The Great Reset

Posted By Mahabodhi on Jul 13, 2024 | 0 comments

Below is an excerpt from my forthcoming book…

© Mahabodhi Burton

10 minute read

This excerpt is from Chapter 4: ‘Postmodernism and the academic mindset’ and follows on from The World Economic Forum.

Involving ‘the youth’

It is interesting, though, how much the WEF  carries the ‘performative’ spirit of Live Aid and has come, at times, to look to ‘the global youth’ for guidance: and how non-governmental organizations–which are typically voluntary groups or institutions with a social mission, operating independently from the government–have been increasingly participants at meetings: the rock star Bono, for instance, has been a regular invitee to the WEF since the mid-2000s.

‘The WEF has survived by adapting to the times. Following the surge of so-called anti-globalization protests in 1999, the Forum began to invite non-governmental organizations [NGOs] representing constituencies that were more frequently found in the streets protesting against meetings of the [World Trade Organisation (WTO,] [International Monetary Fund (IMF)] and Group of Seven.

 

’In the 2000 meeting at Davos, the Forum invited leaders from 15 NGOs to debate the heads of the WTO and the President of Mexico on the subject of globalization. The participation of NGOs and non-profit organizations has increased over time, and not without reason. According to a poll conducted on behalf of the WEF just prior to the 2011 meeting, while global trust in bankers, governments and business was significantly low, NGOs had the highest rate of trust among the public.[1]

 

‘In an interview with the Wall Street Journal last September, … Klaus Schwab, was asked about the prospects of “youth frustration over high levels of underemployment and unemployment” as expressed in the Arab Spring and Occupy Wall Street movements, noting that the Forum was frequently criticized for promoting policies and ideologies that contribute to those very problems. Schwab replied that the Forum tries “to have everybody in the boat.” … In reaction to the Occupy Wall Street movement, Schwab said, “We also try … to put more emphasis on integrating the youth into what we are doing.”[2]

What is wrong with that, I hear you say? Well, nothing, except it has paved the way for what we see today: the emergence of Woke Capitalism and its totalitarian tendencies, as Ilan Kapoor argues in his essay ‘Humanitarian Heroes?’

‘ … that celebrity humanitarian heroes help legitimate late liberal capitalism and global inequality. Their outwardly “altruistic” and “heroic” humanitarianism is belied by several accompaniments: its tendency to promote both the celebrity’s brand and the image of the “caring” (Western) nation; its entrenchment in a marketing and promotion machine that, willy-nilly, helps advance corporate capitalism and rationalizes the very global inequality it seeks to redress; its support to a “post-democratic” liberal political order that is outwardly democratic and populist, yet, for all intents and purposes, conducted by unaccountable elites; and its use and abuse of the Third World, making Africa, in particular, a background for First World hero-worship and a dumping ground for humanitarian ideals and fantasies.’[3]

As the ‘Liberal anti-establishment’ has, over decades, grown into a position of increasing power: to become now, effectively, ‘The Establishment,’ that growth ‘set the mould’ for the political flavour of the WEF. Kapoor made the above assertion in 2013. Three years later, Trump came into office and Brexit happened, partly as a nationalist / populist reaction to these unaccountable global elites; and globalism/ populism remains the main political and cultural divide today: a divide that just gets deeper.

Stakeholder Capitalism

Schwab has authored or co-authored several books; and some consider him ‘an evangelist for stakeholder capitalism.’[4] In a corporation, a stakeholder is a member of ‘groups without whose support the organization would cease to exist:’[5] so stakeholder capitalism includes everybody with an interest in the effects of a corporation: shareholders, employees, customers: including those with ethical and environmental concerns about the business; the Bank of America website[6] thus summarizes the philosophy, hailing it as ‘a sea change in capitalism,’ in June 2023:

‘The business community, from individual companies to entire industries and sectors, is undergoing one of the most fundamental transformations it has ever experienced. At the heart of this evolution is the critical idea that commerce, trade and exchange of all kinds must consider more than just profit maximization as a final goal. Additionally, business must take into account its impact on a variety of social and environmental factors, such as equality and sustainability.’[7]

The Great Reset

It seems like the global response to the pandemic has already allowed the WEF to implement some of its ideas; and power:

‘“The Great Reset” of capitalism was the conference theme of the 50th Annual Meeting of the World Economic Forum (WEF) in 2019. The theme came from the title of a 2011 Richard Florida book which addressed the future of cities in light of his theories of urban development and in context of the 2008–09 financial crisis. But the Great Reset as articulated at the WEF meeting and in a later book by the WEF’s main organizer, Klaus Schwab, went far beyond Florida’s ideas.[8] Great Reset proponents argue that the Covid-19 pandemic has  opened a window of opportunity to implement a fundamental restructuring of the economy that changes patterns of influence and ownership in business, measures company performance in novel ways, and provides a stronger role for the state in shaping and guiding economic activity.[9]

Roth et al: ‘This reset would imply the implementation of new institutional arrangements that steer markets towards fairer outcomes, incentivize investments towards shared goals, build and sustain greener infrastructures, and harness the momentum of the fourth industrial revolution for the resolution of pressing social, health, and environmental challenges, including climate change.’[10]

Steffen Roth points out how the Great Reset takes up health as its religion; no doubt wishes to enforce its religion universally: both physically (through vaccine mandates; and by initiatives to add drugs to the water supply) and mentally (by conditioning social conformity) and is effectively a modern version of the caste system:

‘In reviewing the Great Reset, an initiative launched by the World Economic Forum (WEF) in response to the global coronavirus crisis, this perspective article considers the scenario of an epochal transition from capitalism to “restorism”. … It is thus shown that the “shared goals” advocated by the WEF would converge to a transition from a modern pluralist to a “new-normative” order stratified to the primacy of individual, institutional, and planetary health.

 

‘In discussing sociological implications of this transition, a vision emerges of a new digitally enhanced medieval era where health plays the role once played by religion. In this restorist scenario of a neo-medieval world health society, the emergence of new social strata corresponding to different levels of purity, infection, or pollution would be a probable consequence.’[11]

In the following comment, Roth is no doubt alluding to the proposal among some that the WEF and its allies either caused the pandemic to happen (in order to hasten the Great Reset,) or at least didn’t wholeheartedly work against whatever reset did seem to be happening through its effects:

‘The paper concludes that idea of deliberately caused great resets and other control illusions nurtured by the WEF initiative are barely smarter than and spur what the UN Secretary-General refers to as “wild conspiracy theories”.[12]

Nicolai Foss et al outline the history of resets through time:

‘What we might call “reset thinking” has a long history. Marx’s ideas were embraced by those discomforted by the rapid industrialization of the 19th century, while Keynes’s General Theory offered a “new economics” to explain the unprecedented global depression of the 1930s.’[13]

Sometimes reformers take advantage of natural and man-made disasters, but often it is the system itself which needs an overhaul:

‘Naomi Klein[14] argues that The Great Reset represents a “bastardization” of her earlier idea of the “shock doctrine,” the claim that social and economic reformers (in her story, pro-market reformers promoting privatization and liberalization, which she opposes) take advantage of natural and man-made disasters to spread their doctrines.

 

‘More generally, global shocks are often seen as caused by previous social and economic systems which therefore need an overhaul.[15] For example, both world wars prompted major changes not just in international institutional arrangements but also in the politics and institutions of individual countries.[16] Thus, the First World War with its experience of the presumed effectiveness of war socialism led to a push towards the welfare state.[17] The Second World War caused even more state involvement at all levels in the economy, as politicians used the momentum and excess resources from the war effort to satisfy the electorate’s preferences for more state-provided services.’[18][19]

Often leading to an enlargement of the state:

‘Interestingly, those “resets” were indeed accompanied by new thinking designed to justify the expansion of state power, such as welfare economics,[20] market failure theory,[21] and Keynesian macroeconomics.’[22][23]

Foss et al. do not believe that stakeholder capitalism is the answer to the current pressing social, environmental, and political challenges, but believe it will actually make things worse:

‘… While Great Reset proponents do not a call for eliminating markets or capitalism, they call for new, normative management theory that in many ways is inconsistent with the market economy in its current form. The Great Reset is not only about changing managers’ objectives, beliefs, and actions, but also changing how organizations interact. In essence, calls for stakeholder management, new metrics for assessing social and environmental impact, and greater government intervention in markets to achieve social and environmental goals are closely related; they represent complementary arguments for restructuring the conventional capitalist model in which the means of production are privately owned and these owners—for large companies, shareholders—are responsible for managing their assets. We argue that the Great Reset thesis is based on a fundamental lack of appreciation of the power of markets to bring about desirable social outcomes. In calling for a break with the traditional capitalist model, it leads to a world in which pressing social, environmental, and political challenges are exacerbated rather than alleviated.’[24]

A key reason being the problem of incentive and lobbying:

‘Moreover, the Great Reset thesis rests on a naïve conception of how governments work that neglects well-known problems concerning what governments (can) know, their incentives to take the right actions, and their vulnerability to rent-seeking on the part of organized special interests. It also mistakenly believes that the current system is a mostly unfettered market-based economy[25] when, in reality, there is already massive government intervention—and, as a result, crony capitalism[26]–in every major sector of the economy.[27]

And how the interests of multiple stakeholders can be aligned is not thought out:

‘At the firm level, the Great Reset thesis is similarly based more on a naïve belief in the benefits of stakeholder governance rather than a careful, sober analysis of the relative benefits and costs of alternative systems of governance, including shareholder and stakeholder models. As a large literature suggests, stakeholder approaches are plagued by unresolved (and perhaps unresolvable) problems of aligning the interests of multiple stakeholders with goals that cannot be aligned in the absence of a common scale of measurement.[28] The new proposed metrics will not solve these problems.’[29]

And then there is the problem of ownership, aligning that with competence and coming to meaningful consensus:

‘Moreover, implementing stakeholder management amounts to a dilution of ownership. Ownership is an economic function that can be performed better or worse, and the goal of an economic system should be to align ownership with ownership competence.[30] Stakeholder management proposals risk putting ownership in the hands of less competent owners,[31] which is particularly harmful under the conditions of high novelty, uncertainty, and complexity that characterize more innovative parts of the economy.[32] In particular, as emphasized by Hansmann,[33] larger and more heterogeneous groups have difficulty exercising ownership rights, as diverging interests make agreement difficult, particularly where exit from the group is costly.

 

’Thus, even if we conceive of a community, society, or even the entire world population as the rightful “owners” of various public goods (e.g., environmental preservation), it doesn’t follow that assigning ownership rights to everyone in the group will be effective in achieving the group’s goals.[34]

The chapter goes on to explore Environmental, Social and Governance practices (ESGs.)

[1] Andrew Marshall. ‘World Economic Forum: a history and analysis.‘ TNI. 20 January 2015.

https://www.tni.org/en/article/world-economic-forum-a-history-and-analysis

[2] Ibid.

[3] Gavin Fridell and Martijn Konings (2013) Age of Icons: Exploring Philanthrocapitalism in the Contemporary World. University of Toronto Press. p27.

[4] ‘Klaus Schwab.’ Wikipedia. Accessed 20 June 2023. https://en.wikipedia.org/wiki/Klaus_Schwab

[5] ‘Stakeholder.’ Wikipedia.

[6] ‘A new standard for measuring global sustainability.’ Bank of America. Accessed 21 June 2023. https://about.bankofamerica.com/en/making-an-impact/stakeholder-capitalism-metrics#

[7] Ibid.

[8] Schwab, K., & Malleraet, T. (2020) COVID-19: The Great Reset. Forum Publishing.

[9] Foss, N.J., Klein, P.G., Murtinu, S. ‘The economy doesn’t need a reset, and neither does management theory.’ Scandinavian Journal of Management. Volume 38, Issue 3, September 2022, 101214. https://doi.org/10.1016/j.scaman.2022.101214

[10] Roth, S., Czakon, W., Amann, W., & Dana, L.-P., 2020, November 24, Call for papers to a special issue of the Scandinavian Journal of Management: The Great Reset of management and organization theory. Retrieved from https://derroth.com/2020/11/24/cfp-the-great-reset-of-management-and-organization-theory/..

[11] S. Roth. The Great Reset. Restratification for lives, livelihoods, and the planet. Technological Forecasting and Social Change, 166 (2021), Article 120636.

https://www.sciencedirect.com/science/article/pii/S0040162521000688

[12] Ibid.

[13] ‘The economy doesn’t need a reset, and neither does management theory.’

[14] N. Klein. ‘The great reset conspiracy smoothie.’ Intercept. 8 December 2020. https://theintercept.com/2020/12/08/great-reset-conspiracy/

[15] F. Higgs. (1987) Crisis and Leviathan: Critical Episodes in the Growth of American Government

OUP.

[16] J.L. Campbell. (2021) Institutional Change and Globalization. Princeton University Press.

[17] S. Kuhnle, A. Sander. (2010) ‘The emergence of the western welfare state.’

The Oxford Handbook of the Welfare State. OUP. p 73-93.

[18] F. Nullmeier, F. Kaufmann. (2010) ‘Post-war welfare state development: the “Golden Age”.’ The Oxford Handbook of the Welfare State. OUP. p 93-112

[19] ‘The economy doesn’t need a reset, and neither does management theory.’

[20] Pigou, A.C. (1920) The Economics of Welfare. London: MacMillan.

[21] F. Bator. (1958) ‘The anatomy of market failure.’ The Quarterly Journal of Economics, 72 (3) p 351-379.

[22] A.H. Hansen. (1949) Monetary Theory and Fiscal Policy. McGraw-Hill Book, New York.

[23] ‘The economy doesn’t need a reset, and neither does management theory.’

[24] Ibid.

[25] E.g., Schwab, K. ‘Now is the time for a “great reset”.’ World Economic Forum. 3 June 2020. Retrieved from https://www.weforum.org/agenda/2020/06/now-is-the-time-for-a-great-reset/

[26] Klein, P.G., Holmes, R.M., Foss, N.J., Terjesen, S., & Pepe, J., 2021, Capitalism, Cronyism, and Management Scholarship: A Call for Clarity. Academy of Management Perspectives. In press.

[27] J.E. Stiglitz. ‘Markets, market failures, and development.’ American Economic Review, 79 (1989), p197-203 & G. Majone. ‘The rise of the regulatory state in Europe,’ West European Politics, 17 (1994), p77-101

[28] M.C. Jensen. ‘Value maximization, stakeholder theory, and the corporate objective function.’

Business Ethics Quarterly, 12 (2) (2002), p235-56 & Foss, N.J., & Klein, P.G., 2018, ‘Stakeholders and corporate social responsibility: An ownership perspective. In Sustainability, Stakeholder Governance, and Corporate Social Responsibility.’ Emerald. p17–35.

[29] ‘The economy doesn’t need a reset, and neither does management theory.’

[30] N.J. Foss, P.G. Klein, L.B. Lien, T. Zellweger, T. Zenger. ‘Ownership competence.’

Strategic Management Journal, 42 (2) (2021), p302-28

[31] Foss, N.J., & Klein, P.G. (2018) ‘Stakeholders and corporate social responsibility: An ownership perspective.’ In Sustainability, Stakeholder Governance, and Corporate Social Responsibility. Emerald. p17–35.

[32] R.B. Adams, A.N. Licht, L. Sagiv. (2011) ‘Shareholders and stakeholders: How do directors decide?’ Strategic Management Journal, 32 (12), p1331-55.

[33] H. Hansmann. (1996) The Ownership of Enterprise. Harvard University Press.

[34] ‘The economy doesn’t need a reset, and neither does management theory.’