The global economic system is broken

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Just a few space-loving billionaires. — Open democracy

How long can billionaires keep amassing wealth while the world’s poorest struggle to buy food? request Paul Roger

While it has long been clear that the global economic model is not working for everyone, the rate of wealth accumulation by a small minority is now breathtaking, if not downright obscene.

With the situation only made worse by the economic impact of the war in Ukraine – which added to the effects of the Covid pandemic – could we be heading for mass revolts sparked by a desperate need for change?

War causes food shortages, with the world’s poorest hardest hit. Although the full impact is yet to be felt, the number of severely food insecure people has already “doubled from 135 million to 276 million” in just two years, leaving “nearly 50 million on the brink of starvation “.

Although the countries of the South are the most affected, the poorest communities in the richer states are also affected. In the UK, where millions of people already live near the edge, there has been an increase in the need for food banks as many are pushed into critical need. Many schools located in more deprived areas are obliged to provide breakfasts every morning, in particular to avoid having to teach hungry children who cannot concentrate.

Meanwhile, the rich are getting richer. During a three-month period in 2020 – which coincided with the start of the pandemic – the world’s 2,189 billionaires then increased their wealth by 27.5% to $10.2 trillion, according to the bank. Swiss private UBS. This represented a 70% increase in their wealth in just three years.

Two years later, there are now 2,668 billionaires. Just last week Britain’s Sunday Times published its annual ‘rich list’ of the country’s richest – reporting that the ten richest individuals and families have a total of £182billion.

In this context, two questions arise. Why has the global gap between rich and poor widened so much? And why hasn’t there been a bigger uprising against her?

This last point is particularly confusing, given that our global system has seen such an increase in global wealth over the past 75 years. After all, after the end of the Second World War, many Western countries made great efforts in public services, developing vastly improved health systems, public education, housing and basic social assistance for the most marginalized. .

What has happened since? The answer is widely recognized as “neoliberalism,” an approach whose essence is that the true foundation of economic success is strong and determined competition, which a political system must work towards to have any chance of success.

This approach was developed in the 1950s, with the work of economists such as Friedrich Hayek and Milton Friedman, and has since been shaped by a network of more than 450 right-wing think tanks and campaign groups.

Neoliberalism is aided by a tax system designed to benefit the most prosperous; firm control of organized labor to minimize opposition; and the maximum privatization of transport, public services such as energy, water and communications, housing, health, education and even security.

There are obviously losers in this system, but usually enough wealth will “trickle down” to prevent serious opposition. It is a line of thought that can reach the fervor of a religious belief and is certainly best considered an ideology.

The shift to neoliberalism was spurred by the huge economic upheavals that followed the oil price hikes of 1973-74 (more than 400% in eight months). Stagflation became the order of the day, and in the UK and US, key elections at the end of the decade brought in the Thatcher and Reagan administrations.

Both newly elected leaders were convinced of the need to embrace the new thinking. Throughout the 1980s, the United States firmly believed in the need to accelerate tax changes and financial deregulation, while Britain sought to control labor unions and oversee the large-scale privatization of corporate assets. the state – Thatcher’s mantra being “there is no alternative”.

Two global processes have also done much to accelerate the transition to neoliberalism. The first was the “Washington Consensus”, introduced in 1989, which defined free market economic policies for “developing countries”. The World Bank and the IMF have led the way in ensuring that countries in the South follow the new model.

The second was the collapse of the Soviet bloc. Russia’s immediate embrace of hypercapitalism was surely proof, if need be, of the value of the neoliberal approach and the obsolescence of a planned system. Even China was moving towards a hybrid authoritarian capitalism.

But now, more than three decades later, neoliberalism is doing a lot to explain obscene levels of wealth for the few, not the many. So why did he have so little resistance? Part of the answer is the residue of the experience of pre-neoliberal economics, a sense that things were worse before Thatcher and Reagan came on the scene. This point of view persists but quickly loses its power in the face of the widening of the fracture.

A more realistic explanation is that much of Western mass media is controlled by singularly wealthy individuals, families and corporations. In the UK, the print media is dominated by just three billionaire families, who set much of the news agenda. They are unlikely to focus too much on the deep inequalities that, if addressed, would hit their own power.

This does not, however, exclude radical responses. ISIS and other Islamist paramilitary movements have profited enormously from their ability to recruit marginalized and angry young men with very limited life prospects, providing a sectarian alternative to their deep frustrations.

There are, of course, current examples of revolt elsewhere, such as in Sri Lanka, which have specific causes, invariably within a much broader context. But we have yet to see a truly transnational movement, although it is worth recalling the coincidence of many revolts in a few months during the latter part of 2019.

In October that year, thousands of people took to the streets in Iraq to rebel against high levels of unemployment and low wages, which came amid rampant corruption in a largely fuel-rich country. fossils. At the same time, Lebanon has witnessed repeated street protests against inequality and corruption, and Chile has seen demonstrations that were designed “as a response to both the broken promises of neoliberalism and the inequality that neoliberal policies have arguably created in the country”. Elsewhere, France has seen the Yellow Vest protests, and Ecuador, Bolivia, Haiti, Albania, Ukraine, Serbia and even Russia have seen civil unrest.

As an Oxford Research Group analysis noted at the time: “In most cases, there are specific factors that push unease and resentment into manifestations often followed by repression and violence. A few may have little to do with rising inequality and diminishing life prospects, but for the majority it is part and parcel of the larger social and political context.

However, these revolts did not turn into transnational anger, let alone violence. Individual protests have not been seen as part of a larger process and there is little sense in a worldwide movement of revolt. But now the economic effects of the pandemic and the war in Ukraine, combined with the growing impact of climate breakdown, suggest it is only a matter of time. If so, then we are truly entering uncertain times.

OpenDemocracy.net, May 28. Paul Rogers is Emeritus Professor of Peace Studies in the Department of Peace Studies and International Relations at the University of Bradford and an Honorary Fellow of the Joint Service Command and Staff College.

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