World government illustrated: The World Economic Forum

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Already at the second meeting in Davos in 1972, the first head of government took part: Luxembourg’s President Pierre Werner presented his “Werner Plan” for a European monetary union. The world-famous rocket scientist Wernher von Braun also made an appearance. The EU Commission took over the patronage of the meeting and also of that of the following year. It was chaired by the Prince Bernhard of the Netherlands, a former member of the Nazi Party and the Reiter SS, who resigned from all public office a few years later because of his involvement in the Lockheed bribery scandal.

Prince Bernhard was chairman of the Bilderberg Conference, a long-secret forum for transatlantic exchange among political and business elites, from 1954 until his inglorious departure. Schwab was at times a member of the steering committee of the Bilderberg conferences.

As early as 1975, the World Economic Forum concluded the first official cooperation agreement with a UN organization, the United Nations Industrial Development Organization (UNIDO), which had the task of fostering the industrial development of developing countries. This agreement was the nucleus for the integration of governments into the Davos agenda. This agenda was pursued so successfully that today almost all important heads of government make a pilgrimage to Davos once a year to pay their respects to representatives of the largest international corporations.

Beauty contest in front of a jury of investors

Wisely, the forum initially directed its invitations to the weakest members of the international community. Under the UNIDO agreement, starting in 1976, government officials of poor countries were invited to come to Davos with their delegations and explain to the assembled corporate managers why it would be worthwhile to invest in their countries – and what they were willing to do to make it happen.

The OECD, a high-profile, but informal club of industrialized countries, became a paying member of the World Economic Forum in the following year, 1977.

In 1997, when political scientist Samuel Huntington coined the term “Davos Man” to describe a global elite that “has little need for national loyalty, views national borders as obstacles, and sees national governments as residues from the past whose only useful function is to facilitate the elite’s global operations,” the British Economist countered with an editorial that the Forum proudly reproduced in its 40th anniversary commemorative publication.

the article, entitled “In Praise of Davos Man,” discussed the ways in which capital wields power over governments:

“It is not every day that 1000 people who rule the world gather under one roof. But every year, 1000 people who think they rule the world gather in Davos, for the annual meeting of a foundation known as the World Economic Forum. (…) Samuel Huntington, an American academic, has put Davos at the center of a discussion about civilization and its future. He has attacked the Davos man. And whether he is self-important or not, the Davos Man must be defended. Although some 40 heads of state are flocking to Davos this weekend, the event is paid for by corporations and run in their interests. They don’t go there to butter up the politicians, it’s the other way around. “

1997 was also the year in which the Forum decided to add to its logo the slogan “Committed to improving the state of the world.” In the spirit of the Economist‘s  defense speech, one is inclined to add “.. for international capital”, to complete the slogan.

The vast potential of a beauty contest of nations before a jury of investment-minded but skeptical global capital did not escape Schwab. In 1979, the World Economic Forum published its “Global Competitiveness Report” for the first time. Every year, with few exceptions, the Forum ranks nations by their attractiveness to international investors.

In addition to some official statistics, the basis of the ranking is how satisfied managers are with the conditions in the country, according to the Forum’s surveys. What it supposedly means when a nation scores high on this index is explained by the Forum in its 2019 Competitiveness Report:

“The Competitiveness Index measures the factors that drive long-term growth and prosperity. It provides unbiased information that allows public and private sector leaders to better understand the key drivers of growth.”

However, the Forum’s index has never served as a predictive tool for long-term growth. China and India, which ranked far down in the competitiveness index in 2012, have since far exceeded the growth rates of countries that had much higher growth potential according to the index, such as Switzerland, the USA and Germany.

A closer look at the methodology reveals that the index measures something quite different and is also anything but objective and impartial. It is made up of sub-indices that measure, for example, the quality of the legal system and the extent of labor market regulation from the perspective of capital, or the level of taxes.

According to the Forum, these factors influence growth indirectly by impacting on the returns on investment, “which are the fundamental drivers of growth.” Thus, the profit interest of companies supposedly coincides completely with the goal of increasing growth. Anything that increases the profits of internationally mobile corporations and financial investors is good for competitiveness and thereby drives growth. Accordingly, a high index value indicates that corporations that are active in this country have little to bother with onerous regulations and can generate a high return, with very little of it going to employees and the tax office.

This interpretation is supported by the pronounced overlap of the top rankings with the shadow financial index of the Tax Justice Network organization. In this index, Switzerland, for many years also a leader in the competitiveness ranking, is routinely on top, with very “competitive” countries such as the USA, Singapore, Luxembourg, Germany and the Netherlands not far behind. Shadow financial centers provide the necessary infrastructure for companies to circumvent tax laws and transparency rules. The most significant shadow financial centers are also the most “competitive” countries. (…)

In the World Economic Forum’s view, the index is doing an excellent job of pushing governments toward pro-capital policies. “The report has become an irreplaceable tool that many governments use to identify their reform priorities,” the Forum’s anniversary brochure says. The prominent and uncritical media coverage that the ranking routinely gets, supports this assessment. (…)

Exclusive club of big business
In the beginning, Schwab was happy to welcome any company that wanted to come to Davos in exchange for paying the entrance fee. But as early as 1977, in order to emphasize the “intimate and exclusive atmosphere of the Forum,” he introduced a special status for companies whose managers attended regularly. Initially there were 71 companies, and by 1980 there were already 300, increasingly from outside Europe as well. For this reason, the “European Management Forum” was renamed the “World Economic Forum” in 1987. In 1994, the number of members reached the thousand mark. Schwab turned it into a cap “to maintain exclusivity.” There was to be no more members.
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The institution for public-private partnership

As its influence and membership grew, the Forum intensified its lobbying activities for big business. The World Economic Forum calls itself “the institution for public-private partnership.” It signed a number of agreements with UN organizations. At the core of most of these agreements is a commitment by the cash-strapped UN agencies to use the expertise and active support of “the private sector” in their own activities, and to do so in an (economically) sustainable manner, i.e. in such a way that private profits are made in the process. In return, corporations are expected to co-finance the projects.

To ensure that the interests of the major corporations can be effectively represented vis-à-vis the UN and global regulatory bodies, the Forum has been organizing sector-specific special clubs since the 1980s. In these clubs, the largest companies in the financial sector or the automotive industry can agree on their interests and strategies and get a forum in Davos to promote these interests vis-a-vis governments and regulators. On the early days of this arrangement in 1985, the Forum’s anniversary publication states:

“At that year’s European Management Symposium, the CEOs of the leading companies in the telecommunications and IT industries held separate meetings with relevant ministers and regulators. It was the Forum’s first industry-specific event and the beginning of an evolution that eventually led to the establishment of the Governors’ Meetings and Industry Partnerships.”

By 1991, they expanded this successful format to include industries particularly dependent on government protection, aid, and regulation, including aerospace, automotive, energy, construction, finance, agriculture, health care, IT, media, and textiles.

Academics, policymakers and other experts on specific topics were included. These initial 300 “Forum Fellows” acted as permanent advisors and participants in Forum activities on topics relevant to the various industries. The Forum Fellows later became today’s Global Agenda Councils, or “world agenda councils,” a term that attests to the Forum’s global agenda. According to the Forum, membership in the Global Agenda Councils is not remunerated.

As a good partner to governments, the Forum structured the program of its 2005 annual meeting for the first time so that it could “provide targeted support to the United Kingdom, which had assumed the presidency of the G8 group of industrialized nations and would hold the EU presidency in the second half of the year.” In subsequent years, the Forum continued its successful approach of working closely with each G8 or G20 host government to shape the Davos program. According to the Forum’s account, this serves to ensure that input from interested groups and sectors of big business can be reflected in the work program that the respective government draws up for the G7, G8 or G20.

The guiding influence of the World Economic Forum on the rotating presidency of the G-groups of governments have become so great that Washington apparently wanted to make sure that Chinese, Russian or Indian interests did not compete with American interests. In 2005 the World Economic Forum founded an offshoot in the USA, the “World Economic Forum USA Inc. It formed the global headquarters of the Centre for Global Industries, which was entrusted with the design and implementation of the industry partnerships. The U.S. branch of the Forum was established as a legally independent entity, with its own board and staff, independent of the Forum. This ensured that the U.S. would retain control over the important industry partnerships.

Note: This is a provisional translation from German. Quotes are retranslations of the original quotes.

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