The Financial Express

Old wine in new bottle: The Davos Manifesto

Lankabangla and Fianancial Express Lankabangla and Fianancial Express
Old wine in new bottle: The Davos Manifesto

Klaus Schwab helped initiate the World Economic Forum (WEF) in Davos, Switzerland, from 1971. Two years later he presented a 'Davos Manifesto' about capitalism that he is now, in January 2020, re-modelling. He now calls it a 'stakeholder capitalism', where the stakes are all that led the 15-year old Swedish school-girl, Greta Thunberg, to launch a worldwide movement, and win the Time personality recognition to end 2019 with (see Scopus, December 12, 2019), among other dynamics. This is Schwab's third type of capitalism: from 'shareholder capitalism' to 'state capitalism', and now 'stakeholder capitalism'. Scopus readers might recall the last issue discussed two types of Branco Milanovic's capitalism (from which both he and Scopus tried to squeeze out a third version, yet in vain). Schwab might be resolving that third type through his 'stakeholder'' version.

Whereas 'shareholder capitalism' builds upon corporation share values, and how expanding them was seen as the key task involved, 'stake capitalism' is very much like Milanovic's 'political capitalism', that is, state intervenes to guide the market, lowering prices to boost exports and crusading to supply loans to any country tired of borrowing from the International Monetary Fund (IMF), or, in general, in the 'liberal meritocratic capitalism' group (his other group). Schwab's 'stakeholder capitalism' brings in every group with stakes in any public context, be they economic, or, as in Thunberg's case, climate-change controls as an example of social dynamics. It is a strident step outside the market: even with 'state capitalism' the state performed market duties, buying, selling, loaning, producing, and consuming. More than personal profits, the target was the country's profits. 'Stakeholder capitalism' also looks at the country's profits, but with two significant departures: the 'state' must belong to a 'global' compact, much like how environmental protection, Millennium Development Goals (MDGs), or Sustainable Development Goals (SDGs) bring countries together under one broad non-market commitment of common interest; and material benefits can be dispensed with, for example, if the new need is to survive amid environmental collapse, then that overrides the profit-making catalyst.

This could not have come at a more opportune time. Global warming has turned out to be not at all a short-term infliction, and with ice melting in both poles and on top of many mountains, ocean water-levels rising also appears to be very long-term. Every country is affected, and so the stakes match both above qualifications as 'stakes'. Greta's persistence and patience pay off in both mobilising school-children (that is, future consumers), the world over, particularly through her post-Generation Z flock, though Generation Z (born in the 1990s) group also fits this batch well, and in getting recognition in a peak economic forum.

Much has been said about how climate-change forces have been threatening economics as it typically operates. There are other issues demanding equal recognition as well. Before turning to them, let us first note what the Greta effect is likely to be. First, it is going to mobilise developed countries more and faster than it will less developed countries: this is but a function of democracy being more stable and rooted in the former than in the latter for the stakes to be given that respect. Second, it brings in non-economic factors within the economic fold, not just as silent spectators, but active forces not only interacting with market forces, but actually directing them as the state would. Third, it does nothing to elevate those below the poverty-line in many countries, therefore the possibility of not becoming a 'stake' is higher than it should be in less developed countries. Fourth, when push comes to shove, even developed countries might prefer retaliating over economic issues against defaulting less developed countries than upholding the particular 'stake' bringing them together, in this case, climate-change concerns. Finally, any improvement in climate-change conditions might easily translate into lowering the guard on behalf of that stake. In other words, 'stakeholder capitalism' is not expected to be a long-term innings, but its significance lies in projecting a cause far more disarmingly than, for example, poverty was for half a century.

Beyond climate-change, other 'stakes' of growing importance is human rights, terrorism, nuclear arms-race, and one that connects with climate-change, ocean-exploration, particularly mining. That is not an exhaustive list, but the idea is simply that each has built a reason, rationale, and requirement for far greater consideration. If democracy is growing, which it is even if we discount populist outbursts and the huge appeal to authoritarian-rule (remember every autocrat is bound by some democratic precept, just as without democratic elections, populism would not be as loud a force as it is today), human rights have to also be disseminated enough to be used as a weapon by anyone. We see that this year after over two years of virtually no action against Myanmar's Rohingya genocide, when Aung Suu Kyi had to travel to The Hague to defend her government's action: time and tide will catch up on all concurrent defaulters at some point. Even if buried, human rights have the force to reawaken robustly and successfully against any foe (though that success cannot be guaranteed always).

Nuclear arms-race is a growing force, simply because more countries engage in it, some of the leaders capable of pressing the 'button' have been eliciting lower public confidence, like Kim Jong-Un in North Korea, and we are getting closer to some accidental crisis. Chernobyl and Fukushima were not intended, but they exposed why a 'stake' here might be amplified and made fruitful. This particular 'stake' may be the hardest to mobilise, but counter-punches, such as sanctions, could be very catalytic.

The last on the list could be equally devastating, particularly if ocean mining begins to rake up the ocean-bed (more on ocean-mining in the next Scopus piece). That bed could be over 35,000 feet deep, and the materials disturbed in the process may alter the eco-system so badly as to negatively affect all of us on land. Oil leaks from tankers themselves show us the wide disturbance caused in the oceans; only this time, on the ocean-floor, the disturbances would be a lot larger. We see further evidences of that when corporations go raking up land and mountains in search of minerals, such as shale oil. On the ocean and within it, ocean-life could be fundamentally affected in ways that could ripple across human settlements. We have experienced those ripples from how land resources have been exploited by corporations. A far wider and more precipitous counterpart could follow under the oceans, which may hold more treasures than we have found on land.

The list could go on, but 'stakeholder capitalism' demands greater mileage than its two predecessors could manage. It alone involves civilisational life-and-death changes in a way the other two types of capitalism could not. We have heard such perfunctory statements before and gotten used to the fact that nothing may happen, after all. This time the situation could be a lot different: the wine and the bottle remain in the caricature, but their roles get inverted. There is about as much of a possibility of this course of action as there is of the other Milanovic version. Much depends on what we, the interpreter, believe in more.

Dr. Imtiaz A. Hussain is Dean (Acting), School of Liberal Arts and Social

Sciences (SLASS) and Head, Global Studies & Governance Program Independent

University, Bangladesh

[email protected]



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