A four-year economic crisis has left societies battered and widened the gap between the haves and have-nots, financial leaders conceded Wednesday _ with one suggesting that Western capitalism itself may be endangered.
With the global economic outlook gloomy at best as Europe struggles with its debt crisis, there’s a sense at the heavily guarded World Economic Forum in the Swiss Alps that free markets are on trial.
There’s a widespread acceptance that more must be done to convince critics that Western capitalism has a future and that it can learn the lessons of its massive failures.
For 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’s lasted longer than anyone predicted and will probably go on for a number more years … we’re gonna have a lot of economic disparities,” said Rubenstein.
“We’ve got to work through these problems, if we don’t do in 3 or 4 years … the game will be over for the type of capitalism that many of us have lived through and thought was the best type,” he added.
His stark appraisal may have been an outlier, but there was a clear defensive posture among many participants on this opening day of the World Economic Forum in Davos.
There were numerous references to the need to innovate, the need to consult with employees and the realization that power in the world is shifting from the west to the east. While the traditional industrial economies of the United States and Europe have limped through the last few years, often from one crisis to another, many economies in Asia and Latin America have been booming.
As Ben Verwaayen, the chief executive of Alcatel-Lucent, said, there’s a “very different view” of capitalism in Brazil.
“This is a very different discussion depending where you are,” Verwaayen said.
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 the World War II.
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 was important that policymakers don’t 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. He also noted that boom and bust cycles are a part of the Western capitalist structure.
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 even as top executives have continued to reap huge pay packets.
Davos activists on Wednesday sent aloft big red weather balloons carrying a huge protest banner reading “Hey WEF, Where are the other 6.9999 billion leaders?”
The activists were from the Occupy WEF movement, a small group camping out in igloos here and following in the footsteps of the Occupy Wall Street movement that spread to cities around the world.
Davos is a hard-to-reach place to protest, tucked in the Swiss Alps. Some 2,600 of the world’s most influential people are gathered for the forum this week, amid increasing worries about the global economy and social unrest due to rising income inequalities.
The CEO of accounting giant Deloitte, Joe Echevarria, talked about developing “compassionate capitalism.”
“You’re going to have to deal with regulation _ balancing the need to protect society along with stifling growth,” he told The Associated Press in an interview. “I think that has to manifest itself through the choices that governments and businesses make.”
While the bigwigs debated at Davos, key Greek bondholders were holding closed-door meetings in Paris to discuss how _ and whether _ to continue talks central to resolving Europe’s debt crisis that would forgive 50 percent of Greece’s enormous debt.
Mark Penn, global CEO of the public relations firm Burson-Marsteller, told AP “the whole crisis has raised larger questions about how is capitalism working, how do you redefine fairness in the 21st century?”
Later Wednesday, German Chancellor Angela Merkel may chart her course for Europe’s crisis in her keynote speech at the Davos forum.
In an interview with six European newspapers published Wednesday, Merkel drove home the need for reform in debt-troubled eurozone nations instead of spending more to beef up the region’s bailout fund.
Surveys ahead of the meeting showed pessimism among world CEOs and plunging levels of public trust in business and government leaders and concerns that fragility in the U.S. and European economies will bring the whole world’s economy down.
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