World Economic Forum: Financial crisis, inequality threatens entire social contract
The World Economic Forum (WEF) – an annual gathering of the world's most powerful business and government leaders – has assessed global economic risks in the wake of the worst financial crisis since WWII.
Their conclusion? The crisis – along with an increasing gap between rich and poor – has fuelled widespread resentment that foretells social unrest, nationalism and even a break-down in the so-called “social contract” between citizens and their governments around the world, according to 500 of the world's experts on industry, government and civil society.
“For the first time in generations, many people no longer believe that their children will grow up to enjoy a higher standard of living than theirs,'' said Lee Howell, managing director of the WEF. “This new malaise is particularly acute in the industrialized countries that historically have been a source of great confidence and bold ideas.”
The report came in advance of the WEF's annual meeting in Davos, Switzerland, which every year attracts thousands of activists – many of them with anti-capitalist views strikingly similar to the Forum's own conclusions, it would seem.
Tasked with assessing global economic risks, WEF warned that the benefits its members believed came from globalization could be eliminated in a “dystopian future.”
“This report is a wake-up call to both the public and private sectors to come up with constructive ways to realign the expectations of an increasingly anxious global community,” said John Drzik, CEO of Oliver Wyman management consultants.
The report went so far as to suggest that escalating economic inequality – as well as a gap between skilled and unskilled workers – would feed a vicious cycle of disillusionment and upheaval, threatening the traditional bond that allows nation-states and governments to exist in the first place: the social contract.
The report comes in the wake of a year of uncertainty in Europe, with Greece facing months of rioting and massive demonstrations against brutal austerity measures, which dramatically clawed back the country's social safety net. England faced similar circumstances when it attempted to reduce pension payments.
This years Davos summit starts on January 25. The risk assessment report was based on a survey of 469 industry, government and civil society experts, who suggested across the board that the policies and institutions of the last century may not hold up against an increasingly interdependent and complex 21st century world.
The report also warned that the benefits of social media – such as Twitter and Facebook – are overshadowed by a “dark side of connectivity,” in which rioting can be fuelled by instant communication networks and societies are susceptible to the “malicious” intent of cyberattackers.
With files from The Canadian Press.