Megatrend: The Crumbling of the Economic System – Towards a More Sustainable Future

The current economic system is in a state of flux. In its 2024 trend report, Sitra identifies the crumbling foundation of the economy as one of the megatrends. Megatrends refer to long-term directions that shape societies and economies. This trend has not emerged in a vacuum but is the result of the culmination of several other megatrends. Global inequality, the ecological sustainability crisis, the uneven concentration of wealth, the increase in extreme conditions, and the major crises of the 2020s, such as the Covid-19 pandemic and Russia’s war of aggression in Ukraine, have created the need for fundamental corrections to the economic system to make it more sustainable and resilient to the challenges of today and the future. 

Global Crises Reveal Economic Vulnerabilities

The crises experienced in recent years have heightened awareness of global interdependencies and the impacts of globalization. The Covid-19 pandemic spread at an unprecedented speed around the globe, halting international trade and causing disruptions in supply chains. Russia’s war of aggression caused widespread fear in Europe about energy sufficiency and supply security when Russian gas distribution was cut off. The armed conflict in the Middle East keeps many on edge, waiting to see how oil prices will change if transportation in the Persian Gulf can no longer be carried out.

These examples highlight the vulnerability of value chains. States and companies around the world are now considering how to reduce dependence on fragile and complex global supply chains. Deglobalization and the reshoring of production have become key objectives for many countries, as security of supply and risk management require a new approach.

The Economic System on an Unsustainable Basis for People and Nature 

The economic system is also no longer sustainable for people or nature. In Western countries, the population is aging, which increases public sector costs for pensions and healthcare, while the number of working-age people decreases. This makes innovations such as digitalization and automation even more important for enabling economic growth. 

Another key problem is the uneven distribution of wealth, which increases social tension and reduces economic mobility. When part of the population feels left out of economic growth, societal inequality also increases, which in turn weakens the overall resilience of the economy.

From an ecological perspective, the challenges of the economic system are perhaps even more severe. The planet’s carrying capacity has been reached, and consumption habits cannot remain the same. More than half of the world’s gross domestic product is directly dependent on nature, whose biodiversity is depleting at an alarming rate. Consumption habits and business models need to be re-evaluated, as the current linear model, where resources are taken, used, and discarded, is no longer a viable option.

Towards a Regenerative Economy

The traditional concept of responsible business is no longer sufficient to address the challenges of the ecological crisis. Companies must develop new business models that are not only ecologically but also socially regenerative. Regenerativity means that business aims to restore and strengthen natural resources instead of depleting them. At the same time, companies must respond to the growing sustainability demands of consumers and investors and ensure compliance with tightening legislation.

Reforms are not just an ecological necessity but also an economic opportunity. Those companies that can adapt and innovate are best prepared to meet the challenges of the future. The crumbling foundation of the economy is a megatrend, but it does not mean ultimate destruction. It is an opportunity through which we can build a better, sustainable future for all.

Maiju Nikula and Eeva Honkonen

The authors are a Blic analyst and consultant who hope for a sustainable economic system in the future.