Davos-2019: The New World Order Is Global Disorder

“Is the guardian angel grieving over the misfortunes of his fosterling?

“No, because all is as God wills it.”

(From Medieval scholastics)

For several years running, globalization and related processes have become the main subjects of discussion at the World Economic Forum in Davos. In 2019,   the organizers decided to combine the discussion of globalization issues with the so-called Industry 4.0 and titled the main theme “Globalization 4.0: Shaping a Global Architecture in the Age of the Fourth Industrial Revolution.”

Regrettably, geo-economic risks and the different strategies and goals of the main world actors are making this agenda insipid, while debates are contentious and can be compared with the scholastic discourse of the Thomas Aquinas era and his culmination of civilizational development. 

“The new global order is global disorder, and not merely in trade,” former Minister of Commerce and Industry of India Kamal Nath said at Davos.  

The growth of political tensions, trade wars and protectionism are indications of the world processes that threaten to destroy globalization and phase out not only the innovative Industry 4.0 that still has a weak influence on the world economy but also the “neo-industrialization” of the new industrial paradigm in general. 

The point is that after the 2008 crisis, the global elites placed their bets on monetary policy and the idea that economic development was primarily determined by the amount of money in circulation and the freedom of trade, while technology, resources, socio-political processes and the like were secondary. Overcoming the crisis with a huge pumping of money (with the preservation of the postindustrial paradigm in advanced countries) finally asserted the global domination of financial capital and the supremacy of trade over production and science. 

At the same time, this financial world has created a situation where capital could reproduce itself without relying on material production, which results in the deceleration of economic development, leaving less money for both individuals and governments. This is why countries increasingly often have to borrow to fund their budget expenses, while people have to resort to loans to maintain current levels of consumption. The ratio between global debt and GDP is now at a historical high totaling a record 320 percent. 

But now any financial crisis threatens to destroy this created structure while the continued growth of production and consumption in the developing countries that already account for half of global GDP will reduce the economic weight and influence of the advanced countries in global processes. 

Although Industry 4.0 looks like a renunciation of postindustrial philosophy and an attempt by the West to regain its economic leadership, in reality it is an attempt by a number of advanced countries, such as Germany and Japan, to find an opportunity to compete with Chinese industry and make profitable the production of even small batches of goods. However, for the time being, this “fourth industrial revolution” is focused on streamlining logistics and financial flows and has no scientific or technical foundation, which dooms it to failure. The digitization, which is being viewed as a panacea, is also of little help to the material production because digital technology is designed to redistribute resources and is largely used in services, finances and trade, as well as management and government administration. 

The upcoming crisis of the postindustrial economic model is becoming increasingly obvious. A wave of pessimism is mounting in world business. The protectionism that is criticized by participants in Davos-2019 is the first sign of a changing trend. 

Donald Trump’s attempt to return production to the US and launch re-industrialization is a clear sign that the world trend is beginning to change. 

As for “the world factory,” China, which is represented at Davos by an impressive delegation, is still following the trodden path of the West while also trying to control trade and financial flows in its region. Regrettably, this attempt to jump on a departing train to catch the trend could soon result in a global crisis. The Chinese economy is no longer growing so fast. In the fourth quarter of 2018 its growth rates were the lowest since 1990. In the midst of trade wars, it would be logical to use the principles of multilateralism and WTO rules. 

At a Davos meeting devoted to world trade, WTO Director-General Roberto Azevedo warned that the global economy would plunge into the Dark Ages without free trade: “if the WTO and the global trading system is out of the picture, we’re in for the Dark Ages, I guarantee you that.” At the same meeting, European Trade Commissioner Cecilia Malmstrom talked about a deep crisis in the WTO and said that risks like growing protectionism, trade wars and actions by some countries were undermining the global trade system.

In fact, this is a verbalization of the WTO’s limited influence on negative processes. As long as the world lives in the current financial and economic system, the dominant power – the US – determines the rules and monitors other countries’ compliance. 

Russia, which has lowered the status of its delegation because of the continued sanctions pressure, is nonetheless l present at the Davos forum – as distinct from the Americans – because it continues to be part of the global economy and is a major player in the fuel and energy sector. Although the head of the Russian delegation, Maxim Oreshkin, spoke with regret about the increase in de-globalization and the uneven distribution of added value and globalization benefits, Russia is interested in preserving the existing rules of trade and international agreements. 

Russian Energy Minister Alexander Novak’s meeting with his Saudi counterpart Khalid Al-Falih on the sidelines of the Davos forum indicates that the coordination of efforts to stabilize the oil market will continue. 

The Davos forum allows those who control global processes to compare notes, but they will not forego their interests. Summing up the results, it may be appropriate to recall the words of Friedrich Nietzsche: “A thousand goals have there been hitherto, for a thousand peoples have there been. Only the fetter for the thousand necks is still lacking; there is lacking the one goal. As yet humanity hath not a goal. But pray tell me, my brethren, if the goal of humanity be still lacking, is there not also still lacking – humanity itself?”

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.