The conflict is spreading to two new stages, says Karen Harris, the top in her field – she has a serious message for Europeans

Excuse me, you must be coming to see me, comes from behind me in English.

Häkellyn. Rarely in Helsinki does an international guest stop another so determinedly.

“I noticed the Risk game under your arm and thought it must be you,” says Karen Harriswhen we have introduced ourselves.

Harris is a consulting giant of Bain & Company head of the macro trends group. A kind of chief economist, then. But in addition to examining the cyclical fluctuations of the economy, the group examines the broader economic developments even over the course of centuries. A bit like a change in the continental plates of the economy.

That’s why the world conquest game has been included for filming. The world order is in transition and now the continental plates are clearly in motion.

According to Harris, the globalization that started with the collapse of the Soviet Union stopped in 2008. It was the year of the global financial crisis and in August Russia attacked Georgia.

“We ourselves are talking about post-globalization. In our opinion, it is not about deglobalization, i.e. the dissolution of globalization.”

After 2008, superpower games and struggles have become visible and their effects have been felt in Finland as well. But it’s not just about military power.

In his work, Harris specifically examines the economy and economic development. It also involves technology, resources such as energy, and operations in new wild frontiers in space and cyberspace. They all belong to the interests of the great powers. And, of course, the picture also includes military power.

For example, when the leader of Russia Vladimir Putin decided to use natural gas deliveries as a weapon first in the fall of 2021 and again after the start of the war in Ukraine, Finns also felt it in their wallets.

Now Harris says he is worried that European business leaders and decision-makers are underestimating the risks of disruptions in US-European relations – especially if ex-president Donald Trump will be re-elected.

“In the United States, many people think more and more strongly that the interests of Europe are not the interests of the United States. It’s not so much that Europe’s interests are directly opposed to US interests, but that they are not aligned,” says Harris.

“We are back in conflict”

The current world order ever since World War II has been called Pax Americana, American peace.

It is based on the idea of ​​the United States as the protector of Western liberal democracy and its superior military and economic power.

Harris compares the power relations of the United States and the Soviet Union through defense spending.

During the Cold War, the United States spent about 2-2.5 times more money on defense than the Soviet Union. When the Soviet Union collapsed in 1991, the divide was torn apart. The second largest defense expenditure was in Britain and it was about eight times smaller than on the other side of the Atlantic.

“It was an era that crystallized in the eyes of business leaders Francis Fukuyaman to famous words about the end of history. As the world becomes more prosperous, it would become more democratic – especially China. It was like gravity, a law of nature.”

It happened otherwise. Harris illustrates the breakdown of the world order through defense spending. The United States again spends about 2.5 times more on defense than the “runner-up”, which this time is China.

“So we are back in conflict. For companies, it is more important – despite the tragedies of traditional war – that the real areas of conflict are space and cyberspace.”

According to Harris, new conflict areas threaten the United States more concretely than before.

“As Matthew Pottinger [Presidentti Donald Trumpin neuvonantajana] said, the United States used to have two best neighbors: the Atlantic and the Pacific. Now every country is a neighboring country in cyberspace and in space, where the number of threats and the possibilities of implementing them are much greater.”

According to Harris’ interpretation, this is exactly what has once again started a reflection on their own role in the world in the United States.

“If there is a massive cyber attack on the United States, I suspect it would make it more withdrawn.”

“Economy is just transformed energy”

Harris sees parallels between the end of the 19th century and the First World War in the current world order change.

“I hope the end is better.”

In France, the era is named La Belle Époque, the beautiful time. It was a time of great progress both in the fields of science, arts, technology and social rights. Economic history speaks more broadly about the second industrial revolution.

There was a time of relative peace in Europe, the Pax Britannica. The British Empire was the most powerful in the world and it dominated the sea routes of global trade. But the world was also multipolar. Other great powers in Europe were France, Germany and Russia. The United States made great strides.

Similarly, Harris believes that even now the world is becoming more multipolar.

At the end of the 19th century, industrial development and trade were accelerated by new technologies. The internal combustion engine, electricity, telephones, radio and cars made connections faster and reduced the costs of distances. The world is devouring a new source of energy: coal.

“Fundamentally, the economy is nothing but converted energy.”

Coal’s leading position remained until 1964, when the first place was usurped by oil. And globally, the demand for oil continues to grow. But there are signs of change.

When the US left Afghanistan in 2021, it also said that the US no longer has the same interest in Middle Eastern oil as before. Water fracturing and oil shale have made the United States almost self-sufficient in oil. The country became energy self-sufficient in 2019.

And China’s electric car development is also about self-sufficiency.

“Its transition to electric cars is not only about dominating this technology – which they should be able to do, since they have the largest car market – but because after that the driving force of traffic will no longer depend on an imported product. To me, energy is clearly the basis of power. And food,” he hastens to add.

Concern for Europe

For Europeans, Harris’ message is stark. After the collapse of the Soviet Union, many European countries had built their energy systems on Russian natural gas and other energy imports.

But that is by no means the only weakness Harris sees in Europe.

“Europe has fallen behind in all critical technologies,” he says.

He now closely follows the development of the European Union. The former Prime Minister of Italy and the former President of the ECB Mario Draghin Harris has met the new EU competitiveness report carefully.

In his report, Draghi goes through the problems of the EU’s ten key sectors and gives policy recommendations to solve them. In the second part of the report, he breaks down five policy areas, from innovations, to regulation and investments.

Among Finnish politicians, Draghi’s presentations have aroused skepticism. Joint debt immediately became a hot topic of discussion. It has raised a spine-tingling reaction, especially in the right wing, that once again the only solution is to shovel money on top of the problems.

“Yep. In my world, that’s called venture capital,” Harris says, flashing a small grin.

Spending money on projects important to Europe’s own global position is justified.

“We think that Brussels could issue loans and Europe could invest in common and modern defense, which would mean satellite technology, drone capabilities and so on. It would already create really interesting industries and companies as a byproduct,” Harris begins and continues:

“If Europe defines its own defense as energy self-sufficiency, we would see a lot of investment in new nuclear power technology, hydrogen. There are plenty of opportunities and they all require capital investment.”

According to Harris, it seems much more likely that European companies know how to use their capital efficiently than that the Hungarian Prime Minister Victor Orbán and the President of France Emmanuel Macron would be able to negotiate which regulations should be cut and how.

The machine that made all other machines

One key enabler of the second industrial revolution at the end of the 19th century was a Frenchman who lived in the 18th century Jacques de Vaucanson. He was an inventor who is best remembered for his robot duck. It knew how to peck grains from the ground, poop and say quack.

Creating a robot – not to mention a mechanical digestive system – was of course already a feat in itself. But while inventing his other machines and devices, de Vaucanson developed the first all-metal lathe in 1751. With it, he could make machine parts with more precision than before.

That is, a machine that could be used to make all other machines.

The lathe was such a revolutionary machine in terms of mass production and industry that even Karl Marx mentions de Vaucanson by name in his work Capital, and not at all in a good way.

Karen Harris’ reflections on the parallels between the second industrial revolution and today, make you think about technology.

What if generative artificial intelligence accelerates digitization to the next stage and becomes a service that performs all other services?

“Yes. And especially in the automation of service industries. Let’s think, for example, of the possibilities for smaller companies to adopt automation. Generative artificial intelligence brings coding within the reach of plain language. So you can say, for example: robot, flip my burger instead of having to look for how to code it on page 63 of the manual. This is an important consequence.”

A strong Europe benefits the whole world

Throughout the interview, Harris’s speech exuded genuine concern about the situation in Europe.

The dual citizen of Germany and the United States has a clear emotional bond with Europe. But it’s not about passport or citizenship, it’s about values. He clearly has the values ​​of the Enlightenment in his heart, and along with the fate of Europe, he worries about the fate of these values. Someone has to carry the torch.

“From the point of view of values, the world would be a better place if a strong integrated Europe was present. Think about what Europe has given the world in the last 500 years: enlightenment, sciences, technological innovations, human rights. A few really useful things that we all enjoy. A strong Europe with these values ​​at the center benefits the whole world in my opinion.”

And although protectionism is now growing in the world, Harris believes that extensive globalization is still in Europe’s interest.

“European economies do better in free trade and a globalized world. China’s view is the opposite. It is focused on its own people, it prioritizes the needs of the domestic market and is happy to be part of the global community when it suits it. Its main strategy is still to get resources to China.”

“The United States is very divided here and has been since its inception.”