Context

Social inequalities and the grim problems of stark and continuing poverty are at the epicentre of the new world.

The ugly face of capitalism and growing inequalities

• The concentration of the health: The latest Oxfam Report presented at Davos points out that 2,153 billionaires have more wealth than 4.6 billion people.
• Rising poverty: The emergence of billionaires and oligarchs in different parts of the world coincides with increased poverty among the already poor people, especially children.
• Concept of stakeholder’s capitalism: These realities make observers question the tenability of stakeholder capitalism as a concept.
• Faults in the capitalism on display in 2008: The ugliest face of this capitalism was visible during the 2007-2008 economic crisis, first in the U.S. and thereafter across the European Union.
  • At that time, it appeared as if the global economy was on the verge of collapse.

Intensification of energy use and sustainability

• The relation between growth and energy: One of the chief characteristics of economic development is the intensification of energy use.
  • There is an unprecedented concentration of high energy density in all economic development strategies.
• Use of non-renewable sources: The bulk of the energy continues to be generated from non-renewable sources.
• Developing world capturing energy-generating sources: The developed world’s, and China’s, central objective is to capture energy-generating resources from across continents and put them to use to push GDP growth to greater heights.
  • In the process, sustainability is becoming a casualty.
• Higher waste generation: The higher the use of energy, the larger the amount of waste generated. Entropy, like time, is always unidirectional, it only goes forward.

Disposal of e-waste

• High energy consumption and disposal of waste: Egregious consumption of energy by the developed world has been accompanied by the disposal of residual products (‘e-waste’) on the shores of many African and Asian countries.
• Impact on the developing world: As a result of the disposal, the poor in the developing world are, unwittingly, drawn and exposed to toxic, hazardous materials like lead, cadmium and arsenic.
  • Hence, the ‘globalisation’ phenomenon has turned out to be nothing other than the exploitation of the developing world, with most countries being treated as a source of cheap labour and critical raw material.

Unfairness involved in the Globalisation

• Increasing consumption in the developing world: Countries in the developed world, and China, are ferociously using up finite raw materials without care or concern for the welfare of present and future generations.
• Bright and the dark side of the development: Certainly, there has been significant technological progress which has brought about a revolution in the fields of healthcare and communications, but there is also a dark side to this.
• System loaded in the favour of the rich: High expenses and Intellectual Property Rights load the system further in favour of the rich.
  • Pernicious system of carbon credit: To demonstrate how unfair the system is, one can look at the pernicious plan to set up a carbon credit system.
  • Under this, countries with high energy consumption trends can simply offset their consumption patterns by purchasing carbon credits, the unutilised carbon footprint, from poor developing countries.

Understanding the Nordic Economic Model

• ‘Nordic Economic Model’: It pertains to the remarkable achievements of the Scandinavian countries comprising Denmark, Finland, Iceland, Sweden, Norway, and allied territories. They also have-
  • Large public sector enterprises.
  • Extensive and generous universal welfare systems.
  • High levels of taxation.
  • And considerable state involvement in promoting and upholding welfare states.
  • Among the happiest countries: UN reports also indicate that the Nordic countries are the happiest countries in the world. The U.S., in contrast, is in 19th place.
  • The total population of the Nordic countries is estimated at almost 27 million people.
  • Among the richest countries: These nations are among the richest in the world when measured in terms of GDP per capita.

Enlightened Global Order

• Taking the Nordic model as a template, there are some ingredients that could be part of a new ‘enlightened global order’.
• What does the Global Order include? These should include-
  • Effective welfare safety nets for all.
  • Corruption-free governance.
  • A fundamental right to tuition-free education including higher education.
  • And a fundamental right to good medical care.
  • Shutting of tax havens.
  • Tax structure: In Nordic countries, personal and corporate income tax rates are very high, especially on the very rich. If a just, new world order is to arise, taxes everywhere should go up.
• Holding companies responsible: When it comes to the corporate sector, there are some new perspectives.
  • Changing the parameters of profit: In traditional business accounting, ‘bottom line’ refers to the financial year’s profit or loss earned or incurred by the company on pure financial parameters.
  • The four ‘Ps’: Following vigorous debates, a new format has emerged under which a company’s performance is measured through four ‘Ps’.
  • The first is ‘P’ for ‘profit’.
  • The second ‘P’ is for people — how the company’s actions impact not only employees but society as a whole.
  • The third ‘P’ is for the planet — are the company’s actions and plans sensitive to the environment?
  • The fourth ‘P’ is for purpose, which means the companies and individuals must develop a larger purpose than ‘business as usual’. They must ask: what is the larger purpose of the company, apart from generating profits?
  • Using performance in terms of four ‘P’s: Using big data and text analytics, a company’s performance can be measured in terms of all the four ‘P’s and a corporate entity can be thus held accountable. Market capitalisation need not be the only way to measure the value of a company.

Conclusion

Much work is yet to be done to uplift the global economic order, but the important point is that new tools are now emerging. What is required is a global consensus and the will to make the planet more sustainable, so that all individuals can live with justice and equality, ensuring that not a single child is hungry or seriously unwell because of poverty or lack of affordable medical help.

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now