In summer 2021, we started to be rather worried. The world seemed to be drifting into something “dystopic”.
The responses to the coronavirus outbreak, whose destructive potential we warned in late January 2020, became epidemic in 2020 and 2021. Lockdowns and the largest bailout operations central banks and governments had ever conducted were transforming our societies in ways unseen in the Modern Era.
Our subscribers should focus on the path on which we have been placed. Unless we change it, this path leads to Dystopia. Complete socialization of the capital markets and the imposition of central bank digital currencies would seal our fate. If we fail to change course now, we could first see our economic freedoms slip away. Our political liberties will follow thereafter.
So, we were, rather unwillingly, wathing our worst predictions becoming a reality. This forced us to dig deeper and to analyze the highly speculated Great Reset -agenda driven by the World Economic Forum, or WEF. In December 2021 we published a special report on the agenda.
Here we summarize our main findings.
The main components of the Great Reset
In his address, on June 3, 2020, Klaus Schwab outlined three main components of the Great Reset:
- Governments should steer the market towards “fairer outcomes” using taxation, regulatory and fiscal policies, including wealth taxes and removal of fossil-fuel subsidies, and impose a new set of rules governing intellectual property, trade and competition.
- Ensure that investments advance “shared goals”, like equitability and sustainability, through government led large-scale investment programs, like the Recovery Fund of the EU and the infrastructure bill of the U.S.
- To “harness” the innovations of the so called Fourth Industrial Revolution to address health and social challenges.
All these naturally sound very intriguing, and “progressive”. However, when we started to analyze how they would be implemented and especially to where they would lead to, we noticed that the ‘devil’, again, is in the details.
Steering the markets?
The first idea of steering the market is decades—if not centuries—old. Many think that “markets” are something we need to have control over. This view lacks the understanding that we are the markets.
Markets consists of corporations and different kinds of investors. Markets are, essentially, just people. If we do not like the way something is traded, we can easily change that by changing our behavior, as groups of individuals.
Taxes introduce inefficiencies and distortions in the market-process, which seeks to find the correct prices for all products and services at a given time. Some subsidies, though, like those supporting energy and food production, are there to support the supply (and suppliers, like farmers) and ensure access to necessities, like electricity, food, and water. Viewed from that perspective, such subsidies may be acceptable, especially if “national security” is invoked. These are not addressed in the Great Reset agenda.
The agenda also does not clearly state what the new rules concerning intellectual property, trade or competition should be. This vagueness in action-statements, which surrounds the agenda, is always a big risk, as they may (tend to) be filled with covert, competing, and sometimes highly destructive political agendas.
Investment guidance by governments: a bad idea
The idea that governments or intra-national bodies should ensure that investments advance ‘shared goals’ (whatever they are), is a dangerous one.
It is well-documented that for example the investment programs run by the EU have been very inefficient. This has become painfully visible during the current energy crisis, which will extend far into next year and beyond. The same applies to many ‘green revolution’ programs run across the globe. See, for example the failed green policy programs of the Obama administration.
Also, somewhat strangely, the International Monetary Fund, or “IMF”, has started to support the government-run investment agenda, against which it has argued for decades. From the very start, in 1952, the main aim of the emergency assistance programs the IMF grants to countries has been to remove inefficient government subsidies (see historical record from, e.g., Malinen and Ropponen).
The ‘social challenges’ the Great Reset agenda tries to address have been detailed in the book by Klaus Schwab and Thierry Malleret as “a broader if not universal provision of social assistance, social insurance, healthcare and basic quality services” and “enhanced protection for workers and those most vulnerable”.
These are naturally highly supportable aims, as all citizens of Nordic Welfare States know. However, the Nordic states have developed economically, politically, and culturally in parallel, which has led to the simultaneous integration of effective social insurance, education and health care networks. The Nordic Welfare Model is thus not something that can be directly copied to other developed nations.
The question for the vast majority of the countries of the world is rather how they would pay for the increased social spending and how would they ensure that it would be cost-effective?
The Great Reset literature also tends leave this question mostly unaddressed. It gives only vague hints to increasing taxation of the rich through, e.g., a populistic comparisons of the wages of a hedge fund manager vs. a nurse.
At the heart of the publicly-stated objectives of Great Reset is something called ‘stakeholder capitalism’.
The details of it are rather hard to quantify, as they are usually presented vaguely, but it proposes that large corporations will become “trustees of the society” through a range of multi-stakeholder partnerships’. This would bring the private sector, governments and the civil society together in all areas of global governance.
The main principle is that corporations would be required to balance, or to be accountable for, the costs and benefits they produce for society. Looking the issue more closely reveals that while the idea is superficially attractive (like socialism) there are predictable and serious problems in the details of such a scheme, like corruption which always emerges in large control structures.
Moreover, the breadth of the proposed co-operation, published in 2010, is breath-taking. The initiatives of the WEF would likely bring every area of human existence under global governance, which is, essentially, what we are talking about: the formation of a global government.
Thus, the idea of “stakeholder” capitalism is that corporations would become bigger players in an even bigger, and more intrusive global decision-making system. Governments and customers (and stockholders) would be just ‘stakeholders’. Such a system would be especially threatening to small and medium-sized companies and thus the middleclass.
Destruction of the SME’s?
While some authors consider that ‘stakeholder capitalism’ would lead to world over-run by big corporations, they tend to forget the role of governments and multinational institutions in governance and regulation.
While big firms can lobby governments and authorities, the latter still hold the upper hand, at least as long they have the control over legislation and the institutions upholding the rule-of-law. The true worry here is that ‘stakeholder capitalism’ is just a fancy name for fascism which, in essence, is the alliance of corporations and governments.
However, the idea of big corporations becoming more integrated into the governance system raises another, very serious economic threat. With corporations becoming an essential part of the system of global governance, they could easily make the life of small and medium-sized enterprises very hard by creating legislative and regulatory hurdles for the SMEs.
We could end up into a situation, where SMEs would become all but extinct, or alternatively, mere slaves of the big corporations. This would almost certainly seriously hinder the ‘creative destruction’ which has driven our economic growth for the past 200 years. Moreover, destruction of SME’s would also effectively lead to the death of the middleclass.
Who is participating and why?
What is very worrying is that the Great Reset Initiative, launched by the WEF during the Summer of 2020, has as partners a huge number of the most influential corporations in the world. Are they taking part on purely altruistic grounds, or for some other motive?
It would be naïve to assume that big corporations would take part in anything that would not benefit them. Like explained above, the stakeholder capitalism would increase their role in global governance and essentially help to secure their future, as they would become highly effective in suppressing competition.
Also, there’s a clear push for furthering and deepening global governance. Thus, the Great Reset may actually be means-to-an-end to create a major power grab from democratic societies to global governance, a global authoritarian oligopoly—if not actual fascism—of sort.
Next week, we turn on the scenarios to which the Great Reset could lead us.
We will continue to analyze the current “dystopian” path of the world economy in our Q-Review -reports, which you can order from our Store.