© The Financial Times Ltd 2015 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
January 28, 2011 3:00 pm
It will be party time in Davos this evening. The plutocrats and politicians, academics and business people who have made the trek to the Swiss alps for the annual meeting of the World Economic Forum will be allowed to forget about the seminars and deal-making, and will flock into the resort’s conference centre, dressed in black tie, ball-gowns or “national dress”.
The annual ball that closes Davos used to be an unrestrained affair: loud bands, drunken, middle-aged dancing and massive amounts of free booze. Most of those elements will probably still be there tonight. But in these more straitened times, Davos is getting a bit self-conscious about drunken revelry. This year’s party has been re-branded as a “cultural soirée”, showcasing the food, fashion and performing arts of India.
The annual Davos ball almost seems to invite satire. But then the same thing could be said about the entire World Economic Forum. There is something faintly comic about seeing so many important people (and vast egos) crammed into a small Swiss ski resort, slithering and sliding their way along the same Alpine streets in garish anoraks and newly purchased snow-boots. The earnest mission statement of the World Economic Forum – “committed to improving the state of the world” – sits uneasily alongside the reality of the forum, much of which is made up of frantic networking, self-promotion, deal-making and social climbing. Meanwhile, the annual meeting comes up with ever-more impenetrable descriptions of what the forum is discussing in any given year. This year, apparently, we have all been talking about “Shared Norms for the New Reality”.
But simply laughing at Davos misses the point. For all the posturing, the annual meeting of the World Economic Forum is a genuinely important event. In part, this is because – every now and then – important things happen in Davos (see panel, below). However, the true significance of the World Economic Forum lies in the realm of ideas and ideology.
At Davos, political leaders from all over the world tacitly agree to set aside their differences and to speak a common language. Closeted together in a mountain valley, they restate their commitment to a single, global economy and to the capitalist values that underpin it. They mingle cheerfully with the same multinational executives and investment bankers. They campaign to attract foreign investment and trade. For five days, the world’s leaders seem to agree on a narrative about how the world works. At Davos, even the most intractable differences are temporarily smothered by the globalisation consensus.
The World Economic Forum first got going in 1971. But it really came into its own in the 1990s. In the aftermath of the cold war, the globe was no longer divided between a capitalist and a communist world. The traditional division between developed and developing nations also came to seem less significant, as excitement grew about emerging markets and international trade and investment boomed. In this new political and economic climate, all of the world’s major powers – from China to the US, from India to the European Union, from Brazil to Japan – bought into the idea that globalisation was a positive thing that could benefit their nation and the world in general.
It was in Davos that the political, financial and business elites from around the world gathered every year to celebrate, discuss and promote globalisation. While there was a strong element of self-congratulation in the Davos mantra about “improving the state of the world”, there was also a strong element of truth. The surge in international economic integration encouraged by the “globalisation consensus” created common interests between nations, promoting prosperity and peace into the bargain.
As the World Economic Forum grew in importance and prominence, so outside observers began to identify a new creature – “Davos Man”. The phrase was coined in 1997 by the political scientist Samuel Huntington (of “clash of civilisations” fame). Huntington was no fan of “Davos man”, whom he regarded as elitist and loyal only to his own financial interests and to his international peer group. The delegates at Davos, Huntington later wrote disapprovingly, “have little need for national loyalty, view national boundaries as obstacles that are thankfully vanishing, and see national governments as residues from the past whose only useful function is to facilitate the elite’s global operations”.
Huntington’s critique in 1997 provoked a response from The Economist, in the form of an editorial entitled “In Praise of Davos Man”. It was only appropriate that The Economist of all publications should spring to the defence of Davos Man, since the magazine (or newspaper, as it prefers to call itself) was an energetic promoter of globalisation. (I was working for The Economist at the time, but did not write the editorial in question.)
In its paean to Davos Man, The Economist contrasted the old cold war world, in which diplomats held sway, with the brave new world dominated by businessmen. The old-style diplomat “worried about the world’s division into two armed camps, not his next billion. He probably worked at a western embassy in an exotic Arab country. He may have sent home reports about ‘sentiment in the bazaar’.” In the cold war world, the diplomat could feel that he was working for world peace. But, opined The Economist: “The end of the cold war and the spreading global economy have squashed such pretensions. The two armed camps have become umpteen interlinked economies.”
In this new globalised economy, enthused the editorial, “business is pushing the old Chatham House world [of traditional diplomacy] to the margin… It is this change that Davos symbolises… the event is paid for by companies and run in their interests.” Some might find this “money-grubbing and managerialism” vulgar, but, The Economist concluded, it was “more likely to bring peoples together than to force them apart”.
It was, perhaps, no accident that this debate about the virtues of Davos Man broke out in the late 1990s. For it was during this period that the anti-globalisation movement was gathering strength. In Seattle, in November 1999, a meeting of the World Trade Organisation – convened to launch a new round of trade negotiations – was disrupted by violent street protests. The year after Seattle, there were violent protests in Davos as anti-globalisation protesters clashed with police.
The World Economic Forum, a kind of elite festival of globalisation, was clearly vulnerable to the backlash – but it adapted with characteristic flexibility. Many international organisations chose to start holding meetings in less accessible locations. After Seattle, the WTO’s next big bash was held in Doha, in Qatar. Davos is, fortunately enough, fairly remote. It is three hours’ drive on a winding two-lane road from Zurich, so it is easy enough for the Swiss police to maintain a few discreet roadblocks – although as the demonstrations in 2000 illustrated, such precautions are not foolproof.
Davos’s reaction to the backlash against globalisation went beyond a simple effort to step up security. In response to the criticisms of elitism, the forum made much more of an effort to reach out to critics of globalisation. Bono, the Irish rock star and do-gooder, who had once dismissed Davos as “fat cats in the snow”, attended the forum for the first time in 2006 to promote his charitable ventures and has since become something of a regular. These days, you are just as likely to bump into the head of Oxfam in the corridors of the convention centre as to trip over a Russian oligarch or the head of an investment bank.
Some might criticise this as a transparent effort at co-option. But the non-governmental organisations and critics of globalisation who choose to go to the World Economic Forum go to Davos with their eyes (and hands) open. Environmental activists will know that they might get an opportunity to share a platform with the head of an oil company. Anti-poverty campaigners will get access to government ministers, financiers and journalists. It makes sense to show up.
In 2003, the World Economic Forum also set up an “Open Forum”, open to all members of the public and staged in a school, down the road from the convention centre. Grandees from Davos proper are encouraged to make the short trip to these debates.
Davos Man has shown great ability to engage the more civilised wing of the anti-globalisation movement. (The rest can be kept at bay, by men with truncheons.) But the real threat to the “globalisation consensus” expressed and promoted by the World Economic Forum has emerged in the wake of the global financial crisis. The Great Recession has challenged some of the fundamental assumptions about the workings of the global economy that have been promoted for decades at Davos. Gordon Brown has described the recession as the “first crisis of globalisation”.
Such a crisis presents an opportunity for Davos. One of the roles of the forum is to act as a giant seminar, bringing together thinkers and policymakers from all over the world. This year’s forum has been replete with sessions on the economic and political fallout from the financial crash. But the Great Recession has also had some effects that may be more dangerous for the World Economic Forum. Denunciation by outsiders is one thing; but if some of the stalwarts of the forum – Davos Man himself – begin to lose interest, then the whole show will be endangered.
In the aftermath of the financial crisis of 2008, there has been evidence that two key groups are beginning to take a lower profile at Davos – or even to drift away. The first group is international financiers; the second is senior politicians from the US.
Investment bankers have traditionally been stalwarts of Davos. They paid many of the bills, held some of the most lavish receptions and were crucial players in the deal-making that took place on the fringes of the forum. But at Davos 2009 and 2010, substantially fewer western bankers turned up. With so many important financial institutions propped up by taxpayers’ money – or facing scathing criticism – the bankers may feel that it is impolitic to be seen whizzing down the ski slopes of Davos.
One of the great coups for the World Economic Forum was when Bill Clinton became the first sitting US president to speak at Davos, in 2000. In many ways, Davos is natural Clinton territory – since the former president is both a passionate believer in globalisation and a fantastic glad-hander. But Barack Obama has been much more circumspect, perhaps in deference to the new post-crisis populist mood in the US.
In 2009, the newly elected president was grappling with a financial crisis and chose to send Valerie Jarrett as his main representative to Davos. Jarrett is a bona fide member of the Obama inner circle but she held no official position, and Davos Man had never heard of her. It felt like a snub. In 2010, Larry Summers, Obama’s chief economic adviser, was a vigorous participant in debates, but there were no senior members of the Obama administration on display. The absence is all the more pointed, given that in recent years vice-president Joe Biden and James Jones, then head of the National Security Council, have attended the Munich Security Conference, just down the road from Davos, which traditionally is held just a couple of weeks after the forum.
The investment bankers are likely to creep back into Davos in greater force, as the shock of the financial crisis recedes a little. They still have a real interest in being there, given that so many of their best clients these days are from developing countries that traditionally turn up in force in Davos. For security reasons, the most important VIP visitors to Davos tend not to be announced until the last moment – so it is possible that this year the Forum will pull off a publicity coup by luring a really top American to their Alpine fastness. But if, as in the past two years, the top level of the Obama administration steers clear, the forum will start to worry.
The threat to the prestige of the World Economic Forum is only compounded by the rolling financial and sovereign-debt crisis in Europe. While critics such as Professor Huntington might complain that Davos belongs to a global elite that floats above temporal considerations such as geography, the annual gathering is, as a matter of fact, held in Switzerland every year. It would be damaging to the forum’s prestige – and the aura of smooth success on which it feeds – if Davos were to take place against a backdrop of economic chaos and social dislocation in Europe. The Great Recession has presented Davos Man with his biggest identity crisis since the end of the cold war. Three possible scenarios beckon. The first is that the world economy regains strength – and Davos Man regains confidence with it. In that case the World Economic Forum will simply return to the status quo ante-2008, and will regain its position as the leading forum for the promotion and celebration of globalisation. The second scenario is that Davos has already entered a period of gentle decline, which will become more and more evident as the years pass. Key constituencies in finance and in Washington have already begun to drift away, and a troubled Europe is no longer an obvious location to bring together the world’s interlocking elites.
The final possibility is what might be called the “Wimbledon scenario”. It was the City of London that first adopted the Wimbledon tennis tournament as a metaphor to describe what had happened to the UK financial industry in the age of globalisation. Very few of the most important players in the City were British any more, just as British tennis players no longer mattered much at Wimbledon. But the world’s most important tennis players and financial institutions continued to play in London because Wimbledon and the City provided the perfect backdrop.
Something similar may be happening to Davos. Even if the big western banks and the top American politicians do maintain a lower profile at the World Economic Forum, the days when they were the indispensable centre of any “festival of globalisation” may already be passing. These days it may make just as much sense for Indian and Chinese businessmen to come to Davos, in the hope of meeting Latin American ministers or Middle Eastern financiers. It is perhaps a sign of the times that tonight’s “cultural soirée” in Davos will be hosted by the Indian government and the Confederation of Indian Industry.
Gideon Rachman is the FT’s chief foreign affairs commentator and the author of a new book on the politics of globalisation, “Zero-Sum Future”
Please don't cut articles from FT.com and redistribute by email or post to the web.