In an effort to restore its credibility in global capital markets, the government of Dubai recently issued a 58-page report detailing its austerity plans as it works its way towards responsible, long-term planning. Global media organizations are touting the report as “unusually transparent.” Most reports of this nature coming out of the Middle East are heavily influenced by government officials trying to paint positive images of their centrally planned economies. In this report however, the government of Dubai has acknowledged the cancellation of over a thousand real estate projects valued at tens of billions of dollars. The lack of demand was sighted as the primary reason for the cancellations. This comes at a time when a possible deal is being worked on the restructuring of debt for Dubai World, the largest sovereign wealth fund to ever default on payments to its creditors with the onset of the global financial crisis.

There is a statement in the report that may not stand out to the average reader, but has significant developmental implications as to where Dubai is in its cultural emergence. The statement says that the government had completed a major reassessment of the “economic development” element of the Dubai Strategic Plan for 2015 (DSP 2015), which resulted in the cancellation of these projects. When DSP2015 was made public it called for the systemic development of Dubai.  In addition to economic development, it called for social development, modernization of the security apparatus (police), development of the judiciary and public safety, and for excellence in government. The report made sure it emphasized that the government’s intentions will be focused on those “other” aspects of the plan that were ignored during the boom years.

So, why is Dubai emphasizing these aspects of their cultural development now? The answer is simple: In their rush to look like the West, government leaders trampled over a very essential developmental stage identified primarily as the Law and Order value system, what is known in Spiral Dynamics as the all-important 4th level Blue stage of development shown on the graph below. Blue is a boring and uninteresting stage of development, but is an essential corner stone for sustaining modern day nations. It focuses on the building of institutions such as the security apparatus and the judiciary. It develops 50 and 100 year plans and empowers the institutions that see those plans to fruition. It is where the values of temperance are born and where we develop the capacities to postpone the impulses for immediate gratification in return for the promise of higher future rewards. It moves power from the hands of the charismatic leader and vests in its institutions, which take decades to develop and become a true reflection of a culture’s level of resilience.

But, as the case was with Dubai, the building of those important Blue capacities was by-passed due to the undeniable lure of financial success. Under normal developmental trajectories, resilient and systemic prosperity that defines an entire culture is a part of a healthy 5th level Orange value system that comes after the Blue stage of development. According to the Spiral Dynamics framework, this must be the order of cultural evolution if a country is to sustain itself during times of social and economic upheaval. Orange and all the stages above it need the strong foundational stones of Blue on which higher cultural complexity can be built. In addition, those institutions created in the Blue system must know how to regulate the Orange system as to keep it on a healthy, non-punitive path that promote overall cultural health. Orange identifies with a robust capitalist system, where strategic planning, science, research and development combine to create a diverse economy with self-sustaining psychosocial capacities.

As evidence by the low level of scientific research, and the absence of institutional independence, the two hallmarks of the Orange and the Blue value systems respectively, Dubai and the rest of the Arab world had remained in traditional stages of development. Those are the Tribalistic and Heroic values of the 2nd level Purple and the 3rd level Red value systems on the Spiral respectively. Historically, cultures lingered in the Purple-Red value systems for centuries before life conditions, out of necessity propelled them to seek higher stages of development. For the Middle East however, this normal trajectory of cultural emergence was interrupted by the immense wealth crated by the discovery of oil. This was thought of as a way to bypass the Blue and Orange stages of development that took centuries to form in the West. Oil wealth was thought of as the needed catalyst that would rapidly develop the culture and in a few short years have exhibit social complexity that rivaled that of the West.

With the help of the West, the push to develop the region went into high gear. In a few short decades it became the norm to have Western corporations and personnel in charge of the Gulf’s largest development projects. Western investment bankers managed the oil wealth by investing it in global financial markets. Normalizing these beliefs over the long run, allowed for the values of oil money to be perceived as the productive output of the Orange value system. This became a recognizable fallacy with every passing decade as the economies of the Gulf showed an innate inability to diversify from their heavy dependence on oil revenue. These surface Orange values however became imbedded in the collective psyche of the culture and its belief that sudden appearance of wealth was a sure way to ascend the evolutionary ladder to the Orange system and skip the quintessential Blue stage of development.

The prevailing thought was this: if the surface expressions and the crowded city skyline looked like those of the West, then the culture must possess the same level of psychosocial complexity as the West. This became the dominant narrative propagated by the West and adopted by leaders in the Arab Gulf over a 4-decade period of time. Cultural development became directly tied to the level of wealth each country in the region had, and Dubai was no exception. With a charismatic ruler like Sheik Mohammad Bin Rashid Al Maktoum, this city-state embarked on one of the most ambitious development plans in modern human history.  After showing success in it’s early steps towards economic diversification, Dubai became recognized as the modern day miracle in the Gulf. Soon thereafter, the ruler fell into the “build it and they will come” illusion that was further reinforced by opportunistic global firms offering “the higher, the bigger the better” sales pitch that built this desert oasis overnight.

With most of the focus being on the real estate sector, little attention was paid to who was buying up Dubai, and to the qualification of those who were building it. At one point during the boom, as much as 85% of residential real estate buyers were identified as speculators with values that thrived on the smell of money and very little else. Those were the short-term opportunistic and predatory values of the Red system with thinking that fell in the Egocentric stage of development. Red investors and the builders who encouraged them loved instant gratification with no regard for long-term thinking. There were no laws born of Blue institutions that were similar to those in the US or other advanced countries that limited investor purchases to 25% within a residential real estate project. These Western designed types of restrictions come from decades of trial and errors that protect the consumer and are heavily entrenched in the virtues of the Blue value system.

During the boom years, leaders of Dubai couldn’t be bothered with building Blue capacities with institutional fortitude. After all, having a good Judiciary system doesn’t land you on the cover of Fortune Magazine or get you on 60 Minutes. Anyone who warned of the absence of these virtues was quickly dismissed. This was a growing city-state and the absence of the Blue value system was felt everywhere not just in the real estate sector. It permeated life at systemic levels and the general rule became that anyone sounding the alarm over anything that came in the way of progress was silenced immediately.

Psychiatrist Carl Jung is famously known for his statement about things that we avoid in our conscious that inevitably appear later in our lives as fate. There’s a similar analogy in Spiral Dynamics that says a culture cannot skip a development stage. Attempts to avoid the normal value system sequence of emergence will have that particular value system coming through the back door (as fate) to fix the pathologies created by avoiding the proper sequence.  Well, for Dubai, the strategy to pursue the values of the Orange system and avoiding the Blue system was very short lived and came to a halt when global liquidity dried up and Dubai was left with thousands of unfinished projects and no money to complete them. The collective avoidance of the Blue system has appeared as a humbling fate. The most iconic humiliation the Ruler of Dubai suffered as a consequence of this was having to change the name the tallest building in the world from Burj Dubai to Burj Khalifah. Sheikh Khalifah the Ruler of Abu Dhabi had to put up the money to finish the Tower at a time when the Dubai World sovereign fund became insolvent.

All this worked to expose the short sightedness of an experiment that put one value system before the other. The thinking that money alone can move cultural evolution up the spiral was proven wrong. If anything, money showed the pathologies and greed that are inherent in human nature. Europeans who’ve been known to belong to the Green 6th level Egalitarian and Humanitarian value system, descended to their past imperial/colonialist selves very quickly and became the pillagers of wealth. Americans running some of the world largest sovereign funds for Dubai embarked on buying worthless companies that were teetering on the edge of bankruptcy and collected enormous fees on both ends of the transactions. This was Disney World for Western business people and corporations who saddled every business entity in Dubai with enormous debt, while filling their pocket with outrageous compensation. Very little of their activity was ever scrutinized due to the absence of a competent and proficient Blue system that understood the nature of what was being done.  When all the dust cleared, the Westerners went home and the government of Dubai was left with hundreds of billions in liabilities. The Ruler soon realized you could only imprison so many executives before the practice becomes a public relations disaster.

As Dubai begins to focus on building the Blue capacities it called for in the DSP2015, its past failures in absent of Blue continue to come to the surface. The newly empowered judiciary has begun prosecuting those responsible for inferior quality of construction work, and those responsible for corrupt practices. It’s also becoming aware of the absence of qualifying criteria and normal rules and procedures that led to the collapse of its ill advised global investments worth $100s of billion. Should Dubai’s leaders take their future seriously, the empowerment of Blue capacities must continue as to discourage exploitation by others and build the necessary institutions and capacities to enable it to diversify its economy away from natural resources. This will be its biggest challenge and if it succeeds it will become a beacon of leadership for the future of the region.

If there’s ever a lesson to be learned from this ordeal, it is this: In the absence of a solid foundation in the Blue value system that’s driven by Law and Order, exploitive values will move in to fill the void. It is an open invitation for people and entities with a keen detector for exploitation and a great degree of intelligence to manipulate the lower complexity of emerging cultures. Even with enormous wealth at their disposal, cultures cannot skip a development stage, a very tough lesson indeed in the science of value systems.