How will the world look in 2050? The truth is unknown to all. However, intuitively, it could be assumed that the upcoming transformation of finance and technologies will be unprecedented. It will definitely have an impact on all areas of economic activity. The development of global Yin-markets and “anarchic” areas of the economy will considerably reduce governments’ real influence. Humanity will rethink the role of international institutions and mechanisms that have evolved over decades, if not centuries. The rationale for global governance will be modified.
By 2050, it is highly probable that a new structure of the global economy will be completed. New milestones of global development will be introduced in the decades ahead. The new economy will expand in accordance with its own laws and without any state borders, and it will require adequate international regulation. International law will probably be replaced by the ‘soft’ paradigm of global law, a ‘network’ of non-binding industry guidelines, recommendations, criteria and standards. The general public, including many lawyers, will be puzzled by the fact that global regulation can be effectively carried out ‘with no state coercion’.
The main trends that the author believes will determine global development within the forecast horizon (up to 2050) can still be identified.
Tokenised nature
Throughout the ages, debt has been accumulated by the global economy. The focus is not on huge foreign debt of states and corporate debt. The problem is much more profound and has a philosophical nature to a certain degree. Driven by a blind thirst for consumption, humanity is often incapable of considering world problems, long-term challenges of human civilization, that involve unprecedented degradation of the natural environment and reduction in biodiversity. Unfortunately, it is not widely understood how serious it is to be involved in non-financial ‘borrowing’ that comes with real production (degradation of the environment, extensive usage of natural resources, expanding carbon footprint, withdrawals of ‘natural’ capital in favor of ‘physical’).
From a market perspective, the situation happens because nature has no owner with an economic interest in developing ‘natural’ capital. Whereas the consumers’ and businesses’ resistance to change, such interest will be exclusively possible under the influence of any global force, that will not be subject to the national egoism and ‘rationalistic’ reflections of governments’ officials.
The size of territories with high-quality ‘natural’ capital (natural ecosystems unimpacted by humans) will determine the global influence, just as it was thousands of years ago. Furthermore, as human civilization will increasingly move to urban agglomerations, the recreation of ‘natural’ capital (on the territory of deserted towns and industrial areas) will become the main idea of sustainable businesses. These companies, known as Natural Asset Companies (NACs), will provide global ecosystem services. The New York Stock Exchange (NYSE) estimates that the global market for ecosystem services, i.e. carbon sequestration, biodiversity, etc., will soon amount to $125 trillion per year. By mid-21st century, this amount will significantly increase due to the monetary policy of quantitative easing (QE).
According to the laws of the genre, a global market for ecosystem tokens will be set up. Profitability of ecosystem tokens will be assured by a supra-national system of ‘soft’ taxation. Accessing international capital markets will entail a variety of fees for both the ‘dirty’ industries and the financial businesses involved. The most discussed duty today is the carbon tax. Similar duties will be introduced for non-ecological use of territories, for freshwater withdrawals, for a low recycling rate, etc. These fees, paid by responsible companies, will be accumulated in a special funds. The complexity of global processes will lead to a rise in the demand for advisers who can assist businesses in becoming market-oriented by conveying the essence of world affairs. In a free market, businesses that lack vision and responsibility and ignore these advisory services cannot survive. And this is exactly the type of free market that will continue to evolve.
The global market of ecosystem services will exhibit two types of tokens. Ecosystem’ utility NFTs (non-fungible tokens) will be the first thing to consider. Each utility NFT will grant entitlement to a parcel of land with a complete description: coordinates, an artistic description of the ‘natural’ capital contained, etc. While it contradicts current practice, the utility-token will likely be used to generate income through cash flow. For instance, in case if token owner would provide a legally relevant statement on the physical capacity of the tokenized parcel to sequester a certain amount of carbon. Security tokens will be the second type of ecosystem’ tokens. The ecosystem’ security token will confirm the owner’s right to receive income from ecosystem services provided. In contrast to the utility NFT associated with the specific parcel of land, the ecosystem’ security token will be linked to the established characteristics of an unspecified parcel (for instance, the number of trees per square meter). Security tokens will have a significantly higher cash flow than utility NFTs’.
In the future, capitalization of ecosystem markets will increase significantly faster than the supply of virtual ‘land’. Thus, capitalization of each token will be elevated. Connection between utility NFTs and the unique parcel of land will make these tokens particularly beneficial for long-term investment strategies.
Will these tokens be proof of parcels’ ownership? The implementation of blockchain technology in land registries (going forward — one blockchain worldwide) will be the next step in bringing humanity closer to a single form of accounting for land ownership. In the long term, governments’ adherence to such a regime will undoubtedly be a major step towards closer integration in world affairs. On the other hand, even with current regulations, tokenization doesn’t sound fantastic. While the former would be preferable for international markets, today’s land registration procedures may well coexist alongside tokenization. Particularly it looks possible if AML/KYC requirements are met throughout all transactions (i.e., if investors are identified, tokens’ transactions undergo financial monitoring, etc.).
Token issuers and organizers of trade, special types of NACs, will gain in influence comparable to today’s Big Tech companies. The confidence of these companies will be assured through overall power of global markets.
Furthermore, the position of Basel Committee on Banking Supervision (BCBS), in particular the ‘same risk, same activity, same treatment’ policy, will not be contradicted by the above scenario. When dealing with ‘tokenised traditional assets’, it will be crucial to adhere to risk levels associated with the underlying traditional asset. By 2030-2033, or even prior to that, ecosystem assets will become ‘traditional’. Subsequently, the demand for ecosystem tokens will be assured to be high. What market risks will ecosystem tokens pose? Institutional investors, such as banks and hedge funds, will receive ‘real’ land parcels on their balances but with disproportionately higher, ‘virtual’, revenues. It will therefore attract large institutional investors into new markets.
Yin-transition
The global market for ecosystem services will be based on ‘natural’ capital, not ‘physical’. Moreover, to expand, ecosystem businesses will take on ‘physical’ capital. In practice, it will result in the conversion of ‘physical’ capital (abandoned cities, industrial zones, and other irrationally used territories) to ‘natural’ capital (developed natural ecosystems).
Meanwhile, given the natural macro-cyclicity of the global economy, the looming global market for ecosystem services could be seen as a significant milestone in the process of Yin-transition. In other words, the transition to a completely post-industrial, apolitical society with unprecedented environmental requirements.
Ecosystem services will by no means be the only driver of humanity in propelling into the era of sustainable economic growth, truly free market and environmentally sound globalization. During Yin-transition, which is widely expected to encompass all areas of economy (from finance to energy), it will also introduce a fundamentally new logic of regulation. Yin-regulation means supranational and highly specialized ‘soft laws’, merely with no states’ control and ‘inspections’. Indeed, governments’ support is not necessary for a number of economy’s areas, as well as internal architecture of those excludes the possibility of direct states’ intervention and control. Artificial intelligence, metaverses, crypto-assets, and fintech are areas where Yin-regulation is exhibited even now.
The abovementioned areas of Yin-economy already live under their own laws that are not evident from the current macroeconomic theory. The Bitcoin, the most renowned cryptocurrency, has a capitalization surpassing that of all the Swedish Crowns or the Turkish Lira in circulation. Moreover, there have been times in history when the Bitcoin has been briefly among the world’s 15 largest currencies by market capitalization (with the US Dollar, the Chinese Yuan, the Euro and the other currencies). It should be noted that in 2023, when one of the largest ‘crypto-banks‘ had collapsed, the Bitcoin exchange rate has unexpectedly increased by about one-third. Although it is assumed that growth may have been a rebound, for mainstream economists it would nevertheless be more logical to observe a drop. The BTC exchange rate is an anchor parameter for the broader market analysis, which could indicate that unbacked crypto-assets could now develop without increasing interconnectivity with traditional finance. Furthermore, independent development will likely be crucial for the industry’s future growth.
The methodological distinction between the ‘Yin economy’ (sufficiency, cooperation, ‘mutual credit’ created by participants themselves) and the ‘Yang economy’ (scarce, competition, ‘fiat’ created by a central authority) has been suggested by Bernard A. Lietaer. Mr. Lietaer has limited the horizon of his forecast for 2020 by stating that ‘complementary currencies [not only cryptocurrencies — author’s note] represent 20% of total domestic trade in the most advanced countries’ [1]. The forecast is consistent with the current estimates of the World Economic Forum (WEF). The WEF predicts that by 2025, 10 per cent of the world’s GDP will be saved through blockchain technology [2]. As well as the advent of cryptocurrencies has been foreseen by Milton Friedman in 1999.
The ‘Yin economy’, which includes ‘complementary currencies’, will undoubtedly continue to expand. Based on the illustration of the ‘Yin and Yang’ concept, it is probable that the benchmark for transitioning from Yang to Yin shall not exceed 50% of the global economy volume. It is therefore important to focus on two predictions. First, by 2035, it is expected that comprehensive crypto-asset regulations will be in place. Second, by 2033-2035, the world community will have finalized regulatory developments on the global market for ecosystem services. The Yin-transition will consequently be completed by 2035: over 50% of the world’s economy will be concentrated on Yin-markets.
‘Soft dictatorship’
What will happen next if Yin’s share in the global economy reaches 50%? Will it stop the expansionist march? This scenario could be allowed if it were purely a matter of philosophy. Nevertheless, this is unlikely to occur in real life. The use of term ‘Yin-transition’ will not be fully justified by 2035, after goals of the transition have been accomplished.
The ‘soft dictatorship’, or the dictatorship of Yin-markets, will begin crystallizing by 2035. The ‘dictatorship’ will have no equivalent in the history of mankind. Certainly, the formal power of governments will remain, and the main form of political structure will still be democracy (with minor authoritarian elements). However, governments will likely not be in a position to agree upon effective legal approaches. In parallel, the economy’s dominant sectors will have to be adequately regulated — and globally. Consequently, these regulations will emerge as the ‘soft’ paradigm of global law, i.e. the ‘network’ of non-binding industry guidelines, recommendations, criteria and standards. The general public, including many lawyers, will be puzzled by the fact that global regulation can be effectively carried out ‘with no state coercion’. Nevertheless, all nations, without exception, will comprehend the ‘new’ law’s persuasiveness which will be sustained by the total power of money.
The macroeconomic confrontation will move from the struggle between ‘natural’ and ‘physical’ capital into a conflict between the ‘economy of epileptoid’ (the successor to the ‘Yang economics’) and the ‘economy of emotive and hysteroid’ (the successor to the ‘Yin economics’). The ‘economy of epileptoid’, which will exist only by historical inertia, will increasingly fail to meet the market’s needs. It will consist of non-environmental industries, insufficiently intelligent, and inefficient, with a predominantly vertical model of corporate governance. These areas, along with the underlying philosophy, will slow down the humanity’s development. In contrast, the ‘economy of emotive and hysteroid’ will develop quickly and organically. It will include non-profit sector (purely ‘emotive’), mass entertainment (exclusively ‘hysteroid’), and mentioned ‘hybrid’ areas (ecosystem services, artificial intelligence, metaverses, crypto assets, fintech).
During economic development processes, the ‘economy of emotive and hysteroid’ will exhibit an aggressive tendency to expand. By 2050, its share in the global economy will reach approximately 80%. Furthermore, the ‘hysteroid’ feature of the new economic order will also contribute to the corrosion of ‘epileptoid’ production chains. Humanly, it will provoke a feeling of profound dissatisfaction among the people who participate in these, ‘epileptoid’, chains.
As the new economy will not imply mass employment, by 2035-2040, the universal basic income (UBI) system will be de facto implemented. Theoretically, the new economy will enable mankind to solve all material problems. In practice, many governments will be unprepared for the forthcoming changes; moreover, many governments will not be economically able to guarantee UBI payments. People in these countries will therefore be employed by multinational corporations to mine cryptocurrencies.
These factors notwithstanding, the new economic order will offer unparalleled opportunities for an individual’s intellectual and creative self-realization. Symbolic capital will develop into the new type of real power. Those who possess influence, whether in any practice or art, will be able to easily translate their abilities into any sort of global impact.
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Assuming that these predictions are at least partially correct, the global landscape will be transformed into two stages (until about 2035, then by 2050). Environmentally sound globalization will certainly intensify. The global processes’ governance system will undergo a substantial rethinking during the second stage.
In the short term, the global landscape’s transformation will unavoidably highlight new growth points of the world economy. Successful states will have no other option and will in some sense be hostages of success. Their governments will be obliged to interact appropriately with Yin-markets that live and will live by their own laws. The remaining countries will unite in a universal cauldron of chaos.
The middle of the 21st century will be the culmination for the convergence of financial information and personal data. In the coming decades, the aggregation of society, nature and capital onto a single technology platform will be totally completed. Inevitably, the question of the necessity of new guidelines for global development will be raised as a consequence.
How will the world be in 2050? The truth is unknown to all. However, some questions may already have been answered.
1. Lietaer, Bernard. The Future of Money: Beyond Greed and Scarcity. L.: Random House, 2001.
2. Schwab, Klaus. The Fourth Industrial Revolution. World Economic Forum, 2016.
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