Klaus Schwab says the forces of the new economy have brought a new form of globalisation, needing new forms of governance to safeguard the public good

By Klaus Schwab*

After World War II, the international community came together to build a shared future. Now, it must do so again. Owing to the slow and uneven recovery in the decade since the global financial crisis, a substantial part of society has become disaffected and embittered, not only with politics and politicians, but also with globalisation and the entire economic system it underpins. In an era of widespread insecurity and frustration, populism has become increasingly attractive as an alternative to the status quo.

But populist discourse elides – and often confounds – the substantive distinctions between two concepts: globalisation and globalism. globalisation is a phenomenon driven by technology and the movement of ideas, people, and goods. Globalism is an ideology that prioritises the neoliberal global order over national interests. Nobody can deny that we are living in a globalised world. But whether all of our policies should be “globalist” is highly debatable.

After all, this moment of crisis has raised important questions about our global-governance architecture. With more and more voters demanding to “take back control” from “global forces,” the challenge is to restore sovereignty in a world that requires cooperation. Rather than closing off economies through protectionism and nationalist politics, we must forge a new social compact between citizens and their leaders, so that everyone feels secure enough at home to remain open to the world at large. Failing that, the ongoing disintegration of our social fabric could ultimately lead to the collapse of democracy.

Moreover, the challenges associated with the Fourth Industrial Revolution (4IR) are coinciding with the rapid emergence of ecological constraints, the advent of an increasingly multipolar international order, and rising inequality. These integrated developments are ushering in a new era of globalisation. Whether it will improve the human condition will depend on whether corporate, local, national, and international governance can adapt in time.

Meanwhile, a new framework for global public-private cooperation has been taking shape. Public-private cooperation is about harnessing the private sector and open markets to drive economic growth for the public good, with environmental sustainability and social inclusiveness always in mind. But to determine the public good, we first must identify the root causes of inequality.

For example, while open markets and increased competition certainly produce winners and losers in the international arena, they may be having an even more pronounced effect on inequality at the national level. Moreover, the growing divide between the precariat and the privileged is being reinforced by 4IR business models, which often derive rents from owning capital or intellectual property.

Closing that divide requires us to recognise that we are living in a new type of innovation-driven economy, and that new global norms, standards, policies, and conventions are needed to safeguard the public trust. The new economy has already disrupted and recombined countless industries, and dislocated millions of workers. It is dematerialising production, by increasing the knowledge intensity of value creation. It is heightening competition within domestic product, capital, and labor markets, as well as among countries adopting different trade and investment strategies. And it is fueling distrust, particularly of technology companies and their stewardship of our data.

The unprecedented pace of technological change means that our systems of health, transportation, communication, production, distribution, and energy – just to name a few – will be completely transformed. Managing that change will require not just new frameworks for national and multinational cooperation, but also a new model of education, complete with targeted programs for teaching workers new skills. With advances in robotics and artificial intelligence in the context of aging societies, we will have to move from a narrative of production and consumption toward one of sharing and caring.

Globalisation 4.0 has only just begun, but we are already vastly underprepared for it. Clinging to an outdated mindset and tinkering with our existing processes and institutions will not do. Rather, we need to redesign them from the ground up, so that we can capitalise on the new opportunities that await us, while avoiding the kind of disruptions that we are witnessing today.

As we develop a new approach to the new economy, we must remember that we are not playing a zero-sum game. This is not a matter of free trade or protectionism, technology or jobs, immigration or protecting citizens, and growth or equality. Those are all false dichotomies, which we can avoid by developing policies that favor “and” over “or,” allowing all sets of interests to be pursued in parallel.

To be sure, pessimists will argue that political conditions are standing in the way of a productive global dialogue about globalisation 4.0 and the new economy. But realists will use the current moment to explore the gaps in the present system, and to identify the requirements for a future approach. And optimists will hold out hope that future-oriented stakeholders will create a community of shared interest and, ultimately, shared purpose.

The changes that are underway today are not isolated to a particular country, industry, or issue. They are universal, and thus require a global response. Failing to adopt a new cooperative approach would be a tragedy for humankind. To draft a blueprint for a shared global-governance architecture, we must avoid becoming mired in the current moment of crisis management.

Specifically, this task will require two things of the international community: wider engagement and heightened imagination. The engagement of all stakeholders in sustained dialogue will be crucial, as will the imagination to think systemically, and beyond one’s own short-term institutional and national considerations.

These will be the two organising principles of the World Economic Forum’s upcoming Annual Meeting in Davos-Klosters, which will convene under the theme of “Globalisation 4.0: Shaping a New Architecture in the Age of the Fourth Industrial Revolution”. Ready or not, a new world is upon us.


Klaus Schwab is Founder and Executive Chairman of the World Economic Forum.  Copyright: Project Syndicate, 2018, and published here with permission.

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14 Comments

An article that is full of debateable definitions and unsupported assertions so hard to get a grip on it.
However I like this idea ""Globalisation is a phenomenon driven by technology and the movement of ideas, people, and goods. Globalism is an ideology that prioritises the neoliberal global order over national interests."" [leave out the contenious word 'neoliberal' which is usually just a general pejorative adjective].
So Globalisation is just the rapid international adoption of ideas and is generally good. Globalism is the rapid movement of goods and people over national boundaries. Since an ideal country has maximum possessions per person everytime goods arrive we become wealthier on average (minimise inequality and it is good for all) however when people arrive the goods are shared more sparsely and we become poorer on average. Of course if we bring people in who have unique valuable new knowledge then we win.
Globalists should think about why houses have fences round them, why children cannot move from school to school whenever the mood takes them, why parents give priority to their own children and why children buy Xmas presents for their parents but not all the neighbouring adults. Borders/boundaries can be good for us.

Outrageous ideas Lapun.
Apparently we need to actively recruit 70,000 low skilled people annually from developing countries because NZers no longer wish to work in cafes, petrol stations, or hotels.

dp

Ah, globalism as sharing wages which means poverty and inequality. Of course Kiwis don't want to compete for low wages. Letting wages rise until employers started training again is a novel idea but globalist. Sad when there is so much true talent who would love to come here.

And then Bunnings staff have to do the job that our Govts and Dept of Immigration should have done one generation back
https://www.smh.com.au/national/victoria/how-slip-up-in-bunnings-nailed-...

A serious crime has been committed here, racial profiling. I bet they wouldn't have run after a typical 'true blue' ocker builder and taken note of his registration plate!

Desperation at Davos?

In just 9 short years our former PM made off with millions of $ of tax free capital gains while an entire generation of kiwis got turned into rent surfs. NZ is now unrecognisable compared to a decade ago. Anyone with savings in the bank got eviscerated. Yeah I bet the billionaires at Davos are patting themselves on the back. Meanwhile Trump, Brexit, Le Pen, 5 Star... Nationalism! You can't blame people. Nobody likes getting screwed over.

I have read this article several times now and am still struggling to get my head around it. It's like the globalist leadership is sending a peace offering to the camp of the nationalists.

Because of the nationalists democracy and the world is in great danger. We are in a crisis and humankind is on the brink of a great tragedy because... nationalists.

They understand our concerns but we lack "imagination". They will compromise though. It's not a zero sum game, an either or, rather its is an "and". We can have nationalism and globalism. All sets of interests can be pursued in parallel.

Nationalists understand "sharing and caring". We just need to broaden our outlook to encompass the whole of mankind.

The plan is to ensure, "everyone feels secure enough at home to remain open to the world at large". What does that mean, "open to the world at large"?

Let's just cut to the chase, the only issue is unchecked immigration and the prospect of billions of culturally incompatible migrants, refugees, invaders, entering our lands, destroying our social welfare and cultural identity and demanding a share of our wealth. Why is this not explicitly addressed in this peace offering?

Let's just cut to the chase, the only issue is unchecked immigration and the prospect of billions of culturally incompatible migrants, refugees, invaders, entering our lands, destroying our social welfare and cultural identity and demanding a share of our wealth. Why is this not explicitly addressed in this peace offering?

^This

This is a real fear amongst numerous nations and peoples globally. Whether it is real fear or an imagined fear is largely irrelevant, the psychological impact and affect is real and the repercussions of it will be just as real.

There is an entire branch of theory and academia on "change management" and the psychology of change, populations sciences, soci0-anthropology, etc etc and yet we never see the studies on immigration and cultural impact.... what are the affects of a 5% change (increase in population via inbound migration), vs a 10% change vs a 20% change etc? What is the difference between a huge inbound migration of different populations? Do some populations integrate more easily than others? Why are psychologists and sociologists not looking at the impact of individuals, families, and populations in regards to mental health, happiness and well being as impacted by huge population changes? Oh yes we get plenty of anecdotes, plenty of reports in the news... but where is the goddam science? Why are governments inflicting monumental changes on populations without studies of the impact?

We have had mass migration throughout human history, so it's not like we don't know how problematic it can be. However, now we have the means to unpick all that scientifically. And approach some of this in a more thoughtful informed way. Why is this not informing government policy?

There is a timescale problem.

Living in the UK as a kid during the sixties it was those terrible Jamaicans who were a threat to us white folk and if only they were quiet and well behaved like the peaceful Pakistanis - their men and especially their women were demure not like those in your face black Caribbeans. Same people fifty years later and the people of West Indian heritage are intermarrying (50% of males and 33% of females) and present innumerable role models for Poms. Meanwhile there is a small minority of Muslims who are justifiably terrifying everyone.

A healthy society changes - it has to in the modern world - but it changes as slowly as possible. Then everyone has a common identity.

Lapun, my instincts tell me the same. Rapid change, leads to fear, destabilisation and then there is risk of serious civil/social unrest, backlash and upheaval.

However, my point is, we now have the tools, access to data and academic disciplines to provide theory and produce evidence on this. And yet this is not how political decisions are made. When it comes to health sciences, all treatments that affect us are vigorously tested (it's not a perfect system either but definitely better than pure-belief based medicine). Some public policy... like very high levels of migrations for instance, can potentially have huge impact on human wellbeing. We have randomised controlled trials on slight variations to headache pills and yet millions of people are moving around the globe and we have very little data or theory on how that even affects any of us!!! There is some data and theory out there on the economic impact, and certainly there is data on refugees and the impact on them and their integration and outcomes. But the affect of general migration on populations, both the migrating group and the native group? Whether it is positive or negative, and if so in what ways, and if so to what degree and if so at what speed etc etc? Why aren't some of the world's best minds looking at this?

Zac, i think you sort of hit and miss this, and others don't get it either. Try this The problem I think is that globalisation to date has been a vehicle for large corporations to develop monopolies through their sheer size. So it has been about a small group of individuals just getting richer, when it should have been about raising the living standards of everyone the word over. Big corporations shifted manufacturing to anywhere where the wages were minimal, not because they had a social conscience but because they are and were greedy. Their actions and the competition that has stemmed from them has created a new, modern form of slavery. They use their money to influence, co-opt and corrupt the lawmakers into doing things in a way that favours them. In a few places in the world, where Journalists come close to exposing the greed they are brutally removed (two instances in recent times that i can remember).

Politicians are either complicit through greed or are simply too stupid to understand what is happening.

And Zac you touched on a separate, but related issue. The refugee crisis's are the result of a fundamental failure of the United Nations, and it's toothlessness.

Zachary you're not wrong. I'll add that the elites and globalists pushing open borders are some of the most nationalistic, nepotistic, conservative people in their own private lives. They send their kids to private schools, drive around in private vehicles, teach their kids to be proud of their identity and they live in walled off locations. Many of these globalists even live in a state with a great big wall around it to keep out those problematic cultures.

If diversity is no good for their children why would we want it here?