The Rising Discontent With Development
The current global economic order built around the ideas of open markets and free trade – established with the setting up of Bretton Woods in 1945 – has the inherent tendencies towards concentration of wealth among the few.
Photo Credit : Reuters
A developing pattern of discontentment across the world is hard to miss. Just last month, the series of violent protests took place in Ecuador in response to the austerity measures taken by the government. A week after that, there were incidents of civil unrest in Chile’s capital Santiago due to the rising cost of living in the face of growing income inequality. In Europe, protesters descended on the streets of London to protest against Brexit while Paris is coping with the yellow vests movement against the worsening economic conditions. Over in Asia, Hong Kong and Iraq have been embroiled in protests for months.
Although every protest has a level of indigenousness to it, there is a wider underlying reason of economic stagnation behind the recent upsurge. The turmoil in Ecuador, Chile, Iraq, and France is a direct consequence of the deteriorating economic conditions in these countries. The GDP growth of most of these economies has reached near-zero levels.
Even the protests in Hong Kong that are a demand for autonomy have strong economic connotations. The extent of economic growth experienced by the multinationals has eluded a majority of the Hong Kong locals who work for small and medium-scale enterprises. As a result, income equality in the city-state has significantly worsened. Thus, the public demonstrations against the authority can be traced back to the feeling of economic discontentment among the people against a system that seems to be failing the poor.
The current global economic order built around the ideas of open markets and free trade – established with the setting up of Bretton Woods in 1945 – has the inherent tendencies towards concentration of wealth among the few. When the skewed nature of growth is coupled with a slowdown, its presence is felt more prominently. Therefore, it is not a coincidence that the rise in protests around the world is taking place at a time when the IMF is warning of a slowdown in 90 per cent of the countries around the world.
The new system worked well for the first two decades. During this period, the Western economies, and a few East Asian countries experienced high levels of sustained economic growth along with full employment. However, the stagflation and oil shock of the 1970s resulted in an alternate model led by free marketeers who argued for complete trust in the market and widespread deregulations. But as the production moved out of the developed economies due to the availability of cheap labour abroad, the local working-class felt disempowered. Their real wages stagnated while the economy grew – implying that the concentration of wealth was disproportionately skewed at the top. On the other hand, developing countries like India and China grew rapidly.
But these trends only worked until the 2008 economic crisis. Since then, the economies have struggled to revive growth. The problems have been further aggravated as developed economies like the United States that are closing up their economies. With slower growth across the world, the widespread inequality that has developed over the last few decades is becoming an irritant and public discontent is emerging in the form of violent demonstrations.
The fact that the protests in places like Hong Kong are continuing even after the demands are being met is a reflection of the fact that people have lost faith in the current economic system and the government's ability to fix it. There are lessons to be learnt from the past when economic stagnation and inflation resulted in a rise of leaders like Hilter that required a World Wat to bring the world out of the mess. That history is not worth repeating!
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.