Apologies to purists for the quirky take on Marx’s quote on Communism, but two very starkly contrasting sets of data that came to the fore over the last few days shows how this reality is staring at us in the face.
On the one hand, the stock markets have been cheering an imminent return to a V-shaped economic recovery. The tech-heavy Nasdaq benchmark is above 12,000. Up 7 per cent last month, the S&P 500 recorded the best month since 1986 in August, according to Bloomberg.
Citigroup’s panic/euphoria model is having its longest run of extreme bullishness since the early 2000s. At around 1.1, the current reading is almost three times the level that denotes euphoria, Bloomberg reported.
This situation is likely to get worse as entire sectors are likely to be wiped out by the COVID-19 pandemic. But no one yet has shown any inclination of retraining those millions who lost their jobs to fit into the new scheme of things
These heady moves on the equity markets have propelled the net worth of the super-rich to unheard-of highs. Jeff Bezos, the world’s richest man and owner of Amazon. com, is now worth $200 billion (Dh734 billion). Elon Musk, owner of Tesla, has pushed into the top five, being worth $100 billion.
Now, news from the darker side.
Worldwide acute hunger
About 135 million people worldwide suffered from acute hunger in 2019, according to the 2020 Global Report on Food Crises. The figure has ticked up sharply from 108 million in 2016. It is expected to shoot up further with the COVID-19 pandemic exacerbating economic hardships worldwide.
With the focus on remote learning due to the pandemic, the UN children’s agency says at least a third of children couldn’t access remote learning when the COVID-19 pandemic closed schools, creating ‘a global education emergency’.
At the height of lockdowns meant to curb the pandemic, nearly 1.5 billion children were affected by school closures, UNICEF said. “For at least 463 million children whose schools closed due to COVID-19, there was no such a thing as remote learning,” UNICEF Executive Director Henrietta Fore said in a report, according to the Associated Press.
The report highlights significant inequality across regions, with schoolchildren in sub-Saharan Africa the most affected. The highest number of children affection by region were in South Asia, at least 147 million, according to the report. Children in the poorest households and in rural areas were most affected.
A recent UN report shows that the richest one per cent of the population are the big winners in the changing global economy, increasing their share of income between 1990 and 2015, while at the other end of the scale, the bottom 40 per cent earned less than a quarter of income in all countries surveyed.
No conspiracy theory this
Am I reading a conspiracy theory here, but wasn’t it just a year before this, in 1989, that the Berlin Wall came crashing down — an event that was hailed as the victory of democracy and freedom, signalling the beginning of the end of socialism, which was so often equated with totalitarianism?
It’s been more than three decades since that momentous event. Free market capitalism has had an unopposed run across the world during this period, where dictatorships have fallen like dominoes. The entrepreneurial free spirit has reigned supreme, and technology has spawned billionaires like never before, at the same time bringing the world closer together.
But are we not oversimplifying matters? As economic and social Darwinism held sway, did anyone hold a candle to those who lost out? In any race, there are bound to be losers and winners. So how do the weak survive?
Reading Marx in 2020
Readers will remember the Occupy Wall Street and the ‘We’re the 99%’ movements in recent years. The movements may have died down in the wake of the pandemic, but the issue remains on the surface with protests around the globe demanding an end to the restrictions in movement of people, as livelihoods of millions increasingly get wiped out. Quoting Marx again, the gap between the ‘haves’ and the ‘have-nots’ is widening fast.
Several global institutions have been sounding warning bells over this phenomenon. The Brookings Institution, in a recent report, noted that while income disparities between countries have reduced, income inequality within countries themselves have become much starker.
In the latest issue of Finance and Development, the International Monetary Fund’s (IMF) publication, Nobel laureate Joseph Stiglitz enumerates how income inequalities have translated into disparity in access to health care and other opportunities, resulting in the poorest sections of society suffering more than others.
The World Inequality Report states that the global top 1 per cent earners have benefited twice as much from global growth as the 50 per cent poorest individuals.
So what does the future hold? As we have seen, ever since the global financial crisis, which itself was a product of unbridled capitalism, the state has been a bigger player than ever in the financial sphere — quite a contrast to the laissez faire norms.
Stock markets ran a golden decade on the back on historic highs, all backed by the policies of governments around the world of low interest rates.
But as has been very often pointed out, companies have helped themselves with these low rates to boost their bottom line in the ‘inorganic’ way — that is through mergers and acquisitions, along with share buy-backs. The traditional ‘organic’ means of growth — building new factories, creating new jobs — has fallen by the wayside.
This situation is likely to get worse as entire sectors are likely to be wiped out by the COVID-19 pandemic. But no one yet has shown any inclination of retraining those millions who lost their jobs to fit into the new scheme of things.
As the situation stands today, there is little likelihood that global inequality will come down in the foreseeable future, in fact, just the opposite is the more probable scenario.
We began with a tweak to Karl Marx’s quote, so it is but fitting that we end with one: “Philosophers have hitherto only interpreted the world, in many ways, the point, however, is to change it.” Almost two centuries later, we are still waiting for that change.
