Political Economy of Current Times

Kalyan Guha

Global Covid-19 pandemic from 2020 created havoc all across the globe. People saw governments expressing extraordinary concerns to save people initially through draconian lock-downs, providing rations and even money directly into people’s accounts and subsequently trying to control through vaccinations and phased opening up of economies. The world economy was virtually shut down for most of 2020. Huge money printing by US, Quantitative easing by various governments of advanced economies and heavy government expenditures through deficit budget financing attempted to keep the economy from collapsing, but in vain. Overall world economy shrank by 3.31%. Out of 195 economies, 164 economies including US, UK, Canada, Germany, France, Japan, India—all experienced significant negative growth. China, Iran, Ireland experienced positive growth.

Now with Russia-Ukraine war from February 24th 2022 creating severe food, fertiliser shortages and increase in prices of energy, other commodities the economic crisis has been further aggravated.

In 2018, before Covid-19 pandemic the world witnessed Mouvement des gilets jaunes or yellow vest movement in France demanding justice, institutional political reforms and withdrawal of carbon tax imposed by French government.

In 2020-21 in India, people experienced quite the unprecedented movement farmers demanding complete repeal of 3 Farms acts imposed hurriedly and unilaterally by the Modi Government during pandemic.

It is becoming difficult these days to wrap one’s head around all that has been happening in the world without a larger rudimentary framework. It seems confluence of few fundamental processes and their dynamics is shaping current unfolding of event around the world.

This is a time when advanced matured Capitalism with its own contradictions of overproduction and huge surplus accumulation has been failing to sustain its expanded reproduction, states with their central banks and fiscal management have been struggling to manage the economies through conventional monetary policies and various reforms, various socio economic sections and groups of society are rising up to maintain their living standards and demanding better economic, social ,cultural justice, various nation states are fighting for resources and markets all across the globe, new technologies like Green energy, AI (Artificial Intelligence), Blockchain, Nanotechno-logy, Genetic engineering, 5G/6G based communication are restructuring various sectors of the economies and local and global powers are trying to shape the world order as per their civilisational model with their economic and military might.

All these processes it seems have been amplified and intensified over last few decades particularly since 2008 global financial meltdown.

Most importantly all these confluence at a time when global environmental catastrophe and large-scale habitat and eco-system destruction from global climate change due to fossil fuel burning and callousness to Nature is looming large in the horizon.

Post WW-II, having experienced global warming of the planet due to increasing greenhouse gases in atmosphere mostly from fossil fuel burning and with looming global environmental and social catastrophe in the near horizon, modern concentrated and centralised corporate industrial-financial capitalism in advance economies is undergoing a seismic shift and adaptation to transform itself to a more viable form so that the return on investment can be sustained for centuries without collapsing or radically transforming the system.

Unlike post WW-II mid-twentieth century configuration when large corporates and large banks dominated, the current 21st century configuration of capitalism has been BigOil (Energy), Big Tech (AI), Big Pharma (Genetic engineering)and big asset management firms—in the name of Hedge Funds, Pension Funds, Global wealth management firms dominating bulk of the economies.

With the growth of various stock exchanges, commodity trading exchanges, currency trading exchanges, of late Bit coin trading exchanges and introduction of derivative trading and trading of various exotic financial products, there has been tremendous growth of various wealth management firms—Hedge Funds, Pension Funds, Sovereign wealth management firms most prominently post 2008 financial crisis. Also there has been centralisation and concentration in among these firms.

In present US economy the largest bank JP Morgan Chase has assets worth US$ 3.3 trillion (December 2020), the largest Hedge fund Bridgewater Associates (US) controls US$ 105 billion (2021) and the giant of them Blackrock (US), the largest global wealth management firm alone controls assets worth US$ 10 trillion (2022) spread across various geographies.

With shrinking opportunities for good returns from productive investment in real economy due to stagnation in wages, automation taking away millions of jobs and astronomical amount of wealth accumulated in fewer hands. Even corporates are trying to make money from the booms in overvalued stock markets, real estate sector and commodity market, Bitcoin market. Very few are interested in building brick and mortar companies in these uncertain days.

However, today’s large asset management companies are not mere investment firms looking for short term returns. As quintessential universal owners they have gone for complete image makeover to build their reputations as environmentally and socially responsible investment companies with good governance, becoming acutely aware of things at stake in long run particularly due to Global warming. They also realise that today with their hundreds of trillions of dollars of illiquid, diversified portfolios they do not have the luxury of exiting this investing universe unlike earlier days as outside today’s global economy there is nowhere else to invest.

To sustain their return on investment of such astronomical wealth in the long run and to mitigate the business risk from global climate change corporates and governments have to come up and build policies for Green energy, Sustainability and better Governance as prescribed in IPCC’s reports and recommendations. So, one can see growing shift towards ESG (Environmental Social, Governance) investing and ESG Funds and more and more corporates are incorporating low carbon emission goals and goals consistent with Diversity, Equity and Inclusion movements.

These top wealth management companies along with Big Tech giants are playing major role in shaping current world events for implementing this transition to next stage of capital accumulation. There has taken place a significant shift in their awareness and understandingof the looming catastrophe the corporates will face if they fail to contain global warming within 1.5 to 2 degrees centigrade over pre industrial level by 2100.

All global players and policy makers converge on this.

Since the 1979 First world climate conference and subsequent establishment of IPCC (Intergovernmental Panel on Climate Change) in 1988 and its First Assessment Report in 1990 there has been scientific consensus that since the mid-20th century Global Mean Temperature has been increasing and that human made CO2 (carbon dioxide) emissions are driving it. Since then, the world has been warned about risk of climate change due to the global warming and various mitigating measures that countries can adopt.

First International Treaty in this regard was Kyoto Protocol adopted in Kyoto, Japan, on 11 December 1997 and entered into force on 16 February 2005. The Protocol's first commitment period started in 2008 and ended in 2012. All 36 countries that fully participated in the first commitment period complied with the Protocol.

The greatest emission reductions were seen in the former Eastern Bloc countries because the dissolution of the Soviet Union reduced their emissions in the early 1990s.The financial crisis of 2007–08 helped reduce the emissions. Even though the 36 developed countries reduced their emissions, the global emissions increased by 32% from 1990 to 2010.

A second commitment period was agreed to in 2012 to extend the agreement to 2020, known as the Doha Amendment to the Kyoto Protocol, in which 37 countries had binding targets and many countries stated that they may not force second targets.

However, negotiations were further held on measures to be taken after the second commitment period ended in 2020. This resulted in the 2015 adoption of the Paris Agreement, covering climate change mitigation, adaptation, and finance and negotiated by 196 parties at the 2015 United Nations Climate Change Conference near Paris, France.

US officially withdrew from it on 4th November 2020 and was readmitted on 20th January 2021.

The aim of the agreement has been:

(a) Holding the increase in the global average temperature to well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial levels, recognising that this would significantly reduce the risks and impacts of climate change;

(b) Increasing the ability to adapt to the adverse impacts of climate change and foster climate resilience and low greenhouse gas emissions development, in a manner that does not threaten food production;

(c) Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.

China and Russia committed to be net zero by 2060 and India by 2070. Japan, South Korea and EU committed to be net zero by 2050.

The leaders of Big Tech, Big asset management firms who have been steering this transformation through various nation states , their various institutions and with supra-national institutions (IMF ,World Bank, WTO,WEF, G-7,G-20,UN, WHO) have realised that for this Global energy transition to happen at accelerated pace. BAU (Business As Usual) is not an option anymore and the world and its people need high voltage shock therapy along with varieties of social engineering as they are running against time. Their goal is to direct & shape current world events through this transition to a new sustainable phase of capital accumulation in the foreseeable long run in which green energy, Robotics, Blockchain, 5G&6G based communication systems, AI (Artificial Intelligence) &Digitisation driven systems, space tourism, digital currency based economic and financial systems, Genetic engineering & Molecular biology-based medicines will restructure the economy.

But their agenda has many challenges as well, as this task coincides and aligns at a time (a) when global capitalism has been facing crisis after crisis fundamentally due to overproduction and lack of purchasing power among masses (b) when huge wealth and income inequality even in advanced economies has been creating social turmoil (c) when China is coming up fast economically to surpass USA in few years and (d) when US is determined to maintain its Unipolar geopolitical hegemony and full spectrum dominance against Russia-China-Iran axis.

Moreover, the elites have to do several social engineering to convince, persuade and carry various nation states and the masses along with them in this transition bypassing and suppressing any violent or peaceful social reconstruction project based on radical wealth redistribution or radical institutional and power restructuring.

This is the agenda of the global financial and military elites. One can see this in all their pronouncements, speeches, annual reports, policies and actions—be it LarryFink. CEO of Blackrock or Frederick Kempe, President of Atlantic council or Klaus Schwab, founder and executive chairman of WEF or Bill Gates founder of Microsoft and Bill & Merinda Gates foundation.

So, for next few coming decades people need to be prepared for more lockdowns, shutting down of economies on some pretext or other, more digital mass surveillance schemes, more wars and chaos in various parts of the world as the elites try to steer this Global transition while maintaining global dominance of major capitalist economies with their basic schemes of expropriations, and of course global security and financial architecture led by US and its collective west to maximum extent possible.

Whether the elites succeed to contain global temperature rise within 1.5 to 2 degree of pre industrial level by 2100 maintaining present schemes of appropriations with little tinkering and welfare schemes or people face the worst scenario of 5 to 6 degree centigrade temperature rise and a significant collapse of bulk of human civilisation and planet life or people organise, rise up to steer societies through new pathways managing all the complexities to a more equitable, sustainable Nature-respecting human civilisation only future unfolding of events will tell.

[Guha_k1957@yahoo.co.in , 9860433851]

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Frontier
Vol 54, No. 47, May 22 - 28, 2022