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The Great Transformation 30th January 2012
The 42nd World Economic Forum in Davos has closed and the rich, powerful and famous have returned home. The theme of this year’s annual meeting was ‘The Great Transformation: Shaping New Models.’ The opening day set the scene with accusations from Sharan Burrow, General Secretary of the International Trade Union Confederation (ITUC) that widening income inequality and high unemployment, especially among young people, are an indication that the capitalist system has failed society. David Rubenstein, Co-Founder and Managing Director of the Carlyle Group, a private-equity firm offered a defence of capitalism using the old adage “Capitalism may be the worst economic system except for any of the others.” The problem, he explained is not capitalism but a lack of investment in education and failure to promote innovation and creativity. We have heard all this before but where does it leave us in the search for a new model of capitalism?
Has the Davos Economic Forum made progress with setting off a great transformation? I fear not; despite the good words and recycled arguments there was little sign of breakthrough ideas or even a willingness to acknowledge deep rooted problems with the global economy and world society. It seems to have become fashionable to talk about each of the challenges the world faces, complete the conversation and move on to the next issue. An example which illustrates the point is ‘climate change’. Already there is danger I will lose the reader at this point – “Oh no, not climate change again, we did that a few weeks ago, let’s move on”. Climate Change may not be the most severe problem we face but it is high up on the list of important and intractable problems. Following the Durban climate talks, there is now an agreement to start discussing an agreement to be finalised by 2015 to come into force by 2020. The conversation is regarded as closed and discussion moves onto more immediate urgent issues such as the financial crisis in the euro zone. There is confusion between what is ‘urgent’ and what is ‘important’.
It is time that world leaders stopped continually hopping between the issues responding to the apparent urgency of immediate crisis and use forums like Davos to focus on the really important issues and the tough choices that have to be made. The world badly needs real-world solutions and a new model for the economy and society. I argue that the new model is ‘proximization’; it is my model so it is not for me to decide if it is the best model but it is better than the alternatives. In a world of many problems and few solutions, ‘proximization’ of human society and the economy truly does offer the prospect of a great transformation.
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