M Ziauddin
Last week, 3,000 people, including 70 heads of state, gathered in Davos, Switzerland, for the World Economic Forum. US President Donald Trump joined them, the first American leader to attend in 18 years on the last day (Friday, January 26). His message, according to the White House chief economic adviser Gary Cohn, was that “America is open for business.”
However, the US president’s move on the eve of his arrival in Davos to slap tariffs on solar technology and washing machines, which is expected soon to be followed by charges on steel and aluminum, had some of the leaders and businessmen at Davos skeptical of his cooperation.
Last year, Chinese President Xi Jinping used Davos as an opportunity to promote globalism — and position his country as the new center of world power. This year, Indian Prime Minister Narendra Modi, the first Indian head of state to speak at Davos in more than 20 years, staked out his own spot on the global scene, promoting globalization and promising to double India’s economy to $5 trillion by 2025.
President Donald Trump in his speech at the Forum said “America First does not mean America alone.”
But most of his speech was about America being first: “When the United States grows, so does the world. American prosperity has created countless jobs around the globe and the drive for excellence, creativity and innovation in the United States has led to important discoveries that help people everywhere live more prosperous and healthier lives.
“As the United States pursues domestic reforms to unleash jobs and growth, we are also working to reform the international trading system so that it promotes broadly-shared prosperity and rewards those who play by the rules.
“... Just like we expect the leaders of other countries to protect their interests, as President of the United States, I will always protect the interests of our country, our companies, and our workers.
“My administration is proud to have led historic efforts, at the United Nations Security Council and around the world, to unite all civilized nations in our campaign of maximum pressure to denuclearize the Korean peninsula.
“And we continue to call on partners to confront Iran’s support for terrorists and to block Iran’s path to a nuclear weapon. We are also working with allies and partners to destroy jihadist terrorist organizations such as ISIS.
“America is a cutting-edge economy, but our immigration system is stuck in the past.
“We must replace our current system of extended-family chain migration with a merit-based system of admissions that selects new arrivals based on their ability to contribute to our economy, to support themselves financially, and to strengthen our country.”
“In rebuilding America, we are also fully committed to developing our workforce. We are lifting people from dependence to independence – because we know the single best anti-poverty program is a paycheck.”
The declared focus of the Annual meet of World Economic Forum this year, however, was on ‘creating a shared future in a fractured world’.
And as Víctor Báez Mosqueira, General Secretary of the ‘Trade Union Confederation of the Americas’ (TUCA) pointed out in his piece (Call the doctor—-How the super-rich created the ‘fractured world’ they claim they want to heal—Jan. 24, 2018)), that many of these ‘fractures’ are the result of business-led policies that ignore the needs of ordinary workers.
Declaring that the main characters of the WEF are the CEOs of major corporations and their motivations are to expand their businesses, Mosqueira traced back the Forum’s idea as conceived by German-born Klaus Schwab to the state of the global economy as obtained in 1971.
“The Forum has since developed as a place for CEOs to discuss their future plans with world leaders. Its origin coincided with the breakdown of the established world order following the Second World War, when the US abandoned the fixed dollar/gold relationship and Keynesian economic policies failed to tackle ‘stagflation’ (stagnation combined with inflation).
“At that time, neo-liberalism was en vogue and the liberalization of capital flows and trade were upheld as dogmas of good global governance. Schwab believed companies were the key to progress, and he wanted to foster an atmosphere of trust between governments and investors.
“The Forum’s supporters believed the economy was too important to leave to the whims of democracies. Politicians decided that, in the words of Margaret Thatcher, ‘there (was) no alternative’ to financial rules determined by investors.”
So, the investors and a group of unelected institutions –including independent central banks, the International Monetary Fund, credit rating agencies and the World Trade Organization colluded to determine economic policies with the complete exclusion of democratically elected leaders.
Ordinary people who worked to make ends meet, and exercised their political power in the ballot box, were now expected to believe economic problems were due to factors outside of their democratic control, added Mosqueira.
“And the suits in Davos achieved that goal. CEOs started to govern according to the mood of their investors. Even the collapse of hedge fund management firm Long Term Capital Management (LTCM) in 1998 did nothing to dent their power.
LTCM was run by Robert C. Merton (Harvard) and Myron S. Scholes (Stanford), who had won the Nobel Prize in Economics the previous year for their econometric models that checked the ‘rationality’ of the financial derivatives system.
“Could there be a more fitting example of the unstoppable force of capitalism, when LTCM went bankrupt and nearly plunged the world into a global crisis? Merton and Scholes didn’t even have the decency to hand their prize back and Davos did nothing to stop the ideological fever that prevailed... until the financial crisis of 2007/8, that is.”
According to Mosqueira since 1999, ordinary people have been convening at the gates of the WEF to protest against everything the meeting stood for. That, he further contended, was the other side of Davos.
He recalled that in 2001, those that had reservations about the WEF set up a separate meeting in the Brazilian city of Porto Alegre – the World Social Forum – “to discuss alternatives to the kind of capitalism promoted by Davos. The WEF’s response was to invite representatives of alter-globalization movements to their discussions.”
Democratically-elected politicians have also attended World Social Forum meetings, including President Lula da Silva of Brazil in 2003.
So, what did Davos do with Lula’s proposals to limit the free movement of capital, eliminate tax havens and create a global fund to fight poverty? Nothing, says Mosqueira. The problem with Davos, according to him has been the same since 1971: it wants companies to run society and control political decisions.
Mosqueira insists that the WEF bears some responsibility for creating the ‘fractured world’ it is so scared of. It expects the world fall into line with the false ‘rational expectations’ of CEOs and companies under the pretense that ‘there is no alternative’.
But as Mosqueira put it Donald Trump, Brexit, the rise of the far-right in Europe and elsewhere, and growing geopolitical turbulence all suggest the WEF’s remedies are ineffective. Adding he said authoritarian politics is gaining ground.
“It feeds off fear of migrants, foreign countries, and the poor. Yet the far-right’s rise is actually the result of a perverse ideology embraced by businessmen and politicians who ignore the cries of their children.
“As Nobel Prize in Economics recipient Joseph Stiglitz said, the globalisation agenda ‘was set behind closed doors, by corporations. It was an agenda written by, and for, large multinational companies, at the expense of workers and ordinary citizens everywhere’.
“It is workers who have suffered from the outset. Unions have a simple and straightforward way to repair the ‘fractured world’ described by the Davos-clique. We have to restructure political and economic life, under the guidance of social inclusion and coexistence.
“But this can only be achieved in a democracy if we regain sovereignty over the economy. And it depends on societies democratically electing which multilateral institutions should define the global rules of play. The first job will be to open the ‘black box’ of an economy dominated by unbridled finances, managed by the suits in Davos. Can we put that on the World Economic Forum agenda?”
The rise of populism the world over is the direct result of the heavy and sustained damage caused to democracies by the free market mantra that is sung so dedicatedly at the successive WEFs since its establishment.
Free markets are an anathema for democracies. They don’t walk hand-in-hand as most Western free marketeers would have us believe. They work against each other. Genuine democracies flourish on regulated markets while democracies conceding economic decision making to the free market practitioners actually promote populism which ultimately leads to authoritarianism and fascism.
