Børge Brende, President, World Economic Forum speaking in the Closing Remarks Børge Brende, President, World Economic Forum speaking in the Closing Remarks. Source: World Economic Forum - Flickr / cropped from original / shared under license CC BY-NC-SA 2.0

Dominic Alexander examines the evidence in two contrasting reports and finds they presage gloom in a broken capitalist system

Every year, the World Economic Forum, which holds the annual jamboree for the business elite and selected others in the Davos resort in Switzerland, publishes a ‘Global Risks Report’, which is based on responses from its members to the WEF’s survey of what is considered the leading risks for the future. The WEF is funded by its member companies: a thousand largely multinational corporations, each of about $5 billion in turnover depending on sector and region. Various politicians, heads of NGOs, and academics are also invited to attend. Last year, 116 billionaires went to Davos. Since 48% of the recipients of the survey are from the private sector, its findings reflect the current concerns of the global business elite more than anything else. A counter to this, then, is Oxfam’s annual report on inequality, timed to be released at the start of the Davos conference.

It is perhaps a sign of the seriousness of the poly-crisis affecting the world economy that there are several areas of overlap between the two reports. Both lay considerable emphasis on the dangers of ecological breakdown, driven by global heating and worry about the increasing concentration of capital and corporate power. Unsurprisingly, divergences are also immediately apparent. 

While Oxfam’s briefing notes at the start that the ‘wealth of the world’s five richest billionaires has more than doubled since the start of this decade, while 60% of humanity has grown poorer’ (p.4), the third-greatest global risk for the WEF’s respondents for the short-term two-year period is ‘social polarisation’. This is defined as ‘ideological and cultural divisions within and across communities leading to declining social stability, gridlocks in decision-making, economic disruption, and increased political polarization’ (p.97), carefully avoiding the obvious cause of all this. 

Mostly, polarisation is connected here to the dangers of ‘misinformation and disinformation’ fuelled by the growth of AI and other technology. However, at points, the WEF report does acknowledge the economic connections of polarisation: ‘Societal polarisation and economic downturn are seen as the most interconnected – and therefore influential – risks in the global risks network’ (p.7).

Polarisation of wealth and power

If the WEF report is a bit coy about the chasm of inequality driven by the concentration of wealth in the hands of the mushrooming billionaire class, it is nonetheless very worried about the direction of the global economy. Inflation and high-interest rates remain concerns, with risks to supply chains, not least from climate factors, being the second highest economic issue (p.11). Overall, the outlook is dire:

‘The global economy had been propped up by continued strength in services throughout 2023, which is now flagging, while manufacturing has already been in contraction for over a year. Economic growth is stagnant in the European Union, at 0.6% last year, with estimates suggesting that the economic powerhouse of Germany contracted by 0.3% in 2023.51 Profits of the S&P 500, excluding the ‘Magnificent 7’ tech stocks, were estimated to contract by 8.6% last year’ (p.29).

Given that the prospects for global growth are grim, the weight of debt ranks as the highest economic concern, but this falls most heavily on small and medium-sized companies and poorer countries, where there is a high risk of debt default. The Oxfam report is much more detailed about what this means for poor countries. Yet the WEF notes that the structure of debt currently means that ‘the world’s largest companies will be effectively insulated from higher interest rates for more than half a decade’ (p.31). Debt crisis is not going to affect those who are winning in the current global economy. This then is polarisation of the most dangerous kind. It will boil down to the already wealthy and powerful individuals and corporations being likely to be able to grow further at the expense of the weaker and poorer, whether in corporate or geographical terms.

The great hope for a new round of economic growth comes from technology, particularly AI, but the WEF sees considerable downsides to this much-hyped possibility: ‘Exponential technology growth may leave the next generation without a clear path to improve human potential, security, and wellbeing’ (p.32). While the WEF sees AI as providing ‘productivity benefits and breakthroughs’ in many areas, it highlights significant economic dangers that would further accelerate the economic polarisation already noted: ‘Adverse outcomes of advanced AI could create a new set of divides between those who are able to access or produce technology resources and intellectual property (IP) and those who cannot’ (p.50). Again, such developments are likely to benefit the already rich and powerful against the rest, geographically and corporately.

With AI, however, it is more difficult to judge how seriously to take the WEF’s fairly alarming warnings about the need for regulation (for example that ‘integration of AI in conflict decisions could lead to unintended escalation, while open access to AI applications may asymmetrically empower malicious actors’, p.50). There are many reasons to think that much of what is said about AI is more hype than likely reality, and the respondents to the WEF survey are very much the same people from whom the hype originates, and for whom the benefits of such are most clear. Nevertheless, it is significant that AI is the only noted factor that might fuel future economic growth.

The report’s pessimism about the future is reinforced by its commendable emphasis on the cascading social and economic disasters that will result from climate change. The report notes that its younger respondents and those from civil society rather than business are much more likely to highlight the immediate dangers of climate change, rather than seeing them as more of a long-term issue. It warns: ‘This dissonance in perceptions of urgency among key decision-makers implies sub-optimal alignment and decision-making, heightening the risk of missing key moments of intervention, which would result in long-term changes to planetary systems’ (p.7). Despite the technocratic coding, this reads as a fairly stiff warning that the corporate elite can’t be complacent about the issue.

How the world will react to the increasing immiseration of one pole at the expense of the other is another thread of worry that runs through the report. The key fear is that the dominance of the Western international order will be challenged: ‘Over the next decade, as dissatisfaction with the continued dominance of the Global North grows, an evolving set of states will seek a more pivotal influence on the global stage across multiple domains, asserting their power in military, technological and economic terms.’

Moreover: ‘Coordinated efforts to isolate “rogue” states are likely to be increasingly futile, while international governance and peacekeeping efforts shown to be ineffective at “policing” conflict could be sidelined (p.10). ‘Novel power dynamics’ will likely arise from nations attempting to ‘leverage’ their advantages either in ‘critical minerals’ or capital and technology (p.54). It is also noted that since the responses were made before Israel’s war on Gaza, the threat of ‘interstate armed conflict’ comes in lower, at fifth in severity for the two-year term, than it would have been otherwise, but the report, in general, sees international conflicts as the possible result of a number of the pressures seen as increasingly worrisome.

Unsystemic solutions

These prospects inform the suggestions for solutions later on, as, with palpable relief, it is suggested that progress on various fronts does not necessarily have to be made through large-scale international agreements, i.e. ‘deep global cooperation’ (p.85). However, the suggestions of what could be done in this regard are less than encouraging. For climate change, apart from a rather desperate appeal to the possibility of nuclear fusion (p.88), the report seriously suggests individual lifestyle changes, such as adopting vegetarianism: ‘if a material number of people take such actions concurrently, such aggregate efforts have the power to alter market dynamics’ (p.89). Moral exhortation isn’t going to work, since it is ultimately systems that drive individual behaviour, rather than individualised ‘market choices’ shaping systems. The report takes refuge in the same approach towards the corporations themselves: ‘If a critical number of companies commit to building ethical supply chains, respect for human rights and labour standards will improve worldwide’ (p.89).

The Oxfam report is altogether more direct about the damage being done to societies around the world by the concentration of wealth and economic power in ever fewer hands, and the looming climate catastrophe. It does suggest some useful responses, such as prioritising public ownership of transport, energy, housing, education and health, and ‘other public infrastructure’ (p.32). Oxfam further urges wealth taxes, and restrictions on dividend payments, subject to corporate behaviour. These are all desirable policies, but the report ignores the degree to which states have become ferociously committed to the neoliberal model. It will take militant, mass pressure to turn that around. This would count, presumably, as a kind of ‘polarisation’ about which the WEF is so worried.

However, the general tendency of the Oxfam report is to blame the monopolistic concentration of wealth, rather than the underlying system, for the current direction of the world. Thus it concludes with sections on how states should break up ‘private monopolies and prevent corporate power from becoming too large’ (p.50), pointing to ‘current anti-monopoly cases, such as those against Amazon and Google in the USA and Europe’.

There are several problems with this approach, not least that the US has had antitrust laws since 1890, but that has not stopped the growth of corporate power and monopolies even so. It also remains to be seen whether those current cases will genuinely curb the power of the tech giants. Reinvigorating state power over social infrastructure, and indeed the economy in general, is certainly something with which socialists can agree, but unless it’s backed by powerful movements that understand it is the fundamental laws of the capitalist system that have pushed things to this point, the rulers of the system are likely to defeat attempts to hobble their power.

The WEF, in contrast, is certainly concerned with preserving that power, and this is why it can only make feeble prescriptions for solving the multiplicity of crises that even the global elite seem to perceive as urgent. The WEF is reduced to making discredited suggestions about consumer power and technological breakthroughs to solve climate change because otherwise, they would have to suggest actual structural changes to the world economy. This they are not going to do.

It would be absurd to have hoped that the WEF would suggest meaningful solutions for a poly-crisis of capital’s own making, but the fact that the report is driven to risible admonitions instead of real solutions by way of conclusion shows the elite’s awareness of how badly broken the whole system is.

Before you go

Counterfire is growing faster than ever before

We need to raise £20,000 as we are having to expand operations. We are moving to a bigger, better central office, upping our print run and distribution, buying a new printer, new computers and employing more staff.

Please give generously.

Dominic Alexander

Dominic Alexander is a member of Counterfire, for which he is the book review editor. He is a longstanding activist in north London. He is a historian whose work includes the book Saints and Animals in the Middle Ages (2008), a social history of medieval wonder tales, and articles on London’s first revolutionary, William Longbeard, and the revolt of 1196, in Viator 48:3 (2017), and Science and Society 84:3 (July 2020). He is also the author of the Counterfire books, The Limits of Keynesianism (2018) and Trotsky in the Bronze Age (2020).