Is capitalism dead in the 21st century?

© 2012 Richard Quest, CNN Anchor and Correspondent

Davos, Switzerland (CNN) – With the world still shaking from the global economic earthquake, and suffering daily aftershocks from Europe, it is not surprising that the topic at Davos is whether capitalism is dead.

On the opening day, the main debate focused on the question: “Is 20th century capitalism failing 21st century society?”

It’s not hard to see why. Former White House economist Nouriel Roubini reminded us that today we are “back to the inequality of 1929 and the Great Depression.” High unemployment and the failure of wages to keep pace with living costs are resulting in widespread unrest against elites.

In the eyes of many workers, and especially young people, the business community “has lost its moral compass,” trade union leader Sharan Burrow pointed out in today’s debate. “We must redesign the model. We must reset it,” she urged.

Klaus Schwab, founder of the World Economic Forum, is in no doubt that capitalism is “outdated,” and that talent, not capital, should be the main driver of economies.

So far there seems to be a view that capitalism may be the worst form of economy – except for all the others.

Saying that the system needs fixing is the starting point. Leaders like Muhtar Kent, CEO and chairman of Coca Cola, are spending a lot of time here thinking about what might come next. He believes that a new model based around a triangle of government, companies and society is the way forward. But hang on. Didn’t we used to call that the “stakeholder economy” in the 1980s? Wasn’t the very idea of “stakeholder” designed to broaden the reach of those under the tent? Make more people feel included?

Many like Kent, who employs more than 700,000 people, believe that there has to be a more inclusive form of capitalism. But there are still far too many narrow-minded executives that don’t truly want to make the fundamental changes.

As the failure of capitalism over the past decade shows us, it’s all lip service unless major action is implemented.

While the shift in economic power to the East is undeniable (OK, John Defterios, but that doesn’t mean the West is down and out…) no-one should think these emerging markets are great paragons of new model capitalism, spreading wealth and benefits.

There may well be a rising middle class in the BRICS economies, but poverty, disease and a lack of social welfare still abound there. To say nothing of corruption, and a lack of corporate transparency in many cases.

Earlier in the week, I called this “Davos Do Little” because of the complexities faced in solving the pressing euro crises. I am coming to the view that this might be a good thing.

Since they can’t waste too much time trying to do what they can’t, they are at last willing to talk about what might come next. Now, can someone please tell me what a new model of capitalism might look like? And crucially, how we prevent it becoming just a re-fashioned version of the old?

Richard Quest

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