The road from Davos to serfdom.
The road from Davos to serfdom.
I should start by confessing that when I first came across the Great Reset (henceforward TGR) on the internet, I guessed it must be a simple, old-fashioned, low-level con, the sort that ends up in courts where tearful pensioners lament the theft of their savings and a slick grifter faces five years as a government guest. Watching the video introducing TGR, however, I couldn’t quite work out how the trick would be pulled.
“You’ll own nothing,” said the soothing voice-over (well, that was honest enough), “and you’ll be happy” (more dubious but also the kind of shrewd promise that might not be actionable at law). Still, where would the pitch go next?
“Whatever you want you’ll rent, and it’ll be delivered by drone,” the video went on smoothly. Odder and odder. Was this some kind of reverse-mortgage scam, run maybe by techno-hackers exploiting the AirBnB system? It appeared not, for there then followed a series of video clips showing scientific and technical advances leading to a Wellsian sci-fi utopia where “you” would be having artificial-organ transplants in the morning and traveling in space to find aliens in the afternoon.
And then gradually the mental fog started to lift. I remembered an old friend from the financial-services industry quoting a Wall Street quip to me: “It’s much easier to peddle high-class junk than low-class junk.” Yes, it was a scam all right, but a high-class scam, the Big Con that grifters dream about, and the best thing was that, as Michael Kinsley once noted about Washington scandals, it was all perfectly legal, maybe even compulsory.
In everyday terms, the video was an advertisement for that spring’s World Economic Forum in Davos, Switzerland, and it was advertising what reforms the Forum would likely decide and how successful they would be in transforming the world. Nor is “world” an exaggeration.
While the video summarized the Great Reset in a few examples, giving mainly a flavor of the ideology that inspired it, the full website of the World Economic Forum applies TGR’s reforming zeal both to almost all major national and global economic and political institutions and to almost anything else that catches its attention along the way.
That second objective is helped along by inviting eminent people from business, government, and the arts to Davos, asking them to suggest their favorite social improvements and, where possible, incorporating their suggestions in its overall proposals for global governance. Coincidentally, this also serves as a useful method of recruiting “the great and the good” to the wider cause.
Does the wider cause of TGR reflect the interests and opinions of people at the top of, well, more or less everything? With certain qualifications, noted below, the answer is that it does. But then it always did.
From the 1970s onwards, Klaus Schwab, the brains behind TRG and the engineer-economist who heads the World Economic Forum, made the principles that inspire TGR the mission of Davos and laid them down in a manifesto. The two most important principles, at least for my purposes here, are “stakeholder capitalism” and “environmental, social, and governance” (or ESG) goals for investing.
Neither is quite what it seems. Stakeholder capitalism would in principle transfer power from the owners of a corporation — namely, its shareholders — to an arbitrary group of stakeholders: its managers, its workers, its unions, its customers, its suppliers, the local community, or some more remote representative of “the public interest.” In practice, however, it would transfer power from the shareholders to corporate managers.
You have only to ask yourself: Who would choose the stakeholders? Or draw up the agenda of their meetings? Or proclaim the “values” of the corporation? Or set the levels of wages, salaries, corporate charitable contributions, and, ahem, dividends.
The story is the same with ESG. In theory, it merely wants companies to act responsibly as well as make profits. Well, who could object to that? In practice it encourages, indeed increasingly requires, that investments be made in response not to profitability and price signals in the capital markets but to the political views and cultural tastes of fund managers, bank officials, and regulators.
This social vision goes a good deal further back than the 1970s, moreover. It’s the second coming of James Burnham’s The Managerial Revolution (1940), which forecast that shareholder capitalism was dying — to be replaced, however, not by a workers’ revolution but by the rule of managers across government and the economy.
In this vision, whether companies were state-owned or privately-owned would be a secondary matter. Capital allocation and management decisions would be socialized anyway but in the interests of the management class rather than in those of “society.”
There are a lot of problems with this vision, starting with straightforward economic ones. It removes both the stimulus (profit) and the discipline (bankruptcy) that together drive the most productive use of capital and corporate efficiency. Without those twin goads, mistaken policies live on almost indefinitely. Economies become increasingly clogged up with restrictive practices, rent-seeking, excessive regulation, undue executive compensation, cronyism both capitalist and statist, and the misallocation of capital. All of which, especially the last, means that there is a lower “residue” of profits to finance dividend payments, new enterprises, scientific innovation, and, above all, the incomes of savers and pensioners.
That was the kind of cozy corporate stakeholder capitalism that, inter alia, produced the stagflation of the 1970s from which we were rescued by the innovative profit-driven shareholder capitalism of the 1980s that gave birth to the information revolution, the new economy, and many of the scientific and technical advances that the TGR video promises as its future benefits.
A recent example of the risks of such TRG oversight is the advice given by Mark Carney, formerly governor of the Bank of England and now a worldwide adviser on climate change to governments and major corporations. Carney warned that investment managers might one day be held financially responsible for investments gone wrong because they had underestimated the market failure of fossil fuels. Since he gave that stern advice, however, EU and government policies rooted in the same arguments have produced an energy shortage that has enabled fossil-fuel companies to outperform the market so strongly that governments are now demanding they pay additional taxes on, er, “windfall profits.”
No word on whether Carney is writing checks to investors and investment banks he frightened away from fossil-fuel investments. Just: “Oh well, back to the drawing board.”
But Schwab and the TRG vision go well beyond merely reforming corporate structures and ESG investing, as readers of Andrew Stuttaford’s Capital Matters well know. They also advocate that “stakeholders should work with other stakeholders to improve the state of the world in which they are operating. In fact this latter proviso should be their ultimate purpose.” (My italics)
But when that happens (and it’s starting to), we transform corporations from economic actors seeking to make profits by manufacturing goods or providing services into an entirely new kind of organization — a blend of political party, charitable foundation, and economic enterprise. It’s hard to think of an accurate comparison, but the East India Company probably comes nearest.
The managers controlling the operations of such a behemoth would in effect be levying taxes on the shareholders when they divert profits from dividends and corporate refinancing into achieving whatever political or other projects designed to “improve the state of the world” they (or their corporate wives) happened to favor. There’s a “democracy problem” there as well as an economic one. The managers were not elected by — nor are they accountable to — the voters who in democracies choose governments to determine how to improve the world and, more important, how not to.
Government ministers, congressmen, and MPs are, admittedly, among the great and good whom TGR recruits to help shape and advance its vision. As the Biden administration is showing in its relations with Big Tech, however, governments are often happy to have private corporations impose and finance the policies (such as censoring their rivals) that they are nervous of embracing openly. Besides, elected officials are a minority in a mix that brings together civil servants, quango heads, government bureaucrats, international-agency heads, corporate CEOs, regulatory officials, and managers of every kind. TGR promotional language seems to prefer terms such as “policy-makers” for all of these, perhaps because they elide the vital distinction between those who are elected and accountable and those who aren’t.
The new, improved world that TGR promises, therefore, is likely to be one in which the already powerful are given greater powers, more resources, and less oversight than in our present world. Some will object that the video affirms that the “checks and balances that underpin our democracies must not be forgotten.” Aside from its phrasing, which plainly signals an afterthought, one suspects that the checks and balances in question are the TGR crowd itself. They are those Davos men and women who administer both the administrative state and private corporations — each of which has captured the other in a monogamous relationship that excludes competitors — together with those NGOs designated by governments and the United Nations as “international civil society.” The Davos people within undeniably political institutions like the UN, the EU, and governments have invented this term to refer to NGOs when they feel a need to be seemingly accountable to a reliably sympathetic electorate.
And what are the “improvements” they are likely to bring to an unsuspecting world? As it happens, that and other key questions are answered in scintillating and learned detail in a superb new book, Against the Great Reset: Eighteen Theses Contra the New World Order, edited and introduced by Michael Walsh (Bombardier Books). Journalistic full disclosure compels me to say that I played a small part in discussions on this project but, alas, had to withdraw early to meet other work obligations. The silver lining to that withdrawal is that instead of having had to read vigilantly for typos and misplaced commas, I am relaxed and thoroughly enjoying the finished brilliant essays by the extraordinarily varied talents of the group of 18 writers assembled by Michael.
Some will be familiar to NRO readers — Victor Davis Hanson, Douglas Murray, Roger Kimball, Conrad Black. Others will be equally recognizable — Michael Anton, David P. Goldman, and the late Angelo Codevilla (to whom the book is dedicated). Others have established reputations either outside America or outside the political Right — Alberto Mingardi from Milan’s Institute Bruno Leoni, Salvatore Babones from Sydney University and Quadrant magazine, Martin Hutchinson of the Bear’s Lair market-watching website. And to those who claim that Davos Man is too immured in solemn self-regard to be wounded by mockery — the satirist Harry Stein succeeds gloriously in undermining them, and Janice Fiamengo, Canada’s “unacceptable” skeptical feminist, does the same for Davos Woman. Between them these writers demolish the pretensions, the arguments, and the “visions” of the Great Reset. And as with Orwell’s 1984, their book’s important truths and criticisms are delivered with both intellectual power and great readability.
To be fair, however, the TGR’s own video is also informative on the future it offers “you.”
“We’ll have to do a better job of welcoming and integrating refugees,” it admonishes sternly. That would be nice, of course, as would having laws to enable the deportation of fraudulent refugees with criminal records. The polls suggest the voters would like that. But I doubt it’s on TGR’s agenda. Still, at least “we’ll” all be doing this together.
Not for long, however. Soon we’re back to “you” again:
“You’ll eat much less meat. An occasional treat, not a staple. For the good of the environment and our health.”
Oh, dear. Then I recall with relief that in TGR’s future world I would be “preparing to travel in space.” And, frankly, having read Against the Great Reset, I think I’d take Klaus Schwab up on the offer.