Reforming Capitalism

Context: The World Economic Forum’s (WEF) initiative for  ‘Great Reset’ of capitalism is based on the pandemic’s devastating effects on global society, technological revolution, and climate change.

Key Global Issues to Be Addressed by Great Reset

• Reforming capitalism: WEF has been at the forefront of calling for “stakeholder capitalism” that looks beyond maximizing profit for shareholders. However, it was criticized on following grounds -
  • Wall Street Journal criticizes it as a front for “irresponsible corporatism” that diverts cash flows from productive use of capital.
  • American left criticizes capital as more of profit maximization less about stakeholders.
  • Realists consider that State intervention is a must for responsible capitalism.
  • Large technology companies unprecedented power to influence the governments (tech giants pay few taxes and actively depress wages).
• Mitigating climate change: Re-joining Paris accord by the U.S. is not enough to resolve the internal (managing differential social impact) and external political conflicts (reconciling the divergent carbon policy imperatives).
• Establishing global cooperation: Getting universalist solutions amid intense political and economic and technological contestation has not only become harder.
  • It might lead to “competitive multilateralism” and construction of coalitions of willing, capable of developing and enforcing new rules.

Way Forward for India:

• Actively contribute to the framing of new rules to govern global capitalism and re-shaping of international institutions.
• Reform economy and society to make it more equitable, sustainable and capable of coping with rapid external change.

Conclusion: Only those nations which can effectively manage the dynamic interaction between the internal and external, will come out as winners in the Great Reset that is unfolding.