A few observations from Davos World Economic Forum, as always, an extraordinary circus cum conference.
I spent a few days at Davos World Economic Forum (WEF) last week, as always an extraordinary circus cum conference. I spoke at quite a few sessions and moderated some too (on AI, regulation, civil society, measurement and entrepreneurship), some linked to the WEF Global Futures Council that I co-chair. Here are a few observations (for a broader analysis of the event and its relation to capitalism there’s a section in my book ‘The Locust and the Bee’).
Davos this year was overshadowed by Trump’s visit, the centrepiece of which was a fairly straight speech about America First. But the much bigger message was the accelerating decline of the US. China is steadily becoming much more dominant, not just across Asia but also in Africa, and of course in flows of finance. The US appears to have, by historical standards, little or no strategy for many parts of the world, including the Middle East, Africa and Asia. Russia has greatly expanded its influence and its constant interference in democracy is taken as a new normal (and worryingly it’s not talked about much because so many powerful figures fear themselves becoming targets); likewise Iran has been the big winner of many of the recent struggles in its region. Meanwhile Europe has bounced back to a remarkable level of confidence, the surprising result of Trump and Brexit, and the less surprising result of renewed growth, and is now planning to take much more responsibility for its own security. In short, the geopolitical landscape is radically different from at the beginning of the decade, with the tectonic plates shifting faster than most anticipated.
Davos had what can only be called a fever around Blockchain and AI. The former is incredibly fertile, attracting lot of innovators and investors, and is surrounded by a counterculture attracted by crypto ideas. But it’s still very unclear what the long-run uses of Blockchain will be. I still broadly stand by what I said a few years ago: that many of the monies will turn out to be more a substitute for gold or quasi-Ponzi schemes than genuine currencies; that the big institutions – central banks and other banks – will issue their own blockchain currencies that will probably end up more useful than bitcoin; that most of the really valuable applications of blockchain will be in other fields like law, democracy and contracts, not in finance. And that the bitcoin variants of Blockchain will in time look like a crazily inefficient and clunky way to solve problems. As the various coins have boomed over the last couple of years my judgements looked wrong. But I came away more confident that by the end of the decade they’ll look broadly right and that the various Nesta blockchain projects – on data management and democracy - are well positioned to make a valuable difference.
AI is everywhere. Here the pattern too was a mix of fertility and hype. I’m convinced of the long-term importance of AI in all its many forms, and Nesta is now heavily involved. But the genuine experts found themselves again and again having to caution rather under-informed audiences not to exaggerate what AI can do now or what it’s likely to be able to do in the next couple of decades. The ethical issues we have written about extensively were also much discussed, and to its credit the UK appears to have stepped ahead with a new centre that recognises the technology will be blocked if it can’t address valid public questions.
We’ve been pioneering the idea of anticipatory regulation for some time, both through publications and practical projects (on open banking and drones in particular). The WEF is picking up on this field and is building it into its new Center for the Fourth Industrial Revolution in San Francisco. It’s got some very smart people in it but I have a slight anxiety it will be too dominated by lawyers. It has yet to generate new ideas. But it should become an important hub for debate about how to navigate some of the crucial technologies of the next few decades.
Many think global capitalism is in a crisis: the long-term shifts of income from labour to capital; the reactions against globalisation in many countries; individual cases like Carillion; the continued interest in social impact and ESG (with Blackrock’s Larry Fink issuing another letter on why investors should take account of social and environmental effects). The Guardian even ran a headline on how the critics of capitalism dominated Davos.
Unfortunately that reading of things is almost certainly fantasy. The truth is that mainstream business feels as comfortable as it has for years. Growth has returned in every part of the world. Corporate America is doing very well from Trump, both in terms of macro results and in terms of higher pay and lower taxes for executives and weakened regulation. Very few of the structural causes of the 2007/8 crash were dealt with. But the beneficiaries don’t show much appetite for dealing with them now.
I’ve had to watch political leaders' speeches over many years and have written more than a few. This year I was struck by the poor quality of the speeches. Trump’s was dull (the audience didn’t even get the craziness they hoped for). Macron has charisma and content but his speech was twice as long as it should have been, and often rambling. May’s was listless. Merkel’s was competent but uninspiring. Trudeau came closest to a good speech but it was hardly classic. Very few of them had jokes, compelling anecdotes or memorable turns of phrase. Flowery rhetoric isn’t always a good thing. But it’s sad to see more than 2,000 years of learning about the art of rhetoric apparently forgotten.