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Davos and the crisis of international capitalism

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From flickr.com/photos/70981241@N00/16154727648/: Helipad Stilli Davos - WEF 2015
Helipad Stilli Davos - WEF 2015
(image by Kecko)
It's Wednesday, Jan. 21, first day of the annual meeting of the World Economic Forum (WEF) at the posh mile-high ski resort in Davos, Switzerland. 1500 executives of the world's largest corporations have descended from the sky on private jets to network with each other and 40 heads of state. They can also mix with specially invited celebrities, academics and NGO representatives.

Klaus Schwab, the WEF's Founder and Executive Chairman, wants the capitalist elite to assemble and talk about pressing global issues affecting the well-being of humanity world-wide. Speakers and seminars will address such issues as climate change, political instability and economic inequality, problems affecting multinational corporations operating around the globe.

To get solutions to such giant problems, Schwab believes, you need to engage the real powers of this world--multinational corporations rather than governments whose interests are limited by national borders. As he puts it , "The sovereign state has become obsolete... [we need] a 'global issue alliance.'" Real power in the capitalist world order rests with multinational corporations, 37 of which have revenues that place them in the top 100 economies .

For the most part, the 63 nations in the top 100 list are oligarchies dominated by politically active billionaires whose fortunes are tied up with multinational corporations. The United States and China, the two biggest economies, demonstrate the political flexibility of capitalist oligarchy.

In an interview with Bloomberg News at Davos, prominent economist Nouriel Roubini had this to say about American 'democracy': "In the US we have a system of legalized corruption if you think about it. K Street and the lobbying affect legislation with the money they give the politician. . . . So it's not a true democracy, it's a plutocracy." He should have added that politicians are subservient because they depend on the super-rich to fund their election campaigns.

At the other end of the capitalist spectrum, China's Communist Party dispenses with the trappings of Western democracy. As John Chan of the World Socialist Web Site reported : "The corporate empires now controlled by leading figures in the "communist party" are as big, if not bigger, than those appropriated by their Stalinist counterparts in Russia after the dissolution of the former Soviet Union in 1991." As the Shanghai Daily boasted last year, the number of billionaires in the world grew by 28% to 1867, and "The US and China headed the list, with 481 and 358 dollar billionaires respectively."

The capitalist nobility at Davos will hear from Winnie Byanyima, Oxfam International Executive Director, that the global 1% are likely to control more than half of the world's total wealth in 2016. Moreover, "The 80 wealthiest people in the world altogether own $1.9 trillion, [Oxfam's] report found, nearly the same amount shared by the 3.5 billion people who occupy the bottom half of the world's income scale" ( NYT 1/19/15 ). Will the very people whose political activity has brought about extreme inequality want to do something to reverse this dangerous trend?

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At the Conference On Inclusive Capitalism in London last May, Christine Lagarde, director of the International Monetary Fund, put this question to the super-rich audience: "Is 'inclusive capitalism' an oxymoron?" Capitalism, she said, will not survive unless it brings "rewards for all within a market economy."

The alternative, Lagarde suggested, is the fulfilment of Marx's prediction that capitalism "carried the seeds of its own destruction, the accumulation of capital in the hands of a few, mostly focused on the accumulation of profits, leading to major conflicts, and cyclical crises."

Lagarde's tone was cautiously optimistic about restoring the legitimacy of capitalism. She answered her own question by saying that a more sustainable, democratic and inclusive capitalism "is not an oxymoron, [but] it is not intuitive either." There is no guarantee that the rising tide of capital will lift anything except yachts.

South Africa is a vivid illustration of the overwhelming power of international capital. Nelson Mandela's televised release from prison on Feb. 11, 1990 inspired the whole world. After 27 years of imprisonment by the Apartheid regime in South Africa, he walked between admiring throngs, with clenched fist upraised, seemingly unbowed and uncompromising.

However, after attending the 1992 WEF in Davos, he told his party, the African National Congress, that it must abandon its goal of nationalizing big industries in order to afford programs that would relieve the crushing poverty of black South Africans under Apartheid. He had learned at Davos that nationalization would drive away the capital needed to run the economy.

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During his presidency (1994-99), Mandela's business-friendly policies attracted vast amounts of outside capital, and the South African economy has been since then the fastest growing in Africa. But it is the very opposite of what Christine Lagarde meant by "inclusive."

As Jim Irvin, leader of South Africa's largest union, said in 2013: "There is still a war between capital and labour. Nothing has changed. During the struggle, workers fought for a living wage, but the apartheid wage gap is still there."

Optimism, anyone?

(Article changed on February 6, 2015 at 10:34)


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I'm a retired philosophy professor at Centre College. I also am a regular columnist for The Danville Advocate-Messenger,the local paper in what was my home town (I now live in Connecticut. My last book was Posthumanity-Thinking Philosophically (more...)

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