February 2013        

Rarefied Davos air fosters elite illusions

The 2,600 members of the global elite convened at their exclusive retreat in Davos, Switzerland, once again set about “improving the state of the world.” A columnist in the Financial Times described it as the most optimistic meeting since 2007.
      In a certain respect, the cautious hopefulness of the 2013 meeting was perhaps justified, as it was only a year ago that the retreat was pre-empted by warnings of a looming period of “evil” and the potential “collapse of the financial system” from no less than George Soros.
      Yet one year later, while optimism gains a foothold among the world’s elite, the evil doled out by global capitalism continues unabated.
      According to a recent report by the International Labour Organization, “the number of unemployed worldwide rose by 4.2 million in 2012 to over 197 million.” And, as the report goes on to warn, global unemployment could increase even further in 2013.
      Global youth unemployment, meanwhile, remains particularly dire. According to the ILO report, nearly 74 million people between the ages of 15 and 24 are unemployed. “Some 35 per cent of unemployed youth in advanced economies have been out of a job for six months or longer,” the report states. “As a consequence, increasing numbers of young people are getting discouraged and leaving the labour market.”
      And for those now languishing in the global reserve army of labour, the forecasts for meagre growth offer little hope of a reprieve. According to the latest World Economic Outlook by the International Monetary Fund, global growth is predicted to reach 3½ per cent in 2013. That is a downward revision of 0.1 per cent from the fund’s October outlook. But it is much worse for the advanced economies.
      The IMF predicts that the euro area will contract by 0.2 per cent in 2013, with contractions in Italy and Spain of 1 and 1½ per cent, respectively. In France, where youth unemployment is already over 25 per cent, growth is projected to register a measly 0.3 per cent.
      In Britain it is the spectre of a triple-dip recession that looms, after a contraction of 0.3 per cent was seen in the last quarter of 2012. As the Guardian reports, “the economy remains 3.5% below its peak in 2007 and is not expected to regain its previous level for at least another two years, making it the longest recovery in 100 years.”
      Growth in the United States, meanwhile, is projected by the IMF to come in at 2 per cent—a downward revision of 0.1 per cent from the October outlook. And all this as equality in the United States continues to worsen. A report by the influential US Economic Policy Institute reveals that real annual wages of the top 1 per cent of earners grew by 8.2 per cent from 2009 to 2011, while the real annual wages of the bottom 90 per cent continued to decline, eroding by 1.2 per cent between 2009 and 2011.
      One important cause of the rapid wage and income growth of the highest earners—particularly the top 1 per cent—is the sharp increase in corporate CEOs’ pay. Another is the expansion of the financial sector and the increased pay, relative to other workers, of those in the this sector.
      Other factors contributing to the general increase in wage inequality include policy decisions (of omission as well as commission), such as those concerning globalisation, the minimum wage, collective bargaining rights, industry deregulation, and unemployment.
      But even the bleak outlook for the world’s advanced economies may be too optimistic. As the IMF cautions, “downside risks remain significant, including prolonged stagnation in the euro area and excessive short-term fiscal tightening in the United States.”
      Indeed, as the Economist warns, “you might think that six years after the global financial crisis first broke, the downturn would be well behind us and the economy would be humming along. Instead, huge swaths of the world seem to be embarking on a Japanese-style experiment with long-term stagnation.”
      This is precisely what the Marxist scholars John Bellamy Foster and Robert McChesney argue in their latest book, The Endless Crisis. Showing that the globalised system of monopoly-finance capital is characterised by a dangerous stagnation-financialisation trap, Foster and McChesney argue that it is in fact stagnation that is now the norm—not growth. And this stagnant reality has left greater financialisation as the only acceptable remedy for the global elite.
      “Yet,” they write, “rather than overcoming the stagnation problem, this renewed financialisation will only serve at best to put off the problem, while piling on further contradictions, setting the stage for even bigger shocks in the future.”
      Of course, working out how to put off the problem, while piling on further contradictions, is where the World Economic Forum comes in. After all, despite the pretentious claims of “improving the state of the world,” Davos is really little more than a posh mountain retreat held for global elites hell-bent on preserving their own privileged class positions.
      And, in this sense, the growing talk of an “economic recovery” is the by-product of a world suspended in an illusion cultivated annually high up in the Swiss Alps.

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