Unlocking the “S” in capitalism Another major driver is climate change. Local environmental resources are crucial for a high proportion of the poorest populations, and these resources are affected by global warming. Bridging the digital divide For instance, under the medium scenario for population Some 2.9 billion people remain offline globally – development, the Intergovernmental Panel on Climate equal to around 37% of the world population – Change estimates that at 1.5°C warming 178 million people – with 96% of them living in developing countries. including a high proportion of women, children and the Those who remain unconnected face multiple elderly – will be affected by water stress, drought intensity barriers, including a lack of access: some and habitat degradation by 2050. At 2°C warming this 390 million people are not even covered by a figure rises to 220 million people.6 7 mobile broadband signal. Inequality is a problem for everyone The Covid-19 pandemic is the most obvious recent example of a global crisis that has brought global inequality into stark relief. But think about the recent Shifting the economic model towards financial crises and increasingly regular extreme weather inclusive capitalism events. Inequalities undermine our capacity as a society It is time for society and economy to move to an inclusive to mitigate and overcome the impact of major crises like and fair world these, and as such they are a concern for everyone: A persistent, decades-long rise in gross domestic product – Covid-19 showed how the economy relies on global and (GDP) in many countries has increased overall living tight supply chains and exposed the lack of resilience standards and lifted many people out of poverty. This in the “just in time” model. Broken and delayed supply is proof of the power of capitalism. However, measuring chains affect everyone. GDP has its limitations. It cannot shed light on unequal – Consider the repercussion of a dock workers’ strike on income distribution. Nor does GDP give any insight into the global supply of goods. Or the effect on the price we other types of societal inequality – including less access to would have to pay if the “fair” cost of these goods was healthcare, education or infrastructure. applied that includes the social and environmental costs. According to the Allianz Global Wealth report, the richest – Sustained inequalities often result in heightened political 10% of the world’s population together owned more than or even geopolitical risks. This environment is typically 84% of total net financial assets in 2020, and the middle class 8 negative for economic growth, since it raises costs and is shrinking. And figures from the OECD show that median limits the availability of capital. In many regions of the incomes grew more slowly than top incomes since the mid- world, this has led to large-scale refugee crises. 1980s – and the Covid-19 pandemic made this trend worse. Exhibit 2: median incomes grow more slowly than top incomes Real disposable income growth by income position, average for 17 OECD countries, 1985 2016 (1985 = 100%) 170% Top 10% Median Bottom 20-40% Bottom 10% 160% 150% 140% 130% 120% 110% 100% 1985 1990 1995 2000 2005 2010 2015 Note: Unweighted average for 17 countries for which long-term data are available: Canada, Germany, Denmark, Finland, France, United Kingdom, Greece, Israel, Italy, Japan, Luxembourg, Mexico, Netherlands, Norway, New Zealand, Sweden and United States. Incomes are disposable incomes, corrected for household size. Source: Chapter 2, OECD calculations from OECD Income Distribution Database. Data as at April, 2019. StatLink Data 6. Summary for Policymakers – Special Report on Climate Change and Land (ipcc.ch) 7. Measuring digital development – Facts and figures 2021 (itu.int) 8. Allianz Global Wealth Report 2021 3