in the developing world to support the 2.5 million new members of the middle class presents the largest wealth creation opportunity in a century • Capturing this opportunities requires a new approach to management Resource Revolution

37. From Cost Advantage to Loss Advantage • Achieving superior efficiency in 21st century terms—”socio-efficiency”--results not in cost advantage, but in loss advantage • Loss advantage means an advantage in minimizing a business’s own direct cost, while also minimizing the social human, public and environment losses the business imposes on other economic actors • While businesses seeking a cost advantage are often irresponsible , shifting, hiding, and pushing costs onto others, business seeking a loss advantage are radically—indeed, disruptively—responsible: they take responsibility for the full spectrum of the costs and losses production occurs • Loss advantage happens by re-conceptualizing, organizing, and rebuilding production and consumption as a value cycle, instead of a value chain • Today’s innovators are discovering that building cycles instead of chains is the key to renewing resources for tomorrow, instead of merely exploiting them today The New Capitalist Manifesto

38. The Missing Factor • GDP is a measure of the wealth that a country generates each year, but from a thermodynamic point of view, it is more a measure of the temporary energy value embedded in the goods or services produced at the expense of the diminution of the available energy reserves and an accumulation of entropic waste • All economic activity creates only temporary value, at the expense of the degradation of the resource base on which it depends • Along with capital and labor inputs, energy is the “missing factor,” accounting for the rest of the productivity and economic growth P202, 204 The Third Industrial Revolution

39. From linear to cyclical modes of production and consumption The Value Chain Inbound Logistics Outbound Logistics Operations Marketing Service The Value Cycle From the thermodynamic perspective, the most important lesson we an learn is how to budget our consumption patterns to conform with nature’s recycling schedules, so that we can live more sustainably on Earth* Marketing Outbound Logistics Production & Reproduction Service Remarketing Reverse Logistics The New Capitalist Manifesto * The Third Industrial Revolution

40. From Technical Productivity to Socio-Productivity • Today’s challenge is achieving a better kind of efficiency altogether: Socio efficiency that minimizes both direct costs and full-spectrum losses, creating thicker value • To achieve gains to next-generation efficiency, all three—Walmart, Nike, and Interface—are innovating the cornerstone of industrial-age production itself: they are producing not in lines, but in circles • They are doing this not out of altruism, but because doing so unlocks radical new paths for strategy, competition, and ultimately a new source of advantage: Loss advantage • Simply, renewing resources for tomorrow is wiser than exploiting them today The New Capitalist Manifesto

41. Food for Culture

42. Food as total nourishment for the body, the senses, the mind and the earth • The entire food chain is reflected • in what we eat, running from the • soil to the plate • It is beyond the modernist concept • of nutritionism • Sharing food = creating community Nature Food Culture Sustainism is the New Modernism

43. Food for Culture • The disconnection between young people and the global food system • is growing. • - Most young people do not grow up wanting to be farmers. • - Consumers all over the world have forgotten basic cooking skills • because of an overreliance on processed foods. • Agricultural diversity is declining: most diets in riche countries consist • of just six foods, including maize, wheat, rice and potatoes. • Agriculture is looked down upon as a career and is often viewed as • work for the poor or people who have no other options. • Farmers also lack access to markets, making it hard for them to earn • an income from their work Danielle Nierenberg, Is Sustainability Still Possible?

44. Transition Culture Reinstating the idea that food is something that grows near where you live, by someone you have some kind of a relationship with, and that you actually cook yourself Global Consumption Production Food Production and consumption occurred at the same place Local Sustainism is the New Modernism

45. From food as a part of local experience and community to food as a global economic commodity Global Present: different places Consumption Production Past: the same place Local Sustainism is the New Modernism

46. Marketplace wants “Less for More”* Lower Quantities Higher Diverse Fewer Products More selective about what to grow and what not *Chris Anderson, The Long Tail Sustainism is the New Modernism

47. In valuing time and place, we value seasonal and local foods Option I: Shifting Global Consumption Production Option II: Balancing Local Sustainism is the New Modernism

48. Every morning in Africa, a gazelle wakes up.It knows it must run faster than the fastest lion or it will be killed. Every morning a lion wakes up.It knows it must outrun the slowest gazelle or it will starve to death. It does not matter whether you are a lion or a gazelle. When the sun comes up, you better start running. African Proverb

49. “If You want to go quickly, go alone; if you want to go far, go together.” African Proverb

50. “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.” Charles Darwin