The main challenge related to the future of Wealth is how to maintain a high level of growth at the global level, while simultaneously tackling the issue of higher wealth inequality. Before the Great Recession, wealth inequality was a topic of discussion and concern mainly in developing countries where inequality was historically high. Nevertheless, in the post-recession era, there is an increasing concern on topics related to wealth inequality in Developed countries, most notably in the USA and the Euro Zone. According to an article by The Economist, 56% of people living in rich countries, believe the most pressing problem of the economy is inequality.
Another challenge is the need to reanalyse and review the role of capitalism in wealth creation and wealth distribution. Capitalism has been the engine behind wealth growth in the large majority of countries in the world since the industrial revolution. But, the model is currently under attack and an increasing proportion of the global population – even in OECD countries – believes capitalism has contributed to the global crisis without contributing to the search for a long-term solution. As a result, trust in capitalist societies (The Economist) as problem solvers, is at an historically low level. Even if the large majority of global leaders would agree that there is no better alternative to the creation and distribution of wealth, there is an increasing pressure to move to a new form of capitalism, one with a more human side to it; one that could probably be more connected to the roots of capitalism as proposed by Adam Smith himself, but not in his most celebrated book “The Wealth of Nations” but rather the view that he presented in his first book, “The Theory of Moral Sentiments”.
Finally, another major challenge that needs to be considered is the rapid growth in wealth which is taking place in developing countries, especially China and India. The increasing proportion of citizens from those massively populated countries who now have access to higher levels of wealth, will have important consequences in terms of global supply chains, global prices, environmental issues, as well as the geopolitical implications, that have already began to become evident. It is clear, for example, that the position of geopolitical importance of China before and after the Great Recession has completely shifted in favour of the Asian giant. But as the importance of China is growing in a large number of global value chains, both as a main producer and consumer, there is increasing concern about how a potential downturn in that economy will affect the rest of world, still feeling the pinch from the last recession.
So, some key questions to consider include: How will the countries equate the need to grow at a higher rate with the increasing inequality that is observed in many countries?
Is there a real trade-off between higher growth and less inequality? Are there any ways in which economies can have both? Is that solution sustainable in the long term?