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- [00:00]
A
The problem is now that everybody has a choice of what truth he wants to adapt for himself. And that, of course, leads to a situation of a vicious circle. You choose your truth, you want to have a reconfirmation of your truth, and so you dig a hole into which you fall more and more.
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And now the good fight with Jascha Monk. Well, this is an interesting one. A few months ago, Klaus Schwab emailed me. Schwab, of course, is the founder and former president of a World Economic Forum. He is the host of the big Global Chinwag at Davos, in which some of the most important decision makers in the world come together in one place. And he shared with me his latest book and wanted to be in conversation about it. And so I happily invited him onto the podcast to do what I've now done with over 400 different guests to have a mostly friendly but somewhat challenging conversation about the content of that work and the broader oeuvre of the guest. Well, I have to say that Professor Schwab did not seem to take very well to my line of questioning. About 20 minutes in, he said that he had a migraine and didn't want to continue the conversation. And even fo. We, of course, immediately offered multiple opportunities to his team to reschedule the conversation, saying that we would be available in the following weeks. Being told that he would be on holiday, offering many dates after he would return from holiday, we ultimately got word that, I quote, professor Schwab has decided not to resume the conversation. This is the first time that this has happened to me in the history of this podcast. So what you're about to listen to is a rather abbreviated attempt to probe some of the ideas that have guided Klaus Schwab's work. I hope you enjoy the conversation. Klaus Schwab, welcome to the podcast.
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A
Great pleasure.
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I really look forward to this conversation. You founded one of the most important organizations in the world, the World Economic Forum. That is really a meeting ground of influential people in the world. And we live in a strange time in which the political assumptions we've had about the world seem to be crumbling around us. There was a lot of talk about that at the last meeting in Davos. How do you see this moment? Do you think that the broader set of ideas and assumptions on which the World Economic Forum were founded are going to prevail through this moment? Or do you think that it's the end of a political era and many of the ideas that you've advocated for over the course of your career, we
- [03:23]
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are suddenly going through a very, I would say, dramatic period of change. And when I look back and I look at the values on which the forum was created, it was particularly the stakeholder concept, which means that business has a responsibility also for society, and it was the concept of global cooperation. I think those two values and those two principles, even in the new context of today, I call it the intelligent age, I think are more important than even before. Because if we look at the technological trends, we have a more globalizing world and not a deglobalizing world. We just need to adapt our standards, our patterns and so on to the new forms of globalization. So some people speak about re globalization, I speak about neo globalization or intelligent globalization.
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B
What is the role of democracy in this? You've spoken about trilemma that underlies how we deal with changes in the world, in which you argue that globalization is in some core ways in tension with democracy. Explain to listeners to this podcast what you mean by that. Trilemma, and which part of a trilemma should we choose? If we have to give up one of the three important values that constitute the trilemma, which should we give up?
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I think there is a dilemma, particularly also between the need to act fast and to be very flexible and adaptive. The new speed of change requires this adaptability. On the other hand, we have our very much loved democratic systems which have a tendency to function rather in a slow way. And so we have to find here a balance. The solution, I do not have a patent solution. I just would say we have to make sure. And here's Switzerland, my home country here is maybe a very important example. We have to make sure that citizens feel that they are part in determining the policies, how to confront the change we are facing.
- [06:03]
B
So that sounds very good. But I do think that there's a fundamental question in this moment where I think if we're trying to understand why it is that these populist forces are rising around the world, in the United States, in Brazil and India, but also of course, in Europe, with reform ahead in Britain and the Rasson Ro Nacional leading in polls in France and the AfD equal to first place or leading in some polls in Germany, in Switzerland, of course, the SFP being very strong. That feeling that the preferences that ordinary citizens have have been ignored by decision makers for a long time, that the demands of globalization and other things have in some way taken precedence over their preferences and priorities in the local context is, I think, one of the drivers of this. Right. So how do we deal with the evident displeasure that a lot of citizens have with the current systems in a way that preempts what seems to be the natural tendency at the moment, which is that they say, if you don't listen to us, then we vote for these people, and they're willing to blow up this order in a much more radical way than the new countenance.
- [07:12]
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I think the key which we have and which I described in my latest book, Restoring Truth and Trust, I think the key is that people feel with what's happening in the economic field, in the social field, in the political field, in the technological field, in the environmental field, I mean, there are so many factors which have to be digested at the same time, and people feel they have lost control over their destiny. Now, if we ask the question why? I think there is now this lack of common understanding of what is the truth we have, particularly with digital media, we have different interpretations of truth. So there is no common objective evaluation of developments anymore. And this leads, of course, what I describe in my book, to erosion of trust. So if you want to attack this issue, I think the first question should be, how do we make sure that we establish again a common basis of truth? And I come back again to Switzerland. I think with the referendums and with the process which we have around the world about each of the referendums, I think people are exposed to different ways to look for the truth, but at the end, they find at least some common ground. And this means that the political erosion of trust in this country at least, has not progressed as fast as it did in other countries.
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B
That's really interesting. I think it shows a particular kind of vision of what the problem is. Right. So you're saying that there's a lack of trust in our institutions and that the reason for that is that there's not a common basis of truth. And so in a way, that implies that people are wrong to mistrust institutions. Right? That it's a misperception of the world. Now, I think that one response that a lot of the voters for these movements and parties would have is to say, hang on a second. I look at the last 25 years and what do we see? We see the Great Recession brought on by bad economic management, the euro crisis brought on by a flawed structure of a single currency. I see 2015 and the refugee crisis and politicians making decisions that ignore what most people wanted. I see a global pandemic in which institutions like, say, the Centers for Disease Control in the United States, that were founded on the promise that they're going to be able to contain and respond to those kinds of pandemics in an efficient way, flailing and making poor decisions. In fact, that mistrust isn't downstream from misinformation or downstream from the inability of the media to control the narrative. It's downstream from the fact that these institutions just aren't living up to the role, that they're actually making mistakes.
- [10:33]
A
I think it's easy to criticize if we look at, let's take the pandemic. We were certainly unprepared, despite, let's say, many warnings. So we had to find out our ways. And certainly mistakes were made in this respect. So what I want to question is no government system is perfect, I think. And even if you look back your own life, if I look back my own life, I certainly can enumerate a certain number of mistakes I have made. So making mistakes belongs to decision making. The problem is now with, let's say, I come back to the social media, I come back to the polarization of societies. The problem is now that everybody has a choice of what truth he wants to adapt for himself. And that, of course, leads to a situation of a vicious circle. You choose your truth, you want to have a reconfirmation of your truth, and so you dig a hole into which you fall more and more. And this creates this tremendous polarization of society. I would not be how you describe the situation sounds to me very pessimistic. Of course we had all those setbacks. But finally, if you look, for example, at the global crisis at the end of the 2010, we suffered, but we overcame it. And in my opinion, and of course, that's the mantra which I have followed for 55 years in my life, in my opinion, what is needed are two things. It is to think more in strategic terms, which allows us to foresee such crises much more. And second, nobody alone can solve those crises. We are living inside a system which is interdependent. So dialogue among the leaders of the different knots in the system is absolutely essential. And that's what I have devoted my life to.
- [13:16]
B
Let me stay with this for just one more moment. And then I want to make sure that we talk about stakeholder capitalism and other contributions that you've made. I guess the question is, how do more moderate political parties, moderate political movements, among which I certainly count myself, try to respond to this political moment? And my concern about the frame of misinformation, disinformation, my concern about telling people that they simply haven't really understood reality, that they've been misled, is that it just feels like a strategy in which you try, with increasing irritation, to tell voters the same thing you've told them before. Joe Biden's administration in the United States insisted that the economy was great when voters felt that it wasn't great, and that's what led to Donald Trump getting reelected. I worry that if the message that people take from this conversation, from your work is that, yes, there's been some mistakes, but really, in the end, everything is fine. And in order to stem the populist rise around the world, we simply have to somehow change the media ecosystem and make sure that there's not that much misinformation and get people to see that we were right all along. That just feels tone deaf in this moment. It feels like it is likely to exacerbate the populist revolt that we're seeing rather than to stem it. Do you really think that if the next candidate for chancellor in Germany, whether it's from the Christian Democrats or the Social Democrats or the next Labour leader, whoever comes after Keir Starmer, who's likely on his way out, run in the next election and say the problem is just, but we don't have a right basis of truth, and if you're all upset, you're just being overly pessimistic about the state of our institution, as you just told me, and just content yourself with the things that are going well, do you think that has any chance of actually averting the people who intend on destroying this order and destroying any limits on responsible capitalism that I agree with you are important. Destroying the important national institutions, from NATO to the EU that I agree with you are worth preserving. Are we going to be able to stop them from winning?
- [15:41]
A
Yes. I would come back to the principal issue which we have, one of the principal issues which we have, because the road has been becoming much more determined by short term thinking and we react to crisis. For me, the question is what is the ideology or the philosophy which is behind what are the frameworks of values with which we should approach the tremendous challenges which we have in front of us? And, you know, I have been very much committed and formulated, probably as the first person, this concept of stakeholder capitalism. I take it just as one example of, let's say, taking a much more principled approach to the issues, not just to react to a specific crisis, but I think stakeholder capitalism means, as you know, that a business has to serve not only shareholders, of course, at the core, it's always the entrepreneurial activity and entrepreneurship which creates wealth, but at the same time, a Company is part of society and has to take care of societal partners. So there is a conflict just now between those two concepts, shareholder capitalism and stakeholder capitalism. I think this is wrong approach. If we look long term, we need, of course, stakeholder responsibility. At the moment people lose, for example, confidence and trust into companies because they see without companies serve particularly only the shareholders and come back to a pure shareholder dominated policy. And instead of embracing the stakeholder concept.
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So let's talk about stakeholder capitalism for a moment. The idea that, you know, companies should be responsible for something other than maximizing the profits over the short run is very appealing. It's appealing because companies might have a broader social responsibility to the environment around them. And it's appealing because, in fact there's some reason to think that that's going to serve the company's own long term interest better than trying to, you know, maximize quarterly earnings for the next call with Wall street analysts. However, the problem with the concept of stakeholder capitalism is that it is very open to interpretation of what exactly it is that companies should then be pursuing. Which stockholder is being consulted, what considerations take priority, who's making decisions about that? When you have shareholder values, it's very clear what that means, right? The metric is, is, is clear. With stakeholder value, the metric is rather less clear. What do you think companies should prioritize when they are making those decisions? You know, who should we they consult with? What are the criteria? Help us understand in slightly more concrete terms what it means for companies to actually pursue stakeholder value.
- [19:24]
A
Yeah, sure. I'm, I'm, I'm very sorry that I have to Stop. Stop. I have such a mig lane. I have difficulties to understand you and also the connection is not good. I think we have to rearrange. I'm sorry. Give me five minutes to relax so we can see whether we can continue. Otherwise we would have to. I'm sorry.
- [19:50]
B
So, as you can see, that was the rather abrupt ending of, of my conversation with Klaus Schwab. We of course gave him time to recover. After 10 or so minutes, his assistant said that he still was feeling unwell. We offered multiple opportunities for Professor Schwab to reschedule over the course of the coming weeks. His assistant said that he would be on holiday. We said we're very happy to wait until he returns from his holiday eventually. The assistant repeatedly asked us not to publish the this part of the conversation and let us know that Professor Schwab has decided that he does not wish to continue with the podcast. I have to say I'M a little bit sad about this. This is my first guest in 437 episodes of a Good Fight. To interrupt a podcast and not agree to reschedule, you can draw your own conclusions as to the motivations. I will say that particularly for an influential public figure who has just released a book called Restoring Truth and Trust, a willingness to field mildly skeptical questions should perhaps be on the list of attributes that is desirable. Thank you so much as ever to listening to this unusually short episode of the Good Fight. If you want to support what we're doing here, if you want to make sure to receive the future episodes of this podcast directly to your favorite app, Please go to writing.yashamonk.com Listen. That's writing.yashamonk.Com Listen.