Commentary | Trade and Globalization

Partying in Davos


Opinion pieces and speeches by EPI staff and associates.


Partying at Davos


By  Jeff Faux 
The world’s rich and powerful are heading this week to their annual meeting in the plush mountain resort of Davos, Switzerland. Hosted by the great global corporations (Citigroup, Siemans, Microsoft, Nestles, etc.), some 2000 CEO’s, prominent politicians, pundits and international bureaucrats will network over great food, fine wine, good skiing and cozy evenings by the fire contemplating the world’s future.

This is not a secret cabal; journalists will issue daily reports to the rest of us on the wit and informal charm of our financial betters. Rather it is like the political convention of those who manage the global economy. Call it the Party of Davos.

All markets are systems of rules that determine what sort of people are winners and what sort are losers. Politics is largely conflict among the different sorts – or classes – over who gets what. In stable societies, a social contract provides for enough wealth to trickle down to keep the lower orders from rebelling. Thus, in the 1950s, when Dwight Eisenhower’s secretary of defense said that what was good for General Motors was good for America, most Americans – including the United Auto Workers – agreed. Within the boundaries of the US economy, capital and labor needed each other.

But as corporations went global, the mutual dependence weakened. And in the absence of global democracy, their owners and top managers seized the opportunity to set the new rules without social constraints. The first head of the World Trade Organization called these new rules a “constitution for the global economy.” It’s a constitution that protects just one world citizen – the corporate investor. It prohibits effective protections for the workers, consumers and the environment.

In America, as in most places, the party of Davos is bipartisan. It includes Bill Clinton and Dick Cheney, Robert Rubin and Don Rumsfeld, Madeleine Albright and Condoleezza Rice. (George Bush is also a member, but he doesn’t like to travel). John Kerry is quoted as having called himself a “Davos” man.

Indeed, without reference to economic class it is impossible to explain why Democratic elites championed NAFTA, the WTO and the other instruments of corporate protectionism, which traded away the interests of its blue-collar industrial base in favor of the GOP constituencies in Wall Street and red-state agri-business. Nor is it possible to explain why Washington is indifferent to a relentlessly rising trade deficit, and the resulting foreign debt that has put the country’s future in the hands of the central bank of China, while the Pentagon simulates war games with China as the enemy.

The media language we use to talk to each other about globalization hides its class structure. The press consistently talks about national “interest” without defining who exactly is getting what. Thus, American workers are told that the “Chinese” are taking their jobs. But the China threat is in fact another global business partnership – this one between commissars who supply the cheap labor and the United States and other foreign capitalists who supply the technology and two-thirds of the capital used to finance China’s exports. The rest of the world calls this “neo-liberalism,” a term unknown among America’s media “internationalists.”

The politics of the global marketplace are a one- party system. The opposition to Davos is unorganized globally. What might be called the Party of Porto Alegre – the NGOs who meet at the same time in Brazil – is politically marginal. The trade union movement’s effort to organize the workers of the world is at best at a very early stage.

Still, there may be some bad new ahead for Davos. After a quarter of a century, the world is beginning to resist policies that have shifted wealth and power away from people who work for a living to those who invest. Scarcely a day goes by without a major riot somewhere in China, Indonesia and elsewhere in Asia. In South America, anti-neoliberal parties have come to power in Brazil, Bolivia, Venezuela, and Argentina – and already have slowed down the effort to extend NAFTA to the rest of the hemisphere. Very close to home, a leftist candidate is leading in the campaign for Mexico’s next president.

But perhaps more important, Davos’ chief champion – the U.S. governing class – is in trouble. The opposition to the War in Iraq has demonstrated the limits of America’s willingness to send its children to die in order to force the world’s cultures into one vast shopping mall. And the looming crisis of America’s foreign debt will cramp the ability of our elites to use the countries’ economic power to support their global corporate backers. The erosion of the American social contract – already being reflected in stagnant wages, financial insecurity and collapsing health care system – could soon force the governing class to pay more attention to Bloomington, Illinois than to Baghdad, Iraq.

Globalization will not go away. Improvements in communications and transportation will continue to make the world smaller for as far into the future as we can see. Nor will economic classes soon disappear. The question is, as always, who sets the rules and in whose interests? So although the parties at Davos may not be over, the rest of the world seems less willing to pay for them.

Jeff Faux is a distinguished fellow and the founder and former president of the Economic Policy Institute in Washington, D.C.


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