With the extraordinary measures from the European Central Bank this week, the world is once again looking to monetary policy to provide a source of stability. It is necessary to look back only a week to the causes of the current currency volatility and it will be clear that central bankers’ best efforts will not be enough if all the major stakeholders in this crisis do not act together.
This week’s events are the latest of many examples I have observed in nearly half a century in global affairs. The “wicked problems” which direct events on a global scale can only be addressed when all stakeholders of society are able to come to common agreement through dialogue and interaction, based on mutual trust.
The world is now beset with interconnected, complex challenges driven by unprecedented global forces. These forces are well known, if not well understood, and have been much discussed this week in Davos – not only in the economic sphere, but equally in the geopolitical, technological, and social dimensions.
From the breakdown of nation-states to the burnout of leaders
They include the breakdown of nation-states as citizens redefine their identities through the forces of technology and globalization, the changing nature of work and a critical employment crisis in both developed and developing countries, long-term shifts in growth levels across the developed world, a “mid-life crisis” in emerging economies, a “burnout” syndrome in leaders who are stretched to their limits, and the re-emergence of strategic competition between countries and regions as the realities of resource limits take effect.
These and many other global trends are multiplying the number and complexity of challenges which reach beyond traditional spheres of governance and the formal frameworks of our international system.
Challenges such as these demand a new kind of global institution. While we may not entirely know what the institutions of tomorrow will look like, we do know that the environment in which they operate will not be any easier than the one we currently live in.
We know that the institutions of tomorrow will need to be informal, flexible, and agile, because challenges are emerging faster than ever and institutions need to be responsive above all. We know that they will need to be networked, because challenges cannot be addressed without the most relevant leaders and insightful expertise in the room. We also know that institutions must be able to bring people together online as well as in person, as progress is made through continuous interaction, face to face and virtually.
Importantly, we know that institutions, to be effective, need to be trusted and impartial.
This week, the World Economic Forum received formal recognition as an international institution for public-private cooperation. It is my hope that this will provide the basis for fulfilling our mission, to give both context and challenges a continuum where leaders can shape answers that go beyond the interests they represent and move us forward.
While the Annual Meeting in Davos will close today, our work is just beginning.
Author: Professor Klaus Schwab is Founder and Executive Chairman of the World Economic Forum.
Image: The Logo of the Annual Meeting 2015 of the World Economic Forum is seen at the congress centre in Davos, January 20, 2015.