By David Gelles
It was just weeks before the World Economic Forum would host its 50th anniversary gathering in Davos, Switzerland, and Klaus Schwab, the event’s patrician founder, was pensive. In an interview at his organization’s midtown Manhattan offices, Schwab lamented the apparent retreat of ideals he has championed for a half-century.
Open borders, liberal democracy and free markets are under threat around the world. Instead, the moment is being shaped by rising nationalism, authoritarianism and a Chinese economic system to rival Western capitalism.
Couple this with a surge of anti-elitist sentiment, and the forum, which hosts world leaders and chief executives in mountaintop chalets under tight security, has for some become a symbol of all that is wrong with the world.
Attendees fret about inequality while hotel rooms in Davos — if you can get one — cost $500 or more a night. Many express concern about climate change, but arrive at the event in private jets. Describing the concentration of executives and heads of state there, “Late Show” host Stephen Colbert said, “Basically, it’s what Lex Luthor would point his space laser at.” Once a beacon of international cooperation, Davos has become a punch line.
“It pains me,” Schwab said.
But it hasn’t slowed him down. At 81, Schwab remains the animating force behind WEF, as it is colloquially known. He will preside over the meeting in Davos, greeting dignitaries, opining from the main stage of the Congress Center and dropping in on exclusive dinner parties. A German academic who charted an unlikely path to the summit of international thought leadership, Schwab has the power to frame the debate among the world’s most influential actors, even as much of what he stands for comes under assault.
“Klaus has been so successful in bringing together these decision-makers,” said David Gergen, a former White House adviser and a Davos regular. “And yet in so many ways, we’ve been going backward in terms of climate, nationalism and the health of our democracies.”
Despite the hand-wringing, everyone is still showing up to the party.
The forum has once again charged corporations a small fortune for the privilege to send their executives tramping around Davos in snow boots and suits. Companies like Microsoft and Ikea have once again spent lavishly to transform ski town gift shops into glorified exhibition booths. World leaders, including President Donald Trump, are expected to attend.
At a practical level, the sheer concentration of movers and shakers makes Davos an irresistible draw for other movers and shakers. Business and political leaders dice up their schedules into 30-minute increments, cramming in more than a dozen meetings a day with customers, partners, regulators and journalists.
In the evenings, masters of the universe will hop from, say, a dinner hosted by George Soros, a billionaire philanthropist, to a wine party sponsored by Anthony Scaramucci, a financier and former Trump administration official. JPMorgan’s chief executive, Jamie Dimon, is hosting a cocktail reception at a museum. Marc Benioff, Salesforce co-founder and co-chief executive, will buy out a nightclub and fly in a pop star.
“Six days of work at Davos is easily six months of work in other places for these people,” said Ian Bremmer, founder of the Eurasia Group, who has worked with the forum over the years. “That intensity is valuable.”
As usual, the agenda will touch upon the litany of threats to the dominant world order, including the climate crisis, rising tensions in the Middle East and income inequality. In the months before each year’s gathering, Schwab flies around the globe on an international listening tour, asking executives and world leaders what’s on their mind.
After this year’s travels, Schwab said that the top concerns included rising debt, China’s rise, Brexit and climate change. In short, the elite are worried about the demise of the very ideology long espoused by Schwab: globalism — the notion that the open exchange of people, products, ideas and services across borders will benefit all.
“That was an ideology that felt completely dominant when the Soviet Union collapsed, but today not so much,” Bremmer said. “A lot of people inside those democracies feel like that globalism has failed them.
Over the years, Davos has become the target of scrutiny. Critics have said that it allows companies to gloss over their sins with high-minded pledges to do better, and that it is insufficiently diverse. (It remains an overwhelmingly male affair, with just 22% of attendees women this year, a record high.) And recently, the debate about Davos has begun playing out in real time.
Last year, one of the most talked-about exchanges at the event was about Davos itself.
On a panel discussion featuring, among others, conservationist Jane Goodall and Edward Felsenthal, editor of Time magazine, Rutger Bregman, a Dutch journalist and historian, spoke about what he saw as the rampant hypocrisy on display in the Alps.
“Fifteen hundred private jets have flown in here to hear Sir David Attenborough speak about how, you know, we’re wrecking the planet,” Bregman said, eliciting nervous chuckles from the crowd. “I hear people talk in the language of participation and justice and equality and transparency, but then, I mean, almost no one raises the real issue of tax avoidance, right? And of the rich just not paying their fair share. I mean, it feels like I’m at a firefighters conference, and no one is allowed to speak about water.”
The clip went viral and seemed to confirm people’s suspicions that for all the talk of world-changing agendas in Davos, not much really happened there. Moreover, his comments echoed a broader line of criticism that the global elite are uninterested in solutions to intractable problems if those solutions threaten their dominance.
“They’d rather listen to a Buddhist monk talk about meditation or hear about power poses, but they don’t like to talk about the source of tax evasion,” Bregman said in an interview, noting that he had not been invited back to Davos this year. “They want to hear about how individuals can change their lives, rather than how structural reform can affect inequality or climate change.”
Schwab defended the substance of the event.
Other dissenting voices will be in attendance this year, including teenage climate activist Greta Thunberg, who will attend for a second time. And Schwab was an early proponent of socially responsible business, helping define the “stakeholder theory,” which holds that corporations should answer not just to shareholders, but to employees, customers and the environment.
That may not sound particularly controversial today, but Schwab was ahead of his time in the early 1970s. “Back then you had to fight against Milton Friedman, who gave a moral justification to profit maximization,” Schwab said, referring to the economist who wrote that “the social responsibility of business is to increase its profits.”
Much has changed since then.
Last year, the Business Roundtable, an influential group of American chief executives, redefined its mission statement to more closely align with what Schwab first said a half-century ago. BlackRock, the world’s largest institutional investor, recently said it would make climate change a focus of its investment strategy.
“It’s hard to imagine where the world of business responsibility would be without Davos,” Gergen said.
And even as globalism comes under attack from all sides, Schwab argues that, on balance, it has been a force for good. In the 50 years since the World Economic Forum began, life has improved for most people, he said. Even as the human population has doubled, the likelihood of child mortality, illiteracy and deaths by disease are all at record lows. And he said he believed that while, yes, governments and corporations had fallen short — and maybe even contributed to the problems — they were an integral part of whatever solutions might be possible.
“Elites have always existed,” he said. “We bring together people of influence, and we hope that they use their influence in a positive way.”
In recent years, Schwab has tried to address the criticism that Davos is out of touch. Aware of the bad optics of all those private jets, he has asked all forum members to commit to be carbon-free by 2050. He recently expressed his support for reining in executive pay. Yet he is unlikely to upset BP or Google with calls for a steep carbon tax or stricter antitrust regulation. After all, those are among the companies that pay lavishly for access to the most elite party on earth.
“Klaus is much more comfortable being an activist in the world of ideas than one in the world of action,” Gergen said.
“He doesn’t see himself as someone who needs to be in front of a parade, changing one law or another.”
To skeptics like Bregman, this is the very problem.
While Schwab fashions himself as the conscience of global capitalism, he is constrained in just how far he can go. The genial host of Davos, he must be careful not to upset his guests. If the debate about how to fix the world’s problems is unfailingly polite, it is unlikely that the hard questions will get asked. If access to the forum is restricted to those who can afford the price of admission or score a sponsored invite, the voices at the table risk an ideological homogeneity.
“Some people believe that the global elite go to Davos and plan for world domination, but it’s much scarier than that,” Bregman said.
“You go there and you find out that all those people are pretty nice. But friendliness can stand in the way of justice.”
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