World Economic Forum, 2019: Overshadowed by crisis

Muhammad Mahmood   | Published: February 02, 2019 22:00:30 | Updated: February 05, 2019 21:32:35


The World Economic Forum's (WEF) Annual Meeting 2019 took place on January 22-25 in Davos, Switzerland. For nearly 50 years world business and political leaders come to this place to discuss the future of the global economy. In fact everybody who is anybody is expected to be at this meeting. The worst thing that can happen to anybody who is somebody in the global scene is not being invited to this annual get-together.

About 300 of the world's business and political elites converged on this small Swiss town this year but there were notable exceptions like President Donald Trump caught up in his wall building exercise with no money forthcoming from the Congress for his signature project. In fact, nobody representing the Trump administration was there  "out of consideration for the 800,000 great American workers not receiving pay'' according to Trump's press secretary. She was alluding to Trump shutting down the Federal public service. But Trump's Secretary of State Mike Pompeo spoke via video link and urged the world to embrace "Trumpism''. His message was clearly directed to unsettle the world's liberal establishment. British Prime Minister Theresa May and French President Emmanuel Macron also skipped the meeting to put out the political  fire raging in their respective countries. Also missing were Chinese President Xi Jinping and Russian President Vladimir Putin. The two other notable absentees representing  the third world were Indian Prime Minister Narendra Modi, and President of Zimbabwe Emmerson Mnangagwa who himself was facing protest against fuel price increases  which had already led to 12 deaths. Despite all these no-shows, about 1500 private jets arrived carrying most other attendees. Meanwhile, arrival of  such a large number of politicians, corporate executives, billionaires and campaigners for various causes and others resulted in  serious traffic gridlock caused by limousines in Davos. This is because there are hardly any roads in Devos, the main one is The Promenade.

Trump may have been missing out on the action but his shadow was overhanging. German Chancellor Angela Merkel took a veiled swipe at Trump and expressed her doubts about changing approach to multilateralism. She provided a robust defence of global multilateral institutions, reminding everybody how much progress has been made over the past 50 years. Mrs Merkel even went further challenging the US hegemony by declaring to take steps to make the Euro a rival currency to the US dollar and also creating an European army. But that did not stop Dutch Prime Minister Mark Rutte describing Trump as an opportunity to make changes to some of those multilateral institutions that we hold dearly like the World Trade Organisation (WTO) which he thought was not functioning well.

China's Vice President Wang Quishan, as usual, emphasised the importance of multilateralism and dialogue.  International Monetary Fund (IMF) Managing Director Christine Legarde also echoed similar sentiments and asked everyone to keep on to the same tracks.

New Zealand Prime Minister Jacinda Ardern unveiled her government's new approach to running the country's finance where economic well-being of the country would be combined with societal well-being. This will cause a shift away from the sole focus on gross domestic product (GDP) to broader measures of well-being. This will entail the budget to gauge the long-term impact on the quality of people's lives.

But the Italian Prime Minister Giuseppe Conte said his country would give more power to the people to counter a sense of despair among the middle classes.

Spanish Prime Minister Pedro Sanchez also said that unacceptable levels of inequities were feeding to the rise of populism and reactionary nationalism and unless these inequities were tackled, the cracks in  society would become worse. 

So everyone was not sticking to the same tracks as Ms Legarde wished.

The theme of the WEF, 2019 was  Globalisation 4.0: Shaping a New Architecture in the Age of the Fourth Industrial Revolution. The conference theme sounds rather very esoteric to most of us. However,  Klause Schawab, Founder and Chief Executive of WEF, provided his perspective on it in an article published in Foreign Affairs. In the article he wished the conference to look to rebuild a future in a fractured world through sustained dialogue and cooperation. But critics see it as an effort in  relabelling "globalisation,'' which  many  blame for  increasing poverty and income inequality  and environmental degradation and  the consequent rise of  populism and ultra-right nationalism. In fact, the WEF has been at the centre of the promotion of neoliberal economic agenda which is directly responsible for the economic problems that we face in the 21st century and the consequent political fallout from it. Yet for the WEF attendees there is a strong sense of belonging - belonging to the Devos elite, the 1.0 per cent.

The international charity Oxfam issued a report showing growing global wealth inequities - 26 billionaires held as much as the bottom 50 per cent of the world population, some 3.8 billion. The report further added that the world's wealthiest people grew richer by 12 per cent last year while the bottom half of the global population fell by 11 per cent. Giving a new spin to globalisation will remain a cold comfort for the poor unless excesses of globalisation are effectively dealt with increased wealth taxes as suggested by Oxfam in its report.

Meanwhile, the latest poster boy of the right-wing populism dubbed as "the Trump of the tropics,'' Brazilian President Jair Bolsonaro, the former military commander, made his international debut at Davos. He delivered a speech setting out  his pro-business economic agenda for "new Brazil'' by creating new market opportunities by lowering taxes on business. Many consider this was WEF's answer to the Oxfam's recommended tax regime. And that was a very bad start for the meeting at Davos and gives a wrong signal. It took off mask of the WEF and showed its real face. It still continues to espouse the neo-liberal dogma in a way that it is no longer an ideology but has moved into an arena of utopia. The devastation it has caused to the global economy and millions of human lives is too obvious. We now live in a world where 3.4 billion people earn US$5.50 a day. Understandably the WEF is increasingly seen as a part of the problem rather than a  solution to it.

Meanwhile, the International Monetary Fund has downgraded the global economic forecast for this year and the next. It cited a number of factors for this slowdown such as trade tensions, rising uncertainties arising from Brexit and American protectionism, sluggish growth in the eurozone. The Chinese economy also recorded the slowest growth rate since it started publishing its GDP data. Overall the economic outlook for 2019 looks rather pessimistic and likely to be marked by great volatility both in stock and financial markets. The trend in the global economy indicates a downward direction. While stock and financial markets do not represent the real economy, they are affected by the real economy and in turn they also affect the real economy.

David Lipton, the Deputy Managing director of the IMF clearly signalled  an economic downturn over the horizon. But surely if recession is in offing, the World Economic Forum has not realised it yet, for them it is business as usual. The deepening trade conflicts will further worsen the economic outlook and gradual breakdown of liberal democratic state structure along with escalating social tensions will contribute to economic uncertainty clouding the investment environment.

The fourth industrial revolution, if anything, will further exacerbate the ongoing global economic crisis. The legitimacy of WEF is under serious scrutiny and it has been so since 2008. There is now a growing feeling that the global economic system is completely incapable of reforming itself. The WEF being an integral part of the neo-liberal framework which governs the contemporary global economic system, has become a problem itself, thus contributing to the economic problems faced by the world today. The WEF is now seen as an annual get-together party for the very people who are responsible for wrecking the global economy and causing havoc to lives of millions of people around the world.

Muhammad Mahmood is an independent economic and political analyst.

muhammad.mahmood47@gmail.com

 

 

 

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