WEF: Need for “Great Reset” of Capitalism – UPSC GS2

Read about World Economic Forum from Prelims Section.
  • WEF’s online Summit held.
  • Its physical meeting is scheduled to take place in Singapore in June 2021. It is only the second time after 2002 that Davos annual meeting is taking place outside Davos.
  • Choosing Singapore instead of any European or American city is a symbol of shifting focus on Asia.
What is “The Great Reset”?
  • The concept has been given by the founder and executive chairman of the WEF- Klaus Schwab.
  • The Great Reset is about reforming market-led Capitalism into stakeholder capitalism which will be focussed on ensuring equality and sustainability.
  • The concept is developed based on the assessment that the world economy is in deep trouble. Events like the pandemic, ongoing technological revolution, impacts of climate change have further worsened the global situation.
  • Hence, the concept of  “The Great Reset” suggests, there is an urgent need to reform global societies and economies. Reforms should be brought into every industry of the world and every country should participate in it.
Why the “Great Reset” initiative is a step in the right direction?
  • Economic reforms like deregulation and globalization reduced barriers to capital movement within the countries. Now it is being challenged even in a country like the US.
  • US and EU countries failed in dealing with the COVID pandemic and its economic impacts. Whereas Asian Countries handled it effectively. It magnifies the failure of the Capitalism model of these countries.
How focus areas of The Great Reset’ are relevant for the present world?
The agenda of The Great Reset focuses on many key issues faced by the world today. Three important themes among them are,
  • From Capitalism to Stakeholder Capitalism: Serious thinking on moving from capitalism to “stakeholder capitalism”. Because
    • Capitalism’s lack of concern for stakeholders/society’s interests and its greed for profit maximizationFor example, Tech giants who are the big beneficiaries of deregulation pay few taxes and actively depress wages for working people.
    • Their increasing power to influence the governments is a cause of concern.
  • Equal distribution of costs: With the US rejoining the 2015 Paris accord on mitigating climate change. Now, the focus needs to shift on equal distribution of economic and social costs of moving away from carbon use. 
  • From competitive multilateralism to global cooperation: Liberalism of the ’90s resulted in increasing conflicts among nations and resulted in present “competitive multilateralism”. The forum will focus on global cooperation on important universal issues.
Way forward for India
Rearrangement of the global order looks inevitable. India should prepare for changes that will be introduced due to it;
  • India must actively contribute to the framing of new rules to govern global capitalism and the reshaping of international institutions.
  • Simultaneously, we must also reform our own economy and society to make it more equitable, sustainable.

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