Weekly Current Affairs

Notice

World Economic Forum says capitalism needs urgent change

  • Reforming nature of capitalism will be needed to combat growing appeal of populist political movements around world, World Economic Forum said.
  • Getting higher economic growth, is necessary but insufficient to heal the fractures in society that were evident in the election of Donald Trump as US president and Britain’s vote to leave the European Union, or Brexit.
  • WEF identified “rising income and wealth disparity” as potentially the biggest driver in global affairs over the next 10 years.
  • As an example of this growing inequality, the WEF highlighted the massive increases in CEO pay at a time when many people in advanced economies have struggled to make ends meet following the global financial crisis.
  • This points to need for reviving economic growth, but growing mood of antiestablishment populism suggests we passed stage where this would remedy fractures in society: reforming market capitalism must be added to agenda.
  • Combination of economic inequality and political polarization threatens to amplify global risks, fraying the social solidarity on which the legitimacy of our economic and political systems rests.
  • WEF identified four areas that need to be addressed urgently: need for longterm thinking in capitalism; recognition of importance of identity; inclusiveness in political communities; mitigating risks & exploiting opportunities of new technologies such as driverless cars; and strengthening global cooperation.
  • Although anti-establishment politics have tended to blame globalization for the loss of traditional jobs, the WEF said rapidly changing technologies have had more of an impact on labour markets.
  • Other key drivers identified in the survey of global risks related to climate change, rising cyber dependency and an aging population.
  • The 2017 report, the 12th annual report, is based on an assessment of 30 global risks by 750 experts from a variety of backgrounds, including business, academia and non-governmental organizations.