What the World Economy Needs Now is Not Davos But New Alternatives

By Curtis F.J. Doebbler

Professor of Law, An-Najah National University, Nablus, Palestine

ccun.org, January 25, 2009

 
This week hundreds of business leaders and others interested in the world economy will flock to Davos, Switzerland—one of the most expensive cities in the world—to sip wine, smoke cigars, dine on exquisite cuisine and discuss the world economy.
 
The Swiss government will host this meeting of the rich and powerful by canceling the human right to freedom of expression of anyone who wishes to demonstrate against the World Economic Forum whether peacefully or otherwise. The Swiss hosts will also vet anyone coming to make sure that they have the requisite cash to participate in this forum and are staying at one of the exclusive hotels or residences. Even people living in Davos have trouble moving around their city.
 
Although the residents of Davos don't have to put up with the inconvenience of dedicated, mainly young, people calling for a different approach to world economics, they will be hosting people like John Thain, the former Bank of America head of investment banking, securities and wealth management. Although he was recently fired from his post and his failing former employer doesn't want him to go to Davos, he has insisted on being there anyway. And after laying off 5000 employees, Microsoft magnate Bill Gates will be in Davos to explain how our current economic model can still be made to work, despite the most recent evidence of its failure.
 
There will be a chorus of pro-western economic policy adherents—the same one's tat we have heard for the last decade or their like-minded successors—singing the traditional song about how economic growth is an end in itself to accomplished for the betterment of the world.
 
For some of the rich and famous, however, the tune being sung at Davos is apparently enough to make them sick. Australian Prime Minister Ruud has canceled and new American President Obama is sending a junior envoy. It is also not clear that some of Latin-Ameerica's leaders, who are credited with   soem fo the most astute economic policy steering of the ir countries, even by the Davos crowd, will grace Davos with their presence. In any event, controversial, but still oil rich Venezuelan President Hugo Chavez did nto even consider coming to Davos. 
 
It is true that the Russian and Chinese leaders are attending, but it seems their motivation is more aimed at signing an agreement on sharing their natural resources in an equitable manner. Such equitable sharing of resources run contrary to the Davos-think that suggest that resources should be exploited for profit and little else.
 
Despite some interesting developments that may take place on the sidelines of the Davos 2009 World Economic Forum (WEF), to many observers this meeting and its attendees are losing their relevance. This is not only because of their extravagance, but also because of who they really represent.
 
Most of the people at Davos are the same people who caused the economic problems that are rocking the world. While many of them have managed to survive the economic downturn reasonably well because of their already privileged social and economic status, they are the ones who are responsible for the suffering of the billions of  of people who are suffering because of an economic system they constructed, maintained and still control—abet with somewhat less ability to manipulate in the way they had become accustom.
 
Why would anyone trust the people who got them into a very serious problem, to provide them the way out of the problem? Wouldn't you want fresh advice from new faces, perhaps by the critics of the problem-causers? Not the WEF. For them it is business as usual, even if that business is failing miserably.
 
Part of the problem is that those who are in Davos either haven't understood the message that is inherent in the suffering of the so man people in the world. These world leaders and the world—especially western—media still turn to the same old guard because it makes them feel secure in the world in which they live. Moreover, these failed guardians of the world economy still chant the same mantras that they have been chanting for decades in the hope that we will again adopt their hailed system of laissez-faire economics in which governments keep their hands off a system that merely perpetuates already existing inequalities.
 
The myth of equal opportunity for all the underpins traditional economic wisdom, has been shown not lead to an improvement for the half the people in the world who live on less than two Euro-a-day. In fact, as the past several decades have unambiguously proven, the current inequalities grow wider almost every day.
 
Currently the United States GDP is more than four and half times greater than the average GDP of all the countries in the world. That meas that even if the American economy keeps devaluing as it has during the past year, in about a decade it will still be much stronger than the economies of any developing country. This takes into account, of course, that the economies of developing countries, which themselves have bought into the western model of laissez-faire economics, will be proportionately affected by the world economic downturn.
 
The fact that the gap between rich and poor is widening in many parts of the world is—according to many of those who will be in Davos this week—an 'unavoidable' consequence of our world economic system.
 
Nevertheless, nobody in Davos will be admitting that perhaps there are alternative means for people to live with each other that do not depend on adherence to the failing world economic order that the Davos crowd created and is committed to perpetuating. Even more strikingly, few if any, of the Davos crowd will  admit that the nations of the world have already agreed to a world system of governance that requires almost all countries, no matter what economic policies they pursue, to protect some basic rights of everyone under their jurisdiction.
 
Among these basic rights are social and economic entitlements that governments have represented to their own people, and to the world, that they will protect no matter what policies they pursue. These in include providing basic housing, the highest standard of health care possible, access to education, and an adequate standard of living to everyone for whom they are responsible.
 
The majority of the current economic thinking ignores the binding character of these rights. It denies that governments are not entitled to negotiate away these rights. It ignores the fact that governments must ensure these rights to the best of their abilities and before other negotiable issues like military spending or the bailing out financial institutions is undertaken. And much of the current economic thinking touted by the crowd in Davos, ignores the fact that every government in the world can provide these rights to those who find themselves under their jurisdiction...if they only want to do so.
 
Unfortunately for most of us, the people who have been influencing how governments determine their economic policies don't think that guaranteeing the above social and economic rights for everyone is necessary or even good for the economy. Instead they point to the need for competition and how it teaches people to fend for themselves. They claim tat this self-dependence is better for the world then a social system where people can trust that their government will distribute wealth so as to ensure that everyone has their basic rights satisfied. They don't usually mention the huge head start that they and their paymasters have over the voiceless majority of people in such a competitive system.
 
The myth that we all have equal opportunities to become rich and successful is as false as the promise of unlimited development in a world of finite resources. The World Wildlife Fund has been pointing out for years that if everyone in the world uses the amount of resources that the average American uses, we will exhaust all the world's resources—including our clean air and our potable water—in just over a generation.
 
Ironically, many of the longer existing indigenous civilizations in the world showed more respect for their environment and the natural resources around them then modern societies today. The United States is one of the most striking examples, where three hundred years ago the native American Indians were using their natural resources more efficiently and effectively then modern American society.  There will be no representatives of indigenous people in Davos.
 
As the demonstrators, who will have ignore the Swiss ban on their freedom of expression to get their message across this year have shown in past years, there is an alternative to the world economic order celebrated by Davos. Representatives of these voices will not be allowed into the meetings in the extravagantly decorated and the hyper-security controlled meeting room of the WEF. Instead they will be forced into the streets and forced to brave the threat of prosecution for any attempt to express their views in public.
 
Despite the draconian crack down on the human right to freedom of expression being imposed by the Swiss authorities and despite the fact that their message will be largely ignored by world leaders in Davos and the western media covering them, the message that these demonstrators have for the world may be more relevant than any other message concerning the modern world economy.
 
Many of these alternative voices start from the premise that economic growth is not an end in itself. Pointing to the economic and social rights mentioned above they call for a more equitable distribution of wealth and for governments to take interventionist action to secure a basic social and economic safety net for their people. Somewhat ironically, this is something that governments are in fact doing, although to a much lesser extent than these alternative voices would wish and without the long term commitment that they are being urged to adopt for such policies.
 
American President Obama's estimated 95 billion dollar public spending pledge on social and economic infrastructure is at least a nod in this direction. And countries from the Middle East, African and Asia are now commonly seen as responding to the current economic downturn by strengthening public services rather than privatizing them as they had been urged to do for the last decade.
 
The alternative voices counter those who say that government should let the free market function, by pointing to the current failures and adding that if a government does provide basic social and economic security for its people, it has no value. This is an argument that few in Davos want to hear.
 
Moreover the alternative voices also point out how for decades the western model of laissez-faire economics has failed at least half the people in the world. They demand not only that this must change, but that the past suffering of so many people must be redressed. At one extreme they call for the redistribution of wealth, but in most cases they are merely calling for nuanced changes that will provide  more help to those who have suffered by limiting the excesses of those who have benefited.
 
Among the international economic policies they urge are those that demand that rich states honor the pledge they made almost three decades ago to provide .07% of the GNP to overseas development assistance to poorer countries. As American economist Jeffery Sachs has pointed out, if developing states were to abide by this commitment, the United Nations' minimum set of development objectives,  known as the Millennium Development Goals, could be reached by the target date of 2015. Less than a hand full of states have every met this target and in 2008 only Norway did so.
 
There are even alternatives that will be represented in Davos, but are unlikely to get much of a hearing despite the fact that governments are being forced in the direct that they advocate. A prime example of such policies is the prohibition of interest (riba) that is a fundamental part of Islamic banking. While western governments have annually denied the workability of lending money without getting interest from those who have to pay back the loans—up front fees are not prohibited by Islamic law—the economic down turn has forced many western governments to move in that direction by drastically cutting their lending interest rates to almost zero. Ironically, even as governments of have done this, the financial institutions that lend to the public have maintained interest rates. While Islam sees such interest as evil, there to be increasing good economic reasons why lenders should not require those who borrow from them to pay back the money with interest. Still most of those in Davos will not be willing to admit this.
 
While there may be some value facets to be learned from those who have run our world economy into the ground, does it really make sense to focus attention on their views to dig us out of this rut? Commonsense would seem to dictate an negative answer to this question. Perhaps it is about time that the Davos crowd, their rich Swiss sponsors, the mainly western media that so dutifully covers the Davos party, and especially the policy makers who need to make the best decisions for their people not a few elites, start to look to alternatives.
 
Maybe we should pay more attention to the next series of World Social Forums that will be held around the world this spring, where alternative ideas will be on display or to the people expressing these ideas on the streets of Switzerland, if they are not arrested for doing so.