The Founder of Davos on Confronting Nationalism and Inequality

When Klaus Schwab, the founder and executive chairman of the World Economic Forum, hosted the first summit in Davos in 1971, the global community was on the precipice of profound change. Mass poverty was endemic, computers were the size of Xerox machines, and globalization was still a theory taught to economics students.

Forty-eight years on, the world is utterly transformed. Extreme poverty has halved over five decades, roughly 2.5 billion of us now carry supercomputers in our pockets, and globalization has become the bedrock of the modern economy. But once again, we are facing a period of tumultuous change. In the coming years, the 80-year-old Schwab predicts, our planet will undergo what he calls the fourth industrial revolution: an era of rapid innovation catalyzed by automation, artificial intelligence and other technological advances.

In December, Schwab sat down with TIME ahead of this year’s WEF summit to discuss the unique suite of challenges facing the world today:

TIME: In the 1970s, you helped develop the multistakeholder concept: the idea that business must serve not only shareholders but everyone with a stake in the company. Does that idea still have merit today?
Schwab: Well, today I see the stakeholder concept applied on a global level. The big issues in the world, like climate change, cannot be solved by governments alone. We need new technologies, so business has a role to play. Civil society has a big role to play. We are all stakeholders in our global future. And the World Economic Forum acts as a kind of catalyst for this process.

A portrait of Klaus Schwab Mark Peckmezian for TIME 

That requires collaboration, at a time of shattered alliances, rising misinformation and bitterly divided politics. How can you look at the current state of the globe and feel hope?
We are faced with tremendous change, but change has to be shaped—and it has to be shaped by human beings, by policymakers, by the people. I would call the phase we are in innovative destruction, or perhaps destructive innovation. When you focus on the destructive part, it can make you pessimistic. What we try to do is see the innovative part.

Is the erosion of trust in traditional institutions—from democratic governments to the multilateral order—a hallmark of this period?
If there’s an erosion of trust, it has to do with the imbalances we have in the system. We have trade imbalances, we have social imbalances, we have inequality. So what we have to do is to address those imbalances. Our international system was created after World War II, and since then the world has fundamentally changed. Cybersecurity, artificial intelligence, self-driving cars ... we have no global standards. So we have to create new mechanisms and institutions designed for new challenges.

How do we do that, when inequality is fueling the rise of populists and nationalists who don’t believe in institutions at all?
Well, it’s not just inequality driving this. I think it’s a capability to cope with change. Those who feel overwhelmed by the changes which are happening can look for simple solutions to very complex issues. And so-called populists tend to say, Look, we have the solution—which is to retreat to a good old world, which, in reality, doesn’t exist anymore.

Klaus Schwab and German Chancellor Angela Merkel arrive for a plenary session at last year’s WEF in DavosSchwab and German Chancellor Angela Merkel arrive for a plenary session at last year’s WEF in Davos Xu Jinquan—Xinhua/eyevine/redux 

Does that explain the void in global leadership we are currently seeing?
No, it’s not a void. It’s a transition from a unipolar to a multipolar world. The first industrial revolution created the economic and political power of Great Britain. The second industrial revolution permitted the superiority of the United States, reinforced by the third industrial revolution: the computer age. Now what we are seeing is a struggle of who will be leader in the fourth industrial revolution. We have to recognize that even if we have different philosophies, we are united by common interests.

Do you worry that technology, and specifically social networks, are being used to divide us and undermine those common interests?
Yes, of course. We are living not only in a multipolar and multistakeholder world, but in a multiconceptual world. And what has happened with media broadly reinforces this tendency to create our own values. I think every media organization should make sure that what they disseminate is the truth, including social media.

Who should be responsible for that?
I’m usually in favor of an independent, self-governing body. Probably “shaming and blaming” is a better weapon in this respect than a big book of regulations.

“Shaming and blaming” doesn’t seem to have affected Facebook’s behavior.
If you were the head of Facebook, wouldn’t you come to the conclusion that you have to address those issues? Because at the end you depend on the trust of your users.

But Facebook has repeatedly abused the trust of its users, allowing their data to fall into the hands of Cambridge Analytica and other shady actors. And we’re not seeing a mass abandonment of Facebook.
I don’t have the solution. You can argue for more laws, sure. But in the long run, if you are not able to maintain trust, the business is not sustainable. I see many people who don’t use Facebook anymore.

How can we prepare ourselves for the fourth industrial revolution? Is there a need for a shift in values?
I think the fourth industrial revolution will create a world where we have less need for labor, and where production can be robotized to a large extent. So the question we need to answer is, What is the purpose of life? Up until now we defined our purpose of life by production and by consumption. Perhaps now, we move from that narrative to one of sharing and caring. You can see the first signs already. When I talk to young people, they don’t dream of owning the big villa. They depend much less on consumption. It will be this generation that will force companies to follow suit.

How? By boycotting and socially conscious investing and purchasing?
Yes. Today you see already a tendency to buy products that have less sugar, for example. Next it will be buying products that do not hurt the environment, or that are not made under socially unacceptable conditions for the workforce. I think this will come.

What does the future of employment look like for this generation, as automation eliminates low-skill jobs?
At the moment, a key challenge is the reskilling and upskilling of workers.

We must equip people with the means so they can earn a decent living, and we are failing to do that. But in the long term, I think the jobs of the future will require a combination of talents. One is the digital world, so coding even for first-graders. But that’s not enough. You will also need human qualities. What makes us different from a robot? It’s the fact that we can have feelings. A robot can maybe one day be much more intelligent than we are, but the robot cannot show love, feelings, empathy, solidarity and so on.

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