Global cap­i­tal­ism needs ur­gent re­form, says World Eco­nomic Fo­rum

The Star Late Edition - - WORLD -

LON­DON: Re­form­ing the very na­ture of cap­i­tal­ism will be needed to com­bat the grow­ing ap­peal of pop­ulist po­lit­i­cal move­ments across the world, the World Eco­nomic Fo­rum said yes­ter­day.

Get­ting higher growth lev­els, it added, is nec­es­sary but in­suf­fi­cient to heal the frac­tures in so­ci­ety that were ev­i­dent in the elec­tion of Don­ald Trump as US pres­i­dent and Bri­tain’s vote to leave the EU.

In a wide-rang­ing re­port from the or­gan­iser of the an­nual gath­er­ing of po­lit­i­cal and busi­ness lead­ers in the Swiss re­sort of Davos, the WEF iden­ti­fied “ris­ing in­come and wealth dis­par­ity” as the big­gest driver in global af­fairs over the next 10 years.

As an ex­am­ple of in­equal­ity, it high­lighted the mas­sive in­creases in chief ex­ec­u­tive pay at a time when many peo­ple in ad­vanced economies have strug­gled to make ends meet fol­low­ing the global fi­nan­cial cri­sis.

“This points to the need for re­viv­ing eco­nomic growth, but the grow­ing mood of anti-es­tab­lish­ment pop­ulism sug­gests we may have passed the stage where this alone would rem­edy frac­tures in so­ci­ety: re­form­ing mar­ket cap­i­tal­ism must also be added to the agenda,” it said in its lat­est Global Risks Re­port.

“The com­bi­na­tion of eco­nomic in­equal­ity and po­lit­i­cal po­lar­i­sa­tion threat­ens to am­plify global risks, fray­ing the so­cial sol­i­dar­ity on which the le­git­i­macy of our eco­nomic and po­lit­i­cal sys­tems rests.”

That’s some con­clu­sion from an or­gan­i­sa­tion that’s sought to play a cen­tral role in the glob­al­i­sa­tion process of the past cou­ple of decades and that is closely iden­ti­fied with some of the world’s rich­est peo­ple.

As well as get­ting growth higher, it iden­ti­fied four ar­eas that need to be ad­dressed ur­gently: long-term think­ing in cap­i­tal­ism; recog­ni­tion of the im­por­tance of iden­tity and in­clu­sive­ness in po­lit­i­cal com­mu­ni­ties; mit­i­gat­ing risks and ex­ploit­ing op­por­tu­ni­ties of new tech­nolo­gies such as driver­less cars; and strength­en­ing global co-op­er­a­tion.

It added that a fail­ure to ad­dress the un­der­ly­ing sources of the pop­ulist tide poses a threat to main­stream politi­cians and raises the risk that the glob­al­i­sa­tion trend will re­verse.

“Some peo­ple ques­tion whether the West has reached a tip­ping point and might now em­bark on a pe­riod of de-glob­al­i­sa­tion,” it said.

Al­though anti-es­tab­lish­ment pol­i­tics have tended to blame glob­al­i­sa­tion for the loss of tra­di­tional jobs, the WEF said rapidly chang­ing tech­nolo­gies have had more im­pact. “It is no co­in­ci­dence that chal­lenges to so­cial co­he­sion and pol­i­cy­mak­ers’ le­git­i­macy are co­in­cid­ing with a highly dis­rup­tive phase of tech­no­log­i­cal change,” it said.

Other key driv­ers iden­ti­fied in the sur­vey of global risks re­lated to cli­mate change, ris­ing cy­ber de­pen­dency and an age­ing pop­u­la­tion.

The 2017 re­port, the 12th an­nual re­port, is based on an as­sess­ment of 30 global risks by 750 ex­perts from a va­ri­ety of back­grounds, in­clud­ing busi­ness, academia and NGOs.

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