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Davos: Dodging the cause of the crisis

Jan 24 2016 14:16
Terry Bell

Cape Town - The annual World Economic Forum (WEF) meeting in Davos, Switzerland, ended this week. And it failed to deal with the main theme it belatedly claimed to be this year’s focus: the so-called Fourth Industrial Revolution.

This is the name given to what was, in earlier years, called the integrated circuit or microchip revolution that spawned the exponential growth of automation, robotics and the development of artificial intelligence.

What we did have was a comment by Minister in the Presidency Jeff Radebe that South Africa should lead this revolution in Africa.  But he also admitted, almost as an aside, that this might result "in a loss of jobs". Overall, the impression was that the future at least looked promising.

But this meeting, from all accounts, was much more downbeat than previous gatherings that provided a glittering platform for the movie and media celebrities to parade the hearts on their sleeves. Such froth was clearly seen as inappropriate at a time when even the most diehard market bulls concede that the economic crisis may be deepening. And looming over it all is the Fourth Revolution. 

Not that any real attempt was made to properly analyse it, let alone provide any possible answers.

And the comments by Radebe were fully in line with the overall view, well expressed by Klaus Schwab, the billionaire founder and CEO of what is, in effect, the richest rich man’s club on earth. Before the latest WEF meeting began, Schwab wrote that this revolution “could yield greater inequality, particularly in its potential to disrupt labour markets. As automation substitutes for labour across the entire economy, the net displacement of workers by machines might exacerbate the gap between returns to capital and returns to labour.”

He was right. But he then went on to claim: “On the other hand, it is also possible that the displacement of workers by technology will, in aggregate, result in a net increase in safe and rewarding jobs.” He failed to add: “But only for the very few.”

This is because Schwab and his ilk have a decidedly blinkered view. It is summed up by his comment: “In the future, technological innovation will also lead to a supply-side miracle, with long-term gains in efficiency and productivity.”

In this he is correct in terms of long-term gains in efficiency and productivity. However, within our present system this has already led not to any miracle, but to gluts and the obscene situation of overcapacity and overproduction in a world where poverty is still the lot millions of men, women and children.

It is a world where societies are starting to disintegrate under the economic and social pressures resulting from a political and economic system that is clearly incapable of dealing with the world of the 21st century.

But it is a system to which Schwab and his 999 fellow members of the WEF, along with other beneficiaries, are wed. So instead of dealing openly and honestly with the real consequences of this Fourth Revolution and proposing answers that would benefit humanity as a whole, the WEF avoided the underlying cause and concentrated instead on symptoms such as the pollution of the seas caused by plastic waste.

As a result, as this 46th annual talk shop ended, it brought to mind the aphorism: “There are none so blind as those who will not see.” And, perhaps more appropriately: “The most deluded people are those who choose to ignore what they already know.”

* Terry Bell is a political, economic and labour analyst. Views expressed are his own. Follow him on twitter @telbelsa.

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jeff radebe  |  terry bell  |  davos  |  labour  |  wef  |  world economy



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