Will the chaotic age of Trump lead to a shift in our understanding of the world?
Andrew Sheng says mainstream political and economic thinking has undergone an upheaval over the past decade without arriving at a consensus on our understanding of the world. Donald Trump’s election and his chaotic first year make the need for a paradigm of mutual understanding more urgent
But underlying all this confusion, certain broad trends indicate that the world is already shifting rapidly not only in power, but also thinking and behaviour. One thing is certain – history will not move in straight lines, but there are patterns or rhythms that suggest a major paradigm shift is taking place that we all need to understand.
The term “paradigm” was used by historian and physicist Thomas Kuhn to describe basic concepts and experimental practices of a scientific discipline, which include embedded assumptions, beliefs and interpretation of facts. There are, of course, different paradigms in religion, philosophy, politics or social science that compete with each other. For example, there are essentially two main paradigms in economics – Keynesian philosophy that calls for more state intervention and neoclassical thinking that advocates self-correcting free markets and minimal state interference.
Kuhn’s major contribution was introducing the concept of a paradigm shift in which the accepted or dominant paradigm gives way to new and competing ways of thinking.
After all, it is the way we think that shapes our daily decisions. Intellectual capture happens when the media shapes the way we receive information.
But so far, while most economists accept that the old model is broken, no consensus has been reached on the new winning paradigm. Most agree that the old theories are incomplete, flawed or unrealistic, and there are a whole array of competing ideas, but none with superior analysis and predictive power. Like religious debates, there are heated arguments over fundamental questions, beliefs and choices, so that no clear leader is emerging from the polarised and confusing discourse.
In the face of unknowns, each person, institution, society or state must learn how to use available expertise, theories, experience and knowledge to adapt to the changing environment. We have now accepted that, in practice, all societies and economies are complex adaptive systems that evolve according to different pressures, events and forces, not the mechanical and broadly static models depicted in neoclassical economic theory.
In short, the main mathematical and methodological tools of the mainstream economics profession have remained essentially Cartesian and Newtonian in thinking, whereas the mathematics, physics and biology disciplines have already moved to Einstein’s theories and quantum ideas that embrace relativity and uncertainty.
Ideologically, the “first best” or optimal policy recommendations suited the dominant Washington consensus from a political perspective. Moving away from “first best” to “best fit” would mean that alternative ideas, policies and tools would be pursued, under conditions of uncertainty.
The new paradigm of complex uncertainty and its policy dilemma was identified by Stiglitz: “The world is embarking on an experiment – a closely integrated global economy which is striving for global governance without global government. If this experiment is to be successful, it will be based on a process of global consensus building.” But no consensus is possible following Trump’s “America first” policy, which has opened up a more confused, perhaps chaotic, environment of policy rivalry, that could lead to conflict and mutual destruction.
Luckily, quantum theory suggests that chaos is often a sign of change towards a new order. In the new year, we can only patiently await the unfolding of this new, exciting and perhaps dangerous new era.
Arriving at a narrative of common understanding and mutual respect is more important than ever in this age of warring paradigms.
Andrew Sheng writes on global issues from an Asian perspective