Self-appointed leaders have assembled for forty years, in Davos Switzerland, to promote boundaryless globalization of finance and trade. “Davos is where billionaires tell millionaires what the middle class feels,” according to Jamie Dimon, CEO of JPMorgan Chase, the world’s largest bank in terms of market capitalisation.
In the Davos model of the global economy, accumulation of wealth with billionaires increases the wealth of the poorest classes also. It has not turned out that way. On the contrary, with cumulative causation, whereby those who already have wealth can exploit expanding opportunities to make more wealth, gaps between those on top of the pyramid and the masses below (including the middle classes), have widened. Poor migrants are washing ashore on the borders of America and Europe desperate for opportunities to live and earn safely. Anti-immigrant populism is shaking up governments in the West. Migrants are being forced back, with the rich pulling up drawbridges to save themselves, ending the short history of boundaryless globalization.
“We need to overcome what one would label the “Davos Arrogance”. People gather here, including representatives of the liberal elites primarily from Europe and the United States, and say that we are the ones who know how to solve all the problems of the world”, Kyriakas Mitsotakis, Prime Minister of Greece, said in Davos this year. He says the international arrangements and institutions post World War II, which concentrated power within the G7 (and primarily the US), do not reflect the reality of today’s world, and this is upsetting countries in the global south that are emerging as global powers.
Populism in the rich west is rising from the political Right; in the poorer global south populism is generally from the political Left. “One needs to be very careful in this environment where everyone is pointing the finger at populists, because some of their grievances are actually very real”, Mitsotakis explains. “People feel they are being left behind by globalization. The wages have not really increased. Inflation is really hitting lower-income households.”
In 2001, Goldman Sachs’ economist Jim O’Neill forecasted that the economies of the BRICS countries, outside the G7, would be the engines of global growth in the 21stcentury. Western capitalists and MNCs were attracted by these potential opportunities for profits. However, some were not convinced by economists’ predictions. They said economists’ mathematical models are incomplete. They do not include social and political forces, which are hard to quantify, and therefore economists’ predictions of growth are often wrong. Nate Silver points out in The Signal and the Noise that forecasts of GDP growth by the Survey of Professional Forecasters of GDP growth have been right only 50% of the time—no better than tossing a coin. Therefore, the WEF commissioned some scenarists to use “systems-based scenario forecasting”, which considers all forces that shape the futures of countries, to forecast what the futures of the BRICS countries could be. This method of whole systems thinking anticipates future risks and suggests changes in policies to navigate through them.
The scenarios for India were presented in Davos in 2005. They revealed three plausible futures for India by 2025. The first scenario was an analysis of the trajectory India was on then (when India was declared to be “shining” by the government). Wealth was admired: it had become aspirational for India’s youth. The scenarists described this scenario as a “BollyWorld”, with its celebrations of glamour. But social tensions were also building up beneath “shining India”. A Bollywood movie, with its glamour and violence is entertaining. It ends; but we cannot escape reality.
The second scenario emerges from the first when the social tensions in it are not resolved. Youth are unable to satisfy their aspirations. The government must make ease of living easier for the masses, not just ease of making profits for business. It strains to make growth more inclusive. The scenarists called this scenario with its internal tensions “Atakta Bharat”. Is India in this scenario now?
A third scenario also emerged from the systems analysis. The WEF scenarists called it “Pahale India”, in which India would emerge as a global leader of a new model of growth from the bottom. In this scenario, leaders of change were within the system, in the bottom and middle, not perched like glamorous peacocks on top. These leaders were like fireflies: small, and local. They had an inner light driving them to change the world around them for improving the lives of the families and communities in which they live.
The scenarists found that there were millions of such fireflies making change in India. Fireflies are not counted amongst the “unicorns” who are models of entrepreneurial success taught in management schools. They are not admired because, in the capitalist world of wealth, success is measured by the stock market, not by the well-being of the poor. Fireflies provide models of inclusive, rather than extractive, entrepreneurship. Their strength lies in their human values, not in the financial valuations of their enterprises.
Paradigms are hard to change. The beneficiaries of an established paradigm always resist change. They want to remain on their pedestals, to continue their gains from the upward rush of admiration and wealth towards them in the prevalent paradigm. They use their power to stop those that threaten it. They prevent others from accessing resources and silence their voices. Therefore, the powerless are compelled to resort to other means to remind the powerful that they too deserve respect and must be listened to.
Prevalent theories of economics and institutions of global governance have failed to make the world safer or growth more inclusive and sustainable. The world desperately needs ideas from outside the intellectual and official establishment. Powerful peacocks on their pedestals must deign to come down to earth and listen to the masses of real people. That is where fireflies, who are the genuine social entrepreneurs, are changing the world to make it better for everyone.
(published in The Tribune, January 24th 2024)
https://www.tribuneindia.com/news/comment/improving-the-world-for-everyone-583974