The Economy of Our World – Our World! – Is in Trouble

There are so many things to think over – but as I had written last time, here is always something to think about: what is going on in the world – in our village or town, in our province, in Cambodia, in ASEAN, in Asia, and in the wide world.

It is, in a way, a challenge for which some people created the expression: “Think globally – act locally.”

Recently I read a global analysis from the British organization OXFAM, presented to the World Economic Forum Annual Meeting held in Davos in Switzerland, 21 – 24 January 2015.

In a self-description, abbreviated here, The World Economic Forum says it

  • is an International Institution committed to improving the state of the world through public-private cooperation;
  • engages political, business, academic and other leaders of society in collaborative efforts to shape global, regional and industry agendas. Together with other stakeholders, it works to define challenges, solutions and actions, always in the spirit of global citizenship;
  • strives in all its efforts to demonstrate entrepreneurship in the global public interest while upholding the highest standards of governance. Moral and intellectual integrity is at the heart of everything it does.

Quite a task, quite a promise!

In an Issue Briefing in January 2015 under the title Wealth: Having It All And Wanting More, the British aid organization OXFAM fundamentally challenged that those who control the world economy act with moral and intellectual integrity.

Already in 2014, OXFAM had presented a report under the title Working For The Few. What OXFAM was focusing on were not just some humanitarian ideas, but their report was compiled considering the data from the Global Wealth Report 2013 of the bank Credit Suisse and the 2013 Forbes’ list of the world’s billionaires.

OXFAM had summarized the results from these documents, saying:

1% of the global population controls half of the world’s wealth.

The 2014 World Economic Forum meeting responded to these conclusions by starting to compile a Global Risks 2014 assessment, being aware that if these risks are not removed, “their social, economic and political fallouts could be far-reaching” but “businesses, governments and civil society … can improve how they approach risk by taking steps such as opening lines of communication with each other to build trust, systematically learning from others’ experiences.”

In spite of all these concerns expressed early in 2014, the OXFAM Issue Briefing in 2015 stated:

“Global wealth is increasingly being concentrated in the hands of a small wealthy elite. These wealthy individuals have generated and sustained their vast riches through their interests and activities in a few important economic sectors…

“Companies from these sectors spend millions of dollars every year on lobbying to create a policy environment that protects and enhances their interests further. The most prolific lobbying activities in the US are on budget and tax issues; public resources that should be directed to benefit the whole population, rather than reflect the interests of powerful lobbyists.”

A report in The Guardian about the 2015 Davos meeting of billionaires and big company and corporation leaders, together with some politicians, had the headline: The Davos oligarchs are right to fear the world they’ve made.

This headline expresses not just the opinion of one journalist. He wrote that it might be surprising “that the overlords of a system that has delivered the widest global economic gulf in human history” would be concerned about what they themselves had created.

“Even the architects of the crisis-ridden international economic order are starting to see the dangers. It’s not just the maverick hedge-funder George Soros, who likes to describe himself as a class traitor. Paul Polman, Unilever chief executive, frets about the “capitalist threat to capitalism”. Christine Lagarde, the International Monetary Fund managing director , fears capitalism might indeed carry Karl Marx’s “seeds of its own destruction” and warns that something needs to be done.”

OXFAM had summarized:

In 2014, the richest 1% of people in the world owned 48% of global wealth, leaving just 52% to be shared between the other 99% of adults on the planet. Almost all of that 52% is owned by those included in the richest 20%, leaving just 5.5% for the remaining 80% of people in the world. If this trend continues of an increasing wealth share to the richest, the top 1% will have more wealth than the remaining 99% of people in just two years…, with the wealth share of the top 1% exceeding 50% by 2016.”

So this is not only the world we are living in now – it is also the perspective into the future with ever increasing inequality and poverty, the results of political and economic decisions of today.

We will see how those holding the power will act, as “something needs to be done” to avoid the self-destruction of the world economic system, as the managing director of the International Monetary Fund had said.

And Cambodia, as part of all this? To think globally and to act locally, means to learn from the global context, and to consider how far similar structures are also prevalent in our own environment.

The Constitution of the Kingdom of Cambodia states in its Chapter V, on the Economy, in Article 56:

The Kingdom of Cambodia shall adopt the market economy system. The preparation and process of this economic system shall be determined by the law.

With a “market economy system” we are obviously under similar dangers as others, but the second sentence in the Constitution makes it clear that this is not an uncontrolled process. It points to the need for political decisions towards just and equitable legislation; the operation of “this economic system shall be determined by the law.”

The legislators are responsible to avoid economic chaos, and the people are responsible to elect responsible legislators.

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