Why the sun is setting on Davos

The World Economic Forum no longer serves as the Mecca of global capitalism, thanks to technological change, the rise of Asian economies and capitalist hubris

Davos is so 1990s

Davos Is So 1990s

The jamboree has lost shine, thanks to social media, Asia’s rise & global elite’s failure to solve problems

TK Arun

We had joy, we had fun/ We had seasons in the sun. Although that seems an inappropriate elegy for Davos – the Swiss town that hosts the World Economic Forum is not exactly sun-drenched – the pathos of nostalgia that made those song lyrics famous is very appropriate. WEF at Davos is on now but it is no longer the premier gathering for the ‘great and the good’.

Three things contribute to Devos’s loss of uber-relevance. One, the forward march of the communications revolution beginning in the 1990s and early 2000s, just when Davos was the mecca of globalising capitalism, that saw the birth of social media. Two, the relative decline of Transatlantic economies in global heft and, in particular, the growing importance of Asian ones in driving global growth. Three, the hubris behind the assumption that global hotshots could together ward off Armageddon being shown up for what it is.

The power of the internet to transform the world was obvious to seers of Silicon Valley before the build-up of the dotcom bust, but it was WEF that took awareness of the potential of the connected world mainstream. It took a special place and a special gathering of movers and shakers of the world to catalyse dialogue and disagreement that threw out sparks of illumination and insight.

The ever-awake social media has changed all that. A tweet from Elon Musk in praise of cryptocurrencies would not fly very far before being intercepted by a Bill Gates interview that explains why Gates would never own a bitcoin. The tweet and the rebuttal are both visible to anyone interested, whether in Timbuktu or Jhumri Telaiya.

No one stores their unique take on the world or people for animated articulation at a global watering hole once a year. People who have any sort of confidence in their own opinions profess and proffer them, whether they are Kangana Ranaut or Emmanuel Macron. Social media picks up the thread and runs with it.

The shift in regional concentration of global economic power is another factor responsible for the decline of Davos: Conversations among the Masters of the Universe at a pristine resort of their world mattered a whole lot more when G7accounted for 44% of global output, as in 2000, than in 2020, when G7 accounted for 31% of global GDP and the non-G7members of G20 accounted for 42.2% of global output.

G7 comprise nations that were the largest seven economies of the world in the late 1970s, the US, Japan, Germany, Britain, France, Italy and Canada. G20 are the largest 20 economies of the world, and include emerging market champions such as China, India, Brazil, South Africa, South Korea, Indonesia and Turkey. Statista. com forecasts G20 minus G7 to account for over 44.76% of global output in 2026, while G7’s share will dwindle to less than 29%. In 2013, there were 300 unicorns – startups valued at $1 billion or more – in the world. These were concentrated in the rich world. Today, there are some 900 unicorns, according to Hubspot. The US leads the pack, China is closing the gap and India has 100 of these business creatures, as of May.

Unicorns contain in them a condensation of the factors that make the sun set on Davos. They represent the cutting edge of business and innovation. To take advantage of their value-creation opportunity, investors must track trends in technology and entrepreneurship in real time, not wait for an annual powwow. When hundreds of venture funds careen around the world sniffing out foals with protruding foreheads, their findings filter through to the larger world – without the need for a forum to meet, chew the cud and digest the world with the help of some chardonnay.

Finally, we have the failure of global capitalism’s good intentions to hold off major crises. Regular pilgrims to Davos failed to notice or avert the global financial crisis of 2007-09 or the euro crisis thereafter. Ditto for Brexit or the election of President Trump – both those stood for discontent with globalisation and inequality. In 2017, WEF did set up the Coalition for Epidemic Preparedness Innovations. The proof of this particular pudding is in the dying: 15 million is Covid’s direct and indirect toll, says WHO.

WEF has not prevented global warming to 1. 09˚C over pre-industrial times. It shows no interest in pressing the rich world to stop preaching lower emissions to India and Africa, and start sucking out the carbon dioxide, 2,400 gigatonnes of it, they have injected into the world: Large negative emissions by the rich are the only hope the world has to prevent global warming by 2 degrees or more.

The goal of uniting the bourgeoisie of the world to pursue enlightened self-interest remains noble, no doubt. But it is not the nobility who forge and implement solutions to the world’s problems, but the rabble, through the institutions of democracy. The challenge is to raise the quality of democratic sensibility, in general. That is hard work. But, of course, the pretence of elite magic conjured at an exclusive resort was, however, more joy and more fun.