Issues in new world –
- Social inequalities and the grim problems of stark and continuing poverty are at the epicentre of the new world.
- The latest Oxfam Report presented at Davos points out that 2,153 billionaires have more wealth than 4.6 billion people.
- The emergence of billionaires and oligarchs in different parts of the world coincides with increased poverty among the already poor people, especially children.
- These realities make observers question the tenability of stakeholder capitalism as a concept.
Unsustainable economic development –
- One of the chief characteristics of economic development is the intensification of energy use. There is an unprecedented concentration of high energy density in all economic development strategies. The bulk of the energy continues to be generated from non-renewable sources.
- The developed world’s, and China’s, central objective is to capture energy-generating resources from across continents and put them to use to push GDP growth to greater heights. In the process, sustainability is becoming a casualty.
- The higher the use of energy, the larger the amount of waste generated.
Development at the cost of developing nations –
- Egregious consumption of energy by the developed world has been accompanied by the disposal of residual products (‘e-waste’) on the shores of many African and Asian countries.
- As a result, the poor in the developing world are, unwittingly, drawn and exposed to toxic, hazardous materials like lead, cadmium and arsenic.
- Hence, the ‘globalisation’ phenomenon has turned out to be nothing other than exploitation of the developing world, with most countries being treated as a source of cheap labour and critical raw material.
- Transactions are based on the arbitrage between price and value difference, from which only the ‘middleman’ gains, not the primary producer. Countries in the developed world, and China, are ferociously using up finite raw materials without care or concern for the welfare of present and future generations.
Case study of Nordic Economic Model –
- The ‘Nordic Economic Model’, which pertains to the remarkable achievements of the Scandinavian countries comprising Denmark, Finland, Iceland, Sweden, Norway, and allied territories.
- The total population of the Nordic countries is estimated at almost 27 million people. These nations are among the richest in the world when measured in terms of GDP per capita.
- They also have large public sector enterprises; extensive and generous universal welfare systems; high levels of taxation; and considerable state involvement in promoting and upholding welfare states. UN reports also indicate that the Nordic countries are the happiest countries in the world.
- Taking the Nordic model as a template, there are some ingredients that could be part of a new ‘enlightened global order’— effective welfare safety nets for all; corruption-free governance; a fundamental right to tuition-free education, including higher education; and a fundamental right to good medical care.
- In Nordic countries, personal and corporate income tax rates are very high, especially on the very rich. If a just, new world order is to arise, taxes everywhere should go up.
Way forward –
A new format has emerged under which a company’s performance is measured through 4‘Ps’.
- The first is ‘P’ for ‘profit’.
- The second ‘P’ is for people — how the company’s actions impact not only employees, but society as a whole.
- The third ‘P’ is for planet — are the company’s actions and plans sensitive to the environment?
- The four ‘P’ is for purpose, which means the companies and individuals must develop a larger purpose than ‘business as usual’. They must ask: what is the larger purpose of the company, apart from generating profits?
Using big data and text analytics, a company’s performance can be measured in terms of all the four ‘P’s and a corporate entity can be thus held accountable. Market capitalisation need not be the only way to measure the value of a company.
Source – The Hindu
QUESTION – Examine the cause and effect relationship between economic development and resource management. Suggest a way forward.