Why the World Economic Forum summit is held in Davos, and other interesting facts about the event

Klaus Schwab and stakeholder capitalism

Klaus Schwab was born in Ravensburg, Germany in 1938. He has pioneered the concept of “stakeholder capitalism.” According to Schwab, “it is a form of capitalism in which companies do not only optimize short-term profits for shareholders, but seek long term value creation, by taking into account the needs of all their stakeholders, and society at large.” In his various books and papers on the topic, he says this form of economic organisation keeps society and the planet front and centre, moving beyond the narrow interests of a corporation.

Klaus Schwab founded the WEF in 1971 and has been its chairperson since then. The WEF was envisioned as a forum that would bring Schwab’s vision of capitalism to life by engaging with foremost political and business leaders of the world.

The WEF partners

The WEF is largely funded by its partnering corporations. These are generally global enterprises with annual turnover greater than $ 5 billion. For these corporations, the WEF provides a platform “to shape the future, accessing networks and experts to ensure strategic decision-making on the most pressing world issues.” Partners range from Apollo Tyres to Apple – they can be from any industry, as long as they wish to engage using WEF’s platforms.

WEF also partners with public subsidies.

The reason behind choosing Davos as location for annual meet

Davos, a ski resort, and the annual host of WEF’s meeting is a quaint town located on the lap of the Swiss Alps. In many ways, it is a surprising choice for a meeting of global economic giants and geopolitical leaders. However, the location was not arbitrarily selected. Rather, it has philosophical significance for the founder of WEF.

Davos was the setting for Thomas Mann’s novel The Magic Mountain. The book is the story of a young man who goes to Davos to stay at a sanatorium for three weeks and ends up spending seven years. A TIME review of the novel stated: “In the sanatorium, a high and chilly retreat, the perspective of life changes … With death for a background, massive and eccentric as the high Alps, the caperings of man seem puny by comparison. The idiotic decadence, the absurdly microscopic preoccupations of humanity are emphasized by their isolation.”

WEF’s “magical meeting place” seeks to have a similar impact on world leaders. Relaxed in its serene environs, it seeks to cut through the many distractions of global politics to succeed in its mission to create a more prosperous global economy.

More than “just economics”

Davos brings together some 3,000 paying members and selected participants – among whom are investors, business leaders, political leaders, economists, celebrities and journalists – for up to five days to discuss global issues across 500 sessions. However, its salience goes far beyond discussions on economic issues. In the past, it has been used as a location for pivotal international diplomacy as leaders are able to break tensions in the town.

For instance, in 1988 Greece and Turkey avoided war, when the two signed the now famous Davos Declaration. Greek Premier Andreas Papandreou and Turkish Prime Minister Turgut Özal met during the WEF annual meeting that year preventing what would have been a long and bloody conflict.

Eknath Shinde in Davos?

Recently, Maharashtra Chief Minister Eknath Shinde has come under fire for cancelling his trip to Davos during the WEF. The trip was supposed to invite more investment in the state, with Shinde and his deputy Devendra Fadnavis set to meet several business leaders. The trip was cancelled due to Narendra Modi’s impending arrival in the state prior to the BMC elections.

The opposition lost no time in criticising Shinde and his government, especially on the back of Maharashtra losing major mega-investment opportunities to the neighbouring Gujarat.

One of Davos’s major attractions is that it is a forum where thousands of politicians, industrialists and entrepreneurs congregate. For chief ministers of a state, or indeed the prime minister of a nation, it provides an opportunity to cultivate meaningful and enduring relationships between corporations and countries for their mutual benefit.

Journalists are invited but not given “full access”

In order for informal conversations and relationships to be built and thrive, it is crucial that leaders get adequate privacy. Outside the scrutinising glare of the media and public opinion, meaningful dialogue can actually be facilitated, the idea goes.

Thus, Davos restricts access that journalists get to the event. While over 500 journalists flock to Davos annually, most get “orange badges” – which restrict their movement to more public fora.

“Davos runs an almost caste-like system of badges”, according to BBC journalist Anthony Reuben. “A white badge means you’re one of the delegates – you might be the chief executive of a company or the leader of a country (although that would also get you a little holographic sticker to add to your badge), or a senior journalist. An orange badge means you’re just a run-of-the-mill working journalist.”