Davos: creating the impression of business being done

After the Wall Street crash that led to the Great Depression, the US president Herbert Hoover had a series of high-profile meetings with top industrialists.

In response to the seriousness of events, important men were seen gathering with apparent grim determination to sort out the economic mess and its human consequences. It was designed to reassure the public but was almost certainly misleading.

In his book on The Great Crash, the economist JK Galbraith wryly noted meetings like this were called, “not because there is business to be done, but because it is necessary to create the impression that business is being done”.

Right now Davos looks like a very expensive chauffeur-driven limousine, speeding toward a cliff, full of hand-wringing, well-heeled individuals who refuse to change course.

It would be wrong to think that no business gets done at the World Economic Forum in Davos – far from it. Reputations get polished, gossip exchanged and business cards circulate like an alternative currency. But, like Hoover and his industrialists, the business actually being done is at best irrelevant to the economic, social and environmental crises outside the well-catered meeting rooms, and at worst a display of deference that further validates and entrenches the networks and world views which generated the crises in the first place.

Impression of action

We’ve had a systemic banking failure, corrosive inequality because of how the economy is designed to favour disproportionately the very people who go to Davos, and the ultimate system failure, as the economy over which the participants of Davos preside accelerates like a car toward the cliff edge of climate change.

These things, of course, do not go unnoticed at the event. There are always sessions and announcements discussing threats from poverty or climate change or dodgy banks. At different points in recent years, and where the banks were concerned safely after the event, the World Economic Forum has pronounced earnestly on the need for action. Having those discussions is, in fact, essential for the appearance of relevance of those in attendance.

They are happy talking about cleaning slime from the muddied economic model, but not about changing the paradigm.

As it was in Hoover’s day, the impression of action is needed for maintaining faith in the system they are part of. But debate of such issues is welcomed only up to the point that they question the underlying economic model.

Panellists in one session reported to me were once reluctantly forced to conclude that endless material economic growth in a finite biosphere was a logical impossibility. But there was silence when it came to imagining what an economy not dependent on such growth would look like, in spite of the fact that beyond the walls of Davos such vital questions cause fervent debate.

If you were to summarise the limitations of Davos – apart from it being exclusive and self-selecting, an embodiment of what is wrong more broadly with the economy – it is that they are happy talking about cleaning slime from the muddied economic model, but not about changing the paradigm. Questions of slime are OK (although big corporate tax avoiders are also welcome in Davos), questioning the paradigm is not.

Redemption?

What might constitute a redeeming act of sincerity? The greatest question we face is how nine billion people will co-habit amicably on a planet with a flexible but ultimately limited biosphere? Answering that means subjugating the whims and appetites (or “tyranny” as it has been recently called) of the market, to the needs of society and realities of the environment.

We need some sort of simple compass or test to guide decisions in everything from the design and control of the global food chain, to transport, energy and everything else.

We have enough information to assess whether any policy, business or project is likely to raise or lower our burden on the environment, lead to a more equal distribution of the benefits from economic activity, or even to raise or lower our well-being. Davos could make every participant at least sign a do-no-harm pledge to embrace only actions that lower impact, distribute wealth more equally and are likely to raise well-being.

Over five years on from the crash, and given their collective power and influence, it’s not looking good. Global carbon emissions are rising and the equivalent of the wealth of half the world’s population is concentrated in the hands of just 85 people (that’s a group the size of the Czech Winter Olympics team).

Right now Davos looks like a very expensive chauffeur-driven limousine, speeding toward a cliff, full of hand-wringing, well-heeled individuals who refuse to change course, but might, in the light of concerns raised, consider the business opportunities of switching to a hybrid engine and possibly paying the chauffeur the minimum wage – just as long as he or she will keep driving straight ahead.

Andrew Simms works for Global Witness and is a Fellow of nef (new economics foundation). A new edition of his Cancel the Apocalypse: the New Path to Prosperity is published on 30 January by Little Brown.