Nelson Mandela was part of the Illuminati
Founder Klaus Schwab on the history of the WEF and on the 50th meeting in Davos: "I don't want to be instrumentalized by Greta"
It all started with the belief that companies need to be there for all stakeholders. In an interview with Peter A. Fischer, founder Klaus Schwab explains how this resulted in the rendezvous of the global elite in the Graubünden mountains and why he believes that the World Economic Forum WEF has actually made the world a better place.
Mr. Schwab, let's switch to Standard German for the interview.
I prefer to speak Swiss German. I am a German citizen who grew up in Ravensburg, but we always spoke Swiss German at home. In the autumn of 1944, when I started school, my Swiss mother was even summoned by the Gestapo. She should explain why the son could not speak and understand decent Standard German.
Well, then I'll translate our conversation into Standard German afterwards. You are already responsible for the 50th annual meeting of the World Economic Forum. Reason enough to look back. Let's start with you, the founder. In the 1960s you studied engineering at the ETH and business administration at the University of Freiburg and did your dissertation in both subjects, after which you obtained a Master of Public Administration at Harvard and also worked as an assistant to the General Director of the Association of German Mechanical Engineers. How does this all come together?
My German father was the boss of the Swiss Escher Wyss in Ravensburg. I actually wanted to study economics, but as the head of a mechanical engineering company my father thought: "Son, if you want to become something, you have to study mechanical engineering." That's how I ended up at ETH. Then, without being registered, I attended the economics lectures at the University of Zurich. When I got my ETH degree, I was looking for a university where I could quickly complete an economics degree. After all, after a relatively short time at the University of Freiburg, I was able to take all the exams at once and then do my dissertation.
What about Harvard?
My father then thought that if I really wanted to become something, I should go to Harvard after all. So I went to what would later become the Kennedy School of Public Administration, but mainly attended business administration lectures at the Business School. There I met Dean George Baker, the economist Kenneth Galbraith and Henry Kissinger. Baker later took over the presidency of the first annual meeting in Davos, Galbraith appeared as a speaker, and I also stayed in contact with Kissinger.
When you returned to Switzerland, you did not set up the WEF straight away.
I was supposed to start at Boston Consulting, but then Peter Schmidheiny, who had just sold Escher Wyss to the Sulzer Group, called me and said: “You come from Harvard now and you know modern management methods, help make the integration work . " I then tried that. Then the Association of German Mechanical Engineers came to me and said: "You have been to Harvard and now you also have this experience in business, please write a book for our members about modern corporate management."
This apparently had far-reaching consequences.
Yes, the central question for me was: What is the purpose of a modern company? And I came to the conclusion that the real purpose of the company is what is known as the stakeholder principle. There was then a dispute with the supporters of the principle propagated by Milton Friedman, "The purpose of business is business".
And why did you then organize a conference in Davos?
I wanted to create a platform where company bosses can meet their stakeholders. I called it the European Management Forum.
What was the highlight of the first event?
We had 444 participants, and the highlight was certainly the top-class composition. Kenneth Galbraith was there, Herman Kahn and Otto von Habsburg.
Who was behind the organization?
I organized the first conference together with my future wife Hilde and an assistant with the support of my parents and a loan from an entrepreneur from the Black Forest. I had an agreement with him that if I couldn't repay the loan, I would have to join his management team. After the first symposium there was a small profit left over, I was able to set up a foundation and became a professor at the University of Geneva.
Why a foundation?
First of all, I didn't think about spending my life with the conference and the foundation at the time, and secondly, the EU Commission had assured me of support for my project, but wanted it to be organized on a non-profit basis. She actually wanted me to hold the conference in the European Community, but then I said that Switzerland would definitely become a member at some point.
At your third event in 1973 you published a Davos Manifesto. How did that happen?
I wanted to deliberately oppose Friedman's shareholder value with my stakeholder principle to a different conception and anchor this institutionally. I then developed the manifesto with a small working group of participants and submitted it to the plenary for a vote. It was adopted with one abstention.
Professional managers should therefore not only be obliged to their shareholders, but also to their employees and society, and to harmonize the interests of all parties involved. Isn't that wishful thinking? Managers are employees of their owners.
First, in my opinion, managers are appointed by shareholders, but primarily committed to the company. And secondly, I don't see the stipulated contradiction between financial objectives on the one hand and the stakeholder principle including sustainable corporate management on the other. The compromise a manager has to seek is between the short and long term. In the long term, shareholders, like other stakeholders, have an interest in strengthening the viability of a company.
At this year's WEF in Davos you want to launch an initiative in which the almost unimaginable number of 1,000 billion trees is to be planted to save the world CO2-to make it more neutral. Is it really up to leading corporations to plant trees?
You shouldn't plant the trees yourself. But they should work within the framework we have made available so that they can be planted. It takes a whole system, satellite images, to know which trees are to be planted where, governments to participate. The World Economic Forum creates the platform that enables and guides this process. You will hear many announcements about this in Davos. This nicely illustrates why the forum is needed: to initiate effective cooperation between business, politics and civil society for a better future.
"Improving the State of the World" is your motto. Was and is not a better world for a conference organization?
Shall we say "Worsening the State of the World"? You have to have an ideal goal, a vision!
When and how did the WEF really manage to make the world a better place?
I think there are three levels to be distinguished. First, where did we have an influence on public opinion? That was the case with the stakeholder concept. Of course, I am particularly pleased that, after almost fifty years, even the US Business Roundtable has practically adopted my concept from 1973. But we were certainly also formative in raising awareness of the concept of social entrepreneurship and the concept of the fourth industrial revolution.
And the second level?
Where did we as a platform have influence on the political level? This is not always publicly known, but I will give you three examples: We once brought the Turkish and Greek Prime Ministers together in Davos and were thus able to prevent an armed conflict over oil drilling, even though they had already made them partially mobile. In 1990, what was probably the only meeting of the leaders of all South African parties took place very secretly in my office here. Afterwards Mandela was released from prison and in 1992 he performed with de Klerk in Davos. And thirdly, Genscher wrote in his memoir that he gave the most important speech of his life in Davos in 1987 when he said: "Let's give Gorbachev a chance." According to Genscher, that was the end of the Cold War.
Impressions from the history of the WEF
That leaves the third level.
This affects public-private partnerships. I am proud that the idea for the Global Alliance for Vaccines and Immunization arose out of a breakfast that Bill Gates, the World Health Organization and myself had in Davos twenty years ago, just as UN Secretary General Kofi Annan once did the Global Compact with me in a little room hatched and then presented in Davos. The Global Fund to fight AIDS and malaria was also set up in Davos.
In the last few years you have published two books on the fourth industrial revolution and founded numerous so-called centers for the fourth industrial revolution around the world, for which more than 100 of your around 800 employees work. What is it that fascinates you so much?
The new, the technologies. They will revolutionize our lives. Now we are all talking about artificial intelligence, but no organization in the world deals with the ethical aspects of it and the principles that must be established in order to comply with it. I believe that you can no longer appoint parliamentary commissions to discuss a bill after five or six years, as you used to do in the past. Today progress is so rapid that the system has to regulate itself. That is only possible if you bring companies and governments together permanently. And we help that the best people from science are there too.
Together with the government of Rwanda, we have developed rules for the use of drones, which are now being adopted by many other African countries in Africa. In San Francisco, with the participation of 27 governments, we developed a set of rules for the use of artificial intelligence in public procurement. In Davos we will now present principles for the use of digital currencies that we have developed together with around a dozen central banks as well as experts from science, the financial sector and multilateral organizations. We will then publish a white paper each time.
National banks have their committees, the economy has its associations and institutions, why is the WEF needed?
So that they work together effectively. And it works. By the end of the year we will have 20 centers for the fourth industrial revolution that will work together worldwide.
First you organized a conference, then you bound corporations through memberships and then formed networks. And now?
Now we want to create the platforms for the issues on which the private and public sectors have to work together globally.
What are you hoping for from this year's WEF?
The political cannot be predetermined. But our many platforms all have their own working sessions and should make progress in Davos.
The motto this year is “Stakeholders for a cohesive and sustainable world”. Is there a Greta WEF waiting for us?
Greta is an impressive young woman, but I don't want to be instrumentalized by Greta. We have now invited ten under twenty years old Gretas, all of whom have a special concern. For example Ms. Melati, who got the whole Indonesian plastic policy rolling. Incidentally, we are also one of the most sustainable conferences ourselves. We have no influence on whether participants arrive with private planes, but we offset all CO2Emissions.
Now President Donald Trump wants to take part in the WEF for the second time. Why does he enjoy it?
I think it's very good that he's even taking part in such a multilateral event.
When the US president comes, everything will revolve around him. Doesn't that harm the WEF idea?
No, many always think that the annual meeting is built around certain particularly well-known people. This is nonsense. The participants come to Davos because the most important decision-makers from business and politics meet here. On the political side, there is a ministerial delegation from practically every important country, and on the economic side alone, over 200 of the 300 most important companies worldwide are represented by their boss.
That is why the WEF is seen by many as the meeting of a detached global elite.
This is a complete misunderstanding. We also have the heads of the large non-governmental organizations in Davos, top scientists, global shapers and young global leaders, social entrepreneurs and artists. This broad exchange is what is special about the annual meeting in Davos.
Because so many important people are there, the agenda of many participants is already timed in advance. Isn't that where the dialogue gets lost?
Bilateral meetings are not so much the problem as completely foreign organizations that use the presence of the decision-makers to hold their own mini-conferences. That drives up prices and burdens traffic.
Isn't Davos too small for such an occasion?
Davos is the global village. It is a brand of its own, with its mountain scenery, its charm. You can walk practically anywhere, meet on the promenade. And Davos has the advantage that it is two hours away from the airport. You don't just come there for a day, you stay. With a maximum of 3000 participants, the forum is a size that Davos can still handle and that we do not want to exceed. We don't want to become a mass event.
The Swiss Confederation and the cantons have to put in an extraordinary effort every year to ensure the safety of the illustrious guests. Some ask themselves: What do they get out of it, besides costs?
A study by the University of St. Gallen has shown that the tax revenues generated by the World Economic Forum are higher than the public expenditure. Added to this is the marketing value of the meeting for Davos and Switzerland, which should not be neglected. And the signal of openness and networking that Switzerland is sending out with it.
According to your annual report, the WEF generated sales of CHF 344.7 million in 2019 and had an endowment capital of CHF 345.6 million. Couldn't it bear the security costs itself?
It is a country's duty to ensure the safety of foreign politicians. Official Switzerland must know whether it wants to receive foreign state guests. Our annual accounts were almost balanced in each case. The foundation capital of the World Economic Forum has grown because we are growing and attracting new contributions for new tasks. Around half of this is tied up in fixed assets. The liquid funds are only half of the turnover. We also need them because of the risk. Imagine if the annual meeting had to be canceled at short notice.
Let's end our conversation the way we started it - with you. You still spend a large part of your time on airplanes.
I made 16 overseas trips last year.
You are now 81 years old. How do you do it?
Through curiosity, enjoyment of what I do and discipline. Nature is very important to me and I go swimming every day.
Her son Oliver also works on the management board of the WEF. Will this become a family business?
No, definitely not. My son could work elsewhere at any time. The forum is now recognized as an international organization for public-private partnerships with clear corporate governance rules. This is intentional, because the forum has to make the transition from a donor-dominated to an institutionalized organization.
As a business economics professor, you campaigned for good corporate governance. Isn't it time you arranged your succession?
If my position becomes vacant, the best successor will be chosen. The organization is now set up in such a way that it works in any case. The World Economic Forum is not Klaus Schwab, nor is it there because Klaus Schwab had a good idea. The forum is the answer to the need for cooperation between the various stakeholders on global issues of the future.
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