Business is the enterprise that keeps society humming with jobs, value creation and driving progress by bringing together people from all walks of life who have the drive and the influence to make positive change.
The World Economic Forum (WEF’17) that concluded last week in Davos, Switzerland engages the foremost political, business and other leaders of society to shape global, regional and industry agendas.
Global leaders had pressing concerns on the state of Globalization and the recent effects of anti-globalization narrative coming out from various nations.
While globalization started out with all the right intents i.e.
1) world-wide cross-cultural understanding
2) beneficial exchange of products and ideas
3) driving down cost of living with access to economically manufactured products/services
Some of the negative and unintended effects have been
1) unfavorable environmental impact
2) developing countries did not benefit equally
3) wealth distribution became increasingly lopsided.
At the start of WEF’17, Oxfam International published a headline grabbing article that read
“Just 8 billionaires own the same wealth as the poorest 3.6 billion people on the planet”.
While the headline is shocking, it captures the anguish of those without productive jobs - who have showed their displeasure at the effects of globalization by wanting to get out of the common market construct. Nationalist fervor has given rise to right wing politics and leaders who caught on this angst have led their people’s to promoting an anti-globalization agenda. Case in point, the Brexit referendum the recent win of Donald Trump who rode on a wave of working class voter anxiety for an anti-immigrant / pro nationalistic vote.
Leaders from IMF and business have voiced their concerns on the anti-incumbency rhetoric. They’ve proposed to address this through an Economic policy development that includes the national constituency and addresses their needs for jobs. The global leaders are yet to figure out the right policy instruments to include the masses as some business leaders consider lower profitability growth with a view to address the social exclusion.
There are some who argue – understandably though – that globalization is not the villain as it has been made out to be.
"Most of the problems troubling the worlds are not caused by economic globalization"
Xi Jinping - President of the Peoples Republic of China
In his address at the WEF, Xi championed the cause of economic globalization, while insisting that despite the recent Anglo-Saxon political backlash, globalization is the engine to drive people’s lives for the better.
While USA and UK led the globalization narrative 3 decades ago – it is clear the need and balance has shifted eastwards and China came looking out as the new champion of globalization.
The increasing spheres of Influence
One of the feelings through the forum was the shift in the Influence of global powers. From the days of the cold war – when the world saw the effects of a bi-polar world – the business and socio-political environment has now shifted towards a multipolar world.
At this stage power divided between the Americas, Europe as a common grouping – though looking increasingly fragile and constituents in the Asian continent. This will surely lead to an increased power and influence tussle with impact on trade and people movement.
How could this change the world?
While the concerns are legit, the shape of the new world order will depend on the decisions that these leaders influence. The people are clamoring for change, for a world where opportunity to a decent standard of life is available – vs existing conditions with increasing income disparity between the haves and have nots.
The nationalist movement is focusing on change to Localization vs. Globalization. Right wing movements are gaining support across European nations – motivated by the Brexit vote which is likely to have a domino effect on the series of expected exits from the single market union.
“There are 3.6 billion people around the world aspiring to better income, to food on the table twice a day, once a day. To say that globalization is bad because it destroys jobs is a very short cut for something that needs far more analytical work and understanding.” IMF chief Christine Lagarde said.
Almost all leaders agreed to consider a reform to globalization, and consider economic policies that would favor local jobs creation and stem the discontent.
What would be those policies?
These leaders will likely influence policies to bring change and tweak the economy engine. Ideas thrown up at various discussion forums ranged from
a) retraining people to ensure the populace is trained to take up the new jobs
b) spread the message of future impact and management through public private endeavors
c) reform tax systems and drive digital payments to boost local economies
d) radical thoughts like introducing a universal basic income.
The Compact for Responsive and Responsible Leadership
A Roadmap for Sustainable Long-Term Growth and Opportunity
The forum ended on a positive note for action, wherein some 100 leading businesses signed the Compact for Responsive and Responsible Leadership. A few of the elements from this pact are;
a) Society is best served by corporations that have aligned their goals to serve the long-term goals of society.
b) Short-term financial gains should not distract from the corporate and societal goals of long-term economic prosperity and social welfare.
c) Ensure the board oversees the definition and implementation of corporate strategies that pursue sustainable long-term value creation.
d) Publicly support the adoption of the Compact and implement policies and practices within my organization that drive transformation towards the adherence to long-term strategies and sustainable growth for the benefit of all stakeholders.
Corporations and business leaders are powerful actors in society. As such, their responsive and responsible leadership can significantly improve the state of the world. Governments are eager to work alongwith business sector leaders to create a partnership framework with a focus on the long-term goals of society.