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Creating a harmonious global society

By Klaus Schwab (China Daily) Updated: 2011-05-21 07:53

The state of the world is fraught with unprecendented imbalances and tremendous risks, and our institutions are struggling to keep up with the changing times.

From a lack of progress on international trade and climate change negotiations to challenges involved in meeting energy and food security and the United Nations Millennium Development Goals - we are witnessing a number of failures in international governance. Moreover, the 2008-2009 global financial crisis starkly illustrated the systemic nature of risks, demonstrating how the integration of financial and trade markets quickly transmit turbulence in one economy regionally and internationally.

A major reason for the crisis was the belief that evolved in the exuberant economic climate beforehand, where free markets can self-regulate and the purpose of business is purely to make profit. This belief has shifted the balance of power to the shareholder and the financial community at the expense of other stakeholders.

While globalization has brought vastly improved economic welfare for hundreds of millions of people, billions more are still being left behind as economic inequality reaches epic proportions.

Today, about 1.75 billion people live in what the UN calls "multidimensional poverty", with acute deprivation in health, education and standard of living. Such inequities are not sustainable without social repercussions. We need to devise a way to address the social impacts of globalization. We must demonstrate that the free flow of goods and capital does not develop to the detriment of the most vulnerable segments of the population.

Although as a global society we have never been more interlinked and interdependent, there is a paradox in how the more globalized our world and systems have become, the more "localized" and self-centered we have become. What we are experiencing is not only a wake-up call to rethink our global institutions and systems but, above all, our ability to think long-term and not just to the next quarterly report.

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