Economic protectionism and vociferous nationalism have joined forces to win elections and widen differences
Strong winds buffeting the world over the last few years have intensified and spread, causing change and disruption
As the good and great converge in Davos for the 2019 World Economic Forum meeting—the Mecca of discussions on inclusive capitalism—responsibility towards the larger society will receive more airtime than ever before.
After all, the last time the world was at a crossroads similar to that of today, things did not work out—and objects in the rear view mirror are closer than they appear.
Strong winds buffeting the world over the last few years have intensified and spread, causing change and disruption.
The economy has recovered gradually and unevenly since the global financial crisis, leading large sections of the population feeling bitter towards globalization and affecting many national elections. Economic protectionism and vociferous nationalism have joined forces to win elections or deepen differences.
This would not have mattered long ago: When Louis XV asked merchants, “How can I help you?" their response was “Laissez-nous-Faire, Laissez-nous-passer, Le monde va de lui-meme" which translates to “Let us do what we do, let us pass unfettered. Our world runs itself." Almost three centuries later, times have changed. Capitalism’s legitimacy depends on healthy democracy and rule of law, and some business leaders have only recently realized that while moneyed interests can influence law making and regulations in the short-run, over a long arc politics always bends to the people.
The 2019 Davos agenda is timely–not just because of what has already happened, but also because of what’s coming. As a recent report by Bain & Co., Labor 2030: The Collision of Demographics, Automation and Inequality, showed, these three forces will dramatically reshape the world in 2020s. Their interplay could trigger economic disruption far greater than we saw over past 60 years, giving rise to new opportunities like a decade-plus investment boom, but also an economic climate of increasing extremes.
Closer home, the Davos 2019 theme is salient for India. The long-standing “India is decoupled" justification is unlikely to hold as we grow among top six nations by GDP. That GDP growth quantity is inevitable thanks to favourable demographics, informal labour markets, and an entrepreneurial SME ecosystem. But that GDP growth is also at-risk possibly from more capital-intensive supply, continuing skilling and employment issues, widening socio-economic divides, and continuing unmet healthcare needs. Our government has done much, but, much more lies ahead. Importantly, states have progressed on their Human Development Index indicators at different paces and this two-speed India is a good news/bad news story: It is heartening that some states have leaped forward, but the results are sobering when you overlay the laggards with where population growth is concentrated.
Globalization 4.0 has just begun. Not only is it disruptive, but we are vastly underprepared for it. The need of the hour is to design a blueprint from the ground up that can capitalize on new opportunities while prioritizing sustainability and inclusiveness more than ever before. Prof. Klaus Schwab’s introductory note for 2019 World Economic Forum meeting gets it right: “The task requires two things of the international community: wider engagement and heightened imagination". Without these, we cannot go forward; with these, we cannot fail. But intent alone is neither strategy nor leadership. Will these captains of industry, economy, and politics, among who I find myself this week in Davos, truly lead the world towards a new dawn? Will these ladies and gentlemen personify the “what got us here won’t get us there" mentality? Will we need to cast a wider net more imaginatively to find true leadership for tomorrow? Only time will tell.
Nikhil Prasad Ojha is a partner in Bain and Co.’s Mumbai office. He leads Bain’s Strategy practice in India. He is also a member of Bain’s Consumer Products practice.
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