For nearly half a century the Masters of the Universe – business titans, political heavyweights, the global great and the good – have gathered at the start of each year at the World Economic Forum in the Swiss ski resort of Davos. There they have pondered and pontificated on the future of the world. This week they are back again. And they don’t like what they see.
From their Alpine perch, the prospects for the world’s financial and political elites over the past five decades have generally been fairly promising; their touchstone liberal values such as globalisation, free trade, and multilateralism have long governed world affairs. Today, this “Davos consensus” is under withering assault. Incoming President Donald Trump shares none of these values, and nationalist, protectionist politicians are gathering strength across Europe. And there are signs that some participants at this year’s forum are prepared to admit that Davos might be as much a part of the problem as it is part of the solution. That’s because the Davosian approach to the international economy has not brought the world broad-based economic growth with fairly distributed rewards. It has made the sort of people who come to Davos richer; they are the winners. But in the US and Europe an increasing number of disillusioned, insecure, and often angry voters see themselves as losers, and globalisation as a threat, not a blessing. “There’s a sense of danger,” says Yves Tiberghien, an expert in global governance at the University of British Columbia. “We could be facing the collapse of the liberal global order.”
Punit Renjen, the CEO of Deloitte, recognised the change of global mood in a blog he posted on the WEF website titled “Business leaders, this is your wake-up call.”
“Voters have sent an unequivocal message: the status quo is no longer acceptable,” he wrote. “Business – particularly big business – has played an undeniable role in creating this untenable situation.” Companies should treat their employees better, he argued, and find ways of creating opportunities for people normally denied prosperity. There have been some surprising interventions. Larry Summers, the archetypal “Davos Man” (former World Bank chief economist, US Treasury secretary, Harvard president), lambasted politicians for protecting multinationals’ money-making intellectual property rights while doing little to stop them hoarding their profits in tax havens. If governments had reversed those priorities, he suggested, “It would be easier to persuade middle class people that they should be interested in the project of global integration.” It is by no means clear, though, that Davos participants will actually do much about any of this when the echoes of the after-dinner chatter have died away.
“At Davos they always speak nicely,” says Professor Tiberghien, “but when they get home they do not take action to preempt problems or reduce inequality.”
“Donald Trump’s election should be an inspiration for business leaders to wrestle harder with long-term solutions” for problems such as alienation and inequality, argues Alan Wheatley, Associate Fellow at Chatham House, a London-based think tank. “But it would be a surprise were they to do so.” Danny Sriskandarajah, head of an international alliance of civil society groups, is attending Davos for the fifth time, but wondering whether it is worth it. Corporate and political leaders are certainly alarmed by the current wave of populism, he says, but they are concerned about “how they can push their agenda in the new era, how they can adapt and survive, not about how we can change to address the root causes of public anger.” In a panel discussion about “how to fix the middle class crisis,” IMF Managing Director Christine Lagarde reminded her audience that four years ago, in her opening speech to the 2013 Davos meeting, she had warned of a backlash against the excessive economic and social inequality that globalisation had fostered. Nobody paid much attention then, she lamented.