Founder of Davos has interesting comments on capitalism

In what to me is a surprisingly under-reported story, Klaus Schwab (the founder of the annual World Economic Forum conference at Davos) says that capitalism is out of whack.

This comes from a man who embraces free markets and who for 41 years has been bringing world CEOs and political leaders together for elite brainstorming sessions.

Excerpts from the stories referenced at the bottom:

"I'm a deep believer in free markets but free markets have to serve society," he said in Davos, a ski resort tucked away deep in the Swiss Alps. He lamented excesses and "lack of inclusiveness in the capitalist system."

Other quotes: "Capitalism, in its current form, no longer fits the world around us."

"We have failed to learn the lessons from the financial crisis of 2009," he goes on. "A global transformation is urgently needed and it must start with reinstating a global sense of social responsibility."

The official program: "the necessary conceptual models do not exist from which to develop a systemic understanding of the great transformations taking place now and in the future."

As a systems thinker, this to me is encouraging, and the perfect application for System Dynamics modelling.

"Conventional modes of decision-making have become outdated," he announces, arguing that we must now consider the young, the poor, the unemployed. He insists on "the need to integrate new non-state actors who want to have their say ... we need new models where governance processes on all levels integrate these newcomers in the most collaborative way."

We must "seriously address the social impact of globalization," he says. "Growing inequities within and between countries and rising unemployment are no longer sustainable ... We must rethink our traditional notions of economic growth and global competitiveness, not only by focusing on growth rates and market penetration, but also, equally — if not more importantly — by assessing the quality of economic growth."

Again, Scwab is looking at a systems view, including longer term sustainability.

Schwab wonders, "How sustainable is it and at what cost to the environment? How are the gains distributed? What has become of the family and community fabric, as well as of our culture and heritage? The time has come to embrace a much more holistic, inclusive and qualitative approach to economic development."

And in an interesting comment:

"The success of any national and business model for competitiveness in the future will be less based on capital and much more based on talent. I define this transition as moving from capitalism to 'talentism'."

Kudos to Terry Milewski of CBC and Angela Charlton of Associated Press, and their organizations, for reporting on this important perspective from an influential business leader.

The CBC has covered it, and here is a link to the AP interview.