The richest 1pc club – Editorials

EDITORIAL: It is strange that on the one hand the pandemic, which is not yet over, has already increased unemployment and poverty, even threatened with “famines of biblical proportions” (WHO), but on the other hand it has also sent the fortune of the world’s richest 1% skyrocketing like never before. According to the World Inequality Report, published by the World Inequality Lab of the Paris School of Economics, “2020 marked the biggest increase in the share of wealth of global billionaires on record.” He went on to note that “as the wealth of billionaires has increased by over 3.6 trillion euros ($ 4 trillion), an additional 100 million people have joined the ranks of extreme poverty” means that “after more than 18 months of Covid-19, the world is even more polarized”. Much the same thing happened after the Great Recession of 2007-08 when the world’s central banks, led by the US Federal Reserve, intervened in markets on an epic scale not only by embezzling trillions of money. of taxpayers in rescue funds for the world’s biggest and most powerful. companies, but also engaged in excessive quantitative easing – old-fashioned money printing – to strengthen the balance sheets of big banks that had made bad bets.

Such things were made possible by what modern economists are beginning to call the financialization of economies, which began in the second half of the last century and gained momentum in the late 1990s. The corporate focus has begun to shift from serving employees, communities and corporations at large to a fanatical and determined obsession with making a profit. This phenomenon has resulted in a sudden and rapid growth in the size and reach of the Financial, Insurance and Real Estate (FIRE) sectors and also pushed things like financial markets and tech deeper into the markets than ever before. economies and societies. And in just a few decades, the predominant global trade is driven not by the relationships between national economies, but by multinational corporations coordinating extensive value chains. Thus, a run on a major bank can have repercussions far beyond the implosion of a particular country’s trade balance.

This is the reasoning behind the world’s biggest central banks whenever they have to scramble to prevent such institutions from collapsing by throwing money at them, no matter how little hands-off they do. classic neoliberal in the process. The Chinese are clearly experimenting with a new variant of capitalism, even though they call it “modern socialist economy,” and even a number of Western scholars and thinkers are beginning to see the intricacies. Calling it “state capitalism,” they say it just might be the thing to keep big, free-wheeling corporations in check in the future. If the state doesn’t bend over backwards to protect the biggest players in the corporate sector, and instead narrow them down when they cross one too many lines, it may well deliver the kiss of death to this style of capitalism. gangster who is now firmly controlling at least two-thirds of the world’s wealth.

Yet, as might be expected, China’s initiatives have come under fierce attack from Western economies, especially the United States and the EU, not primarily because of their economic innovations, but rather because China is on its way to becoming the world’s largest economy and most influential country by the middle of this century. This is unfortunate because the economic inequalities created by the financialization of capitalism, and exasperated by the pandemic, are not sustainable in the long term. In fact, by getting so far ahead of itself by tapping into the financial nerve centers of the modern world, the 1pc club of the super-rich might well have moved closer to its own expiration date; because different types of economic orders tend to emerge from pandemics than those that plunge into them. And just as the Great Plague of Europe ended feudalism, because most of the serfs who worked for their masters died more than anything else, it seems the Covid-19 pandemic is dragging the world to the cliff. from where he could throw crony and gangster capitalism on the edge once and for all.

Copyright Business Recorder, 2021