Some of the world’s top chief executives gathering at Davos forum admit capitalism is worsening inequalities, but say it is better than any alternative.
The annual World Economic Forum in the Swiss ski resort of Davos, the traditional emblem of the free market economy for more than four decades, is discussing the sustainability of capitalism amid concerns over the global economy this year, focusing on the eurozone.
According to David Rubenstein, the co-founder and managing director of asset management firm Carlyle Group, leaders must work fast to overcome the current crisis or else different models of capitalism, such as the form practiced in China, may win the day.
“As a result of this recession, that has lasted longer than anyone predicted and will probably go on for a number of years, we are going have a lot of economic disparities,” said Rubenstein. “We have got to work through these problems; if we do not, in 3 or 4 years the game will be over for the type of capitalism many of us have lived through and thought was the best type,” he told The Associated Press.
Many rejected the suggestion from Sharan Burrow, the general secretary of the International Trade Union Confederation, that capitalism has lost its “moral compass” and needed to be “reset.” Still, representatives of the business community insisted they were learning from the mistakes that dragged the world into its deepest economic recession since World War II.
The Bank of America’s CEO Brian Moynihan said the excesses of banks in the run-up to the banking crisis of 2008 reflected the economies they were operating in, so it is important policymakers do not overreact.
Moynihan, whose bank was forced to back down on plans to start charging a $5 debit card fee after protests by the Occupy movement and others, said banks have “done a lot” to reduce excesses.
Many outside the confines of the Davos conference center disagree; after years of crisis in which hundreds of millions of people have lost their jobs, top executives have continued to reap huge pay packets.
Davos activists yesterday sent aloft big red weather balloons carrying a huge protest banner reading “Hey WEF, Where are the other 6.9999 billion leaders?”
Europe must show more resolve in fixing the debt crisis, as officials race to draft rules governing the euro and bridge widening difference over how to keep Greece’s finances afloat, said delegates at the World Economic Forum.
“We cannot wait too long,” said Peter Voser, chief executive officer of Royal Dutch/Shell. “It is two minutes before midnight,” Bloomberg News quoted him as saying.
Delegates warned it is too soon to sound the all clear for Europe, even following the European Central Bank’s decision to pump emergency cash into the banking system and staving off the bond market rout in the region.
The CEO of accounting giant Deloitte, Joe Echevarria, talked about developing “compassionate capitalism.”
Muhtar Kent, the Turkish-American chief executive of Coca-Cola, said Turkey will be a shining star in world economy despite slower growth. “The Davos forum this year is highly important,” he said, “Employment and growth for the upcoming period will be discussed. Maybe the seeds will be sown for a new model. This new model will be a version of the current one with modifications in pace with today’s needs.