Capitalism is verging on collapse, according to world leaders calling for 'Globalism 4.0'
It used to be democracy that analysts and political theorists were convinced was having a bad decade. But at the World Government Summit (WGS) in Dubai last week, capitalism, the dominant economic ideology of the world, became the subject of a roast.
Sparking the thought was Professor Klaus Schwab, founder of the World Economic Forum (WEF), the world’s premier gathering of minds and on which the WGS is modelled. His was the opening address this year, and he began by pointing out populist sentiment across the world, protests, protectionism and a lack of income parity across societies and demographics as why world leaders needed to deliver “Globalism 4.0”.
All these were symptoms, he said, resulting from governments and decision makers around the world pursuing policies that left room for disappointed constituents and economic malaise.
“Global growth is slowing while risks are growing. Technology hasn’t solved utmost risks, and we still don’t know if AI will be a positive or negative force. Meanwhile, mother nature too is losing patience with us. We have only 12 years to go before changes in the climate and ecology impact the global economy irreversibly,” he said.
“We need a sustainable, inclusive, and multi-stakeholder economic model where it is not led by just governments but by all members of society including women, the young, businesses and NGOs. And it needs to be re-moralised so we don’t tolerate grey areas such as corruption,” he said.
Schwab’s thought ignited a full-blown conversation among attendees that Arabian Business spoke with, as well as an address from France’s Finance Minister Bruno La Maire. In his speech, he railed against specifics that he said were hindering the kind of social progress that the country was advocating. Tax havens, he said, were“unacceptable”, “vassal states” were being created by powers looking to flood vulnerable economies with seemingly-easy money, and Europe risked being crushed by rules being hammered out by China and America that would leave the continent out in the cold.
From wage creation to open borders, France’s chairmanship of the G7 Presidency this year would call vocally for redefining global boundaries that the current state of the world had inadequately cared for, said La Maire. “The challenges we are facing call into question capitalism as we know it. The world needs a fairer model. It needs rules, and a level playing field.”
Keynote addresses from the heads of state of two major, and miserable, economies also presented evidence for why reforms were needed to ensure viable futures for their nations.
Lebanese Prime Minister Saad Hariri explained to members of his audience that legislative reforms were crucial to untangling the country from the grip of corruption. A lack of accountability and good governance is what had precipitated a power and waste crisis in the country, he said, that left the country unable to adequately care for its own, or its finances.
This is the last chance... There will be no other. We need to make the reforms pass, and start with reforms not projects first. This has to happen first so the rest follows
Lebanon hosts roughly 1.5 million displaced persons, accounting for nearly 30 percent of the country’s population. The numbers weigh heavily on the country’s economy, which has been burdened by public debt of $84bn, or 155 percent of GDP, and unemployment rates of roughly 30 percent.
Hariri wasn’t tone-deaf to the challenges of hosting one of the largest refugee populations in the world, but said complaints of discriminatory behaviour against the displaced were what the government existed to fix.
“If Lebanon were to blame all its problems on the displaced then it would be wrong. Our laws toward the ease of doing business need to be improved. In the 90s, there was an explosion of growth and we were able to absorb many [displaced]. They are a challenge, but we must look at the positive and not always the negative,” he said.
“This is the last chance,” he said. “There will be no other. We need to make the reforms pass, and start with reforms, not projects, first. This has to happen first so the rest follows.”
Pakistan is a country in a different, and yet resembling, predicament. Accounting for approximately 2.65 percent of the world’s population, it also host’s the world’s largest population of refugees according to the UNHCR – Turkey’s statistics might dispute the record but counting refugee numbers is an inexact science.
The country’s problems have precipitated with a current account deficit that had it flirting with bankruptcy for nearly a year, owing largely to loans used to finance development projects to guarantee its future. Graft and poor governance of exports, however, led to a plunge in the value of its currency following the toll loans have taken.
Tapping into populist sentiment against corruption among the country’s youth is what brought former cricketer Imran Khan to power. However, he’s had to enact reforms that have led to discontent at home following the shock of the pace of change.
“Reforms do lead to some suffering,” Khan acknowledged. “But you have to go through it because it’s like surgery and it hurts before getting better,” he said. “You only lose when you give up.”
In CEO Middle East last month, consultancy firm Boyden’s Matthew Lewis said Brexit, a Sino-US trade war, falling oil prices reducing Gulf Arab GDPs, “send mini emotional shock waves through all of us, releasing small doses of the stress hormone cortisol into our systems. This induces a mini flight-or-fight stress response, leaves worforces polarised, and impacts engagement and productivity.”
Lewis argued that broken social contracts by governments around the world affect the market for talent recruitment, retention and performance efficiency. This in turn affects overheads, insurance reimbursements, and overall economic GDP.
While flying taxis, hyperloop transport systems and blockchain carry tremendous promise, their implementation must be paralleled with wide-scale global economic reform that doesn’t leave future generations in a world reminiscent of Elysium where the haves benefit in secluded communities away from desperation of the have-nots.
It was best expressed by the managing director of the International Monetary Fund (IMF) Christine Lagarde, when she said, “Our young people of tomorrow must be the ones that cultivate the benefits of technology such as AI, and it is the role of world governments to ensure that it happens.”
Globalisation and capitalism have a solution in young people, says Dubai Cares CEO Tariq Al Gurg.
“The current generation, despite all its experience and skill, can only work to a certain limit and speed,” he said. “We will not be able to take care of the world’s needs without youth who are equipped, flexible, resilient, and adaptable, especially with the pace of technological advancement and now a fourth industrial revolution.”
Al Gurg spoke with Arabian Business at the seventh World Government Summit held in Dubai, where his organisation had been promoting a youth-centric agenda to attendees at the WGS.
On the first day of the Summit, Dubai Cares signed the Dubai Declaration on early childhood development (ECD) with UNICEF and the UAE’s Ministry of Foreign Affairs and International Cooperation. Three years in the making, the declaration aims to compel governments to consider the importance of ECD programs in their policy programmes.
It also issued guidance to governments on how to provide health, care, and nutrition advancement to children in their first 1,000 days during pre-school so they can be adequately prepared for life after.
An estimated 249 million children under five in developing world countries — 43 per cent of their populations — are at risk of poor development due to extreme poverty and stunting, according to statistics from UNICEF.
Dubai Cares is on the board at UNICEF’s Generation Unlimited. Launched by the agency at the UN General Assembly in September, it aims to improve opportunities global youth can avail by reducing the economic burden of welfare on governments.
“If you can prepare youth in their early years then you can help them prepare for the future, and all the talk on capitalism and globalism [at the Summit] ties into that,” said Al Gurg.