A Very Brief Interview with Klaus Schwab

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1:03Well this is an interesting one. A few months ago, Klaus Schwab emailed me. Schwab of course is the founder and former president of a world economic forum. He is the host of the big global chinwack at Davos in which some of the most important decision makers in the world come together in one place. And he shared with me his latest book and wanted to be in conversation about it. And so I happily invited him onto the podcast to do what I've now done with over 400 different guests to have a mostly friendly but somewhat challenging conversation about the content of that work and the broader other of the guest. Well, I have to say that professor Schwab did not seem to take very well to my line of questioning. About 20 minutes in, he said that he had a migraine and didn't want

2:11to continue the conversation. And even though we of course immediately offered a multiple opportunities to his team to reschedule the conversation, saying that we would be available in the following weeks, being told that he would be in holiday, offering many dates after he would return from holiday. We ultimately got word that I quote Professor Schwab has decided not to resume the conversation. This is the first time that this has happened to me in the history of this podcast. So what you're about to listen to is a rather abbreviated attempt to probe some of the ideas that have guided Klaus Schwab's work. I hope you enjoy the conversation. Klaus Schwab, welcome to the podcast. Great pleasure. I really look forward to this conversation.

3:13You know, you found it one of the most important organizations in the world, the world economic forum that is really a meeting ground of influential people in the world. And we live in a strange time in which the political assumptions we've had about the world seem to be crumbling around us. There was a lot of talk about that at the last meeting in Davos. How do you see this moment? Do you think that the broader set of ideas and assumptions on which the word economic forum were founded are going to prevail through this moment? Or do you think that it's the end of a political era and many of the ideas that you've advocated for over the course of your career? We are only going through a very, I would say, dramatic period of change. When I look back and I look at the values on which the forum was created, it was particularly the stakeholder concept, which means that business has a responsibility also for society,

4:15and it was a concept of global cooperation. I think so is two values and so is two principles, even in the new context of today where I call it the intelligent age. I think are more important than even before, because if we look at the technological trends, we have a more globalizing world, another de-globalizing world, which just need to adapt our standards, our patterns and so on to the new forms of globalization. So it's some people speak about the re-globalization. I speak about neo-globalization or intelligent globalization. What is the role of democracy in this? You've spoken about a dilemma that underlies how we deal with changes in the world, in which you, either the globalization, is in some core ways, intention with democracy. Explain to listeners of this podcast what you mean by that

5:22and which part of the dilemma should we choose? If we have to give up one of the three important values that constitute the dilemma, which should we give up? I think a series of the lemma particularly also between the needs to act fast and to be very flexible and adaptive. The new speed of change requires this adaptability. On the other hand, we have our very much loved democratic systems, which have a tendency to function rather in a slow way. And so we have to find here a balance. The solution, I do not have a pattern solution. I just would say we have to make sure, and here's Switzerland, my home country here, this may be a very important example. We have to make sure that citizens feel that they are

6:25parked in determining the policies how to confront the change we are facing. So that sounds very good, but I do think that there's a fundamental question in this moment, right? Where I think if we're trying to understand why it is that these populist forces are rising around the world in the United States and in Brazil and India, but also of course in Europe, with reform ahead in Britain and the Russian national leading and polls in France and the AFD equal to first place leading in some polls in Germany. In Switzerland, of course, the SAP being very strong, that feeling that the preferences that ordinary citizens have have been ignored by decision makers for a long time, that the demands of globalization and other things have in some way taken precedence over their preferences and priorities in the local context, is I think one of the drivers of this, right? So how do we deal with the evident pleasure that a lot of citizens have with the current systems in a way that preempts what seems

7:31to be the natural tendency at the moment, which is that they say if you don't listen to us, then we vote for these people and they're willing to blow up this order in a much more radical way than the new countenance. I think the key which we have and which I described in my latest book restoring a post on trust, I think the key is people feel with what's happening in the economic field, in the social field, in the political field, in the technological field, in the environment I mean, there are so many factors which have to be digested at the same time and people feel they have lost control over the destiny. Now, if we ask the question why, I think there is now this lack of common understanding of what is the tools. We have, particularly with digital media, we have different interpretations of tools, so there is no common objective evaluation of

8:34developments anymore. And this leads, of course, what I described in my book to erosion of trust. So if we want to attack this issue, I think the first question should be how do we make sure that we establish again a common basis of tools. And I come back again to Switzerland, I think with the referendum that we see with the process which we have around the world about each of the referendums, I think people are exposed to different ways to look for the tools, but at the end they find at least some common ground. And this means that the political erosion of trust in this country at least is not progressed as fast as it did in other countries. This really interesting, I think it shows a particular kind of vision of what the problem is,

9:36right? So you're saying that there's a lack of trust in our institutions and that the reason for that is that there's not a common basis of truth. And so in a way that implies that people are wrong to mistrust institutions, right? That it's a misperception of a world. Now I think that one response that a lot of voters for these movements and parties would have is to say, hang on a second, I look at the last 25 years, and what do we see? We see the great recession brought on by bad economic management. The Euro crisis brought on by a flawed structure of a single currency. I see 2015 and the refugee crisis and politicians making decisions that ignore what most people wanted. I see a global pandemic in which institutions like Save a Centres for Disease Control in the United States that were founded on the promise that they're going to be able to contain and respond

10:41to those kinds of pandemics in an efficient way, flailing and making poor decisions. In fact, that mistrust isn't downstream for misinformation or downstream from the inability of the media to control the narrative. It's downstream from the fact that these institutions just aren't living up to the role that they're actually making mistakes. I think it's easy to criticize if we look up to, let's take the pandemic, we were certainly unprepared despite, let's say, many warnings. So we had to find out our ways, and certainly mistakes were made in this respect. So what I want to question is, no government system is perfect, I think, and even if you look back your own life, if I look back my own life, I certainly can enumerate

11:43to certain numbers or a certain number of mistakes I have made. So we're making mistakes belongs to decision making. The problem is now with, let's say, I come back to the social media, I come back to the polarization of societies. The problem is now that everybody has a choice of what tools he wants to adapt for himself. And so, of course, leads to a situation of a vicious circle. You choose your tools, you want to have a reconformation of your tools, and so you dig a hole into which you form more and more, and this creates this tremendous polarization of society. I would not be how you describe the situation, sounds to be very pessimistic. Of course, we had also setbacks, but finally, if you look, for example,

12:50the global crisis at the end of the 2010s, we suffered, but we all became it. And in my opinion, if, and of course, that's the mantra which I have followed for 55 years in my life, in my opinion, what is needed are two seconds. It is to think more in strategic terms, which allows us to foresee such crisis much more. And second, nobody alone can solve those crisis. We are living in the system inside the system, which is interdependent. So dialogue among the leaders of the different nots in the system is absolutely essential. And that's what I have to vote in my life too. Let me say with this for just one more moment, when I want to make sure that we talk about stakeholder capitalism and other contributions that you've made. You know, I guess the question is,

13:57how do more moderate political parties and moderate political movements, among which I certainly count myself, try to respond to this political moment. And my concern about the frame of misinformation, disinformation, my concern about telling people that they simply haven't really understood reality that they've been misled is that it just feels like a strategy in which you try with increasing irritation to tell voters the same thing you've told them before. You know, Joe Biden's administration in the United States insisted that the economy was great when voters felt that it wasn't great. And that's what led to Donald Trump getting reelected. I worry that if the message that people take from this conversation, from your work is that, you know, yes, there's been some mistakes, but really in the end, everything is fine. And you know, in order to stem the populist rise

14:57around for world, we simply have to somehow change the media ecosystem and, you know, make sure that there's not that much misinformation and get people to see that we were right hold along. That just feels tone-deaf in this moment. It feels like it is likely to exacerbate the populist revolt that we're seeing rather than to stem it. Do you really think that, you know, if the next candidate for chancellor in Germany, whether it's from the Christian Democrats, it was hopefully Democrats, or the next Labour leader, whoever comes after Kirstama, who's likely on his way out, run him in next election and say, the problem is just that we don't have a right basis of truth. And if you're all upset, you know, you're just being overly pessimistic about the state of our institution as you just told me. And, you know, just content yourself with the things that are going well, do you think that has any chance of actually averting the people who intend to destroy this order and destroying any limits on responsible capitalism that I

15:58agree with you are important, destroying the important national institutions from NATO to the EU, that I agree with you are worth preserving. Are we going to be able to stop them from winning? Yes, I would come back to the principle issue, which we have, one of the principle issues which we have, because the world has become much more determined by short term thinking. And we react to crisis. For me, the question is, what is the ideology or the philosophy which is behind? What are, what are the frameworks of values with which we should approach the tremendous challenges which we have in front of us? And you know, I have been very much committed and formulated probably as the first person, this concept of stakeholder capitalism.

17:02I take it just as one example of, let's say, taking a much more principled approach to the issues of not just to react to specific crisis. I think stakeholder capitalism means, as you know, that a business has to serve not only shareholders, of course, at the core is always the entrepreneurial activity and entrepreneurship, which creates wealth. But at the same time, a company is part of society and has to take care of societal partners. So there is a conflict just now between those two concepts, shareholder capitalism, stakeholder capitalism. I think this is a wrong approach. If we look long term, we need, of course, stakeholder responsibility. At the moment,

18:12at the moment, people lose, for example, confidence and trust into companies, because they see most of companies serve particularly only the shareholders and come back to a pure of a shareholder-dominated policy, and instead of embracing the stakeholder concept. So let's talk about stakeholder capitalism for a moment. You know, the idea that, you know, companies should be responsible for something other than maximizing the profits of the short run is very appealing. It's appealing because companies that have a broader social responsibility to be environment around them. And it's appealing because, in fact, there's some reason to think that that's going to serve the company's own long-term interests better than trying to maximize quarterly earnings for the next call of Wall Street analysts. However, the problem with the concept of stakeholder capitalism is that, you know, it is very open

19:15to interpretation of what exactly it is that companies should then be pursuing, right? With stockholder is being consulted. What considerations take priority? Who's making decisions about that? When you have shareholder values, it's very clear what that means, right? The metric is clear. With stakeholder value, the metric is rather less clear. What do you think companies should prioritize? When they are making those decisions, you know, who should they consult with? What are the criteria? Help us understand slightly more concrete terms. What it means for companies to actually pursue stakeholder value? Yes, I'm very sorry that I have to stop. I have such a make a lane. I have difficulties to understand you and also the connection is not good. I think we have to rearrange. I'm sorry. I give you five minutes to relax so we can see whether we can continue otherwise we're going to have to. I'm sorry.

20:20So as you can see, that was rather a abrupt ending of my conversation with Klaus Schwab. We, of course, gave him time to recover after 10 or so minutes. His assistant said that he still was feeling unwell. We offered multiple opportunities for Professor Schwab to reschedule over the course of the coming weeks. His assistant said that he would be in holiday. We said we're very happy to wait until he returns from his holiday. Eventually, the assistant repeatedly asked us not to publish this part of the conversation and let us know that Professor Schwab has decided that he does not wish to continue with the podcast. I have to say I'm a little bit sad about this. This is my first guest in 437 episodes of Forget Fight to interrupt a podcast and not agree to reschedule. You can draw your own conclusions as to the motivations. I will say that particularly for an influential

21:20public figure who has just released a book called Restoring Truth and Trust, a willingness to field mildly skeptical questions should perhaps be on the list of attributes that is desirable. Thank you so much as ever to listening to this unusually short episode of Forget Fight. If you want to support what we're doing here, if you want to make sure to receive future episodes of this podcast directly to your favorite app, please go to writing dot your shamanck.com slash let's write in dot your shamanck dot com slash let's tires matter they're the only part of your vehicle that touches the road tread confidently

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