Exposing the Davos Class Behind Global Economic Inequality
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State of Civil Society/ The search for an equitable economic order The great divide: rich have very different stakes and control of exercised on behalf of those with economic our political systems and the exercise of this power, who reward them in their own way.” exposing the power is seen most visibly in who benefits She goes onto argue that they are united by Davos class from the global economy. a programme “usually called ‘neoliberalism’, based on freedom for financial innovation, behind global The Davos Class no matter where it may lead, on privatization, deregulation, and unlimited growth; on the economic Davos, perhaps more than any other supposedly free, self-regulating market and free inequality gathering, epitomises the way political trade that gave birth to the casino economy.”3 Nick Buxton power and global governance have in recent Transnational Institute decades been entrenched into a small A 2014 report by Transnational Institute (TNI), corporate elite. This elite has succeeded entitled State of Power – Exposing the Davos not only in capturing our economy, but also Class, examined how successful neoliberalism Two years after Occupy gave voice to popular our politics – and increasingly our culture has been in enriching economically as well as anger at growing inequality worldwide, the and society, too. Davos is the networking amplifying the power of this small corporate issue of the 1% versus the 99% continues to conference par excellence, where economic, elite.4 It revealed how the world’s wealth is top the political agenda. At times, though, this political and cultural powerhouses are concentrated even more than is popularly takes a very incongruous form, and no more so encouraged to mingle on equal terms. Over understood, not in the 1% but the 0.001%: than in January 2014 when multi-millionaires cocktails and asparagus mousse, corporate 111,000 people control US$16.3 trillion, gathering at the luxurious ski resort of Davos, executives can hobnob with prime ministers, equivalent to a fifth of the world’s GDP. Even Switzerland declared inequality their chief renowned academics and the occasional rock in the wake of the economic crisis, the world’s concern. The World Economic Forum (WEF) star celebrity, and stitch the deals that will millionaires have thrived. In 2012, the wealth even seemed to welcome admonishment keep profits flowing. The most likely Davos of the world’s millionaires grew by 11% while from the Pope and Oxfam, with Klaus Schwab, twitter status update, as Daniel Gross of the household income in the European Union and the executive chairman, agreeing that, “we Daily Beast accurately satirised, is: “About United States either stagnated or, in some have too large a disparity in the world.”1 to go into top-secret meeting with powerful cases, fell. person. Will tell u all about it when I’m back But there was one mea culpa that those at in ny/dc #wef.”2 This economic wealth is matched by growing the WEF were not willing to make: admit that dominance of transnational corporations in the existence of exclusive meetings and the Political scientist Susan George has labelled the global economy. Today, 37 of the world’s agenda they coordinate – of the economically this elite the Davos Class, noting that they largest economies are corporations. Walmart, rich and politically powerful – is one of the are “nomadic, powerful and interchangeable. Shell, Volkswagen and others have become key reasons for this gross division of wealth. Some have economic power and usually a modern-day empires, bigger economically Economic inequality is fundamentally a considerable personal fortune. Others have than Denmark, Israel or Singapore. A historic reflection of political inequality: the poor and administrative and political power, mostly study by mathematicians in the Zurich 145 State of Civil Society / The search for an equitable economic order Polytechnic Institute revealed an even greater become a well-oiled one, with politicians and This corporate capture of politics and the social concentration of economic power when they businessmen changing places regularly. deprivation that often results is taking place in focused on ownership of these companies. nations worldwide. A study by the Bureau of In a study of 43,000 corporations, they found The infection has been so effective and thor- Investigative Journalism showed, for example, just 147 companies control 40 per cent of the ough that it is increasingly difficult to assess that the financial services sector in the United economic value of the entire sample. Most of who is a public official and who is a corporate Kingdom spent UK£93m on lobbying in 2011. these are banks, hedge funds or other financial leader, given the revolving door between these This money secured significant policy changes, services corporations. Even an advisor to positions. One example covered in TNI’s State including slashing UK corporation tax, neuter- the Deutsche Bank, George Sugihara of the of Power report is the European Round Table ing a pension scheme supposed to benefit mil- Scripps Institution of Oceanography in La Jolla, of Industrialists (ERT), a network of about 50 lions of low paid temporary workers and killing California, admitted that, “It’s disconcerting to of Europe’s largest corporations, which in the off a new corporate super-watchdog.8 There see how connected things really are.”5 early 1980s decided to work together to shape are, of course, no comparable lobbies for cit- EU policy and encourage the development of izens who have lost their houses or savings as Corporate capture a competitive (read: de-regulated or re-regu- a result of the financial sectors’ reckless deci- lated in their favour) ‘internal market’. sions that caused the global economic crisis. Corporations have been able to achieve this unprecedented power through a systematic By 1993, the group had been so successful Corporate-led governance takeover of the state, rather like a virus that one senior ERT official said their propos- infects a body. Driven by a profit-making als and the EU’s proposals were almost done The corporatocracy also increasingly seeks motive embedded in their genetic make-up, in “parallel… we saw their drafts and they saw to poke its nose into the realms of global corporations have sought at every stage to our drafts. And one of my friends, a very senior governance. One approach taken has been to remove any disadvantageous regulatory official in the Commission, he said to me, there promote ‘multi-stakeholderism’: the idea that barriers and facilitate their cancerous growth. is basically no difference between them.” More policy is best developed if you bring together A book published in 2014, A Quiet Word: recently, ERT’s demands for ‘fiscal consolida- different stakeholders – governments, Lobbying, Crony Capitalism and Broken Politics tion’ – in other words, austerity for ordinary corporations, citizens. This has been widely in Britain, chronicles how corporations have people but not for publicly bailed out corpo- embraced by some civil society groups as an become adept at using an array of tactics, rations – have been wholeheartedly applied effective way of bringing decision-making from well-resourced media relations work by European governments and the European processes ‘closer to the citizen’ and therefore to funding think-tanks and fake grassroots Commission, with terrible social costs. After making them more democratic, legitimate groups, in order to push through government several years of EU austerity packages, Greeks and accountable. This approach is usually policies beneficial to their bottom line.6 are now on average almost 40% poorer than combined with promotion of corporate Corporations are also staffing government, they were in 2008. There has been a drastic social responsibility (CSR), the idea that whether by providing contractors and running rise in those losing their homes, while one in corporations can be driven by factors other previously public services or by seconding three children (around 600,000) are now living than profit and can be social actors that take staff to ministries. The revolving door has below the poverty line.7 responsibility for their actions and impacts. 146 State of Civil Society/ The search for an equitable economic order This approach has led to the emergence of world of democratic demands channelled case, civil society is constantly outgunned hundreds of multi-stakeholder corporate through states is replaced by a slicker, fast- by corporations in terms of resources, responsibility initiatives, such as the Forest moving, corporate-led governance. In fact, which means that effective monitoring and Stewardship Council and the Extractive GRI argues quite bluntly that “governing evaluation of corporate commitments is Industries Transparency Initiative, as well as today is no longer a matter for government hard to evaluate and control.11 policy forums such as the World Water Forum alone… governments’ basic ‘public functions’ and the Global Knowledge Partnership. have been redefined… hence the challenge It is worth heeding the warning of Marcos is how to re-invent government as a tool Colchester, reflecting on the history of the Davos has been a very keen advocate for for the joint creation of public value.” In Forestry Stewardship Council, which he multi-stakeholderism and corporate social other words, governments and citizens helped found and eventually resigned from responsibility. In 2009, taking become just actors amongst in frustration at its inability to affect high advantage of the global crisis, many, forced to acquiesce rates of deforestation: WEF launched the Global with a process driven by Redesign Initiative (GRI), profit-seeking.10 “I think there is a major problem with the aiming “to stimulate a model of self-regulation which gives no strategic thought pro- A flawed role to the State, to the rule of law, or even cess among all stake- record to leverage for reformed governance by holders about ways government itself.