Above Photo: After decades of attempts at ‘market-based solutions’ to climate breakdown and slowing global growth, it is clear to Davos attendees that individual capitalists can’t solve these problems on their own. Damian Markutt / Unsplash.
At the start of each year, the World Economic Forum—organiser of the annual Davos conference currently underway in Switzerland—releases its list of the ‘global risks’ expected to dominate over the following twelve months. This year, researchers at the WEF decided that these risks are so great, and so interwoven, that we are now entering an era of ‘polycrisis’.
The clearest risk in the immediate term is a global recession. The UK, most of Europe and the US are pretty much guaranteed to go into recession in 2023. The downturn will be worse in Europe due to the ongoing energy crisis and the war in Ukraine.
The fact that an inflationary crisis—and, relatedly, a cost of living crisis—is taking place alongside this economic downturn makes the outlook even more grim. We’ve had a decade of slow growth and, looking ahead, it’s hard to see where growth is going to come from in the future.
Over the longer term, the greatest existential risk the world faces is climate breakdown. The last eight years were the hottest ever recorded, with 2016 being the warmest. Extreme weather events that once took place every several hundred years are now taking place annually.
We have already started to approach the tipping points that will rapidly and unpredictably accelerate the processes causing the climate breakdown. The oceans are becoming acidified, arctic ice and permafrost are melting, and forests are being lost at a devastating rate.
‘Geoeconomic confrontation’, ‘cybercrime’ and ‘erosion of societal cohesion’ are all high up the WEF’s list of risks as well.
Over the course of the next several days, the world’s elite will come together to discuss among themselves how to tackle these extensive challenges—as they do every year. But what can the ruling class actually do about these problems?
Many of the ‘risks’ on this list should be understood as collective action problems, of the kind that are very familiar in capitalist societies.
If individual capitalists were able to work together to increase investment, they’d be able to engineer an end to low growth. If they were able to work together to come to a binding agreement on how to reduce their emissions, they’d be able to slow the rate of climate breakdown.
Yet the world’s capitalist class is too scattered and divided to achieve such coordination on its own. This is precisely why the state—and international organisations like the WEF—are necessary. They help capitalists to solve their collective action problems.
The post-war Keynesian settlement was a good example of an attempt to do just this. Domestically, states agreed to step in when private investment fell to avoid recessions and maintain profits. Internationally, a series of agreements governing trade and investment flows were enacted to protect global growth.
And, for a while, these policies supported a near-unprecedented period of global economic growth and stability—to the benefit of capitalists in the Global North.
The only issue was that these policies also benefitted workers in the rich world. The ruling class quickly realised that the only thing that allowed them to maintain order in capitalist societies—other than the overt use of force—was the threat of recession.
If workers were no longer terrified of losing their jobs because they knew that the state was capable of exercising control over variables like growth and employment, what was to stop them from striking to demand a greater share of the economic pie?
These questions were at the heart of the neoliberal shift of the 1980s. The policies introduced during this time—privatisation, austerity, the end of restrictions on capital mobility—were about restoring the ‘governability’ of capitalist societies. They had nothing to do with shrinking the state or freeing the market.
And these questions are, once again, at the very front of the minds of the capitalist class as they meet in Davos to discuss the future of the world economy. After decades of attempts at ‘market-based solutions’ to climate breakdown and slowing global growth, it must be very clear to them that individual capitalists can’t solve these problems on their own.
As the Financial Times and the Economist have both recently argued, some level of centralised planning will be necessary to deal with climate breakdown. During Covid, public spending had to rise to protect profits. And it is equally obvious that, without some government action on the cost of living crisis, the risks of what the WEF calls ‘the erosion of social cohesion’ are significant.
Once again, the capitalist state needs to ride to the rescue of the capitalist class. But how can the ruling class square this imperative with the need to keep workers in their place, especially at a time of rising industrial action?
The answer is, of course, that they can’t. Cue frenzied discussion about ‘stakeholder capitalism’ and ‘international cooperation’.
The ruling class doesn’t want to have to rely on the state as a spender of last resort for fear of the impact this might have on working class power. But they also realise that they need some institutions capable of fostering coordination and collaboration among the global capitalist class.
By bringing these men (and a few women) together in one room, the self-proclaimed guardians of the capitalist world system can plead with the interests assembled to work together to safeguard their own futures—even if that means making decisions that might run contrary to their short-term interests.
Of course, the very nature of capitalism makes it very difficult for a corporation or financial institution to do anything that runs contrary to their short-term interests. Why would the owners and managers of the world’s most powerful private institutions sacrifice money and power today to protect a future that most of them are unlikely to live to see?
Even if, out of some latent sense of social responsibility, a few executives wanted to change the way their businesses worked, the very nature of capitalism means that one business’ unearned profit is the potential profit of another.
This brings us to another potential solution to the problem of collective action found within capitalist societies. If all the world’s most powerful corporations ceased to compete and actually began to cooperate, they would find themselves able to plan in a way usually thought to be the preserve of states.
Competition has already decreased substantially in recent years as large corporations have merged with or acquired their competitors, with regulators doing little or nothing to stop them. And with the rise of large asset managers like Blackrock, a few institutions now own shares in pretty much all of the world’s largest businesses, making them the new permanent owners of much of the world economy.
Perhaps those assembled at Davos believe they can rely on Larry Fink, the CEO of Blackrock, to force the managers of the companies whose shares he owns to behave ‘responsibly’. But Blackrock declines to support the majority of shareholder motions pushing for more action on climate breakdown, with Fink saying that such motions have become too radical in recent years.
The only option left for what Gramsci would have termed the ‘organic intellectuals of the ruling class’ is to publish reports, assemble the world’s most powerful people, and hope that by some miracle they all agree to do as they’re told. They’re likely to be disappointed.
As Geoff Mann has argued, Keynesianism was an ingenious attempt to save capitalism from itself, protecting human civilisation in the process. But today it has become clear that human civilisation cannot be saved without moving beyond capitalist social relations.
The greatest risk the world faces comes from the class currently assembled at Davos. If they really wanted to save the world, they’d hand over their wealth and power to their workers—the only class with the ability and the incentive to deal with the challenges the world currently faces.
Of course, at this point in human history, working people are far more scattered and divided than the ruling class. Our only hope is that this period of industrial action and class conflict leaves a legacy of working-class solidarity and cohesion that would allow people to take on these challenges together.