Is Modern Capitalism outdated? (Part Two)

I find it tragic and astonishing that some governments need to learn this lesson again .

IS 20th-century capitalism failing 21st-century society?

A call for a more responsible capitalism, members of the global elite debated that unusual question last Wednesday January 25 at the annual World Economic Forum.

There is a great difference, however, between being willing to talk about an issue and being ready to act. It is a difference between those who still believe that all governments can do is get out of the way and those who believe there is a real role for governments in first reviving our economies, and then setting the right rules for future success. The challenge therefore is not just to capitalism but also to politics. Governments must remember they are elected to serve the people, not the powerful lobbies who can pay for access or influence. Too often the real enemies of capitalism are some of the leading beneficiaries of the current model, which favors price-gouging cartels and consumer exploitation. As President Obama noted in his State of the Union address on Tuesday, it is neither socially nor economically sustainable for the wealthiest and most powerful to avoid paying their fair share. We are losing billions in revenues because of outdated rules that allow our richest citizens to keep their money in off-shore tax havens. Tax authorities need to know about income and wealth hidden behind front companies, trusts and other complex financial products. If these rules cannot be changed by international agreement, progressive governments should go ahead and do it themselves. As President Obama said in his State of the Union address, it is “common sense” to ask a billionaire to pay, proportionally, at least as much as his secretary in taxes.

Personally, I do not believe that any tax reform or similar project can change anything to the actual worldwide disastrous economic situation and worldwide increasing inequalities. To me, the real question is not so much whether 20th-century capitalism is failing 21st-century society but whether politics can rise to the challenge of changing a flawed economic model and I truly believe that for the next 40 years, tackling inequality will be our priority. In the next 40 years, changing the rules of capitalism will mean a radical change of government, adopting a global circular approach to economy rather than a national short-term approach, going from a national type of a government to a global type of government and, if we do not think about it now, do it now, mankind is heading toward deep troubled waters. Yes indeed, most of the world still prefers capitalism to socialism, but they think capitalism is immoral. The obscene gap between the rich and the non-rich is a shame on modern society and if there is anything to be remembered from the 1930s, it is that governments cannot shrug their shoulders and watch as their own people are consigned poverty and unemployment. Such an attitude will only lead to another World Wide War. I find it tragic and astonishing that some governments need to learn this lesson again when angry crowds, all over the world, are sending the clear message to our governments and corporations that they will not rest until the system has been corrected.

Yes indeed, desperation and is starting to attract more and more people.
At the Group of 20 summit in London three years ago, Prime Minister Gordon Brown and President Obama led concerted action to guide the world economy from the brink. Three years later, some governments are engaging in a short-sighted fiscal protectionism that can only lead to stunted growth. Governments cannot only set better rules to encourage productive businesses that invest, invent, train, make and sell real products and services. We need rules that discourage the predatory behavior of those seeking the fast buck through hostile takeovers and asset-stripping that do not have the interests of the global economy at heart. While most of them agree that there is more to be done to tackle excessive pay, poverty and unemployment, growing worldwide inequality should now be the priority for the political leaders of the world.

We stand in a very fragile world.

The view from the street is that what we have seen in the last decade is corporate greed and the financial world getting away with it. People are losing faith in the politicians and global economic forces that were meant to transform their lives. The situation is now moving from a financial crisis to a human rights crisis and will get worse. During the last decade, along with the worldwide ecological crisis, the problem of growing inequality has emerged as one of the key issues of the 21st century. First, to make things right, we have to do all to save our planet, to revitalise our economy, to address all the social injustices, social inequality. We need to invest now in sustainable development. Any delays in addressing these problems and getting the crisis under control could prove to be extremely damaging. We are in danger of frustrating an upsetting a whole generation. While I am optimistic that we know what the solutions are, I am less optimistic that we are making the right decisions to put them in place. While our governments sense all is not well with the world, they don’t seem to be doing anything about it. After four years of stop-start recovery, rising unemployment, austerity, sovereign debt crises and growing social unrest, nobody needs an eight-digit salary to work that out. All it takes is a plan for getting out of this mess. Governments and Companies must reinvent themselves and become socially responsible. They must shape up, stop being nostalgic because there is no going back to the old world, embrace change and get on with this new globalisation economic and social agenda that is shaping up.

The world is going through a third wave of globalisation.

The first wave of globalisation was the British-dominated model that happened between 1870 and 1914, which led us to the First World War and the Germany exemplar of the people-centric model of globalisation that was needed which led us to the Second World War. The second wave of globalisation was the American-led system that emerged at the end of the Second World War and the defeat of Germany. With signs that this year’s presidential elections in the United States and France will be coloured by increasingly isolationist and protectionist language, the economic crisis of the past four years could easily spill over into a strong anti-globalisation movement, which would have threatening consequences to the world peace.

If we keep on closing markets or blocking trade, the prospects are that we will be pushed further into the downward economic and social spiral that we are in already.


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