CAPITALISM. SAVE(S) HUMANITY!
A Davos Conclusion
Following the journalistic perception in advance, Davos 2024 initially seemed something like a crisis meeting. Restoring trust. In science, politics, and especially in the economy. That was the core theme of this year’s World Economic Forum. However, it became clear during the week: The World Economic Forum has become a showcase and competition of global capitalism. Economy drives change.
Technological turbo-capitalism of American-individualistic style meets state capitalism in new red garb, the rapid rise of cash-is-king and show capitalism of the Middle East – especially the Saudi Arabian kind. Quietly behind this, a new longing for India is developing. The silent supermarket ‘can deal with anyone’ and offers investment opportunities as an alternative to the three big players.
But where does Europe stand, and especially what role does Germany play? Erhard’s ‘Prosperity for All’ was once the gospel for all those who sought capitalism with social responsibility, and the German Economic Miracle was like a revelation. But in the face of new technologies, other miracles have long been revealed to people, and here a society has been put to the test: Prosperity is not a law of nature.
The self-confidence is still strong, and the American dream still leads the technological race. As a new global figurehead, Satya Nadella is steering Microsoft towards a 3 trillion valuation. The company has overtaken Apple as the most valuable company in the world and, with its new focus on AI, is not looking back. Political, technological solutions like those from Palantir, events featuring new quantum technology, investor networks, and the presence of the executive floors of all NASDAQ 100 companies are impressive. The USA is still ‘the place to be.’ The events and news from American media houses like Wall Street Journal, Politico, and Bloomberg dominate even in Davos. However, it is noticeable on the promenade and at evening receptions that the loud, boastful, and so self-confident Americans have to realize that they are no longer alone at the top in terms of technology and progress.
The New Kid(s) on the Block
Strategic technology investments are attracting companies. Saudi Arabia is sneaking in with still bubbling oil billions – we buy everything – and a foresight into the action, born from the realization that fossil riches are finite. Nowhere in economy and geopolitics is the Middle East not involved. And, as it would happen, Saudi Arabia announced on Thursday that they will host a two-day World Economic Forum Special at the end of April to enhance the global profile of the Kingdom and its capital Riyadh.
In mid-November, 97,000 people traveled to the UN Climate Conference in Dubai for Cop 28. Climate activists and the media expressed criticism: wrong place and a doubling of travelers! Only 50,000 participants came to Cop 27 a year earlier. The headlines focused on private jets and environmental pollution, values, and ‘greenwashing,’ and everything seemed bad. The major goal of phasing out the use of fossil fuels could not be passed in 2023 either.
However, there is another perspective: Twice as many people from new regions and countries – bringing capital – travel to a region that is undergoing change. The United Arab Emirates and Saudi Arabia are anything but perfect by European standards, but on closer inspection, it is evident that considerable development has taken place here over the last ten years, including the former Austrian Federal Minister for Digitalization and Economy reporting significant progress in women’s rights.
Maybe a big COP in Dubai will turn more ‘black sheep’ white, even if a bit of ‘washing’ has to be done… As a cognitive irritation: 7.2 million people traveled to the last Oktoberfest. The COP was also not climate-neutral, nor was it efficient – the world is not perfect –, but where and how does change take place?
This question is relevant and at least from a German and European perspective of utmost importance. On the Davos promenade, Saudi Arabia staged five houses with high-quality design and technology. Future projects, reminiscent of science fiction, are presented. What looks like utopia is sobering behind the scenes with chaos and a large construction site. But construction is underway!
Beijing is Back
Premier Li Qiang presents a five-point plan for building trust and, after Corona, travels to the Swiss mountains for the first time with a large delegation. China, with its state-capitalist turbo, often perceived as short-term and high-pressure deal-making, is back on the global stage. Delegation trips are taking place all over Europe, and the American government is taking a closer look. Is economic growth prioritized over values?
But China is more than that. Today, the People’s Republic is no longer just the extended workbench and joint-venture partner for outsourced labor markets of Western brands. Capital is (still) not as readily available as before Corona, but numerous background discussions take place during the WEF week, and the Chinese delegation is now deeply intertwined in the Swiss strategic network, showing how innovation and progress can be achieved.
Sexy, innovative, and affordable – this is how the new mobility concepts from China are presented. The sleeping German giant must start to move. ‘Competition invigorates business,’ goes the old wisdom. But here, a reaction is not enough. While Deutsche Bahn provides the energy for the charging stations in the heart of Frankfurt, the e-buses come from China – Build Your Dreams (BYD). New providers are emerging, and alongside Musk with his Tesla, Asian brands are penetrating the heart of the German automotive industry. NIO, with a production site in Berlin and a showroom in Munich, BAIC, which is entering into a joint venture with Mercedes and Hyundai, and SAIC, China’s largest car manufacturer, are turning over hundreds of billions. Overnight we see BYD on German streets – a company that is already close to Tesla in sales figures and sells more than twice as many electric vehicles as VW.
From 2035, the sale of combustion engines in Europe will be prohibited. This may not seem fast, but it is still a spark of hope for progress. However, China is not moving fast enough. As early as 2025, electric cars – with today’s technology – will be cheaper than combustion engines over their entire lifecycle. Laws will not eliminate combustion engines. Progress, technology, and the market economy will bury the old cars.
Progress and investments in new fuel structures like hydrogen, upgrades in design and technology: China is not only cheaper. It delivers quality today in an appealing and functional design. The market economy of the red imprint shows that the model ‘state capitalism’ can not only keep up in the supposedly unattainable competitive advantage of innovation and quality but can also lead.
How many similar narratives can we find here?
Unfortunately, the answer from a German perspective is: Several.
What Remains of the ‘Sick Man’?
The AI House – whose initiators come at least partially from Germany and Europe – seems to have been a success. Otherwise, there is only the small, but charming ‘Belgium House’. Attraction: Beer and fries for everyone. Happy hour at 6:00 PM. A taste highlight, but certainly not the peak of pleasures in the global competition for technology and progress.
During the week, German media reports, ‘German wind energy expansion picks up speed.’ It is estimated that about 40,000 wind turbines are needed in Germany (including older generations and maintenance). That sounds like an incredibly high number. With permitting procedures that can take up to 8 years and are accompanied by lengthy and complex discussions, as well as a lack of willingness to take risks and investment reluctance, one wonders how this is supposed to work. ‘The money is there,’ say the specialists, but everything takes too long.
Surprisingly, however, it works. Germany has already built over 30,000 onshore wind turbines today! And that’s just the wind from the land, not the potential of offshore wind and the incredible possibilities of photovoltaics or other forms of energy for a green future.
In 2023, a new record was set for electricity generation from renewable sources. Nearly 60 percent of electricity was produced ‘sustainably,’ according to the Fraunhofer Institute for Solar Energy Systems (ISE). The amount of electricity from fossil energy sources fell back to a level from the 1960s. And more energy was imported because German coal energy is simply not competitive. In a time of decadence and lack of performance readiness, what future is anticipated? What do we believe? What could we achieve if we managed to develop a new culture of performance and increase speed?
Do we believe in an increase in performance in terms of storage and distribution? Do we believe in more expansion? Technological progress? If so, why are we not able to anticipate such a future? In the next few years, the need for batteries and new, alternative forms of energy will triple. Parallel to this, new large projects are initiated. In the short term, a global competition for resources and new market shares, but in the medium and long term, a shift in global competitiveness.
What is essential is not when the expiry date for fossil energy sources is reached. It is important at most as a vision, but far more important than an arbitrarily named point in time will be the consequences thanks to technological advances. They mark when these forms of energy production will no longer be competitive. ‘Free’ green electricity for all in sight. New business models will emerge. And at least it is foreseeable that, after the rapid rise, the marginal costs for energy will behave similarly to the marginal costs in access to knowledge – intelligence – last year. At the beginning of the next decade, they will rapidly approach zero.
Do we in Europe seriously believe that we have reached a technological development stage on the basis of which we can now design future-proof business models? Are GPT-4 and current battery standards the basis for future calculations? Or do we anticipate a world in which quantum artificial intelligence is achieved? In which new storage and distribution structures are developed? We don’t have an energy problem; we have a storage and distribution problem. And, if that seems solved, what does that mean for Germany and Europe?
It may seem cynical to think about what an anticipated future scenario for Ukraine is, in the midst of a war. But if Ukraine’s existence remains secure, reconstruction will follow. The German Economic Miracle, Silicon Valley. History will then repeat itself.
What would be the consequences? The Ukrainian Foreign and Digital Minister comes to Davos and presents the future. Decentralized green energy, eGovernment, digital education offerings, blockchain-based payment systems, and digital currency to combat corruption and create transparency in funding. The construction industry? A boom market after a hopefully soon end to the senseless war.
Germany: Land of Positive Progress
Not everything that glitters in Davos is gold. And capitalism, as our global operating system, has particularly lost its luster lately in terms of social aspects. If we want to at least stabilize here, an exchange remains important – even in direct encounters. With the vision of an eco-social market economy, this can be realized if the economy functions. If there is something to distribute, then work can be done on social aspects. Sustainability and ecology need frameworks, regulations, and behavioral changes, but above all, investments in new technologies and business models that are not at the expense of the planet.
What does this mean? Regulations are fundamentally important, and from a Western, especially European perspective, a change in consumption behavior is necessary. But from my point of view, an anticipated future will look different. AI regulation, for example, is not realistic, yet global guidelines are needed. However, it is primarily about competitiveness, new markets, and technological competition. Many opportunities are still open. On the economic catwalk in the Swiss Alps, there were many exciting approaches. And they are just the beginning. This is how Davos 2024 feels. Positivity shapes the picture, even if crises and problems are much talked about. Everywhere people are in motion, many small steps.
Germany needs a new culture of achievement. A reversal from a culture of complaint to one of optimism. Cup by cup, as ‘Starbucks founder’ Howard Schultz once formulated – step by step. Big visions and strategic plans are important, but above all, what is needed today is daily progress. Germany: Land of positive progress as a vision for 2024?
If this is achieved, quality and innovation will follow, and from the sick man will emerge a young, vital woman, who looks ahead far-sightedly in the name of Europe and acts in the short term. We need action heroes who see the heroic (again) in action. Even Goethe was aware of this. In ‘Faust’ it sounds so apt: ‘In the beginning was the Word!’ with the realization ‘and write confidently: in the beginning was the Deed!’