Today we are having lunch with a prime minister. Well, not really, but Klaus Schwab, 61, wields that kind of power. As president of the Geneva-based World Economic Forum (WEF), he brings together once a year 1,000 chairmen and chief executives of the foremost global companies with another 1,000 world leaders, scientists and journalists. It's a hot ticket in a cold place--Davos, Switzerland. And quite a concentration of power.
Schwab explains the purpose of this get-together: "I recognized that neither business alone nor government alone can accomplish as much." Put these two power centers together, though, and they can accomplish a lot.
In 1982 the forum was a catalyst for the Uruguay Round of trade liberalization talks that ultimately led to the creation of the World Trade Organization. In 1988 Schwab's behind-the-scenes machinations got Greece and Turkey to agree to stop bickering. In 1990 the forum accelerated German unification by bringing together the heads of East and West Germany. In 1992 Schwab brought Nelson Mandela and F.W. de Klerk together for their first meeting outside of South Africa. In 1994 Schwab's forum witnessed the Palestine Liberation Organization's Yasir Arafat and the Israeli foreign minister Shimon Peres holding hands--in a manner of speaking.
And that's not including all the mergers that were made, factories that were built and investments that came about because of meetings at Davos. "It's the one place where globalization is being advanced," says John Bryan, CEO of Sara Lee.
But Schwab's ideas are being advanced, too. We caught up with him at a restaurant in Boston, Massachusetts, and while he read the menu, we read the line-up of topics for the Davos meeting in January 2000. His program talks about the obligation of leaders to make a difference. There are terms like "responsible globality," making "prosperity inclusive rather than exclusive" and "sustainable development."
For lack of a world crisis and befitting a millennium meeting, this year's forum may contain more of Schwab's social agenda than ever before. "In his own mind, he has an agenda--a deep commitment to public good," says Nemir Kirdar, CEO of London-based Investcorp. "Attendees may not have the same agenda."
So who is this Schwab? His day job is teaching business at the University of Geneva, but the WEF is his passion. "I am a reserved person," he says. What we see is that Schwab has his head in the clouds (as an academic) and his feet on the hard ground (as a German engineer).
He grew up in Ravensburg, Germany, whose outlying areas were ravaged by the war. The landscape engendered in him a sense of social responsibility--a will, as he puts it, "to avoid the political and human catastrophe." Meanwhile, Schwab pursued engineering and economics at the doctoral level. Still hungry for education, he came to Harvard University in 1965 to get a master's in public administration. That was his breakthrough.
"It opened a new world," says Schwab. Schwab turned in his slide rule for the world of ideas. "In all of my [previous] degrees, I was not really stimulated," he says.
When asked which great thinker influenced him, Schwab mentions Karl Popper, the Anglo-Austrian philosopher. Since financier George Soros also publicly espouses Popper as a visionary, we ask Schwab if Soros influenced him. Oops. "Soros learned at Davos," says Schwab, correcting the assumption.
Popper wrote of how totalitarian society claims to hold the ultimate truth and necessarily represses freedom so that no one can argue. He insisted that no one has a monopoly on truth and calls for institutions to protect the rights and freedom of people. Popper saw the need for a framework. Schwab is himself big on framework. "Yes, I am an engineer," he smiles.
After Harvard, Schwab saw Europe at risk of being left in the dust by American business. "It seemed to me that European business should be aware of the new ideas," he says. His forum started in 1971, attracting 440 European CEOs. Thanks to Raymond Barre, vice president of the Commission of the European Communities, he secured support of that group, which serves as the executive branch of what is now the European Union. The forum grew rapidly and became more international as companies crossed borders.
Then the world began to shift. As the Cold War thawed, countries soured on socialism and started to privatize. To privatize, they needed foreign capital. And to seek out the investors who could provide that capital, political leaders started coming to the forum like moths to a flame. In 1987 it became a membership-funded organization.
Schwab's mission statement says the forum is committed to improving the state of the world. "Chief executives do not come to Davos to learn how to make money," Schwab says. "They come to improve the world."
Yes, but isn't it true that corporate leaders also come to press the flesh, academics to gather material for their books, the media to get stories and the political leaders to raise money? That's blasphemy to Schwab, who stays calm and listens with a diplomat's skill.
Would Schwab agree that economic self-interest is the historical engine behind prosperity, and that once you burden companies with social promises, you get Europe--flat on its back, economically?
"I do not agree with your hypothesis," the professor says bluntly. "Even if I did not believe it was just--that businesses must work to cure poverty and human rights abuses, etc.--I think it is only rational. The huge differences in our standard of living, the widening gap, must be narrowed. You can't go beyond certain limits."
At any rate, global companies do not fit behind neat national borders. "The sovereign state has become obsolete," says Schwab. As the world reassembles into regional powers, he says, we need a "global issue alliance." You mean, global government? Answers Schwab: "That's the last thing we want. We facilitate the process of decision making."
If Davos is world government, let's have more of it--it runs a surplus. On a $1.25 billion budget the United Nations is perpetually out of money. The World Economic Forum takes in $37 million annually, mainly from its members ($12,000 apiece), and with that runs a surplus of about $5 million. A tight ship. "We are Swiss; we were run out of Scotland for being too cheap," he quips.
The U.N. is thick with staff. At Davos leaders must check their retinues at the curb. Leaders like Egypt's Mubarak, who are used to bringing hundreds, are restricted to bringing no more than five people. Forget it if you're retired. Even if your former job was running France or General Electric, you must be in power. "No oldies," he scolds.
So Schwab is a prime mover whose power is the power of access. He is received by just about every head of state and global business leader. But what if there were world government and he were the prime minister? What would he do?
"I would like to educate the world with a new set of ten commandments, ethical guidelines that would guide everyone in getting along," Schwab says. He does not want to be a ruler. He wants to be an educator.