Stuff, 28th. January 2023

After a couple of years hiatus due to Covid, the annual winter meeting of the World Economic Forum (WEF) is back in the picturesque Swiss mountain ski resort of Davos.

The WEF has, apart from Covid, been an annual event since 1971. Founded by Klaus Schwab it sports the motto “committed to improving the state of the world” and brings together heads of state, business leaders, heads of UN agencies, together with academics and some civil society organisations. The presence of many media organisations is also an important factor in communicating the activities of this annual get-together to the wider world.

This year the nearly 3,000 attendees included: 50 heads of state, 56 finance ministers, 19 governors of central banks, 1,500 business leaders (including 600 CEOs), 30 trade ministers, and 35 foreign ministers.  

The conference goal and slogan for the 2023 meeting was stated as “cooperation in a fragmented world”, and for nearly five full days the conference centre and surrounding venues hummed with seminars, plenaries, speeches, behind-the-scenes meetings, and informal “corridor conversations” in a vibrant and evolving networking jamboree of a certain portion of the world’s “movers and shakers”.

There was a transatlantic feel to this year’s meeting. China was not much in evidence. There was limited representation from Asia (apart from India), Africa and Latin America, although the oil-rich states of the Middle East were represented in numbers. For all that, this was very much a meeting place of the world’s two dominant models of capitalism – the free market, free-wheeling model of the United States, and the social market, managed variant characteristic of Europe. Key leaders from the United States, Europe, and the United Kingdom were not present in person, however.

Despite the relaxed and uplifting surroundings and despite the headiness of the personal interactions and informal meetings, the mood at the conference was sombre. In the short term we have a major war in Europe, the threat of global recession, the decoupling of supply chains, gridlock at the United Nations, geopolitical realignment, and turbulence in energy markets. This is almost a return to the 1970s. At the same time the long-term, existential issues of climate change and the potential for ecosystem collapse, along with failures in preparation for future pandemic prevention, are requiring urgent and united action of a kind that is simply not forthcoming.

All the indications are that the world will not be able to curtail the growth of carbon emissions to get us inside the 1.5 degrees growth target of climate warming. On current projections it looks like 2-3 degrees, and this promises major ecological collapse and planetary destruction by the end of the century.

Alongside this is evidence of “the great fracture” with the United States and China marking out geopolitical fault lines which could be reflected in a grand realignment of economic activity. Security issues are trumping globalisation. Countries are also starting to consider overt management of markets and supply lines, along with subsidies. There is the potential for the emergence of autarchic, regionalised worlds of economic activity with WTO rules playing an increasingly limited role in freeing up trade.

How do things look from a New Zealand perspective?

The positive aspect of Davos is the range, expertise and civility of debate. Many panels host world experts and the discussions are expertly moderated. The small representation of civil society and alternative voices dulls this debate to a degree, but it is otherwise a refreshing “commons” of expertise and discourse. The long-term issues are being debated forensically and expertly in a balanced manner that is hard to match in the hurly-burly of New Zealand’s political and media culture.  

New Zealand doesn’t come out well on climate change, relying on overseas offsets and delay rather than addressing emissions reductions; indeed, our emissions have not declined in any substantial way for the 30 years that we have been aware of the problem. It is striking that the structure of our electricity market – particularly the way the marginal price is set – prevents the substantial investment in renewables that we will need, and yet the regulatory authority and governments seem unable to unpick this problem.

Other issues discussed at Davos that had relevance to New Zealand were Oceans policy, the Blue economy, carbon sequestration via forestry, regenerative agriculture, sustainable primary production, supply lines, measuring natural capital alongside GDP, social policy, the role of indigenous peoples, and many others.

Davos provides an insight into the workings of at least one portion of the global business and political elite. In an otherwise gloomy world order, WEF attempts to emphasise the positive – stakeholder capitalism, cooperation in a fragmented world, meaningful dialogue, and bringing business into the room with other interests in the environment, society, security and so on. There are obvious blind spots in the areas of inequality, poverty, hunger and injustice, but in a fractured and uncertain world, with the standard multilateral system under strain, this annual WEF gathering at Davos has its place.

Peter Davis, Chair, The Helen Clark Foundation, an independent public policy think tank.