30 January 2009

Davos: Delusions At Not-So-Magic Mountain

By Alejandro Nadal

In 1924, Thomas Mann published his novel, The Magic Mountain, a powerful reflection on the European bourgeoisie, illness, sexuality and the destructive tendencies of “civilisation”. The place where events unfold is Davos, at that time dominated by Waldsanatorium, specialised in treating tuberculosis. Today that tiny alpine city is seat of the World Economic Forum and the irony is immediate: the world economy is very sick but it is not clear that it is going to find its cure at Davos.

Despite the fact that the economic indicators are going downhill faster than experienced skiers on the slopes of Davos, participants at the WEF will look to mend things and relaunch an ideological offensive. The theme of the meeting is humongous: “Shaping the world for after the crisis”. And the agenda includes items such as redefining institutions and systems. It is not a bad thing: after all, the financial and banking systems of the USA and the U.K. are on the point of nationalisation.

Davos has always been presented as the most important meeting on the planet attended by the most influential people. And each year we have to put up with an avalanche of propaganda while the world inexorably advances towards a financial, economic and environmental crisis. The fact is that the rich and the famous slept at the helm and now want to convince us that they can “shape the world” for after the crisis.

At Davos it was always said that globalisation was the panacea, the natural road, there was no alternative to neoliberalism and we were in the time of the sole doctrine. The crises did not worry them (Mexico or Brazil, Thailand or Russia). Nor the bad news on the environmental front: the emission of greenhouse gases, deforestation, soil erosion, over-exploitation of aquifers or the massive extinction of species. The message that always left Davos was a variant of Dr Pangloss’ vision: yes, things are not perfect, but it would have been worse without our vision of globalisation.

Now that the worst crisis of the capitalist world has exploded in their face, the fantastic idea has occurred to those habituated to Davos: find the form of world economy that most suits capital. After all, the reasoning is that the world will remain with the powerful and their work in Davos consists in defining the contours of the new social pacts which will permit another long cycle of accumulation of capital.

The organisers of the Forum have proudly stated that this year the majority of the participants will be politicians (including Putin and Hu Jintan, which says something about the redistribution of power). The financiers are too busy saving their retirement bonuses and will not be able to attend. Perhaps they will not be missed. The objective at Davos is to delineate new capitalist regulation systems, perhaps with a Keynesian and social democratic tint, to drive the ideology of globalisaton. The Duke of Lampedusa would have been proud: that everything changes so that it can keep being the same.

It does not matter that the crisis has hardly begun: Davos is preparing its funeral ceremony. Is this premature? The readers will judge.

In the USA, the monetary policy is not working. Despite the zero interest level and quantitative easing (so-called unconventional measures), credit is not flowing. On the other hand, the Obama administration is negotiating a $825-billion package and the Republicans are haggling for their vote. But it is not even clear if that sum will be enough to revive the economy.

The European Union and Japan are in recession. China has acknowledged a strong reduction in its growth rate. The International Monetary Forum, in other times so optimistic, thinks that the whole world will have close to zero growth in 2009. The participants at the Davos form should not venture out alone to the ski slopes so as not to be buried under an avalanche of bad economic news.

In The Magic Mountain, the young Hans Castorp takes a small train to go up to Davos to visit his cousin hospitalised at Berghof sanatorium. Costorp is not ill but his short visit turns into a seven-year stay in which he comes to know many characters. One of them is the radical Naphta, who during an argument ends up crying out: what our age needs is terror. If the crisis culminates in wars, the warning of that character will have to be borne in mind. After all, that prophecy became reality in the middle of the twentieth century. If only the future is not as dark after this crisis.

The participants at the Davos forum, the rich and the famous, are not going to be cured of anything, much less their arrogance. But they can live with the illusions of the magic mountain. After all, they have the best crisis that money could have bought them.

Source: La Jornada

[Alejandro Nadal is professor of economics at El Colegio de México, Mexico City, coordinating the science, technology and development programme and has campaigned against GM crops as well as serving on international people’s tribunals.]

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