October 28, 2020

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World Economic Forum Outlines Its ‘Great Reset’ to End Traditional Capitalism

Oct 16, 2020 | , , ,

The coronavirus crisis presents an opportunity for a “new kind of capitalism” and “great reset” of global economies, politics, and societies, according to World Economic Forum (WEF) founder and executive chairman Klaus Schwab.

In an article published Monday by the WEF, an impatient Schwab claims neo-liberalism is dead and with it traditional notions of economic capitalism.

In their place is a set of “Stakeholder Capitalism Metrics” the WEF says enables the world to progress under one set of overarching rules as drawn up by it, with “social  justice” a key component of this brave new world.

WEF IBC Measuring Stakehold… by LaneyMasters

This restructure of the way we do business is the new model for the “great reset” Schwab argues, adding he foresees the coronavirus crisis as too good an opportunity not to “re-evaluate sacred cows of the pre-pandemic system.”

He outlines his argument by pointing to just how serious the epidemic has been to the way we live now: Schwab writes:

No event since World War II’s end has had as profound a global impact as COVID-19. The pandemic has triggered a public health and economic crisis on a scale unseen in generations and has exacerbated systemic problems such as inequality and great-power posturing.

The only acceptable response to such a crisis is to pursue a “Great Reset” of our economies, politics, and societies. Indeed, this is a moment to re-evaluate the sacred cows of the pre-pandemic system, but also to defend certain long-held values. The task we face is to preserve the accomplishments of the past 75 years in a more sustainable form.

Schwab believes that if the Chinese coronavirus crisis has shown us anything, it is “that governments, businesses, or civil-society groups acting alone cannot meet systemic global challenges.”

In their stead, the WEF says the world should adopt more socialistic policies, such as wealth taxes, additional regulations and massive Green New Deal-like government programs.

We need to break down the siloes that keep these domains separate, he says, and start to build institutional platforms for public-private cooperation.

Put simply, Schwab believes the time to “re-consider capitalism” has arrived. He adds:

The Great Reset should seek to lend a voice to those who have been left behind, so that everyone who is willing to “co-shape” the future can do so. The reset that we need is not a revolution or a shift to some new ideology… Some of the pillars of the global system will need to be replaced, and others repaired or strengthened. To achieve shared progress, prosperity, and health requires nothing more – or less.

Ulitmately Schwab says the trade, taxation, and competition rules that reflect decades of neoliberal influence are over.

The world stands at the precipice of change and the WEF sees itself in the forefront of that rebuild of capitalism which it envisages means companies “contribute to social welfare and the common good” at the expense of shareholders and investors.

More will be outlined next year at the 2021 WEF global summit in Switzerland.

HERE IS THE ARTICLE FROM WEFORUM.ORG:

We must move on from neoliberalism in the post-COVID era

Cf-wXPHHL5uS-bgqbjTxkhc3X7J0s463CLLF8yNVfWs World Economic Forum Outlines Its ‘Great Reset’ to End Traditional Capitalism Business Featured Top Stories World [your]NEWS
World Economic Forum Founder and Executive Chairman Klaus Schwab calls for a new kind of capitalism
Image: REUTERS/Denis Balibouse
This article is published in collaboration with Project Syndicate
  • COVID-19 has shaken the world in ways not seen since the world wars, affecting all aspects of human life.
  • For the sustainable development of the planet, it’s vital our recovery prioritizes new, greener ways to do business.
  • The ‘Great Reset’ offers an opportunity to re-evaluate sacred cows of the pre-pandemic system but also defend long-held values.

No event since World War II’s end has had as profound a global impact as COVID-19. The pandemic has triggered a public health and economic crisis on a scale unseen in generations and has exacerbated systemic problems such as inequality and great-power posturing.

The only acceptable response to such a crisis is to pursue a “Great Reset” of our economies, politics, and societies. Indeed, this is a moment to re-evaluate the sacred cows of the pre-pandemic system, but also to defend certain long-held values. The task we face is to preserve the accomplishments of the past 75 years in a more sustainable form.

In the decades after WWII, the world made unprecedented strides toward eradicating poverty, reducing childhood mortality, increasing life expectancy, and expanding literacy. Today, international cooperation and trade, which drove the post-war improvement in these and many other measures of human progress, must be maintained and defended against renewed skepticism of their merits.

At the same time, the world also must remain focused on the defining issue of the pre-pandemic era: the “Fourth Industrial Revolution” and the digitization of countless economic activities. Recent technological advances have given us the tools that we need to confront the current crisis – including through the rapid development of vaccines, new treatments, and personal protective equipment. We will need to continue to invest in research and development, education, and innovation, while at the same time building protections against those who would misuse technology.

But other shibboleths of our global economic system will need to be re-evaluated with an open mind. Chief among these is the neoliberal ideology. Free-market fundamentalism has eroded worker rights and economic security, triggered a deregulatory race to the bottom and ruinous tax competition, and enabled the emergence of massive new global monopolies.

Trade, taxation, and competition rules that reflect decades of neoliberal influence will now have to be revised. Otherwise, the ideological pendulum – already in motion – could swing back toward full-scale protectionism and other lose-lose economic strategies.

Cf-wXPHHL5uS-bgqbjTxkhc3X7J0s463CLLF8yNVfWs World Economic Forum Outlines Its ‘Great Reset’ to End Traditional Capitalism Business Featured Top Stories World [your]NEWS

Specifically, we will need to reconsider our collective commitment to “capitalism” as we have known it. Obviously, we should not do away with the basic engines of growth. We owe most of the social progress of the past to entrepreneurship and to the capacity to create wealth by taking risks and pursuing innovative new business models. We need markets to allocate resources and the production of goods and services efficiently, particularly when it comes to confronting problems like climate change.

But we must rethink what we mean by “capital” in its many iterations, whether financial, environmental, social, or human. Today’s consumers do not want more and better goods and services for a reasonable price. Rather, they increasingly expect companies to contribute to social welfare and the common good. There is both a fundamental need and an increasingly widespread demand for a new kind of “capitalism.”

To reconsider capitalism, we must reconsider the role of corporations. An early exponent of neoliberalism, the Nobel laureate economist Milton Friedman believed (quoting former US President Calvin Coolidge) that “the business of business is business.” But when Friedman pioneered the doctrine of shareholder primacy, he did not consider that a publicly traded company might be not just a commercial entity but also a social organism.

Moreover, the COVID crisis has demonstrated that companies that invested in strengthening their long-term vitality have been better equipped to weather the storm. In fact, the pandemic has hastened the shift toward a stakeholder model of corporate capitalism, following the US Business Roundtable’s embrace of this concept last year.

But for more socially and environmentally conscious business practices to stick, companies need clearer guidelines. To meet that need, the World Economic Forum’s International Business Council has developed a set of “Stakeholder Capitalism Metrics,” so that businesses can get on the same page when it comes to assessing value and risks.

If the COVID crisis has shown us anything, it is that governments, businesses, or civil-society groups acting alone cannot meet systemic global challenges. We need to break down the siloes that keep these domains separate, and start to build institutional platforms for public-private cooperation. Equally important, younger generations must be involved in this process, because it is inherently about the long-term future.

Finally, we must expand our effort to recognize the diversity of backgrounds, opinions, and values among citizens at all levels. We each have our individual identities, but we all belong to local, professional, national, and even global communities with shared interests and intertwined destinies.

The Great Reset should seek to lend a voice to those who have been left behind, so that everyone who is willing to “co-shape” the future can do so. The reset that we need is not a revolution or a shift to some new ideology. Rather, it should be seen as a pragmatic step toward a more resilient, cohesive, and sustainable world. Some of the pillars of the global system will need to be replaced, and others repaired or strengthened. To achieve shared progress, prosperity, and health requires nothing more – or less.

RELATED:

The Great Reset: A Unique Twin Summit to Begin 2021

Adrian Monck, Public Engagement, World Economic Forum, public.affairs@weforum.org

  • “The Great Reset” will be the theme of a unique twin summit in January 2021, convened by the World Economic Forum.
  • “The Great Reset” is a commitment to jointly and urgently build the foundations of our economic and social system for a more fair, sustainable and resilient future.
  • It requires a new social contract centred on human dignity, social justice and where societal progress does not fall behind economic development.
  • The global health crisis has laid bare longstanding ruptures in our economies and societies, and created a social crisis that urgently requires decent, meaningful jobs.
  • The twin summit will be both in-person and virtual, connecting key global governmental and business leaders in Davos with a global multistakeholder network in 400 cities around the world for a forward-oriented dialogue driven by the younger generation.
  • The announcement of the Great Reset is made by HRH The Prince of Wales and Klaus Schwab during a virtual meeting today at 14:30 Central European Summer Time and can be followed here

Geneva, Switzerland, 3 June 2020 – “The Great Reset” will be the theme of a unique twin summit to be convened by the World Economic Forum in January 2021. The 51st World Economic Forum Annual Meeting will bring together global leaders from government, business and civil society, and stakeholders from around the world in a unique configuration that includes both in-person and virtual dialogues.

“We only have one planet and we know that climate change could be the next global disaster with even more dramatic consequences for humankind. We have to decarbonize the economy in the short window still remaining and bring our thinking and behaviour once more into harmony with nature,” said Klaus Schwab, Founder and Executive Chairman of the World Economic Forum.

“In order to secure our future and to prosper, we need to evolve our economic model and put people and planet at the heart of global value creation. If there is one critical lesson to learn from this crisis, it is that we need to put nature at the heart of how we operate. We simply can’t waste more time,” said HRH The Prince of Wales.

“The Great Reset is a welcome recognition that this human tragedy must be a wake-up call. We must build more equal, inclusive and sustainable economies and societies that are more resilient in the face of pandemics, climate change and the many other global changes we face,” said António Guterres, Secretary-General, United Nations, New York.

“A Great Reset is necessary to build a new social contract that honours the dignity of every human being,” added Schwab “The global health crisis has laid bare the unsustainability of our old system in terms of social cohesion, the lack of equal opportunities and inclusiveness. Nor can we turn our backs on the evils of racism and discrimination. We need to build into this new social contract our intergenerational responsibility to ensure that we live up to the expectations of young people.”

“COVID-19 has accelerated our transition into the age of the Fourth Industrial Revolution. We have to make sure that the new technologies in the digital, biological and physical world remain human-centred and serve society as a whole, providing everyone with fair access,” he said.

“This global pandemic has also demonstrated again how interconnected we are. We have to restore a functioning system of smart global cooperation structured to address the challenges of the next 50 years. The Great Reset will require us to integrate all stakeholders of global society into a community of common interest, purpose and action,” said Schwab. “We need a change of mindset, moving from short-term to long-term thinking, moving from shareholder capitalism to stakeholder responsibility. Environmental, social and good governance have to be a measured part of corporate and governmental accountability,” he added.

This innovative summit will be a very different Annual Meeting, reflecting the spirit of the Great Reset. It will provide a unique opportunity at the beginning of 2021 to bring together the key global government and business leaders in Davos, yet framed within a global multistakeholder summit driven by the younger generation to ensure that the Great Reset dialogue pushes beyond the boundaries of traditional thinking and is truly forward-oriented.

To do so, the World Economic Forum will draw on thousands of young people in more than 400 cities around the world (the Global Shapers Community) who will be interconnected with a powerful virtual hub network to interact with the leaders in Davos. Each of those hubs will have an open house policy to integrate all interested citizens into this dialogue, making the Annual Meeting open to everyone. In addition, global media and social media networks will mobilize millions of people, enabling them to share their input while also providing them with access to the Annual Meeting discussions in Davos.

The announcement of the Great Reset was made by HRH The Prince of Wales and Professor Schwab during a virtual meeting, followed by statements by UN Secretary-General António Guterres and IMF Managing Director Kristalina Georgieva.

Their statements were supported by voices from all stakeholder groups of global society, including Victoria Alonsoperez, Founder and Chief Executive Officer, Chipsafer, Uruguay, and a Young Global Leader; Caroline Anstey, President and Chief Executive Officer, Pact, USA; Ajay S. Banga, Chief Executive Officer, Mastercard, USA; Sharan Burrow, General Secretary, International Trade Union Confederation (ITUC), Brussels; Ma Jun, Chairman, Green Finance Committee, China Society for Finance and Banking, and a Member of the Monetary Policy Committee of the People’s Bank of China; Bernard Looney, Chief Executive Officer, bp, United Kingdom; Juliana Rotich, Venture Partner, Atlantica Ventures, Kenya; Bradford L. Smith, President, Microsoft, USA; and Nick Stern, Chair, Grantham Research Institute on Climate Change and the Environment, United Kingdom.

In the run-up to the Annual Meeting, the Forum will host a virtual series, The Great Reset Dialogues. These dialogues are a joint initiative of the World Economic Forum and HRH The Prince of Wales. Contributions to the Great Reset will also be invited through UpLink, the World Economic Forum’s digital platform to crowdsource innovations for the Sustainable Development Goals.

The map below shows the location of Hubs of the World Economic Global Shapers Community: More than 420 Hubs and 11,000 Global Shapers and alumni.

Cf-wXPHHL5uS-bgqbjTxkhc3X7J0s463CLLF8yNVfWs World Economic Forum Outlines Its ‘Great Reset’ to End Traditional Capitalism Business Featured Top Stories World [your]NEWS

Notes to editors

Read more about The Great Reset

For more information about joining The Great Reset please contact us

Explore the Forum’s Strategic Intelligence Platform and Transformation Maps

Learn about the Forum’s impact

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