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IPE special report May 2018

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The 'Occupy' protests: We are the 99% – but also the 10%

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  • The 'Occupy' protests: We are the 99% – but also the 10%

The 'Occupy' movement has taken Wall Street by storm. Martin Steward explores some of the contradictions and ironies surrounding the movement.

The 'Occupy' protests that have galvanised Wall Street, St Paul's Cathedral in London and other landmarks in wealthy cities around the developed world express a very real sense of pain, despair and uncertainty. But if we fail properly to articulate the true nature, source and context of this uncertainty, we run the risk of crippling our economies for the next generation of global competition - or worse, perpetuating the sort of worldwide economic injustice the protestors would abhor.

I recently watched one of the recent guest speakers at Occupy Wall Street, Slovenian philosopher Slavoj Žižek, give an interview with Charlie Rose (on, of all places, Bloomberg TV). He was his usual entertaining, enlightening self. But it was a little disappointing that the usually pin-sharp Rose did not pick up on one of his typical barbs against the "radical leftists" among whom Žižek himself is often counted: "Capitalism - to give the devil his due - is without doubt the most productive system we have ever known. Could anyone before the capitalist era even have imagined the living standards that people in, for example, Western Europe, have enjoyed for the past 50 years? But those times are passing."

It's possible to take issue sensibly with improvements in productivity - from an ecological point of view, say, or if one feels, like those Marxists who buy labour theories of value, that its fruits accrue disproportionately to capital over labour. But while Žižek certainly has other critiques against the political psychology that results from high living standards, he does not seem to dispute that those high living standards are widespread in capitalist societies, nor that capitalism is among the requirements for those living standards. I would guess that most readers of IPE are with him in these assumptions.

So if it is not capitalism that has caused all this pain and uncertainty, what is it? The answer, surely, is globalisation. There have been big winners and big losers from globalisation. Capital has certainly been one of the big winners. But labour, as a whole, has not been a big loser. The poorly educated, unskilled or semi-skilled labourer who competes purely or mainly on price certainly has lost out as millions of people in the emerging world have entered the markets. Those among the English-speaking, educated and skilled global elite who are not forced to compete on price have therefore enjoyed growing income (and wealth) relative to their less-skilled compatriots: globalisation has increased domestic inequality in every individual economy.

This is why the anti-globalisation protests of 10-12 years ago were so much more coherent than the current 'Occupy' protests, which have been criticised for their lack of clear demands or goals. The trouble is, it's become so much harder for any right-thinking person to protest against globalisation over the ensuing 10 years because that period has seen more of the world's population lifted out of poverty, at a faster rate, than any other in human history - these are the really big winners from globalisation. And unfortunately for the 'Occupy' protestors, it appears to have been the globalisation of market capitalism that has achieved this.

The protestors' keynote slogan is: "We are the 99%". It is meant to signify that the protestors are those disenfranchised by the 1% that holds half of the wealth of the rich, developed world. But it should also draw our attention to the fact that the protestors are probably also among the 10% of the global adult population that owns 85% of all the world's wealth. They are almost certainly among the 15-20% that owns around half of that wealth. They probably are poorer than 20 years ago, but is that because capitalism has failed or exploited them - or because the globalisation of capitalism has rebalanced the world economy toward greater material equality by moving work and capital into newly open emerging markets?

It is, alas, a queasy position we find ourselves in. We inhabit a world that has become more equal, but observe it from developed economies that have become more unequal. Even worse, that growing inequality was obscured as those parts of developed economies that were not improving their productivity enjoyed support in the form of unsustainable lines of credit and social spending, financed by the reserves of booming emerging economies. That sticking plaster was rudely torn off in 2008, when the credit edifice collapsed, and in 2010 and ongoing, as the social spending edifice collapses along with the developed world's AAA sovereign credit ratings. 

There is one over-riding force at work in the global economy today. If, like the 'Occupy' protestors, you think it is a force of 'crisis', and that the banking fiasco in the West is a cause (rather than a symptom) of that crisis, then you are a dangerous distraction from the reforms the developed world needs to pursue to meet the challenge of the next generation.

The true force driving the economy is the entry of millions from the emerging world into global markets for goods, services, commodities and labour. That is not a force of crisis to be castigated, but a force of opportunity to be celebrated. When Žižek says "those times are passing", he may not recognise it, but what he is saying is that globalisation is finally sharing the fruits of capitalism more equally around the world. Inevitably, for us in the top 15-20% of the world's wealthiest, that will mean the price of goods, services and commodities going up while the global price of labour goes down - negative real income growth will be a fact of our lives.

There are actions we can take to limit the impact of this global rebalancing of wealth - chiefly, of course, to make sure we are educating a workforce for industries that require labour competition on skills rather than price, that respond to growing emerging-market consumption and that hold out the promise of maximum improvements in productivity over time. Again, a previous protest here in the UK, by anxious youths against an enormous rise in university tuition fees (a public policy far more ruinous than anything a cabal of investment bankers could ever come up with), was much closer to the mark than the agenda put forward by 'Occupy'. By contrast, that appears to offer us the unlovable choice of damning the entire world to a lower standard of living - or alternatively only the poorest 80% of it.

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