This post looks in detail at the two top-down scenarios described in the previous post: Petrified Forest (sluggish economy) and Atlas Stands Tall (robust economy).

Both of these scenarios assume that large institutions - big businesses, industry groups, governments and regional blocs, and incumbent economic elites - will maintain their leadership positions, despite the pressure on them from populists, outsiders, and insurgent competitors.

In the case of Petrified Forest, the recalcitrance of these institutions to accept change creates a stalemate that prolongs the economic downturn and inaugurates an era of slow growth and declining opportunities. This represents the predictions of various groups who claim that the recovery policies proposed in the United States and elsewhere do not do enough to solve the problem, incur unsustainable amounts of debt, and/or leave failed strategies and incompetent individuals in place.

Atlas Stands Tall represents the opposite outcome. In this scenario, the coordinated efforts of governments and the more-or-less willing acquiescence of incumbent elites to reform measures successfully reverses the downturn, restores confidence, and lays the basis for a more sustainable growth model moving forward. Although this scenario embodies the best-case promises of the Obama Administration and its supporters, it recognizes that stability also likely means less economic dynamism, less entrepreneurial innovation, and the kind of "father knows best" cultural stasis that characterized a similar era, the 1950s.

Petrified Forest

Ancient oaks stand immobile and immovable in the twilight, their inner life-force turned to stone, clinging to their old forms because that is all they know.

Quadrant: Top-down governance, sluggish/stagnant economy.

Brief description: Large organizations (businesses and governments) refuse to allow change, fight among themselves to preserve control of a shrinking resource base.

Business Climate: Nearly a decade of flat growth has pushed businesses into an instinctive defensive crouch where all new investment must be justified by cost-savings. Defense of market share is the driving imperative, along with a constant search for cheaper labor and supply. Export-oriented sectors suffer from high tariffs. Commodity and energy prices continue to escalate, putting more tension on a frayed global economy.

Information Work: Employers hold the upper hand as work is scarce. People generally work long hours and accept reduced pay and benefits. Successful firms are continually implementing process efficiencies designed to drive greater productivity from existing people and equipment. Entrepreneurism is on the wane because no one is willing to risk venture capital.

Consumer Experience: The consumer is king, as companies terrified of losing market share make every possible concession to the fickle, demanding market. Price-wars are fierce, although the high cost of commodities keeps some products out of the reach of all but the most affluent.

Social/Political Climate: Governments and big businesses employ every manner of surveillance and intimidation tactics to keep a surly and resentful public in line. Part of this is justified by ongoing concerns about security and external enemies.

How We Got Here: Half-hearted and ill-conceived attempts to reverse the economic downturn in 2009 did not achieve results, but squandered huge amounts of resources and drove the debt load of developed countries through the roof. This debt overhang dragged down economic growth for more than a decade, as industrial-age institutions did everything in their waning power to forestall inevitable changes. Countries turned inward to address mounting social problems, leading to increasing international friction, trade wars, and security concerns.

Atlas Stands Tall

In haughty defiance of Ayn Rand's libertarian titan, this revived Atlas embodies the collective will of the world community and proudly shoulders the burdens of social, economic and political harmony.

Quadrant: Top-down governance, fast recovery/robust growth.

Brief Description: Coordinated actions of governments, central banks and large businesses lead to economic recovery. A new cooperative model of capitalism emerges.

Business Climate: Industrial activity is regulated and harmonized by an assertive government that uses modern IT and management practices to diminish boom-and-bust cycles. Free trade is vibrant between partners adhering to international environmental, labor and product safety standards, with non-compliant governments sanctioned or facing barriers.

Information Work: Most information workers work for large companies or the government, and enjoy relatively secure healthcare, pension, and work/life balance benefits, although wages are highly taxed. Creative class professionals associate easily with colleagues around the world.

Consumer Experience: Consumers are empowered but largely satisfied. Companies are on a very tight regulatory leash and attempt to rebuild trust by being proactively transparent.

Social/Political Climate: Incumbent world powers attempt to manage the smooth entry of rising economies into the global system and lean heavily on disruptive players to reduce conflict. Diversity is celebrated. Political discourse is generally pragmatic rather than ideological.

How We Got Here: Cool, steady decision-making by governments and central banks in the heat of the financial crisis of 2009 paid off in a relatively rapid and robust recovery. Large institutions and incumbent elites were permitted the time and space to regroup, in exchange for their support of public investments in healthcare, infrastructure, and greater regulation. A coordinated international response defused political tensions in the Middle East and South Asia, building confidence in the renewed leadership of the United States and its allies.

Next: The Insurgent Scenarios: New Blood Refreshes the System or Old Blood Drowns It?