Nature of capitalism up for discussion at Davos

By Matthias Armborst Jan 26, 2012, 13:34 GMT

Davos, Switzerland - Exploitative, unfair, environmentally destructive and at the expense of future generations - that's the scorecard for capitalism in the 1990s, according to some critics.

In the face of such criticism, the global economic elite assembled at the World Economic Forum in Davos this week is now openly discussing whether 20th-century capitalism is fit for this century, and what exactly 'good' business should look like.

The head of the conference has decided to tackle the issue head on.

'Capitalism in its current form no longer fits the world around us,' World Economic Forum founder Klaus Schwab said ahead of the meeting in the exclusive Swiss mountain resort.

Schwab has even shown some sympathy for the Occupy activists freezing in an igloo camp not far from where the forum meets and welcoming every visit from the international camera teams. However, Schwab says he does not intend to let the activists address his elite gathering.

But even without their participation, there is criticism of capitalism at the forum itself.

The mass demonstrations of Southern Europe's youthful unemployed are having an effect on the proceedings, with participants aware of the fact that activists are camping out in front of banking skyscrapers. Consumers are also expressing more scepticism, looking ever more closely at product labels.

Sharan Burrow, head of the International Trade Union Confederation, spoke of capitalism's 'broken promises,' pointing to an uneven distribution of wealth unmatched since the Great Depression of the 1930s, with the economies of many countries scarcely absorbing the youthful workforce.

'This economic model is undermining itself,' said Burrow, who represents some 175 million workers around the world. She added that the resulting social unrest will not benefit anyone.

The opposing point of view was put succinctly by Ben Verwaayen, chief executive of the network specialist Alcatel-Lucent, who said there are still places in the world where 'people are longing for capitalism,' as a way to take them out of poverty.

Complaining about greedy companies does not help, he said. Instead, innovation is needed. The world is suffering from 'nostalgia,' according to Verwaayen.

'We have to talk about job creation, not job security,' Verwaayen said, adding that there was no road back.

From the audience, a young Egyptian called out: 'Give young people platforms on which they can create their own jobs!' That way, they would not have to wait for others to do it for them. Whether this is called capitalism or not was completely irrelevant, he added.

Hard core capitalists like David Rubinstein insist that the model is capable of reforming itself. He is a co-founder of the Carlyle Group, one of the world's largest financial investors.

Referring to Churchill's comment that democracy was the worst form of government - except for all the other forms that had been tried - he said capitalism was similar, still better than every other economic model.

Rubinstein asked who in 1912 would have foreseen capitalism as it is today. By the same token, no one could foresee how it would develop over the 21st century.

Burrow countered by calling upon corporations to 'pay your taxes and pay your workers a minimum wage.' US companies were fighting pay rises that would have only minimal effects on profits, she criticized.

In response, Rubinstein said, companies stuck to the rules, where they existed. He insisted he was not complaining about too much regulation, but insisting on clear rules. 'But for that, politicians must show leadership,' he said.

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