The deep snow in Davos this year is no surprise — but the deep doubts about capitalism certainly are. What is Stephen Harper getting himself into?
For decades, this ritzy Swiss resort has hosted an annual celebration of capitalism where luxurious Audis ferry potentates and presidents between lavish hotels so they can bemoan the perils of socialism, high taxes and debt. And yet, this year, the veteran founder and Chairman of the Davos World Economic Forum, Professor Klaus Schwab, declares that "Capitalism, in its current form, no longer fits the world around us."
Really? Is Schwab, of all people, joining the Occupy Davos movement? The business professor who's been presiding over these festivals for the rich and mighty for forty years? Maybe so.
"We have failed to learn the lessons from the financial crisis of 2009," he goes on. "A global transformation is urgently needed and it must start with reinstating a global sense of social responsibility."
Such remarks, from such an insider in the capitalist club, certainly give a clue to the trauma that has hit the Eurozone in its season of debt and desperation. Greece and Italy are under new management. The survival of the Euro remains in the balance.
UPDATE: Harper's speech
Speaking to the forum on Thursday, Harper suggested that the developed world [Europe] has somehow lost sight of how to create jobs and growth.
"I ask whether the creation of economic growth, and therefore jobs, really is the number-one policy priority for everyone? Or is it the case, that in the developed world too many of us have, in fact, become complacent about our prosperity, taking our wealth as a given, assuming it is somehow the natural order of things, leaving us instead to focus primarily on our services and entitlements?"
Harper wasn't done. One day after German Chancellor Angela Merkel told the forum that Europe risks becoming just an "interesting place to take a vacation," Harper weighed in with a warning that was no less blunt:
"Western nations, in particular, face a choice of whether to create the conditions for growth and prosperity, or to risk long-term economic decline."
And into this stew of self-doubt comes Stephen Harper to deliver a keynote address which is shaping up as something of a scolding. Much of Harper's message will be familiar to Canadians — that we have come through the recession better than any other G7 country, thanks to sound banking regulations, free trade and fiscal discipline. Europe, by contrast, must take much more decisive action to get its house in order.
Harper sticks to tradition
"The European sovereign debt crisis remains an immediate and pressing problem," said Harper's press secretary, Andrew MacDougall, in a preview of Harper's speech.
"It threatens the strong, sustainable balanced growth that G20 countries have made their priority and risks bringing the world to another recession."
In other words, Harper's remarks may be much more in line with Davos tradition than those of its chairman. He will damn protectionism and over-regulation and, far from preaching a "global transformation" of capitalism, he will speak up for Canadian-style, well-regulated capitalism with sturdy "firewalls" against speculative excess.
We'll see how much appetite there is in Europe for this kind of back-to-basics finger-wagging. Harper believes the traditional model of capitalism remains the best available engine for growth and prosperity — but the Davos forum has convened around the idea that something new is required.
Here's a typically Schwabian sentence from the official program: "the necessary conceptual models do not exist from which to develop a systemic understanding of the great transformations taking place now and in the future."
Poetry, it's not. But that's the mood here now. Chairman Schwab has ruled that the usual bromides about free trade and free markets won't cut it anymore. And a closer look at Prof. Schwab's ideas suggests that, like Bank of Canada Governor Mark Carney — another Davos visitor — he does think the Occupy movement has a point.
Soft on capitalism?
"Conventional modes of decision-making have become outdated," he announces, arguing that we must now consider the young, the poor, the unemployed. He insists on "the need to integrate new non-state actors who want to have their say ... we need new models where governance processes on all levels integrate these newcomers in the most collaborative way."
Yes, it's a slog — but Schwab gets to the point eventually. We must "seriously address the social impact of globalization," he says. "Growing inequities within and between countries and rising unemployment are no longer sustainable ... We must rethink our traditional notions of economic growth and global competitiveness, not only by focusing on growth rates and market penetration, but also, equally — if not more importantly — by assessing the quality of economic growth."
Up to now, it's the quantity of economic growth that's been the holy grail at Davos! Not anymore.
Now, Schwab wonders, "How sustainable is it and at what cost to the environment? How are the gains distributed? What has become of the family and community fabric, as well as of our culture and heritage? The time has come to embrace a much more holistic, inclusive and qualitative approach to economic development."
Holistic? Culture? The environment? Prof Schwab sounds like one of those foreign "radicals" the Harper government accuses of blocking new pipelines.
Schwab even talks about — horrors! — taking the capital out of capitalism: "The success of any national and business model for competitiveness in the future will be less based on capital and much more based on talent. I define this transition as moving from capitalism to 'talentism'."
Well, maybe Prof. Schwab's lumbering prose won't set Europe on fire. But watch out: as usual, he'll be the guy welcoming German Chancellor Angela Merkel for her opening address and he'll be the one moderating the Q & A with Stephen Harper. Few men have been more closely in touch with the capitalist elite over the last four decades. If he's gone soft on capitalism, who's next?