There have been some Christian events over the past week – based around last Sunday’s Pentecost – to celebrate the new millennium once again. It’s only right that the Church should claim the calendar as its own, now that the New Year dust has settled. And it is appropriate that it should be doing so quietly and with dignity, in stark contrast to the vulgarity of the Millennium Dome – this year’s increasingly forgotten monument to naffness.
For the rest of us, continued celebration is an opportunity to ask whether the new millennium means anything significant. The sophisticated will continue to say that, in strict commercial and economic terms, the start of the third millennium is of no intrinsic relevance. And it is undeniable that it represents only an arbitrary medieval system of counting that is historically flawed.
But we shouldn’t underestimate the psychology of the “fresh start” that can pervade all areas of human endeavour, including business. And, arising from that psychology, there are bound to be self-fulfilling prophecies. Which comes first will be a matter for debate, but the new millennium has created a different world, if only because we expected it.
We can identify broad trends in corporate life that will form part of the history of the early third millennium. At the halfway stage of its first year, I can identify three corporate trends, one of which is a false promise but significant all the same. The other two are corporate factors that will change the world forever. They are the supposedly permanent bull market in equities, genetically-modified (GM) food and the Internet (bear with me on the last one – it’s not what you think).
The first one, the alleged new economic paradigm that defies the business cycles of boom and bust, is a shibboleth. It is four years since US Federal Reserve chairman Alan Greenspan referred to “irrational exuberance” in world equity markets. Even with all the economic analytical expertise at his disposal, he couldn’t work out why shares were so overvalued.
Today, after the odd bear leg in stock markets generally – and the technology sector in particular – the Dow Jones index of leading US stocks is believed to be as much as 40 per cent overvalued. This is despite rising interest rates and doleful soothsaying from Greenspan and his advisers.
New millennial optimists tell us that equity markets no longer respond to Jeremiahs such as Greenspan. They say that retail investors, who fuel the US market, have lost their fear of equities over the past century. As a consequence, they add, stocks and shares have become “safe” investments, like bonds. Hmm.
My view, or at least the one I adopt from more cautious economists, is that at some stage in the not-too-distant future US investors will switch from being borrowers and investors to being savers. In doing so, they will radically correct worldwide equities markets and trigger a protracted world recession.
Sorry. This sort of morbidity is hardly reflective of the new millennial optimism I referred to. But that’s my point. It is the obverse of the baseless optimism driving equity markets that will turn out to be a leading global issue of the new millennium. The significance of new millennial optimism is not how it has fuelled equity markets but how that optimism will be revised and reinterpreted when these markets correct.
Then there’s the issue of GM food. This was eclipsed by the general fireworks of the New Year, as well as the lack of fireworks from that other heralded grim reaper of the new millennium, the millennium bug. Just as the bug was well-managed into submission to human intent, so GM foods will become a tool of human progress. The industry is too important to the future of the world to envisage anything else.
Meanwhile, the GM debate today is little more than a parable for the end of the British royal family. Prince Charles, with his narrow group of green advisers (in every sense), wistful nostalgia for societies past and idea that debate, as someone once observed, is a game of tennis in which the only stroke acceptable to him is his ace serve, represents a 20th-century icon that the 21st-century foods industry will destroy.
Finally, the Net. As I promised earlier, in parenthesis, I don’t mean to rehearse arguments about how the digital delivery of information through a global network drives globalisation. I don’t consider this development any more significant than the commercial development of the telephone in the Twenties (remember the worldwide crash of 1929, incidentally).
I’m talking about the Net’s effect on market volatility, witnessed recently in the booms and busts of the Nasdaq stockmarket. Companies have traditionally reported their financial results twice-yearly. But three months can be a lifetime in today’s technology sector. The long-term effect of the Net will be to make short-termism respectable. That is of new millennial significance.
So those are my three considered heralds of the new millennium. All of them – even the correction in equities – can be forces for good and will, to some degree, feed off each other. But there is also much about them that can go wrong.
George Pitcher is managing partner as issue management consultancy Luther Pendragon