Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, and author of the best-selling books “The Fourth Industrial Revolution” and “COVID-19: The Great Reset” released his new book, “Stakeholder Capitalism: A Global Economy that Works for Progress, People and Planet”, co-authored with Peter Vanham.
In the book, Schwab looks at the achievements and shortcomings of the global economic system dominant in the past decades: shareholder capitalism in the West, and state capitalism in the East. Both systems enabled unprecedented advances in wealth, measured by GDP and profits, he writes. But they also led to historical economic inequality, and the degradation of the environment.
“We can’t continue with an economic system driven by selfish values, such as short-term profit maximization, the avoidance of tax and regulation, or the externalizing of environmental harm,” Schwab writes. “Instead, we need a society, economy, and international community that is designed to care for all people and the entire planet.”
Schwab proposes a third way: the model of stakeholder capitalism. It is one where companies seek long-term value creation instead of short-term profits; governments cooperate to create the greatest possible prosperity for their people, and civil society and international organizations complete the stakeholder dialogue, helping balance the interests of people and the planet.
Schwab first wrote about the stakeholder model in his book “Modern Enterprise Management” in 1971. 50 years on, his views are becoming mainstream in the global business community. Advocacy groups such as the US Business Roundtable endorsed stakeholder capitalism in 2019, and more than 60 World Economic Forum members this week signed up for the “Stakeholder Capitalism Metrics”.
Various global commentators provided an “Advance Praise” of the book. Cellist Yo-Yo Ma said it “offers a vision for politics and economics driven not only driven by value creation, but by values”. Primatologist and anthropologist Jane Goodall, called it “fascinating”, and Oxfam Director Gabriela Bucher a “timely analysis”. A discussion on the book was held on Monday at the Davos Agenda.
Political and business leaders also offered their endorsement, including the CEOs of Microsoft, Salesforce, Tata Sons, Grupo Santander, Bank of America, and the Prime Ministers of Belgium and the Netherlands, Alexander De Croo and Mark Rutte. Excerpts of the book are available for publication here, and here.
Vietnam’s economic growth is expected to accelerate to 5.5% in 2022
Vietnam’s economic recovery is likely to accelerate in 2022 as GDP growth is expected to rise to 5.5% from 2.6% in the year just ended, the World Bank’s economic update for Vietnam Taking Stock says.
Assuming the COVID-19 pandemic will be brought under control at home and abroad, the forecast envisions that Vietnam’s services sector will gradually recover as consumer and investor confidence firms, while the manufacturing sector benefits from steady demand from the United States, the European Union, and China. The fiscal deficit and debt are expected to remain sustainable, with the debt-to-GDP ratio projected at 58.8 percent, well below the statutory limit.
The outlook, however, is subject to serious downside risks, particularly the unknown course of the pandemic. Outbreaks of new variants may prompt renewed social distancing measures, dampening economic activity. Weaker-than-expected domestic demand in Vietnam could weigh on the recovery. In addition, many trading partners are facing dwindling fiscal and monetary space, potentially restricting their ability to further support their economies if the crisis persists, which in turn could slow the global recovery and weaken demand for Vietnamese exports.
Careful policy responses could mitigate these risks. Fiscal policy measures, including temporary reduction of VAT rates and more spending on health and education, could support aggregate domestic demand. Support for affected businesses and citizens could be more substantial and more narrowly targeted. Social protection programs could be more carefully targeted and efficiently implemented to address the severe and uneven social consequences of the crisis. Heightened risks in the financial sector should be closely monitored and addressed proactively.
Entitled “NO TIME TO WASTE: The Challenges and Opportunities of Cleaner Trade for Vietnam,” this edition of Taking Stock argues that greening the trade sector should be a priority. Trade, while an important driver of Vietnam’s remarkable economic growth over the past two decades, is carbon-intensive —accounting for one-third of the country’s total greenhouse gas emissions — and polluting.
While Vietnam has started to decarbonize activity associated with trade, more needs to be done to respond to mounting pressures from main destination markets, customers, and multinational companies for greener products and services.
“Trade will be key component of Vietnam’s climate actions in the years to come,” said Carolyn Turk, World Bank Country Director for Vietnam. “Promoting greener trade will not only help Vietnam follow through on its pledge to reach net zero emission in 2050 but will also help it keep its competitive edge in international markets and ensure trade remains a critical income and job generator.”
The report recommends the Government act on three fronts: facilitate the trade of green goods and services, incentivize green foreign direct investment, and develop more resilient and carbon-free industrial zones.
Taking Stock is the World Bank’s bi-annual economic report on Vietnam.
Why cash is a critical resource with no substitute in cashless societies
Many people feel that their right to use cash is at risk. The reason this is so significant might be lost on some, but cash is often an unheralded asset. Sentiment on the subject is so strong in the United Kingdom that a group of stakeholders recently launched a not-for-profit with the aim of safeguarding this ancient and critical resource.
The Cash Supply Alliance (CSA) will promote the widespread acceptance and availability of cash, so it remains a valid payment option for UK consumers of all demographics living anywhere in the country.
“We know that low income, rather than age, is the most accurate indicator for cash dependency,” explains Nigel Constable, Chairman of CSA. For many, it is also about the freedom to use cash, for budgeting, or to avoid card data being captured and monetised by private companies, he adds.
Though it is not taught in schools or discussed much day-to-day, cash plays a broad array of functions not easily replicated by other technologies. One extremely important quality is the capacity to protect an individual’s privacy.
Protection of privacy
The very idea of privacy seems to become more and more diluted each year. The penetration of digital technology in our lives, and in the infrastructure that makes up our societies, makes this a pernicious problem. On top of this, the way in which data is used, for and against us, incentivises the erosion of basic rights, such as the right to a life free of surveillance.
In modern times, our phones and computers are monitored. Unfortunately, this is not fiction nor conspiracy: Facebook and other companies are even exploring the use of special data analysis techniques to mine even our encrypted data, as a way to eke out that little more bit value from users of their services.
Your card transactions already carry quantities of data that can be used to track your life, and your mobile phone never stops talking with the network providers that make its mystical powers function. For many digital payment technologies, privacy is patently impossible; and where that is not the case, companies are actively looking for ways to circumvent obstacles to their profits.
This is an area where cash offers one of the only antidotes: cash is inherently private, requiring no third-party services nor electronic systems to function. In many ways, it is one of the last bastions of privacy in our increasingly monetised society. For many citizens, this safe harbour is something far too important to lose without a fight.
Another strength that cash offers is its power to provide social inclusion. Cash is a public good that belongs in the public domain. Unlike mobile payments or credit cards, the citizens of a country benefit from having banknotes available to them without needing to offer a private enterprise anything in return. In fact, cash is the only means of payment that is entirely public.
This vital quality is part of why Advocate General Giovanni Pitruzzella of the Court of Justice of the European Union stated that cash must be legally protected: “For those vulnerable individuals, cash is the only form of accessible money and thus the only means of exercising their fundamental rights linked to the use of money.”
No other mechanism protects vulnerable people’s rights to conduct payments. That is why, in the opinion of Pitruzzella, it should generally be forbidden to prevent the use of cash for payments.
Cash and emergencies
The power of cash to help those in need goes beyond the routine difficulties of vulnerable people. It can also serve society at the worst possible periods.
During national emergencies, it is well-documented that people turn to cash for assurance. During financial crises, moments of political insecurity, and even most recently with the coronavirus pandemic — it is common for households to store cash as a lifeline. People sometimes fear that systems could break down, or that banks could even fail. In such instances, it offers great peace of mind to know that, no matter what happens, cash is available to keep life moving and food in the home.
This extends to extreme scenarios, such as humanitarian crises too. There are few things more essential for the migrating refugee than the ability to pay for essentials while they complete their uncertain journey. Phones might die, networks fail, but cash is one thing they can be sure of. That is why NGOs often hand out small packets of cash when they intervene in countries or regions in turmoil.
Cash during disruption
Cash has another vital function: it is the stopgap when typical infrastructure fails. When power outages happen, or a technical fault in the ever-expanding digital supply causes disruption — cash is dependably there to catch the economy while it stumbles. When Visa went down around the world, followed weeks later by rival Mastercard’s outages in Europe, each time it was the humble banknote that kept the day’s transactions alive.
As the climate becomes more hostile, we can expect the robustness of our technology systems to be more frequently tested by extreme weather events. In many of these future scenarios, cash use will likely be the decider, determining whether people face a black day for businesses, or merely an inconvenient near-miss for the books. Simply put: it is important to value cash, as it cannot crash.
Cash in the cyber-world
Cash also cannot be hacked. Given the terrifying rise in cyber-attacks and ransomware incidents, many people are understandably sceptical about digital stores of value.
“In the digitalized system, it is easy for someone in Russia, China, whatever, to just shut it off,” according to Björn Eriksson, the former head of Interpol. “[Cash] you can hide in your car, or your stove, or whatever,” he highlights.
Many bankers and business people are also concerned about the trends in cybercrime; they are aware, following research, that the only truly robust means of payment is the banknote. All the rest can be ‘turned off,’ as it were.
With all of these different dimensions in mind, the status of cash as a critical resource becomes self-evident. All the same, whether cash remains available to the public in the coming years might be determined largely by how hard people try in getting their voices heard.
COVID-19 variants, rising debt, threaten global economic growth
Global growth will slow down over the next two years in the face of “fresh threats” from COVID-19 variants and rising inflation, debt and income inequality, the World Bank said on Tuesday in its latest report.
While economic growth experienced a strong rebound in 2021, it is expected to decline markedly from 5.5 per cent last year to 4.1 per cent in 2022, and drop to 3.2 per cent in 2023.
Disruption and deceleration
Furthermore, notable deceleration in major economies, including the United States and China, will have an impact on external demand in their emerging and developing counterparts.
“The world economy is simultaneously facing COVID-19, inflation, and policy uncertainty, with government spending and monetary policies in uncharted territory. Rising inequality and security challenges are particularly harmful for developing countries,” said David Malpass, President of the World Bank Group.
“Putting more countries on a favorable growth path requires concerted international action and a comprehensive set of national policy responses.”
The slowdown will coincide with a widening divergence in growth rates between advanced and emerging or developing economies.
Setback in fragile economies
By 2023, all advanced economies will have achieved a full output recovery, the report said, but output in emerging and developing economies will remain four per cent below its pre-pandemic trend.
The setback is even larger in fragile and conflict-affected economies, whose output will be 7.5 per cent below the pre-pandemic trend. For small island states, it will be 8.5 per cent below.
Meanwhile, rising inflation is constraining monetary policy, with low-income workers particularly hit hard. Inflation is running at the highest rates since 2008, both globally and in advanced economies, and has reached its highest rate in a decade in emerging market and developing economies.
Prioritize vaccine equity
The report contains analytical sections that outline three emerging obstacles to durable recovery in developing economies. It also includes regional outlooks for growth over the next two years.
Mari Pangestu, the World Bank’s Managing Director for Development Policy and Partnerships, stressed the importance of multilateral collaboration as the choices policymakers make in the coming years will decide the course of the next decade.
“The immediate priority should be to ensure that vaccines are deployed more widely and equitably so the pandemic can be brought under control. But tackling reversals in development progress such as rising inequality will require sustained support,” she said.
“In a time of high debt, global cooperation will be essential to help expand the financial resources of developing economies so they can achieve green, resilient, and inclusive development.”
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