Great Reset Initiative - Understanding its Impact and Relevance for UPSC

Understanding the Great Reset

The idea behind the Great Reset initiative originated from Klaus Schwab, the founder of the World Economic Forum (WEF) .

• The initiative is grounded in the belief that the global economy is facing severe challenges.
• Schwab suggests that numerous factors, including the ongoing COVID-19 pandemic, climate change, and rapid technological changes, have exacerbated these challenges.
• Schwab advocates for a global effort to transform the world into a better place. This transformation should encompass all industries, from traditional sectors like oil and gas to emerging ones like technology.
• The Great Reset calls for a complete overhaul of various aspects of economies and societies, including work conditions, education systems, and social contracts.
• Schwab believes that the current pandemic provides an opportunity to initiate a new form of capitalism, referred to as 'stakeholder capitalism'.
  • Stakeholder capitalism is a system where corporations aim to serve the interests of all stakeholders, including customers, employees, suppliers, and local communities, rather than just focusing on maximizing shareholder profits.
  • This approach contrasts with traditional capitalism, which primarily focuses on maximizing shareholder profits.

The Great Reset initiative addresses several critical issues. The top three include:

1. Reforming capitalism – The initiative urges the adoption of stakeholder capitalism, which extends beyond the traditional capitalist concept of solely maximizing shareholder profits.
2. Climate crisis – The initiative encourages partnerships between governments and private entities to support low-carbon and climate-resilient growth.
3. Global cooperation – The Forum seeks to foster global cooperation, which has been challenging to achieve. The liberalization era of the 1990s, characterized by harmony, has transitioned into a period of intense competition in political, technological, and economic domains.

Key Components of the Great Reset

Image courtesy of https://www.weforum.org/ (reused for educational purposes)

The Great Reset initiative comprises three main components:

1. The first component aims to guide the markets towards fairer outcomes. Governments should implement reforms that promote equitable outcomes and establish conditions for a stakeholder economy. Potential measures could include eliminating fossil fuel subsidies and implementing new rules governing intellectual property.
2. The second component emphasizes investments that advance shared goals, such as equality and sustainability. For instance, building environmentally friendly urban infrastructure and incentivizing industries to improve their environmental, social, and governance (ESG) metrics.
3. The third component involves leveraging the innovations of the Fourth Industrial Revolution to serve the public good, especially in addressing health and social challenges.

Reactions to the Great Reset Initiative

The Great Reset Initiative of the WEF has been met with mixed responses. While some have supported the initiative, others have criticized it for being too ambiguous and lacking clear objectives or action plans. The initiative has also been the subject of various conspiracy theories.