Published on Jan 28, 2010
French President, Nicolas Sarkozy, gave the opening address to Davos yesterday. His message: this is not just a global financial crisis; it is a crisis of globalization. My overall assessment of his talk: A good job diagnosing the problems with today’s economy, but Sarkozy offers little in the way of novel or innovative solutions.
Not surprisingly, he was very critical of bankers and financial power brokers who have rigged the system to extract maximum profits for themselves, while squeezing everyone else.
“Globalisation . . . gave rise to a world in which everything was given to financial capital and almost nothing to labour, in which the entrepreneur gave way to the speculator, in which those who lived on unearned income left the workers far behind, in which the use of leverage, to an unreasonably disproportionate extent, created a form of capitalism in which taking risks with other people’s money was the norm, allowing quick and easy profits but all too often without creating either prosperity or jobs.”
In a more provocative statement, he argues that the entire accounting system has been falsified.
“Our entire system of representation had been falsified: the economic value of a company does not change from one second to another, nor every minute, nor every hour. . .Our entire system of statistical assessment had been distorted, too. In the statistics, we noted the increase in revenues. In life, we saw a widening inequality gap. In the statistics the standard of living was rising, but meanwhile the number of those feeling ever more keenly the hardships of life was also constantly increasing.”
The notion that the financial system only accounts for revenues and profits and not social or well being is not a new idea. But it is not discussed often enough, particularly by heads of state. Sarkozy failed to mention, however, that the financial system also treats virtually all natural resources and ecological systems as free inputs, save the labour required to extract them.
Sarkozy goes on to lament the triumph of market values over democracy:
“By discarding all our responsibilities in the marketplace, we have created an economy which has ended up running counter to the values on which it was nominally based, and to its own objectives. By over-mutualising ownership and risk, we have diluted responsibility. By placing free trade above all else we have weakened Democracy, because citizens expect from Democracy that it should protect them.”
He then warns that, left unchecked, the current imbalances will generate further crises.
“In the future, there will be a much greater demand for income to better reflect social utility and merit. There will a much greater demand for justice. There will be a much greater demand for protection. And no-one can escape this. Either we change of our own accord, or change will be imposed on us by economic, social and political crises. Either we are capable of responding to the demand for protection, justice and fairness through cooperation, regulation and governance, or we will have isolation and protectionism.”
As alluded to earlier, the problem is that Sarkozy doesn’t really show the way forward. He points to the G20 as a source of solutions and new models of global governance. He calls for taxes on financial speculation to help fund the fight against poverty. He demands that the world move quickly to adopt a more robust, binding global agreement on climate change.
All of these things, while necessary, are only the beginning of what is needed. Like most heads of state, Sarkozy tends to see the same institutions that produced the current mess as the source of solutions and stability in the future. He argues for a change in values, but still takes most of the old assumptions about how the world works for granted.
For example, he doesn’t consider the fact that markets may have triumphed precisely because our models of government and democracy are broken. He doesn’t call for a complete rethink of the top-down approach to global problem-solving. He merely calls for the same old elite club of decision-makers, except this time with a few additional members at the table. He doesn’t seem to recognize that the of new models of social innovation and wealth creation that offer genuine promise are fundamentally incompatible with his outmoded vision of the role of the nation state in a global economy. Sarkozy proposes traditional instruments like taxes and legal agreements, when we really need a more dynamic way to marshal and fully exploit the collective ingenuity of citizens and businesses around the time-urgent problems facing the world.
In my forthcoming book with Don Tapscott, Macrowikinomics: Rebooting Business and the World (Sept 2010), we’re calling for a new approach to global problem solving that relies less on central control and more on a self-organizing critical mass of people and organisations working in all sectors to initiate small experiments and social innovations that, under the right conditions, can mushroom into pervasive changes in societal behaviour. Put simply, the world needs a new model of problem solving that taps into the world’s decentralized sources of knowledge and capability – an approach built on a platform of openness that mobilizes not just leaders of the world’s largest nations, but a whole ecosystem of citizens and organizations around the world.
Perhaps the book will give Sarkozy and company some food for thought. In the meantime, you can download the full transcript of Sarkozy’s talk here.