My Say: Waiting for a global new deal

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AIMING for maximum effect, anti-poverty organisation Oxfam International megaphoned just before the World Economic Forum began in Davos that the wealth gap has become incredibly huge. It released a study indicating that the richest 1% is on the brink of owning half the wealth of the world.

Put another way, at present, the globe’s poorest 3.5 billion humans own as much as its richest 80 billionaires. Only five years ago, this same number of poverty-stricken people were doing better, owning as much as the richest 388 people. The trend is clear — the wealth pyramid is becoming needle-sharp.

Coming 25 years after the fall of the Berlin Wall deflated the Left-Right ideological tension in the world, this warning needs to be taken seriously. The total loss of credibility suffered by the communist agenda did not lead to a plateauing of political thought, as many had hoped for. Instead, the astoundingly simplistic victor was what we broadly call neoliberalism, which basically proclaims that whatever can be classed as “market forces” is good, and whatever is state intervention is bad.

What this means is that wealth accumulation now radically follows capitalist logic, and the state, in many cases, no longer limits the detrimental effects of capitalism, but instead legislates to benefit capital. Most would agree that such a trend cannot continue, but they are also at a loss as to what can be done about it.

Do capitalist forces close the income gaps automatically if left alone? They do create wealth, as the China case testifies to so impressively. But how big a gap is safe? And what measures — even stop-gap ones will do — are available?

I am sure there are lessons to be learnt from the past. So let’s revisit the world as it was 100 years ago.

As retreating Russian soldiers made their way back to Moscow in 1917, their desperation and anger tipped the already devastated country into a revolution that changed the world for good. With the rise of Vladimir Lenin and the Bolsheviks, Marxism took a practical form that liberation movements throughout the world drew inspiration from for the next 50 years.

What Karl Marx basically propounded in his magnum opus, Das Kapital, was that capitalism — the latest system of economic relations and production developed by man — was capable of enormous resource exploitation.

It was also a system that would generate within itself the very forces that would one day destroy it and replace it with a better system where effective production and fair distribution of goods would prevail: “To each according to his needs, from each according to his ability.”

The Bolsheviks claimed that this would be possible to achieve through proletarian revolutions led by communist parties. This shocked the affluent countries of Western Europe. Given this alternative path to wealth, would the poor among them not rise up like the Russians did? Something had to be done.

The Great Depression unleashed on Oct 29, 1929 — Black Tuesday — on Wall Street, which sent economies throughout the world crashing, added credence to the Bolshevik claim. It was at this point that capitalism pulled a rabbit out of its hat. Inspired by economists like John Maynard Keynes, US president Franklin Roosevelt enacted the New Deal that brought significant social forces together to turn things around.

The programmes focused on the “3Rs” — relief for the poor and unemployed, recovery of the economy to normal levels and reform of the financial system to avoid a repeat of the crash. Basically, state, capital and labour agreed to limit the ill effects of capitalism. This steering of markets — financial, labour and goods — succeeded, saving capitalism to fight another day.

In many European countries, this reining in of capitalism was done through welfare policies and tripartism. The welfare state came into being.

Much has changed since then, no doubt. Communism has been discredited, and down the drain with it has gone much of the welfare values that were the basis for the Golden Age of the West — the half-century after World War II. And out of the window went also the modest belief that states and governments could limit — and has the duty to limit — capitalism, as well as the simple insight that redistribution of wealth cannot be left to market forces.

Environmentalism is being tried as an incubator for alternatives to unhampered capitalism, and global warming as the reason for curbing and regulating market forces has become the most accepted critical stance — in lieu of anything more credible, I must add.

In many ways, religions offer a non-rational alternative that many seem to need. This alone reminds us how desperate the situation is, not to mention the ethnic blame game spreading through Europe today.

As a sad measure of the intellectual vacuum that came with the end of the Cold War, the world today has to rely on the richest men and most powerful nations to devise a system that will limit their own supremacy for the good of all mankind.

At the moment, the world is at their mercy while we wait and hope that a Global New Deal will appear, like manna from heaven.
 
Ooi Kee Beng is deputy director of the Institute of Southeast Asian Studies, Singapore. His latest book is The Eurasian Core and Its Edges: Dialogue with Wang Gungwu on the History of the World (ISEAS 2015).

This article first appeared in Forum, The Edge Malaysia Weekly, on January 26 - February 1, 2015.