Davos 2018: Capitalism still has much to do before it can claim victory

‘The world is getting better! Rejoice!’

An entire style of political commentary is built around this truism. It usually represents an argument for the continuation of the status quo; however it is also a rejoinder to the pessimists. Steven Pinker is its leading guru. Poverty, war, famine – all are waning; therefore one should put away the dog-eared copy of Marx or the Che Guevara t-shirt and celebrate the onward march of progress.

I call it a truism because it is neither a new argument nor a particularly enlightening one. Its ideological function is to sooth the consciences of liberals who have made their peace with capitalism and capitalists who have made their peace with the system’s injustices.

Yet at the same time it is incumbent on reality-dwelling opponents of the wisenheimer style to accept some of points made by the optimism-mongers.

Indeed, there has been a significant reduction in global poverty over recent decades. In 2015, the number of people in the world living in extreme poverty – classed as less than $1.90 a day – fell below 10 per cent for the first time. The absolute number of deaths from war has been declining since 1946. The sorts of famines that wipe out upwards of a million people have been eliminated. As Yuval Noah Harari puts it bracingly in his book Homo Deus: “in the early twenty-first century the average human being is far more likely to die from bingeing at McDonald’s than from drought, Ebola or an al-Qaeda attack”.

This sort of thing is a challenge to the political left but music to the ears of the statesman and business elites gathering at the World Economic Forum in Davos this week. They will be cheered even more by the news that the world is enjoying its strongest period of economic growth since the end of the global financial crisis.

But those meeting in the Swiss mountain resort would do well to heed some of the more sceptical accounts of this story of seemingly unstoppable progress. In many respects the world is getting better. But it is not nearly as straightforward as some would have us believe.

To cite a few examples: there is less war today because of a nuclear balance of terror which probably makes the extinction of life on earth more likely. Despite the decline of apocalyptic famines, there has actually been an increase in recent years in the number of smaller famines. Global inequality has been declining yet inequality within developed countries is increasing. Since 2000, the average weekly wage for an American worker in the bottom tenth of earnings has fallen by 3.7 per cent in real terms, while those near the top of the distribution have seen real wages rise by 9.7 per cent.

To put this in a domestic – and perhaps more three dimensional – context, cast your mind back to the referendum on Britain’s membership of the European Union in 2016. In the lead up to the vote the public were bamboozled with spreadsheets which appeared to demonstrate that they’d never had it so good. Leaving the EU could jeopardise all that, the Remain campaign warned incessantly in highly charged language.

So why didn’t the message wash with the public? Largely, I suspect, because life for many felt at odds with the narrative of a confident march towards the sunlit uplands of a new golden age. I use the word ‘feel’ you notice but Brexit was about more than resentful emotion striking out against cool logic, despite the highfalutin histories of Brexit currently being penned by certain liberals.

I spent much of 2016 travelling around England and Wales and during that journey I was made familiar with a story of decline that contrasted sharply with pollyanna conjecture about the good life. In towns all over the country reasonably well-paid working class jobs had, over recent decades, been replaced by zero hour ‘gigs’ in call centres and dystopian distribution sheds. Many of the pubs, social clubs, voluntary groups and neighbourhood associations – what the political theorist Edmund Burke called the ‘little platoons’ – had similarly disappeared, replaced by rent-to-own stores and betting shops.

Of course progress was real in a sense: as we become more affluent as a society there is invariably a degree of ‘trickle down’, the much-maligned theory beloved by advocates of the free market. To bring in a metaphor, if the wealthy residents of a mixed neighbourhood invest in new street lighting the poorer residents will inevitably derive some benefit from it too. Similarly, progress implies the creation of new technology and with it the obsolescence of the old, which becomes cheaper and more widely available in the process.

But the heads of state gathering in Davos this week would do well to look beyond increasingly cheery global growth forecasts. Not out of some misplaced desire to massage the statistics and paint a picture of capitalism in terminal crisis (something quite unlikely at Davos at any rate). But rather because most accounts of progress usually only tell half the story.

As the International Monetary Fund put it yesterday in words that might have left the mouth of Shadow Chancellor John McDonnell, tackling inequality within wealthy nations is “not only a moral imperative. It is critical for sustaining growth”.