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World Economic Forum: Need for ‘the Great Reset’ of capitalism

Source: Indian Express

GS-2: Important International Institutions, agencies, and fora  – their Structure, Mandate

Synopsis: WEF’s executive chairman Klaus Schwab is advocating for rearrangement of the global order through “The Great Reset”. India should also take this development seriously and try to limit the potential implications of this possible global reset.

Background

  • The WEF’s (World Economic Forum) online  Summit began recently. Its physical meeting is scheduled to take place in Singapore in June 2021. It is only the second time after 2002 that Davos annual meeting is taking place outside Davos.
  • Choice of place in Singapore instead of any European or American city is a symbol of shifting focus on Asia.
  • In this context, the World Economic Forum’s initiative for “The Great Reset” has gained attention.
  • In this article, we will discuss what is “Great Reset” and what are the key changes suggested by the “Great Reset” initiative, and how India should plan for it?

What is “The Great Reset”?

  • The concept has been given by the founder and executive chairman of the WEF- Klaus Schwab.
  • The concept is developed, based on the assessment that the world economy is in deep trouble. Events like the pandemic, ongoing technological revolution, impacts of climate change have further worsened the global situation.
  • Hence, the concept of  “The Great Reset” suggests, there is an urgent need to reform global societies and economies. Reforms should be brought into every country and industry of the world.
  • This initiative will mainly focus on reforming market-led Capitalism into stakeholder capitalism. Which will be focussed on ensuring equality and sustainability.

Why the “Great Reset” initiative is a step in the right direction?

Firstly, economic reforms like deregulation and globalization reduced barriers to capital movement within the countries. Now it is being challenged even in a country like the US.

Secondly, US and EU countries failed in dealing with the COVID pandemic and its economic impacts. Whereas Asian Countries handled it effectively. It magnifies the failure of the Capitalism model of these countries.

How focus areas of The Great Reset’ are relevant for the present world?

The agenda of The Great Reset focuses on many key issues faced by the world today. Three important themes among them are,

  • First, serious thinking on moving from capitalism to “stakeholder capitalism”. Because
      • One, capitalism’s lack of concern for stakeholders/society’s interests and its greed for profit maximization. For example, Tech giants who are the big beneficiaries of deregulation pay few taxes and actively depress wages for working people.
      • Two, their increasing power to influence the governments is a cause of concern.
  • Second, with the US rejoining the 2015 Paris accord on mitigating climate change. Now the focus needs to shift on equal distribution of economic and social costs of moving away from carbon use. 
  • Third,  Liberalism of the ’90s resulted in increasing conflicts among nations and resulted in present “competitive multilateralism”. The forum will focus on global cooperation on important universal issues.

What India should do to deal with the impacts of the Global reset?

Rearrangement of the global order looks inevitable. India should prepare for changes that will be introduced due to it;

  • First, making capitalism more responsive is the duty of the state. The balance of political forces within societies will facilitate beneficial policy choices for different stakeholders.
  • Second, to resolve the challenge of climate change, the economic and social costs required for moving away from carbon use need to be equally distributed among different stakeholders.
  • Third, to promote Global co-operation, India must actively contribute to the framing of new rules to govern global capitalism and the reshaping of international institutions.
      • Simultaneously, we must also reform our own economy and society to make it more equitable, sustainable.
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