Escalating inequality is the work of a global elite that will resist every challenge to its vested interests

The Guardian
22 January 2015

Photograph: Fabrice Coffrini/Getty Images


The president of the World Bank yesterday urged the international community to help developing nations cope with a warming planet as the first day of the World Economic Forum (WEF) in Davos was dominated by calls to make 2015 a year of action on climate change.

Jim Kim called for rich and poor countries to put aside their differences over tackling climate change as he warned that the hottest year on record in 2014 was evidence of accelerating global warming.

“We are seeing the accelerated impact of climate change. Last year was the hottest on record. That matters. Extreme weather is real. It’s a complete no brainer to move towards cleaner, more liveable cities,” said Kim.

He was speaking to the Guardian after Al Gore launched an initiative to get the world’s population behind climate change ahead of crucial United Nation talks scheduled to begin in November by teaming up with the pop star Pharrell Williams. A 24-hour-long live music extravaganza is to be held in June – with concerts involving more than 100 as yet unannounced acts on seven continents – and it will be the second time the former US vicepresident has teamed up with the singer to raise awareness of climate change.

Launching the Live Earth: Road to Paris concert in front of business leaders, politicians and policymakers assembled in the Swiss mountain tops, Gore said: “The purpose is to have a billion voices with one message to demand climate change now.”

“It is absolutely crucial that we build public will for an agreement,” said Gore, who has won the Nobel peace price for his work on climate change.

Much hinges on the UN-based talks in Paris, attendees at the Davos meeting were told. “There is a huge challenge ahead for the rest of this year,” Kim told the Guardian.

Kim noted there had been progress over the last 12 months, including the UN general assembly’s commitment to set a carbon price, the agreement between the US and China on carbon emissions and the steps by big developing countries, such as India to invest in renewable energy.

“The key is coming up with a vision of how we are going to finance mitigation and adaptation to climate change,” said Kim, who runs an institution dedicated to eradicating poverty in the developing world. “We have got to get away from the mutual accusations between rich and poor and move towards cohesive collaboration. Things are different and if we can find ways of being creative, particularly on funding, we are more likely to find agreement. What we don’t want is to get to a situation where developing countries are saying to the rich countries: ‘where’s that $100bn a year you promised us’.”

The hopes for progress in Paris combined with the collapse in the oil price – at its lowest level since 2009 – were also seized upon by Lord Stern, a former advisor to previous UK governments on climate change. “This year will shape the next 20 … it is the poor who are hit hardest by climate change,” Stern said.

He called on policy markers to take enlightened action. “If you want to put a carbon tax on, now is absolutely the right moment,” said Stern.

Gore had started the first full day of events at the annual gathering in Davos by telling delegates: “This is the year of climate”.

Speaking against a backdrop of images intended to show the impact of climate change, Gore launched his plans amid criticism at the WEF of delegates arriving in private jets to attend the conference in 5,000 feet up in the Swiss Alps. The organisers of WEF urge delegates not to fly by private jet and use the train instead.

Williams, who fronted a similar 24-hour Live Earth event in 2007, when Rihanna and Genesis were among the performers, said: “We are going to have humanity harmonise all at once.”

Gore said the 18 June event will take place on seven continents, including Antarctica where climate change scientists are based. The other venues are China, Sydney, Rio de Janeiro, Cape Town, New York and Paris.

The billionaires and corporate oligarchs meeting in Davos today are getting worried about inequality. It might be hard to stomach that the overlords of a system that has delivered the widest global economic gulf in human history should be handwringing about the consequences of their own actions.

But even the architects of the crisisridden international economic order are starting to see the dangers. It’s not just the maverick hedge-funder George Soros, who likes to describe himself as a class traitor. Paul Polman, Unilever chief executive, frets about the “capitalist threat to capitalism”. Christine Lagarde, the IMF managing director, fears capitalism might indeed carry Marx’s “seeds of its own destruction” and warns that something needs to be done.

The scale of the crisis has been laid out for them by the charity Oxfam. Just 80 individuals now have the same net wealth as 3.5 billion people – half the entire global population. Last year, the best-off 1% owned 48% of the world’s wealth, up from 44% five years ago. On current trends, the richest 1% will have pocketed more than the other 99% put together next year. The 0.1% have been doing even better, quadrupling their share of US income since the 1980s.

This is a wealth grab on a grotesque scale. For 30 years, under the rule of what Mark Carney, the Bank of England governor, calls “market fundamentalism”, inequality in income and wealth has ballooned, both between and within the large majority of countries. In Africa, the absolute number living on less than $2 a day has doubled since 1981 as the rollcall of billionaires has swelled.

In most of the world, labour’s share of national income has fallen continuously and wages have stagnated under this regime of privatisation, deregulation and low taxes on the rich. At the same time finance has sucked wealth from the public realm into the hands of a small minority, even as it has laid waste the rest of the economy. Now the evidence has piled up that not only is such appropriation of wealth a moral and social outrage, but it is fuelling social and climate conflict, wars, mass migration and political corruption, stunting health and life chances, increasing poverty, and widening gender and ethnic divides.

Escalating inequality has also been a crucial factor in the economic crisis of the past seven years, squeezing demand and fuelling the credit boom. We don’t just know that from the research of the French economist Thomas Piketty or the British authors of the social study The Spirit Level. After years of promoting Washington orthodoxy, even the western-dominated OECD and IMF argue that the widening income and wealth gap has been key to the slow growth of the past two neoliberal decades. The British economy would have been almost 10% larger if inequality hadn’t mushroomed. Now the richest are using austerity to help themselves to an even larger share of the cake.

The big exception to the tide of inequality in recent years has been Latin America. Progressive governments across the region turned their back on a disastrous economic model, took back resources from corporate control and slashed inequality. The numbers living on less than $2 a day have fallen from 108 million to 53 million in little over a decade. China, which also rejected much of the neoliberal catechism, has seen sharply rising inequality but also lifted more people out of poverty than the rest of the world combined, offsetting the growing global income gap.

These two cases underline that increasing inequality and poverty are very far from inevitable. They’re the result of political and economic decisions. The thinking person’s Davos oligarch realises that allowing things to carry on as they are is dangerous. So some want a more “inclusive capitalism” – including more progressive taxes – to save the system from itself.

B ut it certainly won’t come about as a result of Swiss mountain musings or anxious Guildhall lunches. Whatever the feelings of some corporate barons, vested corporate and elite interests – including the organisations they run and the political structures they have colonised – have shown they will fight even modest reforms tooth and nail. To get the idea, you only have to listen to the squeals of protest, including from some in his own party, at Ed Miliband’s plans to tax homes worth over £2m to fund the health service, or the demand from the one-time reformist Fabian Society that the Labour leader be more pro-business (for which read procorporate), or the wall of congressional resistance to Barack Obama’s mild redistributive taxation proposals.

Perhaps a section of the worried elite might be prepared to pay a bit more tax. What they won’t accept is any change in the balance of social power – which is why, in one country after another, they resist any attempt to strengthen trade unions, even though weaker unions have been a crucial factor in the rise of inequality in the industrialised world.

It’s only through a challenge to the entrenched interests that have dined off a dysfunctional economic order that the tide of inequality will be reversed. The anti-austerity Syriza party, favourite to win the Greek elections this weekend, is attempting to do just that – as the Latin American left has succeeded in doing over the past decade and a half. Even to get to that point demands stronger social and political movements to break down or bypass the blockage in a colonised political mainstream. Crocodile tears about inequality are a symptom of a fearful elite. But change will come only from unrelenting social pressure and political challenge.