THE rich love irony. Some 119 billionaires worth about US$500 billion, according to an AFP report, are at the World Economic Forum (WEF) in Davos, Switzerland, discussing, of all things, extreme poverty. Or forced to discuss it.
An Oxfam report, timed for the elites’ WEF meeting at the Alpine ski resort, is calling on the obscenely rich at the forum to get serious about inequality. The confederation of charitable organisations working on the alleviation of global poverty says extreme poverty is out of control. And it has evidence aplenty.
Globally, there are 2,153 billionaires with more wealth than the 4.6 billion people who make up 60 per cent of the planet’s population. This in the midst of almost half of humanity making do with just US$5.50 a day. Many others are just one hospital bill or failed harvest away from slipping into extreme poverty.
Is a fairer world possible? Yes, but first something has got to be done to capitalism, the elephant in the room. It is time for the economists, especially the liberal variety, to come to their senses. There is more than one way to do economics. As Michael Jacobs and Mariana Mazzucato put it in Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth, the financial crash of 2008, and the long recession and slow recovery which followed, have provided the most obvious evidence that Western capitalism is no longer working.
So did a YouGov poll conducted for the Legatum Institute think tank in the United Kingdom in 2015. The verdict: capitalism makes inequality worse. Perhaps the English newspaper, The Times’ screaming headline on Nov 3, 2015 said it all: “Verdict on capitalism: unfair and corrupt”.
Now we are into the third decade of the 21st century, and the verdict hasn’t changed much. In a poll conducted by United States communications company Edelman, 56 per cent of people around the world say capitalism, as it exists today, does more harm than good. Capitalism is under fire: sensing injustice in the economic model, 73 per cent of those surveyed by the company for the 2020 Edelman Trust Barometer Global Report want to see capitalism changed.
So how do we reengineer capitalism? Zac Tate, writing in the WEF website, suggests bringing the state back to the market. Unsurprisingly, many are admitting that it was a mistake to allow the market to go on a liberalisation frolic, piling capital on capitalists. A more robust role for the government in the market will ensure that some of this capital gets distributed to the more than half of humanity who haven’t any. Many do not know this, but the American government provided “risky but essential early-stage capital”, as Tate describes it, to Apple, Compaq and Intel.
The FAANG companies — Facebook, Amazon, Apple, Netflix and Google — dominating today’s global economy would not be here if not for the robust role of the American government. As Oxfam argues in its report, Time to Care, governments around the world need to build “a new, human economy that values what truly matters to society, rather than fuelling an endless pursuit of profit”. We agree. It is the only way governments can get capitalism out of its crisis.