At Davos, Crisis Is New Normal

DAVOS, SWITZERLAND â€" In certain ways, the very setting of the World Economic Forum reflects the restless, challenged state of human affairs. Our footing is uncertain, as on this ski resort’s slithery streets, and we have steep slopes to climb, as the Magic Mountain will remind the global elite this week.

Barely into 2013, Mali and Algeria are new sites of hot war and chilling fear. Where the tumult that began in the Arab Spring will end is still as unclear as when it erupted â€" far from Davos â€" two years ago. The challenge posed by the free flow of information in China went to the New Year streets in Guangzhou. Washington’s feuding politicians walked up to the brink before resolving not to jump off the fiscal cliff. Europe seems to have averted a collapse of the euro, but even in Germany, growth is anemic.

Crisis, in short, is the new normal.

And, while the business community determinedly seeks opportunity in troubled times, even many an entrepreneur views the years since the fiancial crisis of 2008 as what Rich Lesser, the new chief executive of Boston Consulting Group, called “a higher period of turbulence and uncertainty in the global economy than we have experienced in a very long time.”

The days in which quants and algorithms reigned supreme are gone, their increasingly untrackable results having helped the financial system spin out of control in 2008 and 2009. The heady triumph of capitalism after 1989 is also a distant memory, although its chief effect â€" that capital went global â€" remains a driving force of our age.

But global capital doesn’t solve big world issues: debt and financial crisis, political paralysis or gridlock, the transformative effects of the digital revolution, climate change, resource shortages, shifting demographics.

For those tasks, we must rely either on the nation state â€" an aging collective unit that does not readily serve transnational action â€" or on international institutions whose effectiveness is regularly qu! estioned by the Davos crowd.

“The global economy has integrated, but global society is as fragmented as ever,” said Dennis J. Snower, president of the Kiel Institute for the World Economy.

In that fragmentation, there is an increasing lack of consensus about the global way forward. A few years ago, the inexorable rise of China led to talk of a new Beijing consensus, replacing the Washington consensus that epitomized the confident domination of the United States.

But China, while still growing, is growing less fast. It remains a one-party state, and its advance has arguably resulted more from enormous investment than creative increases in productivity. The challenges to its new leadership are clear: the need for financial reform, the perils of shadow banking and corruption, thick urban pollution and, above all, the free flow of information, as seen in the standoff this month between a state censor in Guangzhou and journalists at the Southern Weekend and their supporters.

Ian Bremmr, head of the Eurasia Group political consulting firm, who in general sees a big return of politics in business calculations as the world becomes permanently restless, likened China to a large car that is racing toward a brick wall, “and we don’t know if they have steering” to skirt the obstacle, or whether they will hit it. “As China grows wealthier,” he said in an interview, “entrenched Chinese will see the benefit of the rule of law” â€" a key element of the Washington consensus. But “the new leadership is not anywhere near there.”

For Yasheng Huang, a professor at the Sloan School of Management at the Massachusetts Institute of Technology, the saving grace of the incoming president, Xi Jinping, and his colleagues is that they are pragmatists. Pragmatism, he argued in a telephone interview, “means that you weigh the costs and benefits of certain actions.” It “checks the ideology.”

Yet even as China helps to sustain international growth â€" where would Europeâ! €™s purve! yors of luxury be without the eager Chinese consumer â€" it remains, like other emerging countries, self-absorbed.

“Look at the big debates of the last five years,” said Minxin Pei, like Mr. Huang a Chinese-born academic, who teaches at Claremont McKenna College in California. “It’s very hard to find one that originated in Beijing. People talk about China outside China, but still the country is very inward-looking.” This also feeds rising nationalism seen most markedly in the escalating dispute between China and Japan in the East China Sea.

As with China, so with Russia, India and Brazil, or indeed South Africa, Nigeria, Indonesia and other favorites of those who seek bright spots on a gloomy globe. In Brazil, “everything is focused on being Brazilian, how great it is,” noted Misha Glenny, a British analyst who has written on global mafias, cybercrime and is now working on a book about Brazil.

In these countries, absorbed in their own material advances and increasingly wary o a Washington-made prescription for their future, the “fiscal cliff” and debate about the limit on the U.S. deficit serve as proof that they are on the right path, though critics might dispute it.

“On the whole, we made a recovery from the crisis even faster than other countries,” President Vladimir V. Putin of Russia told a news conference last month. “Just look at the recession in Europe, while Russia has posted growth, albeit a modest one, but we still have a much better situation than in the once-prosperous eurozone, or even in the United States.”

In the United States, recent books have argued that the country’s status as a debtor nation is curbing its global reach. After the last-minute fiscal deal earlier this month, a commentary of the kind believed to reflect high government thinking on the state-run Chinese news agency Xinhua noted tartly: “The American people were once better known for their ability to make tough choices on difficult issues.” It went on, “The! American! s may be proud of their mature democracy, but the political gridlock in Washington really looks ugly from an outsider’s view.”

One example of how nations in transition are going their own way is Egypt, where President Mohamed Morsi seems to seek a geopolitical mix: a dose of Turkey, an Islamist-leaning democracy, with much-needed financial aid from China, and relations with Washington warm enough to garner more aid and collaborate on diplomacy like mediating the Israeli-Palestinian fighting over the Gaza Strip last November.

The fluid nature of this world is enhanced by digital communication. With the collapse in newspaper readership and the spread of social media, “everyone gets little snippets of information, and never fully understands the implications,” Mr. Glenny noted. “Very few people do deeper reading and thinking.”

This, he argued, increases people’s sense that “everything has just become too big to grasp and understand.”

A crucial topic for the dozen or soanalysts interviewed for this article, and central also to discussions of increasingly important trends like the global rise of women, is education. Instead of machines being in charge, a nimble human mind, connecting individuals with collective wisdom, is seen as the antidote to cacophony, poverty and chaos.

In this view, more and better schooling will help lift hundreds of millions out of poverty, make it easier for populations to cope with change and stimulate the kind of innovation that Mr. Lesser sees already in technology, medicine and health care.

What kind of education is a topic that will be much debated at Davos, to judge from several scheduled sessions on disruptive universities and the like.

“We need government to recognize the need to build the next-gen work force,” Mr. Lesser said. This is “fundamental to staying competitive in the future,” he said. “The challenge goes beyond education. It’s also about good immigration policies.” In this way, he argued, a! country ! facing demographic challenges â€" Germans, according to a government survey released last week, are the most childless adults in Europe â€" may preserve wealth and adapt to the future.

Whether by increasing online courses, interacting with students or raising the relatively dismal level of numeracy and literacy among American high school graduates, improving education “is one of the few things I can be unguardedly optimistic about,” said Niall Ferguson, the Harvard University historian. “The solutions are relatively cheap, simple and to hand.”