Collision Course: Endless Growth on a Finite Planet (41 page)

The World Economic Forum (WEF) started out as a forum on management practices convened by Klaus Schwab, a European business school professor, with funding from what was then the European Community and European industrial associations. Schwab invited more than four hundred CEOs from European corporations to what was originally called the European Management Forum in the summer of 1971, shortly before the 1970s crisis emerged. His initial objective was to spread US management theory to Europe, but the events of the next few years triggered a broadening of Schwab’s scope. Political leaders were included at the annual conference in Davos in 1974. A membership system was instituted in 1977, aimed at enlisting the “1,000 leading companies in the world,” not just Europe, a goal apparently reached in 1992. The US began participating in 1983 with a satellite message from Ronald Reagan. In 1987 Schwab changed the organization’s name to World Economic Forum.
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In addition to the annual Davos meeting, the WEF convenes numerous specialized meetings every year, including the Informal Gathering of World Leaders, which began in 1982 (and exemplifies the cozy “getting-to-know-you” atmosphere the WEF cultivates). The WEF also functions as an international think tank; it has produced an annual “global competitiveness” report since 1979, as well as regular reports on risk, the gender gap, information technology, and regional issues.

Although the WEF characterizes itself as a forum for “business, government and civil society,” the last term of this trio is largely empty. The membership is composed of the one thousand corporations already mentioned, and the meetings are by invitation. Few community and citizen-based organizations attend—and only if the WEF invites them, as it does from time to time. Labor representatives such as Australia’s union leader Sharan Burrow and Britain’s Labour Party leader Arthur Scargill; Petra Kelly, then leader of the German Greens; and Muhammad Yunus, founder of the Grameen Bank, have attended at various times. Since about 2000, Burrow has attended most Davos meetings with a small team of labor delegates and Kumi Naidoo, the Greenpeace activist and currently its international executive director, has also accepted regular invitations in the past decade—a “pinch of public participation” as Naidoo describes it, among 2,500 CEOs, presidents and prime ministers.
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The actual membership includes most of the 737 TNCs that Vitali and colleagues found to be in control of 80 percent of global revenue.
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The WEF is run by these corporations and functions as their own elite club into which select political leaders are invited, as well as reserve bankers, top personnel from the IMF and World Bank, and chosen UN officials. In this way, top global CEOs get access to the policymaking of the world’s elected representatives, facilitating the privileging of business agendas in every corner of the world, especially the interests of transnational capital; input from citizens can be rationed and bypassed.

Socially sensitive phrases permeate the WEF’s self-portrait: “committed to improving the state of the world,” “a human face to the global market,” “entrepreneurship in the global public interest.” “Civil society” also gets a number of mentions on the WEF website,
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and Schwab himself has spoken of “responsible globality” and of making “prosperity inclusive rather than exclusive.… Chief executives do not come to Davos to learn how to make money.… They come to improve the world.” Nonetheless, in reality, there is no democratic element; Schwab told
Fortune
magazine in 1999 that the “sovereign state has become obsolete.”
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Only business, whose leadership is unelected, enjoys representation. The occasional invitation to citizen and labor bodies does not nullify this flaw since the board that controls the organization consists of Schwab himself, corporate chairmen and CEOs, a sprinkling of heads of prestigious academic centers, and, in many years, the head of the IMF.
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Even if some degree of genuine concern for the public interest pertains, perhaps in the case of Schwab himself, the philanthropy of the WEF is paternalistic.

The difficulties of the 1970s, especially after the 1973 oil crisis, also precipitated the formation of the Group of 5. It consisted of the finance ministers of the US, UK, Japan, France, and Germany, who first met in 1974. Italy and Canada were invited in subsequent years, making up the G7. From 1976, the heads of these G7 governments began to meet annually and the finance ministers less regularly. A representative of the European Community was included from 1977. In 1997, Russia was admitted, to form the G8, which, with something like 15 percent of the world’s population, produces 60 percent of world economic output in GDP terms. The members of the organization are the richest countries on earth, and many had been the chief colonial powers in previous centuries.

After the Asian financial crisis of 1997 a broader group, known as the G20, was founded. To the original G8 membership it added the finance ministers and central bank governors of major emerging countries: Brazil, India, and China, as well as South Africa, Mexico, Argentina, Turkey, and Saudi Arabia; also in the G20 are South Korea, Australia, and the EU as a formal member. The global financial crisis of 2008 triggered the elevation of the G20 as the premier economic council of the richest nations, displacing the G8 in that role.
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Obviously more representative of the world’s population (two-thirds) and the world’s wealth (80 percent), the G20 nonetheless remains a collection of invited guests; a half dozen excluded countries, including Iran and Spain, have larger economies than some G20 members.
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The Norwegian foreign minister, Jonas Gahr Støre, pointed out that the group is “self-appointed,” or appointed by the major powers of the old G5, and thus lacks legitimacy. Støre argues that such a group undermines the agreed-upon Bretton Woods institutions (the World Bank and the IMF), which in his view should be reformed rather than supplanted.
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Other Elite Clubs

Members of the global elite meet in other exclusive clubs. The Bilderberg Group, a private organization initially aimed at toning down anti-American feelings in Europe, first met in 1954. It has met annually ever since and, though a list of its participants—tycoons, bankers, politicians, and a few select academics—is made public, the meetings are held in secret and no text is ever released.
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The Trilateral Commission is another such club. It was instigated in 1973 by David Rockefeller, heir to the Standard Oil fortune, president of Chase Manhattan Bank, and a founding member of the Bilderberg Group. The Trilateral Commission brought Japan into an elite club of the Bilderberg kind, alongside the US and Europe, for the first time. The commission’s 1975 report,
The Crisis of Democracy
, echoed the fears of Bernays fifty years earlier; it warned of “an excess of democracy” in the US and yearned for the time when “Truman had been able to govern the country with the cooperation of a relatively small number of Wall Street lawyers and bankers” with input from “the law firms, foundations and media which constitute the private establishment.”
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In 1999, Rockefeller told
Newsweek
that the recent trend toward “democracy and market economies … has lessened the role of government, which is something business people tend to be in favor of. But the other side of that coin is that somebody has to take governments’ place, and business seems to me to be a logical entity to do it.”
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In other words, democratic representation can be discarded and government handed over to business.

The Club of Rome

The personnel of groups such as those described above differs little in class and gross economic interest from the members of the Club of Rome, which had formed just a few years before the WEF. All share an invitation-only membership. The elite origins of most of the Club of Rome’s members illuminate the suspicions of the Left (noted in chapter 4).
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Numerous sources on both left and right have observed a certain amount of overlap between the personnel of the Club of Rome and that of the Bilderberg Group and the Trilateral Commission.
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Yet in one crucial respect, the Club of Rome differed radically from its contemporaries: Peccei and his colleagues recognized a looming environmental crisis and were concerned enough to address it. Above all, they identified the cascade of environmental damage as a corollary of the growth of industrial prosperity itself. They could be characterized as intellectuals who saw beyond their narrow class interests and attempted, unsuccessfully, to change the course of industrial development. In contrast, most of the CEOs who meet at Davos and the politicians who frequent the G8 and G20 meetings share an unquestioned faith in the continuation of the industrial model of progress and in the notion that the international market will provide solutions to the problems that it has produced.

The World Trade Organization

Perhaps the most radical of all the entities invented since the 1970s, the World Trade Organization (WTO) has become what activists Debi Barker and Jerry Mander describe as a worldwide “invisible government.” Built gradually over the entire postwar period, the WTO was officially launched in 1995 with the power to “strike down the domestic laws of its member nations and to compel them to establish new laws that conform to WTO rules.”
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Unlike UN organizations and forums, where environmental accords such as those on biodiversity and climate are wrestled through in conference sessions and always need ratification at home before coming into effect, the WTO gave itself coercive powers. Very few members of the public were aware that their trade negotiators were granting extensive powers to an unelected body working behind closed doors. What has been created at the international level epitomizes the ideology that puts economic priorities before all else and seeks to free corporate self-interest from democratic constraint.

From GATT to WTO: The Coming of “Free Trade”

When the World Bank and the IMF were designed in 1944 at the Bretton Woods meeting, the US government had wanted an international trade organization (ITO) that would work to remove trade barriers as the third part of the new architecture.
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An ITO charter was drawn up at the outset and, though a generalized world trade organization did not materialize at that point, the US trade representative negotiated a tariff agreement with twenty-seven countries in 1947.
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Called the General Agreement on Tariffs and Trade (GATT), it came into force on January 1, 1948, and became the foundation on which the WTO was built over the next forty years. The free traders tapped into anticommunist sentiment to advance their case, arguing that free trade would “immeasurably strengthen us and other freedom loving nations” in the struggle against communism. Although it dealt only with tariff reductions on goods and mentioned neither services nor investment, GATT became the vehicle and foundation for the extension of the free trade regime, functioning as rule book and negotiating forum.
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Eight rounds of negotiations were undertaken over the next fifty years as more countries were gradually persuaded to join.

The eighth round of GATT negotiations (the Uruguay Round) gave birth to the WTO. It began in 1986 with furious lobbying from the representatives of international capital—the WEF, the Bilderberg Group, the Trilateral Commission, the International Chamber of Commerce (ICC), and the European Round Table of Industrialists.
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In the US, more than five hundred corporate representatives had adviser status with US negotiators, and industry trade groups such as the Chamber of Commerce and the Business Roundtable had direct access to the actual negotiations; public interest NGOs representing environment, social justice issues, consumers, or labor were all excluded, along with the press.
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Representatives of transnational capital were adamant that the WTO was essential to a bright future, and dark warnings of “chaos and impoverishment” (if it was not established) emanated from the Eminent Persons Group, composed of first world ex-politicians, bankers and trade bureaucrats.
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Reflecting the centrality of the US-based corporations in world capitalism, the negotiating positions of the US government and transnational capital have often been closely aligned, especially since World War II, even though the headquarters of TNCs are no longer located exclusively in the US. As Giovanni Arrighi has outlined in detail, the center of world capitalism has shifted over the centuries. Arrighi argues for its beginnings in the alliance between Genoa and Spain, followed by a long period based in Amsterdam, a British era, and the rise of US capital early in the twentieth century. Though it is clear that, if the system persists, the center may shift to China in this century, the US remains at its heart so far. This is evidenced by US power in the institutions outlined in this section—bolstered by the UK, which still harbors one pole of international finance, the City of London.
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Before the Uruguay Round, 108 countries had already joined GATT and tariffs had been slashed by 75 percent. The aims of this round were to integrate agriculture and textiles into the tariff-free regime and to set up the WTO, which would formalize an agreement on services. Business organizations in the US and across the world launched a massive lobbying effort to secure the US congressional vote, and when they succeeded, the WTO came into existence in early 1995.

As Sharon Beder points out, “given the thousands of pages of rules that the WTO now presides over, ‘free’ trade is not about doing away with rules altogether, but rather with replacing rules for companies with rules for governments, and replacing rules that protect consumers and the environment with rules that protect and facilitate traders and investors.”
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This is analogous to the construction of the “free market” in nineteenth-century England by edict of Parliament. The word “free” may be appended to the phrase, but markets and trade are always institutions conducted under sets of rules and regulations, imposed by human will. The freedom referred to here is the freedom of business interests to operate without hindrance.