First appearance: “The Next Recession”
The annual jamboree of the world's wealthy elite, known as the World Economic Forum (WEF), is once again being held at the luxury ski resort of Davos, Switzerland. Thousands of people were expected to attend, with many of the “great and good” political and business leaders arriving by private jet with large entourages. Speakers will include Chinese Premier Li Qiang, EU leaders Ursula von der Leyen, Ukraine's Zelenskiy, and a number of top business leaders.
The WEF aims to discuss the challenges facing humanity after 2024. However, these challenges are primarily viewed from the perspective of global capital, and all proposed policy solutions are driven by the objective of preserving the global capitalist order.
This was revealed in the WEF's annual Global Risk Report, which surveyed Davos attendees. report,
We explore some of the most serious risks we may face over the next decade, against a backdrop of rapid technological change, economic uncertainty, global warming and conflict. As cooperation comes under pressure, weakened economies and societies may require minimal shocks to overcome a tipping point of resilience.
Regarding the global economy, the report is concerned. The top 10 “risks” for people surveyed in 2024 included the cost of living crisis and economic downturn. The WEF report states:
Although a “soft landing” appears to be in progress at the moment, the short-term outlook remains highly uncertain. From El Niño to the potential for increased conflict, there are multiple sources of continued supply-side price pressure over the next two years. And if interest rates remain relatively high for an extended period of time, small and medium-sized enterprises and heavily indebted countries will be particularly exposed to debt crises.
Although the report calls the situation “uncertain,” what is certain is that a so-called “soft landing,” or steady economic expansion without downturns, will be limited to the U.S. economy and will not affect other regions, at least the major developed economies. This is something that cannot be seen in capitalist economies.
Despite the optimism expressed by many US officials, there is nothing particularly noteworthy about the outlook for the US economy. Bill Adams, the paper's chief economist, said: “With interest rates trending lower, gas prices lower than last year and incomes growing faster than inflation, the likelihood of next year's recession could be as low as 2023. “It appears to be lower than initially thought.” Comerica Bank. But he said economists, on average, “expect the U.S. economy to grow by just 1% in 2024, about half the normal long-term growth rate and significantly slower than the estimated 2.6% in 2023.” Admitted. So, while it's not a recession at best, it will effectively be a stagnation by 2024. “This is less of a recession and more of a halt to growth,” said Rajeev Dhawan, an economist at Georgia State University.
The situation appears to be even worse in the remaining G7 countries. Germany's economy is likely to fall by 0.3% in 2023 and fall further this year, with German manufacturing shrinking by 6-7% year-on-year. The French and British economies both turned negative in her final quarter of 2023. This is also the case in Canada and Japan, but Italy has stagnated. And there are some advanced capitalist economies that are already in recession, such as the Netherlands, Sweden, Austria, and Norway. In so-called emerging economies, many countries have seen a sharp slowdown in their 2022 recovery after the 2020 pandemic recession ended.
Inflation has fallen from its 2022 peak as supply backlogs and manufacturing slump ease a bit after the pandemic slumped supplies and international trade. Food and energy prices fell significantly in he 2023. But the damage has already been done. On average, prices for most people in the developed capitalist world have risen (and continue to rise) by 20% since the end of the pandemic. It is even worse in many poor countries and in many middle-income countries, such as Argentina (150%) and Turkey (50%). As a result, average household real income has fallen since 2019, effectively the largest decline in living standards in decades. Additionally, recent attacks on ships in the Red Sea could cause inflation to start rising again, as Israel's destruction of the Gaza Strip and its 2 million people begins to ripple across the energy-rich Middle East.
The World Bank sums it up in its latest report. While there may not be a recession in the United States, “the global economy is on its worst five-year growth trajectory in 30 years.”
The World Bank says this slowdown is due to a slowdown in productive investment by major countries in value-creating jobs and incomes.
Marxists would add that behind that investment slump is the historically low profitability of world capital (with the exception of a few high-tech energy giants).
The World Bank expects global GDP growth to remain at 2.4% in 2024, slowing from last year's 2.6% (including India, China, Indonesia, etc., which grew 5% to 6%). This makes him the third year in a row that growth has slowed compared to the previous 12 months. “Without a significant course correction, the 2020s will be a decade of wasted opportunities,” said Indermit Gill, chief economist and senior vice president at the World Bank.
Global trade growth in 2024 was expected to be only half the average of the decade before the pandemic. Global merchandise trade will contract in 2023, marking the first annual decline outside of the Great Recession in the past 20 years. The recovery in global trade from 2021 to 2024 is expected to be the weakest since the Great Recession of the past half century.
Growth in developed countries was expected to be just 1.2%, down from 1.5% in 2023. Many developing countries remain hamstrung by over $5 trillion in debt and shrinking fiscal space (i.e. government fiscal capacity). spend on social needs). Food insecurity skyrocketed in 2022 and remained at high levels in 2023.
The WEF report highlights what it calls “social polarization,” the growing divide between rich and poor caused by economic stagnation that leads to a loss of support for capitalist established political parties and their political institutions. points out that it is dangerous for capitalism.
The report does not mention the extent of social inequality in the world in 2024. But every year at Davos, Oxfam releases an “alternative” report on the state of global inequality. It is a stunning indictment of the failure of the capitalist order to meet the social needs of the majority of humanity. This year's report, entitled 'Survival of the Richest', states:
Oxfam says extreme wealth and extreme poverty have increased simultaneously for the first time in 25 years. “While ordinary people make daily sacrifices for necessities like food, the super-rich are exceeding even their wildest dreams.” Just two years have passed, and this decade has seen the rise of millionaires. “This is shaping up to be the best decade ever for the world's richest people, and the biggest boom of the decade for the world's wealthy,” said Gabriela Butcher, executive director of Oxfam International.
In the years of pandemic and cost-of-living crisis since 2020, $26 trillion (63%) of new wealth was captured by the richest 1%, with a combined $16 trillion (37%) flowing to the rest of the world. . For every dollar of new wealth earned by the bottom 90 percent of the world, billionaires earned about $1.7 million.
Billionaires' fortunes increased by $2.7 billion per day. This comes on top of a decade of historic growth, with the number of billionaires and their wealth doubling over the past decade.
At the same time, at least 1.7 billion workers now live in countries where inflation is outpacing wages, and more than 820 million people (roughly 1 in 10 people on the planet) are hungry. Women and girls eat little, often eat last, and make up almost 60 percent of the world's hungry population. Oxfam quotes the World Bank as saying: “Global inequality and poverty are likely to experience the largest increase since World War II.”
Entire countries are facing bankruptcy, with the poorest countries now spending four times as much on health care as they do on servicing debts to wealthy creditors. Three-quarters of the world's governments plan to cut public sector spending (including health and education) by $7.8 trillion over the next five years under austerity measures.
As usual, the WEF does not offer any policy solutions in its report to reverse or curb this grotesque level of inequality, not even a wealth tax. do not have. Rather, the biggest risk issue for WEF survey respondents is “extreme weather.” Business and government leaders attending Davos are concerned about the economic impact of global warming and climate change. That means damage to businesses and infrastructure, and it means having to deal with millions of people forced to leave their homes and migrate.
However, as the COP28 climate summit demonstrated, businesses and governments are falling short of the greenhouse gas emissions reduction targets needed to avoid extreme temperatures, floods and droughts. The WEF report states:
Many economies will remain largely unprepared for the 'non-linear' impacts. The triggering of several related socio-environmental risk cascades could accelerate climate change through the release of carbon emissions, amplifying associated impacts and threatening climate-vulnerable populations. . Given the scale of potential impacts and infrastructure investment requirements, the adaptive capacity of society as a whole may be overwhelmed, leaving some communities and countries unable to absorb both acute and chronic impacts of rapid climate change. there is.
Capital cannot respond.
According to the European Earth observation agency Copernicus, the world will experience its hottest year in 2023, with global average temperatures rising around 1.5 degrees above pre-industrial levels and “climate records tumbling down like dominoes.” ”. The average global temperature in 2023 was higher than at any time in the past 100,000 years.
In fact, if the Davos elite look beneath the snow in their luxury resorts, comparing the three-year average spanning the 2002-03 to 2004-05 seasons with the 2020 average, they will find that snowfall across Switzerland is almost 8. You can see that it has decreased by a percentage point. From the 2021 season to the 2022-23 season. According to a study published last year in the journal Nature, the number of snowy days in the Alps has fallen by 600 fewer days in the past 20 years. Winter skiing in Davos is in trouble.
Scientists say extreme weather events will become more frequent and more intense as the planet warms, and that limiting warming to 1.5 degrees requires urgent action to cut greenhouse gas emissions by almost 45 percent by 2030. It warns that steps need to be taken. We are currently heading towards 3 degrees Celsius. However, WEF participants have not offered any solutions to this growing disaster other than repeating COP28's calls for a “transition away from fossil fuels”, the expansion of renewable energy and global cooperation. There is no mention of acquisitions of fossil fuel companies or global plans to help poor countries suffering from environmental disasters. Instead, fossil fuel companies are focusing on Davos to ensure “business as usual.”
There were two other issues that worried WEF participants. That is the danger that “pervasive misinformation” could emerge from artificial intelligence and uncontrolled generative AI machines. And armed conflicts between nations are on the rise around the world.
Global capital is concerned about the damage to trade and investment caused by geopolitical conflicts and the social disillusionment caused by “misinformation” about inequality and economic growth. But participants are less worried about the large numbers of workers who will be put out of work due to AI, or about the horrific loss of life and limb caused by the Russo-Ukrainian war and Israel's destruction of Gaza. Or Sudan's civil war, which has left millions starving and displaced. Or the bombing of Yemeni cities and people. But of course they are concerned that tensions over Taiwan could escalate into a direct military conflict between China and the United States, threatening the entire world order.
What did the WEF Risk Report conclude from its survey of Davos attendees?
As we enter 2024, the global outlook for the next two years is primarily negative and is expected to worsen over the next decade. …The 10-year outlook is significantly negative, with nearly two-thirds of respondents expecting a stormy or turbulent outlook.
It's bad for capital, but it's even worse for workers.
