Shell Nordström is a Swedish economist, visionary and futurist. At the beginning of the new millennium, Nordstrom was named part of the top 50 thinkers in the world and #1 in Europe.
He taught at the Stockholm Institute of Economics, and was an adviser to the British government. His books – among which “Funky Business”, “Karaoke Capitalism” and “The Monkey and the Money” have been translated into more than 30 languages around the world.
His theory is that we’re probably at the beginning—not even the middle—of the fastest business model transformation since 1850. He reveals some of his views to bTV.
– Let me start with the title of your new book – “The Monkey and Money” – do we have to be monkeys to have money?
– We humans are the monkey. This is the story of how it all started, how we started trading with each other, how we invented money, created banks and how we got to where we are today with Bitcoin, international financial flows, money markets, you name it. It’s a long story – from the time in Africa, where it all began, to today.
– Coming from a country with a GDP of 635 billion, is there a simple answer to how Sweden achieved it?
– Yes, there is at least one answer we can stick to, one word – trust. This is a high trust country. In fact, all five Scandinavian countries are high-trust societies.
– What does this mean?
– It means that we have confidence in the government, in the municipality, in the airlines, in the grades from the universities, in the neighbor. We trust each other. In such an environment, you can increase efficiency dramatically, because all it takes to do business is to have a cup of coffee, talk – no lawyers, no accountants, just two people and we reach an agreement that we stick to. High confidence is one component.
There is also a second, which we can call high technology, but in the sense of accepting new ideas. All Scandinavians – Finns, Norwegians, Swedes – are very modern people. High trust and high technology, this is the key to the success of the Nordic region.
– Do you mean that there are no fraudsters, there are no businessmen who want to conclude not a mutually beneficial deal, but one from which only they benefit?
– Of course there is. In every society there are people who try to exploit the system in one way or another. But the culture in the region is such that you are doomed. If you do that, you pay a very high social price for your actions: for abuse of public goods, for dishonest business, for attempts at bribery, for everything outside the system you pay very dearly, at least publicly – you are basically out of the game. This can be traced far back in our history, it is not something created in the last 10 years, it is from the end of time.
– Say, in Bulgaria and countries like us, we talk a lot about demography, about a decreasing workforce, but does fewer workers mean that they will receive better remuneration and pay, because there are fewer of them and companies will not have a wide choice ?
– You ask this question on a very special day, because this week, the other day, The Economist, the English edition, analyzed the topic, and the answer was – yes. We now seem to be entering a blue-collar revolution, with the distinctions between intellectual and blue-collar work diminishing. We are seeing a narrowing of the income gap, both in the US and in Europe. For the first time in maybe 60-70 years we can see this trend in the numbers.
– Are we witnessing the end of the era of constant economic growth in Europe? You mentioned The Economist, they also say that in Poland and Germany public transport is limited due to a lack of drivers for example. On the other hand, Romania granted 100 thousand construction site work permits for foreigners. Do you think the time of cheap labor is coming to an end and labor will have to be imported?
– Let’s try to respond first at the global level, then reach Europe, Bulgaria, Sweden and Germany. We are seeing a shift in demographics. There is one large region in the world with high birth rates – Africa. There are currently just over 50 countries, Africa has a population of about 1 billion people. In 25 years it will be 2 billion. There is growth there.
Not so in China, Japan – certainly not, there is a decline there, and European countries, especially the southern ones, are in decline in terms of birth rates. This is a first. Second – economic growth. About 50% of growth in a country usually comes from an increase in the number of people, population, demographics. I.e. 50% of GDP growth stems from demographics. If there is growth, it is also reflected in the gross domestic product.
The Nordic countries – north of Germany, in the Scandinavian countries there are about two births per woman, combined with high immigration, respectively, from the point of view of population, they are in a fairly good condition at the moment – because of immigration, because of a relatively high birth rate. It’s different in Germany – there are almost 100 million people there, it’s huge. But they have a relatively low birth rate and they’ve had immigration, but not enough. Regarding your question – yes, of course, we are moving towards a shortage of people in certain areas of the labor market.
Technology can compensate somewhat – artificial intelligence, you name it, but not everything. So wages will go up, that’s basically the solution.
– Do you disagree with those who predict that artificial intelligence will replace the workforce in many sectors?
– Artificial intelligence will primarily compete with university-educated people. That’s where we’ll see artificial intelligence take over – financial advisors, the financial industry specifically.
– Analysts?
– Analysts, of course, certain parts of the media sector. But look, we can look at it this way: we human beings have a head, hands and a heart. You can work either with your head, or with your hands, or with your heart. Over the past 50 years, we have focused a lot on the head. We always tell children to go to university: “You must have a higher education” – and so in England, in the USA, in Scandinavia, in Germany.
Yes, today 50% of the UK population enrolls in university after high school. An awful lot of people get a university education. Artificial intelligence is entering this realm – competing with the head, not the hands, not the heart.
– Your country maintains an average fiscal deficit of over 3%. In Bulgaria, there is a wide discussion about the state budget – whether to try to stop the spiral of poverty by increasing average salaries and pensions in the public sector, or to keep the deficit lower in these times of crisis. Which way do you think is better?
– My home country Sweden is criticized for being very conservative when it comes to public money and has a very low deficit at the moment, perhaps one of the lowest in Europe. The whole idea with the public sector is to be countercyclical – to do the opposite of what is happening in the market. If there is a crash in the market, if unemployment rises, if there is a generally bad economic situation, then public spending increases to compensate. I would say that in such a situation, now is the time to spend. In Germany, here as well as in Sweden – to compensate for the fact that the market is lagging behind, we are on the brink of recession, so now is the time for the public sector to pour in money.
– But can we spend without borrowing? Should we go into debt first to spend more?
– And now is the time for debt, for spending, for compensating for the recession. The reason for this is to avoid entering a downward spiral – most countries want to avoid it, most governments do not want a downward spiral. Public walking can reverse the spiral and start up again. Countercyclical.
– How do you imagine 2024, what will it look like in your opinion?
– 2024 will most likely be a gap year. Intermediate in the sense that we will not have entered the next step of the industrial revolution. Most likely, we are facing a huge change of the world economy. Why? Because industrialization, the result of 230 years of building our surroundings – airports, factories, hospitals – all this needs to be remade, renovated and made sustainable.
The agricultural industry, the cement industry, the steel industry, the automotive industry – everything. This means that we are on the verge of a large-scale wave of investment and re-industrialization of the planet. Now, with a war in the Middle East, a war in Ukraine, a pandemic behind us, we don’t see it clearly because of the fog of wars and viruses. We are looking at the recession.
But there is growth beyond it. It’s time to roll up our sleeves for a few months, maybe a year, and deal with this growth.
2023-12-11 19:12:41
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