(Above: Archimedes’ Lever Creative Commons CC-BY-4.0)
Written by: (Contributed) on 19 April 2023
A recent warning from the World Bank that global economic growth is slowing has overlooked the fact it has been the general trend for decades. Despite continuing to implement economic rationalist policies, growth has not taken place. Fears have now been raised about a likely recession.
In fact, using statistical information readily available in the public domain, it would appear politicians and financiers have trashed economies for decades for quick profits, not longer-term planned and sustainable development. The legacy of the past, has dominated the present, and is likely to continue to do so until workers organise around a common theme to swing the levers of power in their favour.
In early April an official report from the World Bank warned of a 'lost decade' for global economic growth. (1) It noted declining rates of GDP growth in previous decades; not only have they not reached expectations and forecasting, they have actually dropped. The World Bank, for example, now expects global economic growth for 2023 to drop to a mere 1.7 per cent. (2)
Elsewhere, reliable economic statistical information can be used to reveal longer-term decline.
WORLD ECONOMIC GROWTH
DECADE AVERAGE
1960-69 5.33%
1970-79 4.04%
1980-89 3.07%
1990-99 2.84%
2000-09 3.26%
2010-19 3.16%
2020-21 1.37% (3)
The World Bank has already forecast the global economy will shrink still further during the 2022-30 period, to an estimated 2.2 per cent. (4) The view is also shared by the OECD which has projected real GDP for Australia will be:
2022 - 4.0%
2023 - 1.9%
2024 - 1.6% (5)
During the next decade the figures are likely to sink to zero: serious questions will then arise about viability.
The US economy is expected to reach 1.6 per cent growth this year, a reduction from 2.1 per cent last year, according to an IMF projection: the causes of the problem, they claim, has been recovery from slumps caused by the pandemic and the war in the Ukraine. (6)
The World Bank report was released a few days before a major meeting in Washington with major banking institutions, and designed to cause alarm. While they are an indictment of economic rationalist policies which were foisted upon governments through international financial institutions controlled by the US from the 1980s onwards, the report was couched in diplomatic terminology to not offend the perpetrators of the problem.
Economic rationalist policies, however, did not, and cannot, accelerate economic development; they were responsible, for example, for the flinging of finance capital to the four corners of the globe in order to specifically plunder and pillage the economies of the developing countries.
The policies have been responsible for widening disparities between countries and within them.
The other side of economic rationalist policies has also been the accumulation of wealth in fewer and fewer hands. And those who have gained from the policies are hardly likely to opt for changing the rules of the game, wherever they may reside.
Chile, in 1973, with a brutal military coup, was the test-tube for the Chicago School of Economics and those associated with the academic institution: it served Washington and the Pentagon well with economic rationalist policies designed to serve 'US interests' above those of the Chilean people. It became standard global US foreign policy during the following decade as successive presidential administrations pursued neo-colonial type moves to place the US at the centre of the global economy.
Recent studies of wealth accumulation have revealed the richest ten per cent of the world's population have accumulated 52 per cent of income, while the poorest fifty per cent earn only eight per cent. (7) In recent years the average income gap between the top ten per cent and bottom fifty per cent has almost doubled. (8)
Studies have also revealed 62 billionaires own the same wealth as 3.5 billion people. (9)
And for those advocating austerity, they might like to consider studies conducted during the recent pandemic, when the global economy was considered to be under serious strain.
Global wealth grew by 12.7 per cent in 2021, the fastest rate ever recorded, rising to $463 trillion. (10)
While the estimated average increase in wealth has been maintained at 6.6 per cent annually,
it started to increase soon after sanctions were imposed during the pandemic: in 2020 it grew by 9.8 per cent. (11)
The agendas for those attending the banking summit in Washington, from 10-16 April, however, have not been well publicised. A statement from the World Bank noted, 'it will take a herculean collective policy effort to restore growth in the next decade to the average of the previous one … three main factors are behind the reversal in economic progress: an ageing workforce, weakening investment and slowing productivity'. (12) It did not draw attention to the fact those on the receiving end of the exploitative economic policies appear hyper-active and working very productively, as the accumulation of wealth in their employers' hands has shown.
The question whether those attending the conference correspond by 'cloud', or live in them, still awaits a suitable answer.
The levers of power, nevertheless, remain in their hands, for the time being!
1. World Bank warns of lost decade for growth, Australian, 5 April 2023.
2. Ibid.
3. Marcotrends World Economic Growth, 1960-23.
4. Australian, op.cit., 5 April 2023.
5. OECD, Australian Economic Snapshot, November 2022.
6. Volatility in banking sector to squeeze growth in the US: IMF., Australian, 13 April 2023.
7. Growing Income Inequality, World Economic Forum, 10 December 2021; and, Three Charts, World Economic Forum, 20 January 2016.
8. WEF., ibid., 10 December 2021.
9. WEF., ibid., 20 January 2016.
10. Global Wealth Report, 2022, Credit Suisse.
11. Ibid.
12. Australian, op.cit., 5 April 2023.
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