Klaus Schwab: Our fractured world needs agile governance and smarter globalization

In recent years, our societies have been fractured by overwhelming and interconnected transformations. We need new political ideas to tackle the critical challenges they are creating.

The globalization of prosperity and openness has been derailed by broken social contracts and an ominous fear of our technological future. These can be countered through smart, adaptive leadership, but this will require a new approach to policymaking and a willingness and commitment to collaborate across stakeholders that has lately been too rare in politics.

Why does the polarization of U.S. society and the backlash against big tech occur at the same time other countries are seeing similar societal shake-ups? I believe all these events are driven by the Fourth Industrial Revolution, a phenomenon of wide-ranging disruption tearing through business models, economic and social systems, and labor markets. Technologies such as machine learning and artificial intelligence, blockchain, gene editing, autonomous vehicles and robotics are combining in unprecedented and sometimes frightening ways. Science fiction is becoming reality.

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There is a pervasive feeling of helplessness in the face of this progress that goes some way to explaining the malaise engulfing Western societies. We feel we have lost control over our futures: issues such as data privacy, inequality through the digital divide, the concentration of market power, and the specter of the subservience of humanity to the technology it has created dominate our discourse. As trust in technology is undermined, we are seeing the signs of a backlash.

Yet there is no natural law saying we must be alienated from our inventions. Technologies and their systems reflect the context in which they were created, as well as the purpose for which they were designed. It’s therefore critical we don’t focus simply on the technologies themselves, but also on the incentives and assumptions of the economic, social and political systems influencing their development.

The traditional legislative process to create the necessary regulatory boundaries around these technologies is outpaced by the velocity of innovation. But if we make the effort to proactively shape the change, and not allow it to passively happen, there are new and tremendous opportunities for humankind: longer, healthier and, possibly, augmented lives, and greater satisfaction in education, entertainment and cultural life.

To responsibly embrace the prospects of the Fourth Industrial Revolution, we need permanent interaction between governments and regulatory agencies on the one hand, and business on the other. We call this interaction agile governance, and to facilitate it, we opened our Center for the Fourth Industrial Revolution in San Francisco this year. Core to the center’s mission is shaping the conceptual frameworks and ethical principles for rapidly evolving technologies where agile governance is required.

The second big challenge for global politics and economics is the transformation of a unipolar global governance system, led by the United States, into a multipolar one, with several countries each asserting influence. It is a world where international relations may no longer be based on shared values, and where it is all the more imperative to develop and promote rules for global and regional interaction based on shared interests.

Power will be exercised by many state and non-state actors with different political and societal agendas and with asymmetric means to exercise their influence. This entails a world in transition from a stable to a much more fluid and fractured context, with precarious friction points. It is natural that in such a world, individuals and nation states want to primarily act in their own self-interest. The “America First” doctrine is a case in point. Nevertheless, we are globally interdependent, and there are global challenges, such as terrorism and climate change, for which we have to find solutions in our common interest.

The World Economic Forum, which many readers may know from its annual meeting in Davos, Switzerland, is usually associated with globalization and sees its positive potential for humanity. Societies today are globally interconnected and need globalization — but we need a new type of globalization. Trade and investment engagement should not be driven by a pure focus on reducing impediments, and economic gains should serve to protect those who are losing out. In some way, we need to save globalization from its negative consequences.

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We need a new type of globalization that accounts for the multiplicity of national priorities and creates a harmony between maximizing global trade and investment and fostering national inclusion through adapted social contracts and labor policies. If we want to address the causes of societal fracture, we not only have to regain control over technological progress through the application of agile governance, but we must also rethink globalization. One size will not fit all.

The idea that leveling the global playing field for trade and investment would generate prosperity for all has lost all credibility, particularly in the aftermath of the global financial crisis. The serious erosion of national social contracts, coupled with the fear of technological disruption, has created an ever rising demand on governments to guarantee economic and physical security in an era of open borders.

Simultaneously, we should not forget the substantial contributions that open global trade and economic and financial flows can make towards creating a more prosperous and inclusive global society. Nevertheless, every society requires a tailored global policy approach depending on its political, economic and social situation. We need to be committed to pursuing smart globalization, not the kind of “hyperglobalization” where national interests are subordinated to the imperative of creating a completely borderless society at all costs.

Smart globalization should integrate national economies and societies into a responsive and responsible global system that does not maximize but rather optimizes the interaction among the different parties in well-defined ways. The priority today must be to reestablish trust through rebuilding social cohesion. If we cannot do this, and establish a sense of belonging and purpose, we will see democratic systems replaced with authoritarian power structures.

At the World Economic Forum’s meeting in Davos in January, we will be committed to creating shared solutions for this fractured world. Agile governance and smart globalization are totally new paradigms for a fast-moving, complex world that requires global collaboration and local responses. The world is fast changing, and leaders have to find ways to create new positive narratives that motivate people to embrace change.

Klaus Schwab is the founder and executive chairman of the World Economic Forum.