Preface

In early February 2020 I sat down in Geneva to discuss this book with a colleague, when the phone rang in my office. It turned out to be what you could call an AC/BC moment, when attention shifted from the time before COVID-19 to the reality that set in after COVID-19.

Before that call, me and my colleagues had been preoccupied with the long-term challenges of the world economy, including climate change and inequality. I had reflected in depth on the global economic system built in the 75 years since the end of the Second World War, and the 50 years since the creation of the World Economic Forum. I examined the various elements of our globalized world today, including the benefits, trade-offs, and dangers. Then I considered what changes to the system were needed in the next 50 or 75 years, to make sure it would be more equitable, sustainable, and resilient for future generations.

But in one call, that long-term agenda was upended. My focus moved to the immediate crisis that was about to be faced by all of us, in every country on the planet.

On the other end of the line was the head of our Beijing representative office in China. Usually, these kinds of calls cover routine matters, providing a chance to catch up on established initiatives and programs. But this one was different. The director had called to update me on the epidemic that had hit China hard earlier that winter: COVID-19. Initially confined to the city of Wuhan, this novel coronavirus, which often causes a severe respiratory disease, was rapidly becoming a primary public health concern across the country. Our colleague explained that much of Beijing’s population had travelled beyond the city to attend Lunar New Year celebrations and, as they returned, they carried the novel coronavirus with them, causing an outbreak and subsequent lockdown in the capital.

My colleague kept his cool, providing objective facts on what the lockdown meant for our employees and operations. But from his voice, I could tell that he was very worried. His family, and everyone in his life, was affected, facing the dangers of infection and the lockdown in place. The measures taken by authorities were drastic. Employees would be forced to work from home indefinitely, only being allowed to leave their apartments under very strict conditions. If anyone showed symptoms, they’d be tested and quarantined immediately. But even with these draconian measures, it wasn’t certain that the health threat would be kept in check. The epidemic was spreading so rapidly that, even as people were locked inside, they were terrified of contracting the virus. Meanwhile, news from the hospitals was that the disease was very aggressive, hard to treat, and overwhelming the health system.

Back in Switzerland, we had known about SARS-CoV-2, the virus that causes COVID-19, since our Annual Meeting in late January 2020. It had been a topic of conversation in public health discussions, among participants from or with major operations in Asia. But until that phone conversation, I had hoped the outbreak would be limited in its duration and geographic spread, similar to how the coronaviruses SARS and MERS had been contained. I hoped it would not personally affect so many of my own colleagues, friends, and family.

During the phone call, my understanding of the global public health threat changed. In the days and weeks following, I halted the work on this book, and the World Economic Forum went into crisis mode. We set up a special task force, asked all employees to work from home, and focused all our efforts on aiding the international emergency response. It was not a moment too soon. A week later, the virus forced a lockdown in much of Europe, and a few weeks after that, much of the world was facing a similar situation, including the United States. In the following months, several million people died or were hospitalized, hundreds of millions of people lost their jobs or income, and countless businesses and governments went physically or virtually bankrupt.

As I write this preface in the fall of 2020, the global state of emergency caused by the first wave of COVID-19 has mostly receded, but a new wave of infections is putting the world once more on high alert. Countries around the world cautiously resumed social and economic life, but the economic recovery is very uneven. China was among the first major countries to end its lockdowns and reopen businesses, and is even expected to see economic growth over the full year 2020. In Geneva, New York, San Francisco, and Tokyo, our other permanent bases, by contrast, parts of public life have resumed also, but in a much more fragile way. And all around the world, many lives and livelihoods were lost; billions were spent to keep people, businesses, and governments afloat; existing social divisions deepened and new ones emerged.

By now, we have some distance from the initial crisis, and many of us—including myself—have come to realize the pandemic and its effects are deeply linked to problems we had already identified with the existing global economic system. This perspective brought me back to the discussion I had been having in February 2020 on the date of that fateful phone call from Beijing. Many of the analyses we had previously been working on were more true than ever. You will be able to read about them in this book. I will present in what follows my observations on rising inequality, slowing growth, sputtering productivity, unsustainable levels of debt, accelerating climate change, deepening societal problems, and the lack of global cooperation on some of the world’s most pressing challenges. And as I hope you will agree, these observations are as valid after COVID-19 as they were before.

However, one thing has changed in the interim period between “BC” and “AC”: there is, I notice, a greater understanding among the population, business leaders, and government that creating a better world would require working together. The idea that we need to rebuild differently post-COVID is widely shared. The sudden and all-encompassing impact of COVID-19 made us understand, much more than the gradual effects of climate change or increasing inequality, that an economic system driven by selfish and short-term interests is not sustainable. It is unbalanced, fragile, and increases the chance of societal, environmental, and public health disasters. As COVID-19 demonstrates, when disasters strike, they put an unbearable strain on public systems.

In this book, I will argue that we can’t continue with an economic system driven by selfish values, such as short-term profit maximization, the avoidance of tax and regulation, or the externalizing of environmental harm. Instead, we need a society, economy, and international community that is designed to care for all people and the entire planet. Concretely, from a system of “shareholder capitalism,” which prevailed in the West in the past 50 years, and a system of “state capitalism,” that gained prominence in Asia, and is centered on the primacy of the state, we should move to a system of “stakeholder capitalism.” That is the core message of this book. In what follows, I show how such a system can be built, and why it is so necessary to do so now.

Part I (Chapters 1 through 4) provides an overview of global economic history since 1945, both in the West and Asia. It explores the major achievements and shortcomings of the economic system we live in, including increased economic growth, and also inequality, environmental degradation, and debts for future generations. It also looks at how societal trends, such as increased political polarization, are related to the state of the economy and our governance systems. Part II (Chapters 5 through 7) digs deeper in the possible causes and consequences of our economies’ problems and progress. It looks at the role played by technological innovation, globalization, and trade, and the use of natural resources. Finally, Part III (Chapter 8 through 11) looks at possible changes to our global economic system. It provides a definition of stakeholder capitalism, and shows what it can mean in practice for businesses, governments, international organizations, and civil society.

Throughout the book, I have tried to be fair and even-handed, whether in presenting the global problems we are facing, their possible causes and consequences, and the solutions I see to create a better world going forward. But I should immediately add that the views I present here are my own, and inevitably colored by my personal life experiences. I talk about some of those formative experiences as a child, student, and young professional in the first chapter of this book. I hope they help you as a reader to understand my world view, which is based on the belief that the best outcomes in a society and economy result from cooperation, whether between the public and the private sector, or peoples and nations from around the world.

I hope this book inspires you, whoever you are, to help build such a system. By working together to build an economic system built on inclusivity, sustainability, and equality, we can change COVID-19’s legacy. While it inevitably includes death and ruined lives and livelihoods, it can perhaps help us orient ourselves toward a more resilient world. In that way, I hope the post-pandemic world could be to our generation what the post–World War II era was to my parents’ generations: a moment of unity, where the recent past is a stark reminder of a world that nobody wants, and the present and future are an...