Is Davos just an excuse for the 1% to have a bonding session?

Larry Elliott
The Guardian
23 January 2015

Thomas Piketty wasn’t there but they were talking about his ideas: they’re committed to progress as long as nothing changes

Committed to improving the state of the world. That’s the motto of the World Economic Forum, which wraps up in Davos tomorrow with the rich and powerful pondering whether to listen to Mark Carney’s views about the global economy or head for the ski slopes.

Many will opt for the latter, not because they have anything against the governor of the Bank of England. On the contrary, the former Goldman Sachs banker picked by George Osborne to run Threadneedle Street is very much part of the Davos family. It is simply that one of the reasons the WEF is held in Davos and not in Atlantic City or Blackpool is that it has plenty of black runs available for those who, after four days, have had enough of hearing Christine Lagarde warn about the risks of rising inequality.

All of which raises a couple of obvious questions: is Davos simply an excuse for the 1% to have a big bonding session in which they convince themselves that we are all in it together? And does it actually do any good?

Yes, it does, says to John Cridland, director general of the CBI, who reckons business leaders have taken on board the criticism of capitalism made by French economist Thomas Piketty. “I sometimes think there is a perception that the people in the world business community come to Davos and talk about world business in a self-indulgent way. But most of the conversations between chief executives here are about Piketty-type issues. They talk about things they wouldn’t be talking about back in the boardroom.”

Brendan Cox, director of policy and advocacy at Save the Children, has a slightly different take: “My main impression is of rich people using Davos to devise plans to get even richer. But there are two positives: the gathering of so many rich in one place provides an opportunity to highlight and interrogate their role in inequality, poverty, climate change, and so on. Given how unaccountable so many of them are, that is a good thing.

“Secondly, though getting richer is the main business, there are also people who use [Davos] for serious discussions about how they can play a role in building a fairer, more sustainable world.”

There was a time when Cox would not have been allowed inside the ugly concrete bunker that houses the WEF. Over the years, though, Davos has embraced civil society, NGOs and the more mainstream critics of global capitalism. Winnie Byanyima, executive director of Oxfam International, was one of the co-chairs of this year’s meeting.

This reflects a conscious decision on the part of Klaus Schwab, the man who founded Davos in the early 1970s. Despite having the appearance of a Bond villain, Schwab is by nature a social democrat and has done his best to nudge the WEF in a more progressive direction. The financial crisis of 2008-09 helped by generating a more contemplative mood among those who had previously considered themselves masters of the universe.

That said, there are limits to what Schwab can do. Davos is not a decision-making forum, it is a gab fest. A gab fest for some of the richest and cleverest people in the world, but still a gab fest.

And the quality of the gab depends on those who show up. Piketty was not in attendance this year, which was like putting on Hamlet without the prince. Everybody would have liked to hear from Mario Draghi, but the president of the European Central Bank was busy in Frankfurt trying to save the eurozone from deflation. Vladimir Putin was another notable non-attender.

Another problem, identified by Lord Turner, the former head of the UK’s Financial Services Authority, is that Davos has a settled world view that changes at a glacial pace, if at all. There was nobody at this year’s WEF, for example, arguing that Europe would be better off without the euro. Nobody gives it to the status quo with both barrels. Al Gore on climate change was as radical as it got.

This groupthink is potentially dangerous but perhaps inevitable. For Davos man and woman, life is pretty sweet. Which is why there are some who say the true motto of the WEF should be: committed to improving the state of the world provided nothing much changes.

  1. No comments yet.

You must be logged in to post a comment.