Poor old plutocrats. Yes, according to a new report by Oxfam the world’s billionaires have more wealth than 60 per cent of the global population combined. But this inequality is becoming a problem for them. It is prompting a backlash as voters turn to populists of the right and left and take to the streets. Social injustice was a common backdrop during the global protests of 2019, from Lebanon to Chile, and Hong Kong to Iraq.
Inequality is also undermining capitalism itself. With economics shifting from the theory-focused era of Milton Friedman and his free-market followers to data-focused stars such as Thomas Piketty and Emmanuel Saez, the scarring effects of inequality are becoming better known. Unbound, a new book by the American economist Heather Boushey, shows that growing gaps between rich and poor undermine private competition, public investment, human capital and financial stability.
The result is what one might call “Woke Davos”. The annual Alpine meeting of the World Economic Forum (WEF) used to be a cosy discussion of growth and geopolitics between business and political elites. But in recent years it has evolved into a platform for angst about capitalism’s excesses. Heads are scratched, hands are wrung, technological fixes and buzzword-heavy solutions are proffered: philanthro-capitalism, corporate responsibility, impact investment. This year’s summit, which began on 21 January, sees the WEF pushing “stakeholder capitalism”, the notion that firms should prioritise not just shareholder value but other social goals too. This, a post on the WEF’s website helpfully explains, requires companies to devise “forward-leaning policy agendas” and pay “careful attention to their citizenship agenda”. Hmm.
A lot of Woke Davos is vacuous. That is not because its participants are heartless Dr Evils. Plenty of the leaders who attend are genuinely concerned about the state of society. However, often they are also out-of-touch, more protective of the status quo than they like to admit, or simply uncomfortable about anything that sounds too drastic. In many cases a hefty dose of self-interest is in the mix as well; the corporate responsibility hawked around Davos is pitched as much as an insurance policy against hacked-off workers, consumers and voters as it is a serious answer to the world’s problems.
It’s true that other perspectives are on offer. About a third of the Davos participants are from NGOs or academia. Oxfam is there, as are representatives of UN agencies, and even Greta Thunberg. In 2019 a panel on inequality included the Dutch historian Rutger Bregman, who lambasted fellow attendees for failing to talk about tax: “It feels like I’m at a firefighters’ conference and no one’s allowed to speak about water.”
Yet there are certain unspoken rules about how far such participants can stray from mainstream Woke Davos mumbo-jumbo. Questioning the institutional order of capitalism and promoting redistributions of societal power that are not “win-win” is generally frowned upon.
What does this mean in practice? Acceptable in Woke Davos: Amazon, which, though serially accused of tax avoidance and poor working conditions, gets a big thumbs-up in a post on the WEF website for its decision to spend an average of $117m on worker training every year to 2025 (its net income in 2018 was $10.1bn). Unacceptable in Woke Davos: Bregman’s exhortation to “just stop talking about philanthropy and start talking about taxes”, which was met with what he later called an “aggressive” response from the audience. He was not invited to this year’s meeting.
The great shame is that the Woke Davos-ites do not need all this blue-sky thinking to find a model promoting socially cohesive market economies. There is already an intellectually and historically rich tradition doing just that. It is called social democracy.
This might seem like an anti-climactic suggestion. Social democracy is not a new idea. Judging by recent years, it is not even a very electorally successful one. Its principles of redistributive taxation, social insurance, universal public services, non-market mechanisms of coordination (such as trade unions) and a strategic role for the state where the market falls short are easily overlooked in favour of groovier solutions involving blockchain or the like. But in their cumulative unsexiness they add up to what the late historian Tony Judt poetically called “the banality of good”.
In any case, they are not as moribund as they might look. Social democratic ideas remain in decent fettle across much of Europe and are rising up the EU’s agenda. In America they are more influential in Democrat politics than they have been for decades.
They need updating for a new age, of course – witness the forward-looking unions organising gig economy workers – but they work. The WEF’s newly released ranking of countries by social mobility puts Denmark, Norway, Finland and Sweden top. They did not get there through philanthro-capitalism or corporate responsibility gimmicks.
The question, then, is how to start a more substantial international debate about social democratic solutions to global problems. I have two suggestions. One is to repackage social democracy in terms that Woke Davos will understand. Public services might be reinvented as “stakeholder well-being apps”, trade unions as “networked crowd-bargaining” and taxes as “coercive philanthropy” or “scalable responsibility dividends”. But I am not convinced that would work. The better alternative would probably be to launch a rival global gathering confronting the same issues as Davos, but with an ambition and scope that it cannot comfortably offer. Any takers?
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This article appears in the 22 Jan 2020 issue of the New Statesman, Power to the people