A better capitalism needs to mitigate the booms and busts that too often bracket economic prosperity
Davos opened this morning with a spirited debate over the future of capitalism. This is now the fourth Davos since the financial crisis hit. The persistence of the Great Recession, against the backdrop of the Eurozone crisis and 2011's Occupy movement, has prompted a deeper exploration of the future of the market economy than has been the case the past three years. But while sharper questions are being asked and debated, so far, there is little sense of new answers.
The sense of urgency was vividly on display. Raghuram Rajan of the University of Chicago gives the West ten years to get things right. "As consumer demand moves to emerging markets, finance, marketing and innovation will move there as well," he said. "The West has about ten years to build new models or else high-skill service jobs will also migrate away." David Rubenstein of the Carlyle Group gives the West three or four years to get out of the debt crisis.
Unfortunately, there is little evidence that urgent actions are being prepared to match urgent timelines.
The most cogent recipe for economic revitalization came from Ben Verwaayan, chief executive of Alcatel-Lucent. Verwaayan proposes three pillars of innovation, sustainability and political reform. These, he argues, are we need to generate jobs in a connected world. Verwaayan also earned points by calling on Europe's people and governments in particular to drop nostalgia and face reality. By this, he suggests a fresh look at competitiveness and the social safety net.