World betterment has experienced various crises and touched different circles. One of these was the Club of Rome in the 1970s and another was the first World Economic Forum in Davos. Begun in 1971, it has not only survived all of the economic crises since, but has grown in importance, even if some people prefer to deny it. Years ago, a series of books examining international organizations found that WEF influences global political cooperation and security as well as the global economy, although – or perhaps because – it is a private and not an intergovernmental institution. (See Geoffrey Allen Pigman, The World Economic Forum: A Multi-stakeholder Approach to Global Governance. London and New York: Routledge, 2006) […]
Polyvalent and Adaptable: Klaus Schwab
Business as a profession, the global economy as a calling: connecting, associating, multidisciplinarity; links between economic, educational and social capital – all this runs like a thread through the career of Klaus Schwab, the founder of the World Economic Forum. The son of a southern German father of Swiss extraction and a Swiss mother, he studied engineering (ETH Zurich) and economics (University of Freiburg, Switzerland). Klaus Schwab was able to apply his dual knowledge when, in the late 1960s, it came to ensuring the future of the machine manufacturer Escher Wyss, whose Ravensburg branch was headed by Schwab’s father. The venerable Zurich industrial company, which was an international player with its turbines and steamers, had once before faced ruin during the Great Depression of the 1930s. Its rescue came about through a kind of public-private-partnership: The governments of the city and canton of Zurich saved Escher Wyss together with banks and private industrialists. In the 1960s, Escher Wyss had gotten in a jam due to international competition, but the era when governments would rescue industrial companies was over by then. Instead, with the help of Klaus Schwab, a merger was negotiated and Escher Wyss became part of the Sulzer machinery and technology group. The late nineteenth-century shipbuilding halls had become obsolete and soon enough they were converted to a late modernist purpose. Today, the “Schiffbau” is the name of a state-subsidized theater, where, in a nice coincidence, Staat 4 had its world premiere.
Thinking Big: Harvard, the European Commission, the Club of Rome
When asked at the 2018 World Economic Forum what his motto was, US President Donald Trump said “Peace and Prosperity.” Between 1950 and 1973, the average annual growth rate in Western Europe was 4.06 percent. By comparison, between 1913 and 1950 it had averaged 0.78 percent. The United States had rebuilt Western European countries with the Marshall Plan and logistical support after the war and incorporated them into their trade cycle but, over time, they would face serious economic competition from them. In 1969, under Republican President Richard Nixon, the US shifted to a more unilateral and sometimes protectionist economic policy. The international monetary system, which had been agreed in 1944 for the future stabilization of the global economy and world politics, demanded that European governments, by linking their currencies to the gold dollar standard, steadily absorb the fluctuations of the US currency.
In the context of this economic policy situation, Klaus Schwab and his secretary, Hilde Stoll organized a European executives’ symposium in wintry Davos for at least 440 participants. Intellectuals, entrepreneurs and world improvers meeting with a sense of mission in the Swiss mountains was nothing new. There was Monte Verità in the early 20thcentury with its anarchists, artists and life reformers, and Mont Pèlerin, where the original neoliberal Friedrich Hayek gathered like-minded people in 1947. Then there were the Davos University Conferences, which took place from 1928 to 1931 at Hotel Belvédère. These conferences, co-founded by Albert Einstein, were intended to offer spiritual food to the many tuberculosis-suffering students in Davos hoping for a cure, but they also gave intellectuals from the defeated nations of the First World War – no longer welcomed at scientific congresses – a platform for collegial exchange. The dispute between the philosophers Ernst Cassirer and Martin Heidegger of 1929 went down in the history of philosophy as the “Davos Disputation.” The Great Depression put an end to plans of transforming the courses into an international university in Davos. Then, in 1971, the former Magic Mountain and disputation lodge was given a new purpose.
Klaus Schwab’s Spirit of Davos was also the Spirit of Harvard. Not only had the business school advocated the idea of a symposium. Prominent Harvard economist John Kenneth Galbraith championed the affluent society as well as capitalism’s planning needs and the rapprochement of East and West, which continues until 2018 with India’s Prime Minister Narendra Modi and Trump.
From Planet Europe to Spaceship Earth
Another association that convened in Switzerland is the Club of Rome, a network of liberal world improvers initiated in 1968 by the Italian Fiat industrialist Aurelio Peccei and the Scottish chemist and energy researcher Alexander King. Its agenda significantly influenced the Davos symposium from 1973 at the latest, when it presented the 1972 report The Limits to Growth. The Club of Rome had sponsored the report written by scientists at Massachusetts Institute of Technology (MIT), launching a gloomy bestseller in the midst of the international turnaround towards environmental sensitivity and economic downturn. In addition to the oncoming oil crisis, Western prosperity, built on cheap oil and its products, did not seem to be in question for solely environmental reasons.
The entanglement of business, economics and good governance, combined with marketable environmental and social reforms, became one of the hallmarks of the foundation, which, after the first successful symposium in 1971, was listed as the European Management Forum. The situation in the Arab world favored an Arab-European meeting, and soon a Latin American-European symposium followed. This was held by the Forum in cooperation with, among others, the World Bank, which issued controversial debt consolidation and structural adjustment programs together with the International Monetary Fund, in the 1980s, for the indebted countries of the Global South.
Improving the State of the World!
In 1987, the organization was renamed the World Economic Forum, implementing what had long been clear, and which pursued a dual economic and global policy dynamic. Firstly, the liberalization of international foreign exchange and capital markets was initiated, which promoted the globalization of the trade and financial system. Secondly, the beginnings of glasnost and perestroika emerged in the Soviet Union, which from 1989 would lead to an uncontrollable cascade of political upheaval in Eastern Europe. The US political scientist Francis Fukuyama analyzed this development as “the end of history” in a thoroughly Marxist sense: as the end of systemic contradictions, which were now appearing in the assertion of a social system based on democracy and market economics. (See Francis Fukuyama, The End of History and the Last Man. New York: Free Press, 1992)
What about the Vulnerable World?
In the early 2000s, euphoria as well as criticism about globalization was at its peak as the world economic powers generated their own countervailing power. Thus, the World Social Forum (WSF), held from 2001 onwards in Porto Alegre, Brazil, explicitly saw itself as a reaction to this and as an alternative to WEF. In Davos itself, a countervailing power acceded to create a critical counter-public with a “Public Eye on Davos.” In Porto Alegre, at WSF or the “other Davos” it was agreed that economic globalization must benefit all and be co-shaped by the people of the Global South. “Improving the state of the vulnerable world” was the creed of the counterpower, with which it pressured the states of the North and opposed the arrogance of the economic powers. Within it, the movement met with social liberal economists such as former US President Bill Clinton’s consultant and World Bank employee Joseph Stiglitz, who also promoted a more even-handed development. Although global poverty is decreasing – as the pro-globalization side argues – income and wealth inequality have increased in many places and even worry the OECD, World Bank and International Monetary Fund.
The agile World Economic Forum has long since learned to deal with anti-hegemonic criticism: The “Open Forum” welcomes civil society, there are environmental, social and gender agendas, and, since 2017, criteria from the Human Development Index – developed by economists from the Global South – are integrated in the Global Competitiveness Report (WEF, 2018). Today’s WEF reports, with sections covering “Inclusive Growth,” “The Future of Jobs and Skills in Africa,” “Value in Healthcare” and “The Future of Humanitarian Response,” can easily be confused with reports from various UN agencies.
For a long time, the World Economic Forum has not only been a kind of dating agency for states and companies, but also sees itself as a global political mediation platform. Davos State of the World recalls, for example, the meeting between Palestine’s Yasser Arafat and Israel’s Yitzhak Rabin at the 2001 World Economic Forum. Protests and the WEF agenda show that the assumption that powerless states are facing a powerful private sector in “post-democratic” times is too simplified. […]