An Actual Great Reset
If you are new to the Great Reset or not familiar with what it entails, we recommend reading an introductory article to the topic by Lotuseaters.com: What is The Great Reset?
The much-quoted Great Reset initiative launched by the World Economic Forum is, in fact, no reset at all. Quite the opposite. It is a continuation of current trends on almost all fronts. Rather than using the pandemic to propose changes that would rebuild the world in a different way, as it is often seen, the reforms it calls for only intensify the old ways. The Great Reset doesn’t learn from the failures of the past and is doomed to repeat them, only on a larger scale.
Instead, let us propose an actual ‘Great Reset’. If we have established, as it appears, that the pandemic offers society an unprecedented opportunity to change itself in ways not available or plausible under other circumstances, here is what an actual change for the better would look like.
The following sections loosely mirror the structure of WEF CEO Klaus Schab’s book COVID-19: The Great Reset, published earlier this year - more specifically the three most important sections from its ‘Macro Reset’ part: Economic Reset, Societal Reset, and Geopolitical Reset.
Economic Reset
Public Health and Economics
Economics is not ‘at loggerheads’ with public health, contrary to Simon Schama quoted by Schwab, and the economy does not have to ‘die’ during a crisis and ‘resurrect’ when it is over. Neither are ‘merchants’ and ‘artisans’ those who ‘lose the most’ during a lockdown. The effects of preventing trade and other economic activity in any situation are always harshest on the poor and the vulnerable. Limiting supply increases prices and increasing prices disproportionately hurts those with limited resources. Even in 2020, ‘public health’ is not just the study of pandemics and quarantines are undeniably a public health disaster.
Policy-makers will likely be faced with COVID-19-affected decisions over the following years. But Schwab making an ought statement that a ‘full-fledged economic recovery cannot take place until the virus is defeated or behind us’ is simply wrong. While full economic recovery is not likely to take place soon (as the public continues to adjust their behaviour to the presence of the virus), preventing an economic recovery by fiat would result in negative social consequences far outstripping the impact of the virus itself. There is by now ubiquitous evidence of this after the first and second waves of lockdowns all over the world.
Lockdowns and Demand
Schwab also makes an argument in support of economic restrictions based on popular sentiment (demand) which drives economies. While it is true that the sentiment of the public steers economic activity, by no means does it imply forced shutdowns of the economy. Quite the reverse: public sentiment and behaviour adjusting significantly during a pandemic point to the fact that the government is not the only actor on stage, and that ‘doing nothing’ from the state’s perspective does not mean society is also ‘doing nothing’. Individuals are better equipped than far-distanced officials to make health-related decisions closely affecting their own lives. If economic growth is seriously affected by the compounded decisions of individual people rather than by government fiat, we know that such a ‘shutdown’ is truly legitimate. At the present, despite Schwab’s inherent assumptions from which questionable conclusions are drawn, economies are suffering from the lockdowns and the restrictions (‘measures’), not the pandemic.
Governments’ Role in the Pandemic
Even then, governments are not powerless. Besides immediately removing all virus-related economic restrictions in place now, there are other things they can do. Amid widespread job uncertainty, layoffs, and business shutdowns (whether caused by people’s response to the virus or the lockdowns), governments should ease restrictions on the labour market such as abolishing minimum wage laws or mandatory leave requirements. These laws exacerbate unemployment by making it more difficult to find one’s place in the labour market suitable to one’s circumstances. Maintaining these laws also forces businesses to adopt a hazardous all-or-nothing approach instead of being able to make more modest adjustments to their operations amid a crisis. Governments can also ease the burden on businesses by abolishing personal and corporate income taxes as well as the VAT. This would help crisis-affected businesses stay afloat in the short term and benefit customers in the long term by lowering prices of goods across the board.
GDP, Growth, and Sustainability
Two questions are raised concerning the future aim of economic progress: If GDP is not adequate anymore, “what should the new compass for tracking progress be?” and “What will the new drivers of an economy that is inclusive and sustainable be?”
GDP is indeed inadequate for measuring economic progress. By concealing wealth stock reduction and elevating immediate consumption, it incentivizes short-term planning at the expense of long-term sustainability, especially when it comes to government expenditures and budgeting. Furthermore and perhaps most importantly, GDP includes government expenditures in the same way as private business dealings. However, not being faced with the same external (competitive) constraints, such expenditures could be wholly wasteful or even actively harmful to the economy while still recorded as ‘growth’. To the extent that GDP includes government spending, its summary numbers lack any informative value and are wholly meaningless and misleading.
An actual Great Reset of GDP implies at the minimum removing government expenditure from GDP altogether and preferably even subtracting it from the private economy subtotal. A wealth or capital goods indicator should also be added alongside GDP to provide a more accurate picture of the structure of the economy.
Secondly, new drivers of an inclusive and sustainable economy are an elaboration of the paradigm above. By demonopolizing and liberalizing key spheres of society and the economy, many egregious breaches of human rights prevalent in our societies can be addressed. Furthermore, the fresh air of competition can bring unprecedented progress and a rise in the quality of life as well as the broad social fabric.
The demonopolization of healthcare systems, particularly in European countries, is long overdue, as most of those systems, created as parts of ideological campaigns during the ‘century of socialism’, are unsustainable and often result in abhorrent tragedies. No longer can the world rely on the United States to effectively fund most of today’s medical advances and progress through its comparatively liberal, although still restricted, healthcare industry, propping up inadequate healthcare schemes abroad through covering sky-high costs at home. A more competitive environment will bring declining prices as well as increasing quality of products and services, and faster research and innovation.
Liberalization of education worldwide is, indeed, the ‘civil rights issue of this decade’. The present repressive schooling systems spread worldwide originated as training and conditioning of youths for army and military purposes. In what amounts to grave breaches of the most basic human rights, children are being herded into prison-like facilities to be exposed to some of the worst anti-social conditions they will ever experience in their lives, being taught and surrounded by state propaganda - all under the threat of kidnapping them from their homes and families. An actual Great Reset involves an immediate overhaul of schooling ‘systems’, namely a strict separation of education and state.
A more inclusive economy and society are indeed attainable as well. In short, it would involve the broad scaling back of state powers. By extracting and redistributing large amounts of resources, states exacerbate social conflicts, pitting communities and identity groups against each other in an endless tug of war over ‘communally-owned’ resources. Withdrawal of the state from the social sphere and the removal of its corrupting influence on social relations is a major part of any actual Great Reset.
Calls for ‘degrowth’ in a bid to create a more sustainable future ‘where we can live better with less’ are fundamentally misguided. While the decline in GDP can in some situations translate to higher living standards or quality of life, this is a shortcoming of GDP (as explored above), not of growing wealth. The reverse is actually much more accurate. Economic growth (though not necessarily measured by GDP) is an essential prerequisite of developing more environmentally-friendly methods and processes. It is disproportionately in the wealthiest countries where the public at large can afford to be concerned about and engaged in issues of pollution and environmental degradation, rather than having to focus on more urgent existential needs An actual Great Reset calls for the removal of barriers to economic growth and for the world getting ever more wealthy as fast as possible, for the sake of the well-being of humanity at large as well as for the sake of our natural environment.
Interest Rates and Central Banking
Interest rates are a price like any other and reflect the time-preference of societies at large. In other words, they indicate how inclined people are inclined to save/invest rather than spend, or vice versa. Lower interest rates in response to pandemics do not imply ‘sluggish economic activity’ - they imply a turn to more sustainable, more careful, more long-term planning for the future. In contrast, higher interest rates signal a poor society, a consumerist society, and low confidence in what is to come.
Consequently, interest rates being prices that carry important information, distorting those prices is bound to result in shortages, bubbles, and mismanagement of wealth and resources of society at large. A necessary part of any actual Great Reset, therefore, is doing away with institutions explicitly tasked with interest rate manipulation - central banks - as these quintessentially socialist organizations are a relic of the past and responsible for many of the 20th century’s humanitarian catastrophes.
At the present, during the pandemic followed by an economic crisis, central banks use their ‘money-printing’ powers to bail out some of the world’s biggest corporations, using purchasing power taken away from everyone else by diluting our currencies. Central banks cannot create wealth, but they can act as incredibly effective tools of redistribution from the general public to selected, politically connected hands. Corporate bailouts amid crises at the expense of everyone else will not end unless central-planning powers over the money supply are removed from the equation altogether. As Schwab himself explains, the barrier between the monetary and fiscal policy is becoming progressively thinner. Unless an actual Great Reset takes place, in the future governments will be more eager to use newly-’printed’ money to finance their spending. This further illustrates the true nature of monetary inflation as one type of taxation, only less visible and thus more insidious and dangerous.
It was Lenin who correctly observed, in Keynes’ words, that “there is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” When looking for an explanation of the low GDP growth of the West over recent decades despite its incredible advances in technology, the first and most urgent place to look is the equally-as-incredible growth of the money supply.
In today’s world, extraction is the goal instead of destruction. Price inflation goals set by central banks ensure that the natural price deflationary tendencies of a growing economy can be continuously offset by monetary inflation, transferring most of the benefits of that economic growth to the state and the politically connected class.
Societal Reset
The COVID-19 pandemic is bound to test the limits of tolerance of our societies. As Schwab says, many governments will be met with ‘a lot of anger’ in response to their actions over this year. This will be more than justified. Fundamental socio-political changes need to take place to ensure such a catastrophic mismanagement and policy failure cannot happen in the future anymore. The pandemic has also laid bare some of the grave societal conflicts and faultlines and intensified the urgency of change.
Neoliberalism
The world has been gripped by a strange concept - neoliberalism. While it is often misleadingly described or defined, perhaps the most useful way to define it is to contrast it against simply liberalism, without the neo. While the promotion of some sort of market economy is an important part of both, it is not the central distinguishing factor.
Neoliberalism sees markets, economies, and societies at large as constructed - from the top down - by states and governments. By instituting through fiat the overarching frameworks and rules, a certain space for cooperation, exchange, and the market is created. It is this space that should be left relatively free so that its efficiency can be captured and harvested.
By contrast, liberalism views the same markets, economies, and societies as emergent, rising from the sum of the billions of actions and interactions between people, creating networks and structures through which their needs and desires are actualized and fulfilled.
Failings of neoliberalism, though often misappropriated, are almost always tied to its deviations from liberalism, namely its distinctly authoritarian tendencies and prescriptions. A repudiation of neoliberalism under the auspices of an actual Great Reset, then, should involve a decisive shift towards liberalism, away from its misconceived outgrowth. However, Schwab’s suggestions (voiced by Mazzucato) of a “move towards actively shaping and creating markets that deliver sustainable and inclusive growth” call for the exact opposite - a continuation and intensification of the neoliberal point of view. Schwab’s reset is no reset, but more of the same and of the bad.
Inequality
Part of the case for WEF’s Great Reset is based on the fight against ‘inequality’, usually meaning income and wealth disparities. Firstly, such disparities are often legitimate and just. Contrary to the insistence of some, justice does not mean equity. A much more reasonable and accurate view of the concept is the meritocratic one - getting what one is due (deserves). Secondly, though, these legitimate disparities are mixed together with deeply illegitimate and unjust ones. Through systemic exploitation of various sorts, some people are able to enrich themselves arbitrarily at the expense of others. A very suitable example of this is the aforementioned monetary system and the people benefitting from its predatory nature upon societies. Another example is the egregious redistributive machines extracting wealth from the general public to fund or bail out corporate giants. Furthermore, extensive welfare states tend to exacerbate wealth and income disparities by incentivizing and guiding vulnerable and marginalized individuals towards a state of permanent obedience, quasi-servitude, and reliance on government ‘support.’ Changes promoted by an actual Great Reset will drastically reduce unjust inequalities, removing or at least reducing the pedestal of the current politically connected class and leveling the playing field. At the same time, it will preserve merit-based disparities as one of the cornerstones of a fair and just society.
The Social Contract
The current ‘social contract’ desperately needs to change. More than any other, this year’s developments have revealed the grave shortcomings of today’s states. While people feel and are ever more controlled, directed, regulated, and taxed - what amounts to significant concessions of one’s autonomy and rights - the services offered by states in return are inadequate at best and outright criminal at worst. It is no wonder, then, that the present world is experiencing deep social unrest. When people feel they are not getting what they are due; when they have given up so much while what they were promised in return is nowhere in sight, they rightfully call for governments to step up their game. Almost always, these calls are misunderstood or outright spun as requests that states increase their involvement in people’s lives, rather than provide better service - as promised.
From an economic point of view, the present conundrum is sadly predictable. Monopoly provision/production leads to increasing costs and decreasing quality. The quality of services centralized by states will go down, while the price (in taxes) will go up. This is even more pronounced when the monopoly is powerful enough that it can literally bend law itself to its will, and exempt itself from laws under which the rest of us operate. By design, states violate one of the most basic principles of law - being judges in their own causes.
Naturally, the results of this are outrageous. Over this year, widespread protests and riots have been held over the world and especially in the US against police brutality. Monopoly police can use, abuse, and even kill you with justifications that would be unthinkable if the badge was removed. When they do so and you object, you are not entitled to an impartial, third-party adjudication of your case. Instead, the police investigate themselves, and, to no-one’s surprise, find themselves not guilty. The situation is by-and-large analogous when it comes to all recourse for state conduct causing others harm.
This ‘social contract’ is no contract at all. It is a sad joke. Perhaps the most important plank of an actual Great Reset will feature an overhaul of this relationship between individuals and states. An actual contract needs to be drafted, which must, just as any other contract, be signed by both parties, cannot be unilaterally changed, and is enforced by third-party institutions. Under the new ‘social contract’, states’ customers would have an actual legal right to the services they pay for, rather than just a vague promise and no real right at all. If states did not provide what they were supposed to, they could be sued for damages, as well as taken to court over any harm they cause. States would not be able to raise fees (taxes) or impose social restrictions beyond boundaries agreed to in advance or without additional explicit consent. Only with this change can states be held to account for their actions or excesses and their unjust advantage in the legal system be addressed and remedied.
Schwab’s suggested ‘changes’ to the current ‘social contract’, on the other hand, represent the exact reverse. They are, in fact, no changes at all but only intensifications of today’s trends. Schwab poses that two central features of any proposal for change would be expansions of the welfare state (an utterly failed experiment that displaced previously existing, more effective and sustainable institutions - even Schwab himself notes the ‘ineffectiveness of most redistribution policies’) and ‘enhanced protection for workers’ (translating to further corporatization of the economy and expanded barriers to entry, resulting in a much weaker position of employed workers down the line). These quasi-fascistic developments proposed by Schwab are the opposite of any effective solutions.
Geopolitical Reset
The pandemic has also exposed the inadequate ‘ordering’ of the international system. It has raised the question of the purpose and effectiveness of international institutions as well as regional state-like actors like the EU. The reaction all over the world to the threat of the virus was for nation-states to reassert their ultimate sovereignty and to attempt to separate themselves from the rest of the world and therefore the danger outside. The results of these shifts and the lockdowns are what we are witnessing now. How, then, should the international system be re-made to be better suited for similar challenges in the future?
Globalization and Globalism
The international sphere is vast and consists of a wealth of institutions. Those are nation-states, transnational institutions, regional bureaucracies, the UN, global institutions (for example monetary ones), as well as all branches, subsidiaries, and advocacy organizations funded by any of these. They all share one important feature - a lack of accountability to the sources of their funding. Operating at taxpayer expense, they do not need to be receptive to the views and preferences of the general public expressed through market demand. Only a small part is exposed to the election cycle - itself a faulty process, easily steered to one’s advantage and inadequate for expressing people’s real preferences and their weights.
It is not surprising, therefore, that these institutions without meaningful constraints produce dubious results and policies actively harmful to society at large. As the pressure for action put on the international system amid this pandemic intensified, so has, in turn, the scope for production of large-scale societal harm surged. In a world where institutions responsible for creating the most far-reaching policies with widespread impacts are so removed from any tangible feedback from the ‘consumers’ of those policies, ‘globalizing’ this sector can only make the present situation even worse.
Unfortunately, Schwab views the situation in an exactly opposite way. He is a supporter of both globalization and ‘globalism’ and sees one as unsustainable without the other. Here, I take globalization to mean the interconnectedness of the world through trade and cooperation. Thanks to globalization, the world overall now is wealthier than ever and also more peaceful than ever. If you rely on your neighbors to produce your food, you don’t go to war with them. Reversing globalization is literally unthinkable. Turning to an increasing state-based economic nationalism in a bid for autarchy would swiftly return our societies to pre-industrial revolution levels of poverty.
On the other hand, ‘globalism’ can be understood as the support for international and global institutions to serve as an overarching supranational political structure, potentially even becoming a fully-fledged world state in the long term. Due to his neoliberal leanings, Schwab sees economics as a product and an outgrowth of politics. There can be no economics or economic cooperation without the presence of politics, in his mind. Therefore, he ascribes failures of international institutions to their ‘underfinancing’ and ‘over-governance' by nation states instead of to their ill-conceived nature due to which they are destined to failure from the outset.
Instead of being a necessary component of globalization, ‘globalism’ is a hindrance to it. Just as politics interferes with naturally-emergent economic structures domestically, ‘globalism’ would do the same thing on a world scale. While in some contexts international institutions can be useful in alleviating the barriers to trade and development raised by states, they tend to start raising those barriers themselves as they grow and become powerful. Turning to increased ‘globalism’ would be a disaster for globalization, which would, in turn, be catastrophic for the whole world - but particularly the poor and most vulnerable. Any actual Great Reset will, therefore, include the steady push to redesign international organizations to set their goal explicitly to counter states’ restrictions on trade and social and economic progress instead of being alternative state-like structures themselves.
Global Governance
Throughout recent history, a large part of the world relied on the US for the provision of ‘hegemonic’ security. The Trump administration, however, perhaps signals a beginning of a turn away from such a setting. In the not-so-distant future where this guarantee is gone, the rest of the world might need a different strategy.
Klaus Schwab is concerned about these developments. He claims that ‘if no one power can enforce order, our world will suffer from a “global order deficit”.’ Because of the centralized view of the world and society he seems to hold, he decries a ‘world in which nobody is really in charge’. For Schwab, progress is unimaginable if it is not overseen by a governing body, and it is deeply worrisome that ‘today there is no “committee to save the world”.’ Recognizing the achievements of globalization, which he thinks can only be preserved and expanded by ‘globalism’, he proclaims: ‘There is no time to waste. If we do not improve the functioning and legitimacy of our global institutions, the world will soon become unmanageable and very dangerous.’
In fact, the opposite is true. The world will soon become unmanageable and very dangerous if Schwab’s idea of the Great Reset were to succeed and global government-like structures were significantly expanded. Where there is no ‘committee to save the world’, there is no committee to ruin the world - a far more likely scenario.
Throughout this pandemic, we have repeatedly seen international government-like institutions failing in their supposed task of protecting the world exactly from threats such as these. It was not a ‘vacuum in global governance’ that ‘undermined international efforts to respond to the pandemic’. It was the fact that governments are by design unable to respond to these situations in an adequate way. They cannot perform meaningful economic calculation in the areas they preside over. Their response to the pandemic was catastrophic because of this, and any globally coordinated or globally enforced plan would be much worse still, for the exact same reason. An actual Great Reset would involve political and legal changes to ensure that the powers which allowed governments to inflict this much harm on their populations are permanently removed from the equation through their dissolution and reclamation by society and the public at large. Instead of further centralization and concentration of political power in the hands of an increasingly narrow group of people involved in ‘global governance’, the world should do the opposite - aim for as much decentralization and distribution of political power as possible. It is the only path through which we can hope to be in a better position to address similar crises in the future.
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