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For the first time in forty years, some of the most powerful business leaders and politicians at the World Economic Forum are questioning the value of globalisation. But will this change in rhetoric lead to a more credible vision of human progress?

At Davos, the Globalizers Are Gone - Ian Bremmer, The Washington Post

Davos Does Populism - David Ignatius,  Real Clear Politics

What Are They Up To In Davos? - Tim Jackson, Adbusters magazine

2nd February 2010

Davos, the Globalizers Are Gone

30th January 2010 - Ian Bremmer, The Washington Post

For 40 years there's been a consensus view at the Davos World Economic Forum that globalization's increasingly free cross-border flow of ideas, information, people, money, goods and services is both irreversible and a powerful force for prosperity. As with meetings of the G7 group of industrialized nations, there was broad agreement on the proper role for the state in the performance of markets. Sure, a French cabinet official and an American investment banker might spar over the relative merits of state paternalism and Anglo-Saxon labor laws, but the bargaining table was still reserved for champions of Western-style free market capitalism. No more.

Davos has always had its critics. For those who believe globalization empowers the rich at the expense of the poor, the forum exists to allow the wealthy to pretend they're at a film festival. There are the Hugo Chavez/Mahmoud Ahmadinejad-type critics who insist that Davos represents post-modern imperialism with an alpine backdrop. There are the NGO critics who argue that the forum is more about partying than problem-solving. There are the conspiracy theorists who charge that Davos is simply the spot where Council on Foreign Relations commissars and their bosses at the Trilateral Commission make plans for the future and make time on the slopes.

But for the first time, some of the most powerful folks inside the Davos event are challenging the value of globalization. These aren't the have-nots of years past. These are the men and women driving some of the world's fastest-growing economies.

This massive change has its roots in 2009, when Davos served as the world's single most important multilateral gathering. The discussion was much franker and more open here than anything on display at the London and Pittsburgh meetings of the G20, the United Nations General Assembly or the climate change conference in Copenhagen. At Davos, leaders from the public and private sectors gathered for open discussion of the still-developing crisis, as a financial tsunami created a heightened sense of unity.

Now the sense of crisis is gone -- and so is the unity. Sure, there are still plenty of delegates warning of the lasting effects of the financial crisis and global slowdown, plenty of anxiety that jobs aren't coming back quickly enough and that the worst is yet to come on sovereign debt defaults. But other delegates have moved beyond fear of what has already happened to anticipation of what's to come. They're talking about a wave of populism and protectionism -- and the momentum behind the drive by some governments to use state-owned companies, privately owned national champion firms, natural resources and sovereign wealth funds to dominate markets for political advantage.

This talk of a need for new barriers and of the virtues of state-managed capitalism suggests that Davos -- and the global economy -- have turned a corner, and that free market capitalism now has new competition. We survived the shipwreck, and now we're free to go our separate ways.

Indeed, this edition of Davos leaves me wondering whether the new G20 era will eventually render this gathering obsolete. Next year, when U.S. and European delegates diagnose what ails the global economy and prescribe free market remedies of various kinds, they will face the skeptical smiles of others who believe the free market has failed and that the state should play a leading role in national economic performance.

There will be little left to agree on beyond the beauty of the backdrop.

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Davos Does Populism

31st January 2010 - David Ignatius, Real Clear Politics

Davos, Switzerland -- The World Economic Forum is the last place I would have expected to encounter the new populism. But when a venerable European central banker, a man whose very bearing connotes the old capitalist values, told me privately that he is now convinced that the financial system is too important to be left to the free market, I knew we were wandering into new territory.

The value of this alpine kaffeeklatsch is that it can tell you when ideas have reached critical mass. And that seems to have happened this year in the general enthusiasm for what I will call "post-capitalism" among the political and business leaders gathered here. They take it as a given that the free market failed in the crash of 2008, and that the new system will be more regulated, more interventionist, more prudential than was the old.

This change in the Davos consensus is important because for the past few decades, the Forum has been the leading symbol of the freewheeling economic model known as "globalization" -- a connected world that was fostered by lower tariff barriers, deregulated markets and borderless flows of capital and labor. In years past, calls at Davos for more financial regulation would have been met with guffaws and an escort to the anti-globalization "Open Forum" down the road.

The Davos vision of globalization -- of ever-rising tides that lifted ever more boats -- was itself a bubble. We can see this now. It burst in the financial crisis in 2008, with pulverizing consequences for the real economy in 2009. But it wasn't until this year that the Forum fully reckoned with the mood shift. Its work was no longer to celebrate globalization but, in the words of this year's conference theme, to "Rethink, Redesign, Rebuild."

To quote from one of the session summaries: "There will be no return to 'business as usual.' ... More intrusive regulation of the financial system is now inevitable."

The leading rabble-rouser was French President Nicolas Sarkozy, who opened the conference with a speech urging global citizens to reform the system. "From the moment we accepted the idea that the market was always right," he said, "globalization skidded out of control." An overemphasis on free trade had "weakened democracy," he argued. Human values had been undermined by soulless speculators for whom "the present was all that mattered."

Who but Sarkozy could make a diatribe on international economics so entertaining? The man is the most entertaining figure on the international stage: He scowls, he shrugs, he struts. Dressed in one of his skinny "Rat Pack" suits, he might be a Gallic Dean Martin.

When Sarkozy had finished his anti-capitalist rant, he got a standing ovation from an audience made up mostly of wealthy capitalists. The Davos magic, you might say.

But it wasn't just Sarkozy who was calling for more government intervention. This sort of anti-market talk was the patter of this year's Davos, and it scared me a little, frankly. I heard versions of it from financier George Soros, World Economic Forum Executive Chairman Klaus Schwab, Swiss President Doris Leuthard, and various other business leaders and economists. When the pendulum swings this far and this fast, you are sure to be getting some overreaction that will cause problems later.

Americans need to understand that the 2008 financial crisis proved a point that many Europeans and Asians have been arguing for decades: Economic "liberalism," of the sort found in Britain and the United States, creates a dangerous overreliance on the market. During the boom years, their complaints seemed like just so much whining. Not anymore.

In the new world, citoyens, we can expect lectures from Chinese officials about the need "to bring stability on a balanced level" by controlling exchange rates, as one Chinese attendee here said privately. We can expect demands for global labor standards that mirror the rigidities imposed by European unions (as Sarkozy demanded). This is the price of globalization's failure.

The outlines of the regulated world were clear this past week, and this new stress on soundness and stability is in many ways overdue. I just wish I had more faith in regulators' ability to solve problems. Wasn't the 2002 Sarbanes-Oxley Act supposed to prevent any more Enrons? Didn't Fannie Mae have its own special regulator that was supposed to audit its books? Weren't the most egregious speculators in 2008 the regulated banks?

Oh well, these are the problems for a future Davos to ponder, when it reckons with the mistakes made in 2010 in creating the "post-capitalist" order.

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What Are They Up To In Davos?

29th January 2010 - Tim Jackson, Adbusters magazine

The economy is broken. Our best efforts to fix it rely on pumping more material stuff through the richest nations in the world, while the poorest 2 billion on the planet still languish on less than $2 a day. Resource scarcities are looming. Ecological limits are being exceeded in every direction. And our best attempts to temper this headlong rush to collapse are nothing short of a disaster.

Is that a harsh assessment? Well, let's just take the famous Copenhagen Accord. A ten-page document full of hot air and empty promises cooked up by the world's two "great" superpowers. Is that really the best we have to show for 17 years of climate negotiation? Actually it is, because the big guys said so. Might is right. It's gunboat climate policy. The climate deal wasn't the only thing that fell apart in Copenhagen. Global environmental governance got shafted.

As world leaders flit from abortive Copenhagen to smug Davos, they seem devoid of any real inspiration: caught between the mantra of economic growth and their blatant failure to tackle its impacts. The best we have is an empty annex waiting to be filled with aspirational numbers and an allegiance to "business as usual."

Am I pissed enough? You bet I am!

So here's my thinking: I'm going to find a small patch of land on the side of a hill, somewhere above the rising sea level. The soil will be fertile and the water will be sweet. I'll build a permaculture home for my family and friends. We'll keep a few chickens and maybe a couple of goats. Plant trees and grow vegetables. Write poetry, play music and fix the roof when it leaks. Conditions will be challenging but life will be good. At least we'll be living in harmony with the planet. After two decades of fighting the storm, I'm off to find a lifeboat.

Tempting, isn't it? Some people are actually doing it and I take my hat off to them. I think the lessons will be invaluable later. Maybe we can think of them like the first tiny settlements in the transition from hunter-gatherer to agrarian societies: social experimentation as the basis for future survival.

But even as my mind spins flights of fancy, a part of me hesitates. How long would this lifeboat strategy hold good? How many people could it accommodate? All 6.7 billion of us alive today? The 9 billion expected by 2050? How will people behave in a world with too few lifeboats? How safe will we be when the ship really goes down?

The more I think about it, the more I'm drawn back into the eye of the storm. Somehow we have to steer away from the reef before it's too late. Or get ready to make running repairs fast.

Both of these things demand an economics fit for purpose. For the advanced economies of the Western world, prosperity without growth is no longer a utopian dream. It is a financial and ecological necessity. Riches for the few founded on ecological destruction and persistent social injustice is no foundation for a civilized society. A shared and lasting prosperity demands a massive uplift in "ecological investment": low-carbon technologies, poverty alleviation and protecting ecological assets. It also calls for a new concept of "ecological enterprise": resource-light, community-based activities that offer meaningful employment and deliver the capabilities we need to flourish.

But fixing the economy is only part of the battle. We also have to confront the convoluted logic of consumerism. And that's going to need some restraints on unbridled materialism, a renewed vision of social goods and public spaces and a deeper understanding of what it means to be human.

Maybe this isn't so far from my hillside idyll. A vision of prosperity based on what really matters, on providing capabilities for people to thrive within the ecological limits of a finite planet. Some of that is about material things: food, clothing, shelter. But it's also about our ability to live well, to participate in society in less materialistic, more meaningful ways.

Above all, we need a credible vision of human progress. That certainly doesn't exist in Davos. Nor does it yet exist on my hillside. For the moment, it seems to call on us to stay at the wheel, fighting the mountainous seas that threaten to wreck us all. Perhaps later there'll be poetry and dancing and songs of contentment - or at least a sense of pride that we didn't abandon our shipmates altogether.

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