The American empire is waning, ethnic hatred is growing and economic stability is crumbling.

Question: Are you generally optimistic or pessimistic?

Ferguson: I’m temperamentally a very pessimistic person. I think that’s probably a function of my west of Scotland upbringing.

But the great thing about pessimism is that you’re never disappointed. And when you’re wrong, you’re pleasantly surprised.

So I find this a congenial working assumption for life.

When it comes to the issue of international security, I’m on balance pessimistic. On the one hand I see the American empire waning. At the same time, I see forces of ethnic hatred growing, rather than diminishing, particularly in the Middle East, but not only there.

And then there’s a third issue and that is economic stability. In the "War of the World," I made the point that 20th century conflict correlates quite closely to three things: empires in decline, ethnic disintegration, and economic volatility.

We’ve been through – all in 10 years – a very low economic volatility in most of the world, and that’s had all kinds of benign consequences. It’s been possible for economies to grow that previously were bedeviled by instability. But it’s hard to believe that this low volatility environment will continue indefinitely. And it may be ending as we speak, in the sense that there have been, since the middle of 2007, ructions in financial markets unlike anything we’ve seen in a long time.

So if you take these things together, I’m pessimistic not only about international security issues; not only about the endurance of American power; but also about financial stability.

And a lesson I take away from history is that financial instability can have all kinds of second order affects that aren’t very pretty. So from this point of view, I think there are some quite ugly scenarios quite near to us; nearer to us in time than a profound change in the earth’s climate. And of course, there’s a danger that if we devote too much time and energy to worrying about climate change over 100 years, we could lose sight of our ability to destroy ourselves within five years.

Recorded on: Oct 15 2007