The Shadow Chancellor will head to the Alps next week to take on the elite. But what will he say?by / January 16, 2018 / Leave a comment
You know truth is stranger than fiction when Nigel Farage wants a second referendum on Brexit and John McDonnell accepts an invitation to go to the World Economic Forum in Davos next week. We are used to politics throwing up all sorts of surprises, but there are few things as incongruous as this Labour Shadow Chancellor joining up with what he might easily call “class enemies” as they descend on the Alpine village.
Davos attendees comprise, for the most part, senior corporate executives, bankers, mainstream politicians and journalists. Some of the 2,500 attendees qualify for grants, but most have to pay. In light of various membership and partnership arrangements, the cost ranges between 60,000-600,000 Swiss francs, or £45,000-£450,000, plus the attendance fee, travel, accommodation, entertainment, and, if required, security costs. For about £500, you could get admitted but your access would be highly restricted. While many present, including NGO leaders and academics, may be politically sympathetic to McDonnell, the global elite is for the most part the opposition.
Davos couldn’t be more different from the annual Labour Party or TUC conference in a provincial city or faded seaside town. In 2015 Jeremy Corbyn, promoting a piece he’d written in the Morning Star, summarised his view on Twitter when he wrote: “The obscene hypocrisy of Davos and its lectures to all of the 99pc. Morning Star: Dealings in faux concern.” Much more recently, when the investment bank Morgan Stanley reported that a Labour government would be a bigger threat to British business than Brexit, Corbyn responded that the authors were right: Labour would be a “threat to a damaging and failed system that is rigged for the few.”
So, what might John McDonnell hope to achieve by going to Davos, which will be full of the very people he views as the problem?
The only information provided at the time of the announcement of his attendance was that he would be going to “set out the party’s alternative economic approach” and to explain why “capitalism is failing and why it is vital to rewrite the rules of the global economy.”
The irony is that Davos is keenly aware of these failings but suddenly finds it has no scribes to rewrite the approach. At least, not the kind of approach that it would like. It certainly has little faith in US President Donald Trump, and in a show of support that bordered on sycophancy or ignorance, it hailed President Xi Jinping this time last year as the saviour of globalisation. This year, in more irony, Trump will attend this liberal fest, much to the chagrin of his Republican base. Perhaps McDonnell will take a leaf out of Xi’s Davos playbook—empty rhetoric, but framed in a way that a less-than-confident elite audience can nevertheless applaud and discuss over Gluhwein or Schnapps.
This year’s Davos theme is “Creating a Shared Future in a Fractured World.” So, the organisers do get it. The World Economic Forum website notes that economic prosperity and social cohesion are not one and the same any more. Something must be done.
To be fair, some notable Davos people, such as the founder, Klaus Schwab, and Bill Gates, have long been arguing the case for better global corporate citizenship, climate change mitigation, and for those with fortunes to focus on the fortunes of others, including the poor and the sick. Davos may be seen as a jamboree for the rich and famous, but it is certainly not heartless or ineffective when it comes to raising public awareness and issue-mobilisation.
“The website notes that economic prosperity and social cohesion are not one and the same. Something must be done”
Yet on the big macro issues, the Davos crowd has become much more anxious, if not humble, in the wake of the financial crash. It is anxious about the continuing fragility of the global economy even though the cyclical performance over the period 2017-18 looks quite respectable. It will pore over the global economy’s staying power, the weakness of investment and productivity, the disruptive economic and social effects of new technologies, the Chinese threat to the west in big data, robotics and artificial intelligence, how to manage cryptocurrencies and new financial technologies, and climate change.
McDonnell will aim to hit other spots on which Davos feels subdued and embarrassed about being wrong. Subdued—as a result of being elbowed off the global platform by the rise in populism and nationalism, which has rejected what had been regarded as sacrosanct liberal values. Embarrassed—that its belief in free market capitalism, or at least regulation-lite capitalism, has not had good outcomes, lifted the welfare of most people or prevented uncomfortable increases in income inequality.
He may even be playing to a partially sympathetic gallery. Some captains of industry and finance now opine, whether they believe it or not, that high and persistent income inequality generates profound negative effects on the economy. Karl Marx predicted that income inequality under capitalism would eventually undo it. His predictive powers may have been rather blunt but his analysis was on the button. Lenin and other socialists maintained that income equality among capitalist powers bore considerable responsibility for the outbreak of the First World War. Less dramatically but with some relevance, income inequality has been associated with drags on economic growth, rising rates of poverty and ill-health which hinder mobility, weaken self-esteem andcreate greater tendencies towards unrest and incarceration. Small wonder that the culture of contentment, as JK Galbraith once termed it, has turned frail and vulnerable.
There will be a chasm, of course, between the Davos crowd’s demand for reassurance and satisfactory answers to deep-seated social problems, and the kind of policies that John McDonnell espouses. Davos wants social order restored with many privileges for its own class maintained, McDonnell sees the challenge in transformational terms in which they won’t.
But which John McDonnell will turn up? It could be the scripted man, who will talk to the corrosive effects of income and wealth inequality, the vested interests of business and commerce in ensuring more fairness within and between nations, and the reasoned shifts in public policy needed to bring it about. Or it might be the more fiery Marxist sympathiser, convinced that class politics and capitalist contradictions call for new approaches, such as greater state intervention and nationalisation, controls over capital movements, the removal of central bank independence, and higher tax, spend and borrow fiscal and welfare strategies.
Mostly, we’d bet on the former, but with the US president likely to be tweeting goodness knows what from the Alps, and McDonnell probably feeling like he’s a man on a mission, who knows?