On January 23-26, the World Economic Forum (WEF) was held in Davos, Switzerland, under the theme ‘Shared Prosperity in a Fractured World’. This annual conference sees the financial, political and intellectual elite converge to discuss the direction of world’s economic system. In the years since its inception in 1971, the WEF has increasingly become a stage for advocates of a globalized, neoliberal economic and political system – free trade across borders, light regulation and minimal government involvement.
This globalization has undoubtedly brought benefits in narrowing the inequality between developing and developed countries. Its goods have not been unalloyed, however, either in the developing or the developed world, where there has been rising in-country inequality in opportunities and in outcomes.
Trade liberalization oversees the outflow of jobs to where the most products can be made at the lowest cost: a system devoted to efficiency. In theory, this should leave a country with the production of the goods it has the knowledge and skills to make best, with more jobs and better wages to devote to this manufacture, and with the ability to import other necessary goods from its trading partners without tariffs or taxation, who benefit from the same process.
In reality, the result of this system of globalized neoliberalism is, too often, wage stagnation, poor working conditions and high unemployment, as companies, by nature devoted to profit, have little incentive to re-invest profits in their workforce. As low-skilled jobs move to low-cost countries and without training in new marketable skills, unemployment persists. Without adequate tax revenue or trade income, and adhering to neoliberal macroeconomic principles, the government cuts spending on public education, infrastructure, healthcare and welfare, exacerbating the effects of low wages and high unemployment. Those governments who attempt to introduce increased tax on corporations or individuals find income or wealth moved across open borders. To the public, the politicians and intellectuals who advocated for globalization’s virtues look misinformed or, worse, false – and either way, untrustworthy.
Backlash to modern globalization began in the late 1990s, expressed most virulently in the 1999 WTO protests in Seattle. Subordinated to global terror, war and financial recession, rising political extremism in reaction to neoliberal globalization rose again since 2015: Geert Wilders was narrowly defeated by a broad coalition in the Netherlands, Marine Le Pen and the Front National just missed the French Presidency in 2016; the Alternativ für Deutschland became the third largest party in Germany in 2017; Silvio Berlusconi has made his return to a polarized and anti-establishment Italian election; and thinly-veiled economic and cultural nativism resulted in Britain’s vote to leave the European Union in June 2016.
How did this changing global tide affect the discourse of Davos? Some of the world leaders gathered at the conference in Switzerland rose to power on populist platforms of anti-globalization and still more of them had to return to populations at least skeptical of the system as it exists today.
Verdict on Trump at the WEF: No Style, No Substance
President Donald Trump’s appearance at the World Economic Forum alone was enough to prompt criticism that he was underselling his support base of ‘globalism’s discontents’ – the steel and manufacturing workers whose jobs have long been exported to cheaper climbs.
Once on stage, however, he speaks to the grievances of his followers, railing against unelected bureaucrats, promising to put “America First” and claiming that he is there to represent the American people. His proposals, though, to reduce bureaucracy, reduce taxes, reduce regulation are music to the ears of the gathered neo-cons: Trump’s speech in Davos came just weeks after he implemented a package of tax reform, including cuts to corporate taxation, a move which was lauded at the WEF.
Trump’s suggestions to support free trade and to oppose “regulation…taxation…pervasive state-led economic practices” would do little to deliver on his promises to bring back American jobs, to support the every man and to “lift up forgotten communities.” As usual, the President is better at channeling dissatisfaction into rhetoric than into policy.
Verdict on May at the WEF: All Style, No Substance
Prime Minister Theresa May’s speech resembles a pendulum. On one swing, she espouses commitment to the UK’s ‘modern industrial strategy’, a dedication to free trade and technological innovation and repeated reference to the ‘rules-based international order’. May reaffirms a connection with the WTO, presumably sensing that this is the most realistic – although profoundly listless – post-Brexit trade arrangement. In short, May doubles down on free trade and liberalization as a means to deliver prosperity ‘for all’.
On the next swing, she presents an emotive, but far vaguer commitment to ‘working for everyone’. She calls upon bureaucrats, technocrats and plutocrats in the audience to imagine ‘what it can feel like as someone who has worked for twenty years and who now finds out that the job they know how to do today is not going to be a job in the future’ then promises a national re-training scheme and commitment from government and business alike to address social inequity.
It is hard to deny, whatever the rhetoric, Brexit negotiations up to this point have revealed a distinct gap between the equalizing and concerned display of the British government and the neo-liberal rationale underpinning much of the negotiations.
Verdict on Merkel at the WEF: Sie sagt alles indem sie nichts sagt.
Chancellor Angela Merkel, for her part, barely addresses the issue of globalization and rising populism – at least directly. She draws a foreboding comparison between the conditions leading to war in 1939 and reinforces the importance of global co-operation and multilateralism.
Focusing instead on Germany’s pet agenda of digitization and a general commitment to global development, references to the global political environment are veiled. The migration crisis that was so destabilizing for Merkel is mentioned obliquely in her commitment to working with partners in Africa and the Middle East for security and prosperity. ‘Creating a Shared Future in a Fractured World’, Merkel says, is an appropriate motto for the WEF in 2018 – a gesture, perhaps, to the protectionism, isolationism, individualism and nationalism that characterizes much of transatlantic relations today. At the end of her piece on enabling the developing world, she vows, ‘Let us never accept a situation where some people are left behind… this is one of our most important tasks’ – interpret that as political or humanitarian as you will.
Verdict on Macron at the WEF: The New Davos Man
Macron spoke for over an hour at the WEF – twice as long as his fellow heads of state – and half in French. He was greeted with a genuinely glowing introduction from Schwab. He begins his speech with a dig at Trump over climate change. Macron embraces the liberal cosmopolitanism that Samuel Huntington derided as ‘the Davos Man’ – he recommits to the European project, he applauds entrepreneurship and risk, advocates for regulation and tax cuts, he says he will not be blocked by the ‘less ambitious’. He is, in this sense, unashamedly globalized.
Macron is not yet, perhaps, drawn in to the WEF clique. Whilst other leaders mix in some domestic issues: technology and AI, digitization, cyber-security, Macron devotes his time to his socio-economic treatise. He all but accuses politicians of giving up, taking the easy way out by indulging nationalism and not working hard enough to explain the benefits of globalization to their citizens. He won’t give up on globalization, but he will make it ‘new’: a safety net to protect the ‘left-behinds’; ‘a new global contract’; connect with ‘the common good’; more structural equality.
Macron offers no more policy promises than his fellow leaders, but his dedication to the issue and his thought on this issue at least suggests a passion that is not May or Merkel’s style and a compassion that Trump lacks completely.
The WEF is not a policy platform. It is a networking event and a photo-op as much as it is political, and the speeches delivered are consequently more symbolic than substantial. Yet what is said, even as a gesture, can be revealing of the philosophy and viewpoint of world leaders.
Neoliberalism is one type of globalisation, but not the only type. Macron is right. Globalisation is not itself the problem, but rather the management of it, as Joseph Stiglitz (2018) has argued. It is not easy to swim against the tide of a powerful, global financial system, but national governments or national leaders can consciously enact policies that mitigate the effects of globalisation that cause grievance and inequality. Trump’s corporate tax cuts, making American “open for business” and a “truly global Britain” by deregulating businesses and reducing bureaucracy are not the ways to do this, however, and will only lead to a doubling-down on wealth inequality, labour mistreatment, public suspicion of elites and of political establishment. In short, to more populism, even more toxic than the last.