GUARDIAN (London) Sunday January 30, 2000 Will Hutton
The architects of global capitalism bask in Davos, forgetting the trivial issues of justice and rights
Davos man -- the women here are mainly trophy wives -- has never been so smug. The world lies prostrate before him; endless prosperity and not a cloud in sight, grinned one tanned investment banker. The protests in Seattle and in the City of London are already dismissed as the reaction of 'globophobes' and unrepresentative pressure groups who are trying to deny economic growth to the world's poor. They have no substantial following. The globe is safe for the executive jet and the executive share option in the foreseeable future.
It is a degree of self-congratulation that badly needs to be punctured; and almost surely will. Wealth brings an accompanying demand for rights and justice, to hold the powerful to account. The more far-seeing of the thousand or more chief executives here know it; so do the organisers, lamely inviting one or two representatives of Seattle Woman to put their case. But the balloon of complacency and belief that the Davos consensus is almost unimprovable is so huge that it would take an intellectual atom bomb along with gigantic riots to effect any change.
It is not just that the forces which might challenge this vision are weak -- organised labour is stale and has no alternative case, national governments grow ever feebler and socialism as an idea has lost all its capacity to animate. It is that there is a seemingly wonderful body of free-market economic theory that justifies every business prejudice that ever was, to which even left of cen tre governments are in thrall -- justified by what seems to be working or not working in the world economy.
And, Davos man smiles contentedly, the proof is in the pudding. Take Poland in Europe or Korea in Asia. They have taken the Davos medicine, and lo! How they prosper. South Korea is growing at 10 per cent per annum after the disasters of 1998. It has cut public spending, privatised, encouraged foreign ownership, given up on developing national champions and encouraged workers to do long hours for minimal extra pay. Its $7,000 cars and $40 microwave ovens are unbeatable on world markets.
Ki-ho Lee, the de facto Korean Chancellor of the Exchequer, told me that he now considers that the IMF was right in its tough austerity package after the Asia financial crisis -- and that there is little doubt his country will develop along American lines in future. Poland, following the same policies in Europe, is the only ex-communist country to grow richer since the Wall came down. As for the dreaded multinationals, Poland and Korea are their warmest friends.
But the coup de grace is the so-called 'new economy'; the economy of information and communications technology (ICT), the internet and all that. The sessions on the net have been standing room only, and the message is unambiguous. If any country wants to reproduce the American experience, it will need the same structural assets -- all derived from Davos man's vision. It will need venture capitalists prepared to take financial risks and an entrepreneurial culture backed by low taxes and minimal regulation (a third of US second year MBA students dropped out last year to start dot.com companies).
And above all it will need a well-developed stock market on which all the new companies can be launched to make their founders' fortunes. In other words, if a country wants to succeed it had better remodel itself around the US example and apply the Davos consensus as fast as possible. Demonstrators and doubters are just losers who don't understand the new rules. It's an open question of course whether the US model (and its British variant) are the only routes to economic success; Switzerland's per capita income has grown more rapidly than the US's over the past 20 years, and Germany has both the highest growth and highest absolute level of IT businesses outside the US -- neither fact getting much exposure in Davos.
And the voices arguing that corporations need to behave ethically, socially responsibly and with an eye on enviromental sustainability are the weakest in the 11 years I have been coming here. In over 70 sessions on business there are no more than half a dozen in and around this territory -- and they tend to be undersubscribed. The 'hard' conversations are about how to maximise shareholder value and how to be a winner in the new economy.
In this respect Tony Blair's speech on Friday was refreshing, a reminder to his audience that the 'soft' issues to which all pay lip service are at least taken seriously by one national political leader. Some of the American chief executives in the bars afterwards were muttering darkly that for all his fine pro-business words Blair was too much of a 'liberal' for them; he had dared to argue that while governments had to enable the 'new' information economy to take root they also had to manage the social and democratic consequences -- the heart of the new centre and centre left project.
But while Blair -- and Clinton in his speech yesterday -- talk of the need to reconcile today's turbo-capitalism with social justice, neither are bold enough to turn their rhetoric into legislative and institutional proposals at either national or international level. Clinton recognises the need to act but appealed to his audience for advice on how to do it.
The mood of defensiveness is captured by the United Nation's Progress Report on Business and Human Rights, released here last Thursday. It outlines nine core principles on labour standards, human rights and environmental standards which have already been internationally agreed in varying UN documents, to be restated as a Global Compact with business. But the UN has no teeth. All the UN secretary-general, Kofi Annan, can do is to 'challenge' business to support the compact. The better multinationals -- Shell and BP for example -- will sign up; but most will politely ignore it.
None of this is good enough. Consumers and citizens worldwide are growing more assertive of their rights and more insistent that decision-makers should be held to account for what they do. If power is increasingly held in the global private sector and the new multinational titans, then they can expect more demands to open up and conform at least to the principles of the Global Compact -- and if they do not governments must insist that they do.
Part of this growing demand is this year's reaction to Davos itself; threats of demonstrations and a groundswell of criticism that this hugely influential private club needs to inbuild more accountability itself for how it operates and influences.
Klaus Schwab, Davos's founder, likes to say that he hopes that every participant leaves with at least one new idea. Mine is that international capitalism has to accept new rules of engagement -- and fast.:
