The annual meeting of the World Economic Forum, held in Davos, Switzerland, each January, plays an influential role in shaping the global discussion about the state of business, socioeconomics and the broader culture. Though it has its detractors – particularly in our new era when the “elites” are increasingly reviled – it remains as good a place as any to get a real-time snapshot of what influential people are hearing, thinking and saying and, consequently, what they and the organizations they lead are going to do next. For that reason, the event’s agenda and theme are worth paying attention to.
This is particularly the case this year, because Davos 2020 is shaping up to be one of the most consequential in recent memory. The reason: the acknowledgment by the leadership of WEF that the dominant economic mantra of the last 40 years is now officially past its sell-by date.
A Reset on Capitalism
In its recently published “Davos Manifesto 2020,” the founder and executive chairman of the World Economic Forum, Klaus Schwab, bluntly states that the Chicago School brand of economics, as formulated and popularized by Milton Friedman in the early 1970s, is no longer fit for purpose in a world that must continue to grow but in a more equitable and sustainable way. No longer can every business and economic decision be oriented toward simply serving the interests of shareholders. Now, a broader range of stakeholders – employees, suppliers, the communities in which a business operates, the environment, the future even – must be considered as equally important as the capital owners of an organization.
For the critics of “Davos man,” this change of heart is long overdue. Many from the (mainly but not exclusively) political left have been pointing out the downsides of a world full of Gordon Gekkos for many years. Greed is not good, they have argued. At the Center for the Future of Work, we’ve added our voice to that chorus.
For cynics, the Davos manifesto’s mea culpa may be seen simply as a way to stave off the real revolution brewing in the wings of the Fourth Industrial Revolution. As we’ve often said, the subtext to the notion of the 4IR is, in effect, an attempt to have the First Industrial Evolution. Possible? We shall see …
A Growing Movement
But these critiques aside, the manifesto is an important document that builds on a series of other recent lead indicators of the changing zeitgeist. “Larry’s Letter” – the annual client communiqué from Blackrock CEO Larry Fink – has signaled a change in the investing weather for the last few years. The Rothschild’s Coalition for Inclusive Capitalism has provided a forum for “anti-Gekkos” to develop the stakeholder narrative and ready it for primetime. Christine Lagarde, late of the International Monetary Fund and newly installed head of the European Central Bank, has set out a vision for a much more socially inclusive development strategy for the continent, tying incentives to good (green) social behavior, and moving away from rewarding high-risk investment approaches from too-big-to-fail financial institutions.
Marc Benioff, CEO of Salesforce.com, has championed the stakeholder idea within Salesforce, its clients and the market at large for a number of years – most recently in his best-selling book Trailblazer: The Power of Business as the Greatest Platform for Change. And perhaps most significantly, the recent statement by the Business Roundtable, signed by the CEOs of some of the largest businesses in the U.S. (including Brian Humphries, CEO of Cognizant), has aligned these leaders with a new vision of how businesses should serve society. All these pieces of the jigsaw puzzle illustrate how much has changed in a relatively short period of time: “gradually, then suddenly,” as Ernest Hemingway so brilliantly characterized change (and going bankrupt).
‘Our House Is On Fire’
How suddenly and dramatically change can happen is best seen in Herr Schwab’s embrace of an unlikely new figure who, in a matter of months, has gone from a cold pavement outside the parliament building in Stockholm to the warm embrace of Davos’ inner sanctum.
At the last annual conference of the World Economic Forum (in January of this year), Greta Thunberg, a then unknown 16-year-old curio, emerged from seemingly nowhere to capture global attention with punk-rock-style publicity stunts. Now, Ms. Thunberg is everywhere (though it may take her a few months in a sailboat to get there) and clearly very much inside Klaus Schwab’s head.
The “Davos Manifesto” explicitly states that Ms. Thunberg’s ideas and activism – that we are on the cusp of an environmental extinction event that is no longer an abstract theory of the future but a reality in the here and now – are to be taken seriously. Extremely seriously. She, and those who align themselves with her, are on the right side of history. Those who don’t – I’m looking at you, Gordon – are not.
This is the message of Davos 2020, and difficult as it may seem for many to fully grok, this is the agenda that businesses of all stripes will have to adhere to in the work ahead. Capitalism is still the best model we have to create wealth, but unfettered capitalism – that prioritizes short-term financial profits which accrue to a tiny minority over the long-term health of the planet that impacts everybody – is a malignant virus. This form of capitalism threatens to destroy everything around it that gets in the way of its primary objective: making money. Money we must make – particularly the leaders and executives of the businesses that routinely make their way to the beautiful Swiss Alps. But that money must be seen as a means to an end – the end of bettering society – not as the end itself.
In 2017, Michael Douglas – Mr. Gekko himself – visited Davos. We had, as can be seen above, a lovely chat. But Michael – if you’re planning on coming back this time, I’d suggest you remind folks of all the other wonderful characters you’ve played over your long, distinguished career. Gordon Gekko is no longer welcome among the world’s financial titans. He had a great run, but his time is done. You love sailing. Play the captain of the yacht that couriers Greta around the world. That’s a story that’s going to keep you in gainful employment for a long time to come.
Davos 2020 will be an eventful event. Keep checking in as we bring you more coverage and commentary on the World Economic Forum meeting, during and after the conference.
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