Book Review: The Coming Prosperity, by Philip E. Auerswald

In this highly partisan political season, where economic calamity is deemed inevitable if the wrong party is elected, “The Coming Prosperity” is a refreshing new entrant on the bookshelf. It is a book at odds with political rhetoric, but squares nicely with emerging global trends. The argument, in a nutshell, is that the coming global prosperity will be driven first and foremost by the inherent nature of the human condition: ingenuity, creativity, desire and the entrepreneurial spirit inherent in our species.

This natural advantage will combine with global trends, including the reach of critical technological innovation to the majority of the world’s population, and the growing emergence of democratic governments from formerly despotic regimes that had long stood in the way of prosperity. In the author’s words: “A combination of entrepreneurship, technological innovation, and broad societal transformation are giving even those children born in the most persistently poor places a chance to benefit from, and contribute to, the vitality of global markets and communities of social action.”

Auerswald paints a picture of a world economic ecosystem driven not purely by greed, but desire to change, improve, and have a positive impact on the world around us. While this “coming prosperity” doesn’t preclude the profit motive, it will emanate from far more complicated factors.

Countries like Rwanda, Liberia, Libya, Myanmar, Angola and Sierra Leone have emerged from despotic governments and civil wars. The author even provides positive examples in places such as Afghanistan, where freedom, peace and democracy have yet to fully flower. In the author’s view, the growth of free market economies unleashes an innovative burst that will continue to propel emerging economies.

China, the author notes, is the most successful example of what can happen when centrally planned economies let in the light of individual entrepreneurial spirit. “The practical impact of these reforms was to initiate a long-term process in which roughly a fifth of the world’s population might have the opportunity to seek and create opportunities for themselves,” Auerswald writes. “The consequence? Nothing less than a turning point in human history.”

The author makes a good point, but although China has put the economy more in the hands of individuals, the economy is still centrally guided, if not centrally planned. We note that the “hand” isn’t the invisible hand of Adam Smith, but rather the firm hand of the Communist Party pushing on the backs of units of economic input. Furthermore, the recent controversies over labor conditions in Chinese manufacturing plants indicates that benefits to workers still have room for improvement. As the author notes, China’s businesses “have shown signs of developing a type of social conscience. To be sure, this trend is just getting started.” These caveats notwithstanding, we agree with Auerswald that the freeing up of the Chinese economic system has enabled a reduction in human poverty with few parallels in human history.

Technology, meanwhile, is breaking down walls of the global economic edifice. Technology is improving businesses for fishermen in India by improving access to market pricing information, allowing migrants in Kenya to send remittances to their rural homes by cell phone, and providing a catalytic springboard to successful revolutions in Tunisia, Egypt and Libya. The technological change we are witnessing coupled with the growing prosperity of formerly poor nations enables “small and medium-scale enterprises to connect to the global supply chain.”

The author cites four positive trends concerning technology:

1) Technological innovation, for the first time in history, is reaching the world’s majority.

2) Technology is “democratizing personal productivity.”

3) Previously closed networks are opening to more and more creative and determined people.

4) Technology is enabling unprecedented distribution of collaboration and innovation.

In particular, the author cites mobile telephony and its cousin, social networking, as perhaps having the most profound impact. Our interpretation of the author’s view is that mobile telephony and social networking could permanently limit the suppression and corruption that used to hermetically seal so many emerging economies.

No Malthusian Cassandra is Auerswald. On the contrary, a growing population in his view leads to a growing supply of ideas, whose rewards will more than offset the rising demands placed on the planet resources. The human spirit, in his view, unleashed on the world will stimulate the supply of innovation that will more than adequately satiate the growing needs implied in projections of population trends. Embrace, not fear, the coming population boom. In the author’s words, “the aggregate creativity of humanity may actually increase with the number of people on the planet.”

One example the author provides relates to climate change. Pessimists argue that population growth leads to increasing use of fossil fuels, which in turn will accelerate the trend of global warming. The author points out two flaws in this argument. Global warming doesn’t result from inadequate supplies, but rather excess supplies of fossil fuels. Price adjustments along with human ingenuity should flip the supply balance away from fossil fuels to renewables, thereby slowing or reversing the correlation between population growth and climate change.

The author’s view may seem utopian to some, but organizations like BRAC see this optimism at work every day. BRAC recognizes the enormous challenges of freeing the world’s poor from the shackles of poverty, but it also sees its 40-year efforts bearing fruit – often in myriad small ways. In Uganda, poultry vaccination entrepreneurs, following a model developed in Bangladesh, have delivered 13 million vaccinations in an effort to reduce poultry mortality rate from the current 35 percent to a level more akin to Bangladesh, which is now relatively advanced at 10 percent. BRAC has developed a seed production facility that enables it to supply low-cost seeds to entrepreneurs who earn money on the margins distributing affordable, higher-yielding seeds to farmers. Such agricultural services currently reach 75,000 farmers, a number expected to double by 2014.

Innovations like these are a window into Auerswald’s “coming prosperity” – human ingenuity, coupled with organizational efficiency, sprinkled with a dash of hope and a pinch of risk-taking, proving that it doesn’t take much capital, nor a Google-like technological breakthrough, to see the world through Auerswald’s optimistic lens.

Organizations such as BRAC, can, in the author’s words, assist in the “emergence of a societal context in which the returns to productive entrepreneurship are at least as great as the returns to corruption and destructive entrepreneurship. Once that happens, true development can start.” With organizations like BRAC, which has operated for so long beneath Western radar screens, perhaps we are already seeing what true development looks like.