By Max Dowden
Correspondent, International Relations and Modern History Undergraduate
Davos: the mere mention of this town, which hosts the annual meeting of the World Economic Forum (WEF) conjures up images of powerful people in expensive outfits, rushing between backroom deals with global kingmakers and glitzy receptions splayed out against the backdrop of a Swiss ski resort almost as exclusive as the summit itself. The meeting is always attended by chief executives from the WEF, over 1,000 member companies, as well as political leaders, notable academics, religious leaders, and a flood of media representatives. However, behind the glamor and prestige which marks the summit’s outward image lays an important opportunity for the who’s-who of global economic power to negotiate disputes, make predictions about the future, and judge the overall mood of the economic and political elite. This year, the meeting’s theme was “Globalization 4.0.”
What exactly is Globalization 4.0? A WEF Brochure issued before the meeting describes a global economy entering 2019 in a state of profound transformation, “shifting from a world order based on common values to a ‘multiconceptual’ world shaped by competing narratives seeking to create a new global architecture”. This shift, the Forum argues, is ushering in a new phase of global interaction and cooperation. The WEF further predicts that 2019 is part of a fourth great industrial revolution, centered around technological progress in “the physical, digital, and biological worlds that combine to create innovations at a speed and scale unparalleled in human history”. The brochure goes on to highlight five working principles for the 2019 meeting: multi-stakeholder dialogue, ‘responsible’ globalization, the improvement of international coordination, global challenges requiring the combined efforts of the business and political worlds, and sustainable global growth. To accomplish this dialogue, Davos 2019 featured the normal ecosystem of over a thousand high-powered business leaders, two hundred and fifty political leaders from G20 nations, and a smattering of NGO chiefs and renowned academics, just for good measure.
So, what did this cross section of global capitalism’s best and brightest feel like talking about? The Brunswick Group (a prominent business advisory firm) noted that Davos 2019 was marked by a growing sense of angst among corporate leaders as compared with last year’s event. The mood towards the global economy was generally pessimistic, particularly in reference to the simmering US – China trade war and the ensuing Chinese economic slowdown. Not only that, but the very visual absence of key political leaders like US president Donald Trump, UK Prime Minister Theresa May, and French president Emmanuel Macron–due to domestic crises–did not help to put the largely corporate attendee population at ease. The tagline of “Globalization 4.0” seems to have proven to be a bit of a misnomer, as much of the political discussion was more concerned with the populist brand of ANTI-globalization which has swept over the western political atmosphere in the past three years, as well as rising levels of political extremism in major economies like Mexico and Brazil. Many at Davos expressed concern over emerging legal and social threats to the continued multilateralism of the global economy. Rising protectionism, unilateralism, and economic regionalism have spurred a renewed conversation about the role of nongovernmental actors (including private businesses) in upholding the liberal status quo, with one business executive remarking that such actors should “invest in the preservation of the postwar consensus that has generated a unique period of growth and prosperity”.
However, it wasn’t all bad news – despite economic pessimism few business leaders claimed to be expecting a global recession to hit in 2019, and several unnamed ‘globally renowned investors’ highlighted the strength of the US economy as encouraging news. However, even with optimistic data, several economists have continued to worry that government instability and renewed economic conflict may still lead to the US “talking itself into a recession”. On the other side of America’s costly trade war, China is widely expected to introduce measures to combat its slowdown, but Martin Gilbert (co-CEO of Aberdeen Standard Investments) made sure to remind one news outlet that “even if there were no exports, the Chinese economy would still grow 5% a year on domestic growth. It’s still pretty resilient. Most countries would love to have a 5% growth rate.” Only time will tell if the US and China are able to hash out a lasting armistice to their economic conflict, and put the rest of the global economy at ease. In particular, the mood this year towards Europe was anything but optimistic. With the UK facing potentially crippling Brexit turmoil, the consequences of the ‘Yellow Vest’ crisis in France, and the Germans teetering on the edge of a recession, any good news on US – China trade talks in the near future would be welcome for the beleaguered continent. One senior EU business executive quipped that the world “was a passenger in the aircraft with the US and China as bickering co-pilots”, and added that Europe could do little more than hope the two countries would be able to land the plane safely.
The other main topic on everybody’s lips this year was much the same as at last year’s meeting: the so-called ‘techlash’. This Davos buzzword refers to rising global concerns over the power of big-tech firms like Microsoft and Google, as well as the hopes and fears across all industries with regards to the expected wave of automation and AI advancements over the next decade or so. On the one hand, many leaders in both the public and private sectors expressed excitement over the opportunities brought on by the diffusion of big tech across industries. For example, pharmaceutical behemoths like Novartis have triggered a recent tech-driven shakeup of the healthcare industry, with said company now keeping over four hundred data scientists on staff. Not only that, but companies like Microsoft healthcare are also busy concluding cross-industry partnerships with consumer goods distributors like Walgreens, in the hopes of making drug distribution and patient monitoring more consumer friendly.
On the other side of the conversation, though, serious concerns were raised about the global economic and societal impact of mass automation. The WEF itself released a report shortly before Davos stating that over 1.4 million US workers are likely to lose their jobs to automation over the next decade, and leaders like KPMG global chairman Bill Thomas warned that firms will have to start treating investment in internal training programs as a competitive advantage.These concerns have birthed one of Davos 2019’s new buzzwords: ‘learnability’. Translated to mean an individual’s ability to continue learning and adapting throughout their career, many executives predicted that learnability may become an increasingly important hiring factor in the near future. There was also discussion of the increasingly worrying power of big-tech firms, with many applauding the recent European data privacy regulation as an important step to combat this. Even Microsoft president Brad Smith went on record saying US federal privacy laws were “inevitable”, and could be expected as early as this year.
Finally, everyone at Davos this year seemed to be talking about “their company’s purpose”. Business Insider reported that this phenomenon is largely a product of a letter penned during last year’s Davos meeting by BlackRock CEO Larry Fink and sent out to hundreds of CEOs, which stressed the necessity of “a clear long term strategy and understanding of the societal impact of their business”. While controversial at the time, corporate sustainability has very much returned as the in-vogue trend among executives, summed up by one economist as the simple idea that “practicing better capitalism appears to be good for business”. This appears to be due in large part to increasing consumer awareness over corporate impact on societal issues like income inequality and the environment. Additionally, re-positioning one’s firm to be on the ‘right side of history’ seems to be, in the words of the chairman of Lombard Odier: “one of the most interesting performance opportunities for our clients than we have ever had for the last 25 years”.
All in all, the tone of this year’s WEF summit seemed to be a textbook case of ‘hurry up and wait’, to see how global influencers like the US, China, and Big Tech sort out how best to respond to complex economic indicators for this year. Only then, will everybody else be able to sort out what the world will look like going into 2020.
Featured photo provided by RTE