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02 February, 2016

Decoding Davos signals

BRP Bhaskar
Gulf Today

There were confusing signals from this year’s World Economic Forum meet at Davos, Switzerland, where, according to some observers, India figured as a potential saviour as its economy happens to be the fastest growing at the moment. What’s more, no country appears to be in a position to wrest that distinction in the immediate future.

Optimism about the world’s fastest growing economy contrasts with the economic gloom facing other emerging markets, an international news agency reported from Davos. But an Indian columnist who has not missed a single meet in the last 20 years wrote that the buzz around India 10 years ago was missing.

The difference between the Indian and international perceptions is understandable. India is seeking an opportunity to boost its exports, which registered a fall in the last two years. The developed nations are looking for an opportunity to sell more to India rather than buy more from it.

The interests of the two sides coincide at one point. India is looking for foreign capital to increase manufacturing facilities and developed nations are looking for safe investment destinations. However, building upon this coincidence of interests is not easy.

There was flight of capital from India when the current global slowdown began. But as the other emerging markets present a bleak picture Western investors are forced to gravitate towards India which has a seven per cent growth rate and a market of one billion plus consumers.

The theme of this year’s Davos meet was “Mastering the Fourth Industrial Revolution”. In a theme paper, Klaus Schwab, who founded WEF 46 years ago, wrote that unlike the first Industrial Revolution which used steam power, the second which used electric power and the third which used electronics, the fourth, which began in the last century, is characterised by a fusion of technologies that is blurring the lines between the physical, digital and biological spheres.

Breakthroughs now occur at an incredible pace and disrupt almost every industry in every country, Klaus said, adding: “We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale and scope, and complexity, the transformation will be unlike anything humankind has experienced before.”

Every one of the earlier industrial revolutions he listed too had altered the way we live and work. They also divided the world into haves and have-nots. Such divisions took place between countries as well as between peoples within each country. By and large, the second and the third reinforced the divisions caused by the first one. No discussion of the global economy can be divorced from the fact that the fourth too holds the potential to accentuate the division, this time at a much faster pace than before.

Klaus referred to the importance of people and values in his theme paper. “In its most pessimistic, dehumanised form, the Fourth Industrial Revolution may indeed have the potential to ‘robotise’ humanity and thus to deprive us of our heart and soul. But as a complement to the best parts of human nature – creativity, empathy, stewardship – it can also lift humanity into a new collective and moral consciousness based on a shared sense of destiny. It is incumbent on us all to make sure the latter prevails.”

This ominous aspect did not receive attention in the Davos discussions because the primary objective of the meet was to advance the interests of the haves. The breakthroughs that triggered the earlier industrial revolutions too held out prospects of conferring immense benefits on the people as a whole but the driving force behind them was optimisation of profit and there is nothing to indicate that capital can outgrow its predatory nature.

The World Bank, in its latest ease-of-doing-business survey, places India at 140th position. Both foreign and domestic businessmen have been pressing the government to make it easy to do business. Essentially what they want is relaxation of laws relating to taxation, labour and environment.

With a score of 38 in the 0-100 scale India was at the 76th place in a field of 168 in Transparency International’s corruption perception index last year. However, strong anti-corruption measures do not figure prominently in the demands of either foreign or domestic commercial interests because they can find their way around the problem on their own.

The Swedish Chamber of Commerce in India, which has a membership of 141 companies, said after an internal survey that one out of three companies expressed the view that not paying bribes is a ‘competitive disadvantage’. -- Gulf Today, Sharjah, February 2, 2016.

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