Imagined Futures, Narrative and Cultural Realities
In December 2016, some of the major energy companies came under sustained investor pressure to explain their long-term strategies in the context of changing narratives about climate change and the transitions to autonomous electric vehicles, solar and wind power.
This pressure was not about short-term performance, but about projected events five, ten and more years in the future. It was about imagined futures and the narratives that described them. The future once again showed it can deliver shocks in the here and now.
This is just one example of a wider and important phenomenon: we act in the present on imagined futures. Or fail to. As we put it in ‘Inventing the Big Hedge’:
“The world’s financial institutions have barely explored risks to the global system as investors position themselves in the short-term against the long-term climate change scenarios – well before the events themselves emerge.”
In other words, shocks emerge when underlying narratives break down, with the realisation that climate change may have a devastating impact on people’s lives, or that radical innovation will transform industry prospects. In a broader sense, the innovation landscape is shaped by imagined future worlds projected by inventors, political leaders, corporations and policy makers.
These imagined worlds are cultural realities: they influence present day decision-making, investment priorities and above all judgment about future value. They dominate our lives, from the fundamental micro-structures of our individual neurophysiology, to shaping the macro-level dynamics of complex systems. They pervade global cultures, economics, the financial markets and politics.
In other words, they pervade our lives at all scales. They find expression through narratives and stories, in myriad forms and in everything from central bank minutes that move the financial markets, to corporate advertising, the arts, political rhetoric and propaganda. They are both explicit and calculated and loaded with emotion, operating at conscious and unconscious levels.
Narratives may seem to be about the past, but the defining characteristic is that they look forward. Their intrinsic structures and emotional power lead us to explore possible futures, looking for endgames. The underlying question, particularly important in times of crisis, or after what film theorists call the ‘inciting incident’, is ‘how do we get out of this?’ This drives our curiosity and so the narrative, whether we are watching a movie, or simulating the future of energy.
This matters because until recently, the importance of imagined futures and narrative have not been recognised, either as a driving force of human systems, or as a way of improving predictive power and foresight.
George Lakoff talked about ‘metaphors we live by’ as the micro-foundations of our lives. He was partly right: ‘narratives we live by’ is better. Now narratives, long integral to scenario development and specialist forecasting, have the attention of academics, financial market analysts, regulators, central banks and Nobel prize-winning economists.
History is being rewritten through a narrative lens. Robert Shiller, the Nobel prize-winning economist, has concluded that the 1920-21 depression, the Great Depression of the 1930s and the Great Recession of 2007-9 were the product of ‘viral’ or ‘epidemic’ stories. Albeit with the benefit of hindsight, the signs, in the form of pervasive, deeply intertwined narratives, were there. Not only that, narratives are shaping the ‘contentious political-economic situation of today’. In an interview with CNBC on market volatility in November 2017 Shiller said ‘I try to figure out the narrative behind the markets’. They are the hidden hand that shapes and guides public sentiment, the markets and the world economy.
Micro-Structures: imagined futures, narrative and neuroscience
To put this in context, when our brains are idle, daydreaming is our default cognitive and emotional state and daydreaming is dominated by time-travel in the mind. Our interior life is shaped by simulation and prediction. In other words, imagined futures are innate. We simulate and predict to navigate uncertainty, by nature.
As Lisa Feldman Barrett puts it:
‘Intrinsic brain activity is millions and millions of non-stop predictions’
The clear evidence is that we create a predictive model of the world from experience and then check that the real world sensory and cognitive input fits the model, not the other way around. Otherwise, we would drown in the overwhelming volume.
Imagined Futures as Cultural Realities
The relationship between imagined futures and narrative emerges at a cultural level. Narratives are the primary tools we use to communicate, at scale, about our future expectations, aspirations, desires and visions: they bind our networks together. They act as glue that attracts us to ideas, people, ideologies, innovations and fears. They show who influences who in complex human networks and point to shared views about possible futures. They also provide hints of disruption as the narratives weaken, or come under threat from competitive explanations.
Narratives are not about the logic of market mechanics, or macro-economic theory: they are inseparable expressions of emotional realities and the constant cycle of simulation and prediction. They have more explanatory power than conventional economic theory because they anchor how people live their lives.
In this way, imagined futures and the narratives that explore them have a direct influence on public sentiment, decisions and behaviour. They ‘go viral’ through both explicit and unconscious storylines which are continually created, contested, amplified and often distorted by social and mainstream media. They are the focus of deliberate propaganda by companies and nations alike. Modern media is an ecosystem where stories vie for attention. The risks are that emotional-loaded sensationalism has more impact on politics and the economy than accuracy and provenance. Mary Catherine Bateson’s comment that ‘we live storied lives in a storied landscape’ is more relevant than ever.
Narrative Financial Markets
The deeper reality is that science and economics do little to guide people’s lives, or explain human emotional responses to the world around them. Narratives do.
This is illustrated in the financial markets, particularly at times of crisis. When static models and economic explanations break down, we look for plausible new narratives that help us navigate and ‘make sense’ of the future. One reason is simply that they are infinitely flexible and adaptable to changing circumstances.
None of this is reflected in conventional theory. The assumptions that dominate economic theory – the efficient markets hypothesis and rational expectations – do not have explanatory or predictive power about emerging crises, nor guide decision-makers when shocks hit the system. Narratives do. As Martin Wolf put it recently ‘a macroeconomics that does not include the possibility of crises misses the essential’.
After all, financial markets are complex systems and networks permeated with myriad human ‘agents’, each with their own stories to tell. The game may play out in the media, but the real battle to dominate ‘information space’ is about contested futures.
Viral vs Sustainable Narratives: competing for the future
The underlying dynamics of financial and other systems owe a lot to the structures of narrative itself. All narrative arcs revolve around what might happen next, driving our innate curiosity and holding us in suspense. They are intrinsically about future prospects. Even journalists are coached to look forward.
The danger is that, as Samuel Becket put it, we risk being ‘lulled by the illusion of narrative’. More important, narratives, particularly in periods characterised by uncertainty and speculation, are easily swayed by our weakness for aesthetically appealing, superficially coherent, emotionally rich stories with positive outcomes at the end of the narrative arc.
We can talk about emerging, dominant, contested, competing, broken, fragmentary, incomplete, viral, manipulative, disordered and ambiguous narratives. Each one is characterised by some form of temporal order or questioning.
There are, nonetheless, sustainable narratives, the key to predicting possible outcomes. They are sustainable if they work at all levels, from headlines to the deeper threads, like foundations in pyramid structures, as well as over time. Sustainable narratives can signal stability, but if everyone follows the same storyline, fragility. Consensus can herald shocks if the system lacks diversity. This is not simply about structure and plot: narratives are experienced aesthetically, which means they work by operating at an emotional, unconscious level, not always made explicit in texts, film, or market commentary.
One final word. We compete for the future, constantly re-inventing worlds around us and how we think. As Schiller puts it, ‘new narratives may be regarded often as causative innovations’. In simpler terms, we invent the future through writing.
In other words, creativity, expressed in imagined futures and aesthetically powerful narratives, for good and ill, are dominant forces, shaping our lives at all levels.
 Robert Shiller: ‘Narrative Economics’
 Lisa Feldman Barrett: ‘How Emotions Are Made’
 Peter Sheridan Dodds
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