In a statement released ahead of the World Economic Forum meeting in Davos in January, the leaders of the world’s major financial institutions made a remarkable ‘admission of sorts’. They recognised that the policies of austerity that they have been forcing on governments across the world carry serious risks and on their own, are not likely to work. In stead, they are calling for governments to adopt policies that will boost jobs, tackle inequality, and green the global economy.
Note who made this call, Christine Lagarde of the International Monetary Fund, Robert Zoellick of the World Bank and Pascal Lamy of the World Trade Organisation. They were joined by the heads of eight other multinational and regional organisations including the World Health Organisation, the International Labour Organisation, and the UN World Food Programme.
The people who have forced governments to adopt austerity cuts with the claim that they were necessary to ‘solve the global economic crisis’ have woken up to the fact that such cuts, unequally applied across society as they are, risk damaging social cohesion, and as they say, lead to ‘negative economic and social consequences.’ They are now calling on governments to reappraise their aggressive deficit reduction programmes appealing to them to apply what they call ‘fiscal consolidation’ in a ‘socially responsible manner.’
Of course this is not an open admission of guilt or a full recognition that the austerity packages were misguided. To do that would risk destabilising those governments that have, with varying degrees of enthusiasm, adopted such policies. Rather than execute the necessary U-turn and encourage Governments to start investing in the green economy, they want to see public-private financial partnerships to generate the investment they see as necessary to secure economic growth. In other words, they want to see private companies given access to what remains of the public coffers. Their focus remains on public sector finances and they fail to acknowledge that it was corporate and private sector debt driven by the needs of the consumer economy that precipitated the crisis. They fail to see that the private investor needs a strong ‘steer’ from Governments’ own investment programmes. They think that pious calls to all to play fair by the rules of globalisation to secure ‘growth’ will avert the bigger crisis that most new recognise is yet to come.
It would appear from reports that the World Economic Forum was itself dominated by concerns for the Euro-zone and public finances, and who was throwing the best parties. Here the real business of Davos was conducted, deals made that would make the rich richer, and projects floated that would further deplete the world stock of natural capital, and that would continue to leave millions of people desperate for the basic means of survival.
The Davos jamboree is a sham, it will not find solutions because it is a product of the problem with its exclusivity and shameful conspicuous consumerism. It has nothing new to offer and its only idea is ‘growth’ demonstrating how still economists fail to grasp the fact that the Earth is round not flat. If Christine and her colleagues are serious about equality and greening the global economy, they are wasting their time and damaging their digestive systems at Davos.
But in truth, Davos isn’t about finding solutions, despite the pious ‘statement’. It’s about power. About ensuring that the economic power that underpins political power is held firmly in private hands. It is about ensuring that by the time policy comes to the floor of democratically elected parliaments, it is already decided – like the austerity packages. Better solutions are available, and if they were implemented the economy would respond – because the economy isn’t the problem, it is the means to deliver the agreed programme. At the present, the agreed programme is private wealth and the control of global power. Davos Man may be starting to recognise that climate change, mass unemployment, water, food and energy shortages are a threat to his world, but he is not prepared to do anything effective to counter them, he prefers to fiddle with the economy while the world heats up.
Once again, it is down to us, the affected majority, to take things forward, each of us taking small steps, a myriad of small steps globally creating an unstoppable forward momentum. Once again world leadership, this time in the guise of the World Economic Forum, has failed us.
[Mike Shipley, February 2012]