Dialogue vs. Reality: US Actions Undermine WEF Spirit While Corporate Power Grabs Escalate

Mariana Mazzucato

As the 'World Economic Forum' organizes an event in Davos, Switzerland, under the theme of the 'Spirit of Dialogue,' the United States is attempting to forcibly assert control over Venezuela's oil infrastructure. The American administration is moving to establish control over the country's petroleum reserves.

America is picking a fight with European nations over the Greenland issue. There is a major disconnect between the dialogue the World Economic Forum seeks to present through its program and America's unilateral aggression. Similarly, there is a stark contrast between the pronouncements of the elites gathered in Davos and the increasing global chaos of the current times. The mismatch is not minor; it is bewildering.

The form of US intervention in Latin America might be new, but the nature of the attempted seizure of oil infrastructure echoes past resource grabs. While participants in Davos debate 'Stakeholder Capitalism,' the old rules of power politics and resource exploitation continue in parallel.

New revelations about such exploitative actions are constantly emerging.

During a similar Davos discussion in 2019, Dutch historian Rutger Bregman made a very pointed statement: 'Taxes, taxes, and taxes. Everything besides taxes is useless talk.' His statement was so sharp that it seemed capable of performing surgery on the entire Western economy.

That ten-word sentence revealed the gap between the clamor and reality, the chasm between the talk of prosperity for all and the reality of wealth concentration.

Certainly, companies must pay their due share of taxes. But we must look beyond that. We must also examine where value is created. The issue of redistribution must be considered, and attention must also be paid to pre-distribution.

It is not enough to discuss how value is distributed after it is created. The concept of pre-distribution looks at the prior conditions under which value creation and distribution take place. Based on those concrete circumstances and responsibilities, a new social contract can be forged. Likewise, modern industrial strategies should be organized around various objectives.

These objectives are specific and measurable, addressing social challenges while simultaneously inspiring innovation and investment across diverse sectors.

Economic growth is not an end in itself; it is the result of investment made to solve real problems. For instance, activities aimed at decarbonizing the economy simultaneously transform energy, transport, food, and digital technology. Achieving the goal of 'Health for All' yields results in the public health sector.

Furthermore, this spurs innovation in various fields of life sciences. This leads to progress across broad sectors, rather than just favoring one specific area.

This requires leadership and confidence, meticulous attention to small details, and initiatives based on collective cooperation. Such initiatives must ensure that technology and knowledge derived from publicly funded research are not monopolized by an individual or a company through intellectual property rights. Practices that set exorbitant prices by bypassing value creators must also be prohibited.

The UK can offer us a great lesson on how to structure public-private partnerships. Their experiences can be significant for us. However, the current business-friendly Labour government risks repeating costly mistakes of its own past.

For example, we can look at the growing grip of the American data and analysis company 'Palantir' on British public services. During the pandemic, Palantir announced it would assist the UK's 'National Health Service' for free. That move was later compared by the company's UK head to the 'subscription' model that newspapers initially offered for free.

Now, Palantir has secured a £330 million contract with the UK's National Health Service and has also won a £240 million defense contract without a formal tender.

After Palantir sought a seven-year contract, the Swiss military rejected a similar agreement. Experts had pointed out the risk that a US-owned company could gain control over sensitive information and 'limit the military's capacity in times of crisis' under such an agreement.

Meanwhile, since the UK signed the agreement in 2022, Palantir has tripled its costs. Although various reasons are cited for this, the lesson learned is that such contracts must include conditions that enhance state capacity.

Australia has faced another unfortunate experience. The Australian firm 'Macquarie,' owned by Thames Water, has accumulated almost 2 billion Australian dollars in debt on the company while reaping the profits. Such incidents are no longer unusual. Many of the UK's key infrastructures are being built with investments from firms like 'Blackstone' and 'Macquarie.'

They all share the same fate: the general public bears the risks, but private investors reap the profits, and essential service sectors fall into difficulty due to financial maneuvering. Last week, the government introduced a 'Clean Industry Bonus' for offshore wind energy, necessary for investing in the UK's supply chain.

This move suggests that policymakers there are learning some lessons, but it remains to be seen whether these regulations will be effective in preventing such exploitative behavior in the future.

Effective public-private partnerships include conditions that ensure public value is created through public assistance. The US 'CHIPS and Science Act' provides funding contingent on investments in areas like worker development and childcare. Germany's public bank 'KfW' links the low-interest loans it offers to the campaign for carbon reduction.

Chile's lithium strategy requires mining companies to undertake domestic value-added activities and comply with sustainability standards, along with conditions that ensure significant state benefit. This is not anti-business at all; rather, it is a mutually beneficial framework where the incentive for private profit is linked to public goals.

This is a meaningful and substantive reciprocity. When the UK provided £65.5 million for the Oxford/AstraZeneca vaccine, a condition was that the company must operate on a non-profit basis during the pandemic. This is what a real partnership looks like, where risks, benefits, and goals are shared.

It is not enough for policies and programs to be well-designed; their implementation matters. State capacity must be developed. For this, core tasks should not be outsourced to 'consultants' but should be manageable in-house. This requires inter-ministerial coordination and meaningful partnerships between workers and businesses.

Investment must be increased in capacity building within the bureaucracy, covering everything from design, implementation, operation, and procurement to digital public infrastructure.

Sweden's innovation agency 'Vinnova' has put the vision we discussed above into practice. With the aim of strengthening the transformation of the entire food system, it purchases food for school meals and lunches that is 'healthy, sustainable, environmentally friendly, tasty, and easily accessible.'

To achieve its goals, Vinnova brings together relevant government agencies, municipalities, and the private sector in various areas. They focus on the shared goals of health, sustainability, and local development.

This week in Davos, there is talk of stakeholder capitalism, mission-oriented business, and sustainable development. But without binding conditions, frameworks for accountability, and risk-sharing mechanisms that distinguish between true value creators and rent-seekers, all this talk will remain mere intellectual indulgence.

As a new chapter begins in the long history of resource exploitation in Latin America, participants in Davos must ask themselves a harsh question: Are we trying to build a system based on genuine collaboration, or are we constructing an extremely sophisticated mechanism for exploitation?

The answer is almost obvious. Leaders in the technology sector are scrambling to curry favor with Trump. Mark Zuckerberg of Meta did this by removing the requirement for fact-checking on his network. Jeff Bezos of Amazon stripped the Washington Post of its editorial independence.

Bowing before the powerful, they have made themselves free agents to exploit value through algorithms on their platforms. Meanwhile, oil executives are openly discussing seizing Venezuelan oil reserves. Trump is promising them 'full security' to extract wealth from a Venezuela plunged into chaos.

Traditional multilateral institutions are beginning to appear ineffective. We need collaboration to build new frameworks for global governance. Countries seriously committed to sustainable development must cooperate to enhance state capacity for green economic growth. Consensus must be reached on this goal.

We need agreements that go beyond voluntary roles in technology transfer, green investment, and shared innovation systems, moving towards something binding for all. On this foundation, an economic system serving the entire planet and humanity can be built.

If new methods are not adopted at the fundamental level of value creation, the Spirit of Dialogue at Davos is meaningless.

We need a reciprocity that can deliver new agreements—agreements that make public-private relations more vibrant and effective, and that share both risk and reward equally. Otherwise, we are condemned to repeat the same old mistakes.

There is the famous quote from Giuseppe Tomasi di Lampedusa: 'Everything must change so that everything can stay the same.' In other words, everything appears to change, but fundamentally, nothing changes.

Let us hope it does not remain so!

From Project Syndicate