Alternative economic models for rich countries and the global South

As our world approaches the third decade of the 21st century, we see controversial trends. On one hand, economic well-being, life expectancy, and educational levels are, on average, higher than ever. Despite ongoing regional and ethnic conflicts in different regions, casualties of war as a percentage of the total population are lower in the 21st century than at any other time in recorded human history.

On the other hand, income inequalities within major countries are increasing: the gap between rich and poor has been growing since the early 1980s in the US, in most European countries, and in many countries of the Global South. The size of the gap is approaching the historical highs of the beginning of the 20th century. This trend represents exactly the opposite of the concept of ‘inclusive development’, which is promoted by the UN and other international organisations.

A continuation of these trends could result in two outcomes. First, there may be social upheavals in some countries, where social tensions due to growing inequalities will become unbearable and produce social turmoil. Second, the rise of income and wealth inequalities means there are groups of people who are not gaining from globalisation; this creates fertile ground for a rise of nationalism and ethno-populism.

To prevent this worst-case scenario from materialising, new ideas need to emerge from open, equal, and cooperative exchange. Is there an opportunity to reform global capitalism, so as to make economic and social development inclusive and to give globalisation a human face? Or is capitalism so incapable of reform that it needs to be replaced with a more advanced social system?