World Europe

With globalism in retreat, have Davos elites gotten the message?

a shift in thought

Attendees at the World Economic Forum in Davos, Switzerland, are showing signs that they feel they need to adjust their liberal, globalist philosophy – and how it has redistributed wealth.

Lawrence H. Summers, a Harvard University professor and former US Treasury secretary, attends the annual meeting of the World Economic Forum (WEF) in Davos, Switzerland, on Wednesday.
Ruben Sprich/Reuters | Caption

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 globalization, 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 United States and Europe an increasing number of disillusioned, insecure, and often angry voters see themselves as losers, and globalization 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.”

'They are listening now'

Punit Renjen, the CEO of the worldwide auditing firm Deloitte, recognized the change of global mood in a blog he posted on the World Economic Forum 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.

Guy Standing, a left-wing professor at the University of London, says he “felt my message was getting across” when he gave a well attended talk Tuesday about the dangerous worldwide growth of what he calls “the precariat,” a class of people without job security or a steady income.

“The corporate elite and the political establishment are recognizing now that Trump’s election and the Brexit vote are reflections of what I am writing about, and they are reaching out for a better understanding,” says Professor Standing.

“They are very scared,” he adds. “What I say may not be comfortable, but they are listening now, and they weren’t a year ago.”

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.”

Just lip service?

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 says he is 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 the lay of the land to address the root causes of public anger.”

In a panel discussion Wednesday about “how to fix the middle class crisis,” International Monetary Fund 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 globalization had fostered.

Nobody paid much attention then, she lamented. But “if policymakers don’t get the signal now,” she added, “I don’t know when they will.”