The global economic system is failing to boost living standards for average people around the world and must be reformed to ensure the benefits of growth are spread more widely, the World Economic Forum has warned.
Votes for significant changes to the world order are acting as a wake up call, and the annual meeting in Davos is being presented as a chance for leaders to respond.
“Society is telling us that there needs to be some rethinking and restructuring of our economic and growth model,” said WEF’s Richard Samans.
“There need to be structural improvements and reform of market capitalism to deal with some of the rumbling dissatisfaction in society about the failure of growth to diffuse as widely as it should in living standards.
“We are going to be issuing a clarion call across different disciplines for a dialogue and thought leadership in this area.”
A new measure of economic growth which focuses on living standards and average earnings will be proposed at the WEF’s annual meeting in Davos, Switzerland, next week.
“It is our inclusive development index, and this will be a response to what has been identified for many years as the need for policymakers to have a wider dashboard than simply the production of goods and services in the most recent period, which is what GDP is,” said Mr Samans.
“If the bottom line of the way societies evaluate economic success is whether median living standards – people’s’ livelihoods and economic security – improve, then GDP is not a sufficient measure of that.”
The WEF will also publish a ranking of countries on this measure, as an alternative to GDP or GDP per head.
He said the WEF is a suitable forum for discussing these issues as it brings together business leaders, politicians and wider civil society, rejecting the criticism that it is an unaccountable club for the rich.
“The caricature of the Forum as basically the global rich coming together is a caricature, it does not recognise that this is essentially the world summit of multi sector, multi stakeholder leaders of various kinds of institutions coming together,” he said.