The Magic Mountain

When the imperial global economy explained itself to the membership in Davos in 1998.

By Lewis H. Lapham

Thursday, January 25, 2018

Davos, Dorfli, and Seehorn in Winter, c. 1890. Library of Congress, Prints and Photographs Division.

Davos, Dorfli, and Seehorn in Winter, c. 1890. Library of Congress, Prints and Photographs Division.

In January 1998 Lewis Lapham attended the World Economic Forum in Davos, Switzerland. The following columns were published in the May and June 1998 issues of Harper’s Magazine.


Poverty is an anomaly to rich people. It is very difficult to make out why people who want dinner do not ring the bell.

—Walter Bagehot

Although in many ways bountiful and in some ways benign, the colossal mechanism that generates the wealth of nations (a.k.a. “The Global Economy,” “The Invisible Hand,” “Moloch”) lacks the capacity for human speech or conscious thought, a failing that troubles those of its upper servants who wish to believe that it is they who control the machine and not the machine that controls them. Their amour propre forbids them from picturing themselves as mere stokers heaving computer printouts and Montblanc pens (or shopping malls and movie studios and Mexicans) into a blind, remorseless furnace. They seek a more gracious portraiture (masters of markets, captains of commercial empire), and so, every year in late January, they make their optimistic way from the low-lying places of the earth to the World Economic Forum in Davos, Switzerland, where, high up on the same alp that provided Thomas Mann with the setting for The Magic Mountain, they brood upon the mysteries of capitalist creation.

Last winter I was given the chance to attempt the annual ascent, and because the forum’s sponsors had waived the $18,984 in various subscription fees (in deference to my occupation as an editor, and therefore a prospective supplier of comforting adjectives), I undertook to exercise the option. Here were the people to whom the world’s governments assigned the task of talking about the world’s money, and where else could I expect to learn how to divide the price of the German deutsche mark by the number of fires in the forests of Brazil, or multiply the number of ships in the Suez Canal by the cost of bombing Iraq?

The advance publicity kindled the glow of great expectation at an altitude of five thousand feet—five days and six nights of expensive discussion attended by at least two thousand very important people from 150 countries (heads of state, finance ministers, policy intellectuals, Nobel Prize–winning physicists, corporate executives as thick upon the ground as pine needles), a schedule of continuous discussions on almost any topic that anybody might care to name—the bankruptcy in Jakarta, the future of the internet, the outlook for Romania—maps of the oil fields around Baku, private viewings of George Soros and Bill Gates.


Traveling from Zurich on the afternoon of Thursday, January 29, I changed trains at Landquart, and during the long and patient climb up the Prättigau, watching the mountains present a succession of picture-postcard views behind the shifting foregrounds of majestic trees and snowy villages, I passed the time remembering that Mann’s novel had addressed the confusions of a ruthlessly acquisitive society in the years prior to World War I, the part of its hero assigned to a young engineer from Hamburg named Hans Castorp, who didn’t discover, until well after he’d met the lovely but disquieting Madame Clavdia Chauchat, that he’d been sent on a fool’s errand.

I left the train at Davos-Platz, the next station beyond the one at which Castorp had arrived in the summer of 1907, and although I wasn’t met by a tubercular cousin with a yellow carriage and two brown horses, I was directed to the same Edwardian pavilion—then the International Sanatorium Berghof, now the Berghotel Schatzalp—in which Mann had placed the story of Castorp’s search for the Holy Grail. The coincidence struck me as a humorous one, likely to amuse a sardonic bond trader but not apt to assist my own researches into the fine distinctions between the G-7 and the group of 29 plus 5.

I had enough trouble finding the locus of the forum at the Congress Centre, and then, after passing the security checkpoint stoutly defended by Swiss soldiers holding machine guns, trying to know where to look or what to do next. Meetings had been in progress since early that morning, and my first impression was that of the United Nations building in New York during an outbreak of bad news in West Africa—a great many self-absorbed people hurrying to and fro with documents of appalling significance, a welter of languages (predominantly English but also a good deal of French and German), television crews filming stand-ups of Elie Wiesel and the president of Argentina, nearly everybody talking on cellular phones.

The pretty girl at the registration desk handed me a white badge marked with my name and passport photograph as well as a computer code granting access to the forum’s interior lines of communication. To be worn around the neck at all times, the badge identified me as a participant, and therefore a person of consequence accorded a higher rank than the members of the working press, who received orange badges and were to be looked upon with pity or contempt. Another pretty girl behind a different desk presented me with a canvas shoulder bag stuffed with a sheaf of printed instructions—the plan of the Congress Centre, a directory listing the names and titles of all other participants (well over a thousand pages of small print), elusive references to last year’s meeting (unanimous in praise of the Asian economic miracle), directions to the forum’s several websites and uplinks.

But even with the instructions firmly in hand, I was still at a loss to know which of the late afternoon briefings to attend, the one about El Niño or the one about robots. Unable to resolve the dilemma and while waiting for Helmut Kohl, the chancellor of Germany, to deliver the forum’s opening address, I found a table in one of the building’s five cafes and read through the homework assignment in the canvas bag. The forum’s organizers had chosen “Priorities for the 21st Century” as the theme for 1998, and the printed materials glistened with four-color advertisements announcing the presence in Davos of an impressive number of the world’s good corporate citizens doing their modest best for the future health and happiness of mankind. A program of events listed the place, time, and principal speakers for each of the 310 sessions taking place over the term of the forum, and for most of them (those in the Congress Centre’s twelve halls and conference rooms as well as those conducted over lunch and dinner at twenty-seven of the leading restaurants in town) the participants wishing to attend were advised to secure a ticket in advance. But before I could read through the whole of the book, and just as I turned the page to session seventy-one (“China Business Networking”), I noticed that the badge around the neck of the man seated across the table identified him as a traveler from Beijing. Thinking to begin a conversation and pointing to the page in the book, I said something to the effect that in China these days business presumably was booming.

“Oh yes,” he said. “Four years ago, zero cellular telephones; now, twenty million cellular telephones. Four years ago, no pagers; now, forty million pagers.”

We managed to talk only briefly, because he was late for a meeting with some people from Motorola, but in those few minutes I heard the first faint statement of what I would come to know as the forum’s dominant leitmotif. The man from Beijing didn’t intend any such statement, musical or otherwise; he made it inadvertently, by way of an offhand remark while excusing himself to keep his appointment on Promenade Entry Level 3.

“You know,” he said, “in China we’re spending $750 billion for infrastructures, but in the last two months we laid off one million railroad workers. You could say that our lack of democracy is a blessing. In Europe or America there would be arguments.”

Two days later, delivering a formal speech at one of the forum’s plenary sessions, John J. Sweeney, the president of the AFL-CIO, inverted the leitmotif and transposed it into a minor key, saying that despite the many wonders of modem technology, working people in the United States, and nearly everywhere else in the world that one looked, were being forced to pay a heavy price. Unless the global economy could be reconfigured to supply the needs of the many as well as the comforts of the few, then the nations of the earth could look forward to a response that “may make the twentieth century seem tranquil by comparison.”

Sunrise on the Matterhorn, by Albert Bierstadt, c. 1875. The Metropolitan Museum of Art, Gift of Mrs. Karl W. Koeniger, 1966.

Kohl arrived late and spoke in German. His presence attracted as many as one thousand people to the Congress Hall, the largest of the forum’s auditoria, and among the well-dressed heads in the crowd I recognized several American newspaper columnists as well as a number of corporation presidents whose photographs I had seen in the pages of Fortune and Business Week. Cameras placed at different angles in the hall projected the chancellor’s image onto a large television screen behind the podium. The magnification exaggerated Kohl’s resemblance to a gigantic bird of prey gazing mournfully upon a row of field mice. He had come to say that the Economic and Monetary Union was an accomplished fact about which he didn’t wish to hear any further argument. Yes, it was going to be difficult—everything was always difficult—but what was done was done. The votes had been counted, the presses already busy with the printing of the new currency. All the pointless whimpering about possible political consequences prompted Kohl to regret that the doubting Thomases in London and Copenhagen never had the chance to know his mother, a marvelous woman, as wise as she was strong-minded, who taught her children to eat the meals placed in front of them on the kitchen table without objection or complaint. “We learned to clean up our plates,” he said. Germany had cleaned up its plate (i.e., accepted the financial discipline required by the Maastricht Treaty), and now it was time for the Italians, and for everybody else in Europe, to clean up their plates. The euro was good for people, and the sooner they learned to like it the better.

Kohl spoke at ponderous length, and I noticed that people were free to wander out into the lobby for a phone call or a hopeful exchange of business cards before returning to their seats to listen to the chancellor’s extended remarks. During one of my own brief absences, I ran across Peter Foges, a producer of television documentaries for PBS and a man with whom I was in the habit of talking about books. He informed me that because I was a participant (white badge, not orange), I belonged to what the forum’s organizers denominated as “the Club of Media Leaders.” The honorific brought with it an invitation to dinner later that evening at the Hotel Rinaldi, a dinner that Foges, who had been coming to Davos for five years and recognized me as a novice in need of additional program notes, encouraged me to attend.

Several of the other media leaders present turned out to be journalists whom I knew in New York under less exalted titles, and the after-dinner speaker, an economics professor from MIT named Rudi Dornbusch, set forth what I later understood to be the economically correct attitude toward the financial ruin in the Indonesian archipelago. “It’s important that some people lose a lot of money,” Dornbusch said. “Important that they be punished for their stupidity and greed.”

His phrase “some people” embraced not only the friends and family of President Suharto but also the Japanese and European banks that had placed fanciful loans all over the roulette table of southern Asia, to no purpose other than their own selfish and myopic gain. Because most of the journalists in the room were American, and because American banks had underwritten a smaller share of the Asian risk, the remonstrance of Dornbusch was received with a show of knowing and complacent nods. Supercilious European journalists apparently had been a trifle too free with their remarks about the United States as a flatulent hegemon (isolationist and smug and embarrassed by a president who couldn’t keep his fingers out of pies), and their American associates welcomed the chance to put on the airs of moral superiority. They also took pleasure in the humiliation of Japan. Five or six years ago the Japanese economy was being touted as the wonder of the world; Japanese banks were buying California, Japanese businessmen were touring the Washington lecture circuit with little sermons about the spendthrift Americans who had lost their knack for making cars. But now that the Tokyo real estate market had fallen upon stony ground, the shoe was on the other foot, and it was possible to speak of the once sovereign shogunate of the Pacific Rim as a nation famous for the incidence of suicide among the officials in its finance ministry.

Together with the gossip current in the corridors of the Congress Centre, the journalists at dinner offered suggestions about which briefings to attend and which kinds of domesticated intellectual (academic, political, literary) were most likely to know what they were talking about, how to get invited to the Coca-Cola reception, where to find the Bolivians, when to order the raclette. “If you think that you’re missing the point,” Foges said, “don’t worry about it. So is everybody else. Something more important is always happening somewhere else.”

By the end of the day on Friday I’d become sufficiently familiar with the forum’s procedures to know that I was always going to be in the wrong place at the wrong time, that if I was in the Fluela restaurant listening to a functionary from the IMF discuss the outlook for Thailand, then I should have been at the Waldhaus Grill, listening to four Bulgarians talk about sand. But I’d wandered into several sessions worthy of note—the president of Toyota defending the competence and honor of Japanese businessmen; Bill Richardson, the American ambassador to the U.N., saying that he was “sick of using words like ‘serious consequences’” and then not being given the chance to bomb Iraq—and I’d come to understand that it was important to make as much use as possible of the word transparency, by which was meant full disclosure of another country’s politics, another company’s marketing plan, somebody else’s money. Transparency was always good (like dialogue and building harmony from diversity), and what had gone wrong in Asia (in Japan as well as in Indonesia and Thailand and Korea) was the general failure to produce enough transparency. I also understood that although each and every one of the forum’s two thousand participants was important, some were more important than others. The conversations apt to lead to a specific result (the building of a dam in Nigeria, say, or the formation of an Anglo-Indian trade agreement) took place privately, at small dinners in the Belvedere Hotel, the time and place and principal speakers omitted from the program. The morning and afternoon discussions served the same purpose as the golf and tennis games arranged for the guests attending a conference at the Aspen Institute—a chance to acquire contacts and enlarge the spheres of access.

The division of interest that remained as constant as the weather—bright blue sky, the temperature at thirty degrees, no wind—was the distinction between the buyers and the sellers. The buyers (bankers and industrialists from the wealthy nations) worried about transparency; the sellers (politicians and government ministers from the poorer provinces) worried about paying their hotel bills. The buyers delighted in grand abstractions and the illusions of omnipotence; the sellers hustled investment opportunities, and all their numbers were as bright and shiny as the exhibits at a boat show—low inflation, high growth, willing workers, beautiful girls, democratic institutions springing up like mushrooms, responsible fiscal policies, broad vistas, a tame press, courageous police.

An exceptionally blunt presentation along these lines took place in one of the Congress Centre’s least opulently equipped meeting rooms before a discriminating audience of American oil-company presidents and French suppliers of municipal infrastructure. A Belgian business executive in a well-cut suit sat on a small stage with three Russian bureaucrats, all of whom looked as if they recently had escaped from one of Chekhov’s provincial town meetings, and after introducing each of them in tum, he smiled upon his fellow participants as if he had brought them gifts of rare and precious fur.

“Here we have three active, successful, real-life politicians,” he said. “They wish to make important statements.”

The Russians spoke in succession from stage left to stage right, like accordion players performing a set of variations on “Moscow Nights.” Some of the translation was hard to follow, but not the principal points of interest: yes, it was true, Russia was a difficult business environment (“Still some chaos”), but Russian enterprises had begun to pay salaries (“We have real government, real president, two chambers of parliament”); Russian exports weren’t being dumped on international markets (“We wouldn’t do that to our good friends, the Europeans”); crime was receding (“Here in Russia we have learned how to get the criminals into the investment process”); foreign investors didn’t pay taxes until their deals returned a profit (“Remember America in the nineteenth century, wonderful place, no antitrust laws”); and eighteen thousand feet of pipe had been drilled into the Caspian basin without yet hitting bottom in what appeared to be an ocean of oil.

At the end of their recitation the Russians fell abruptly silent, their faces as stolid as cement, their hands clasped patiently on their knees, their innocent blue eyes staring innocently off into the innocent blue distance of the Siberian steppe. The Belgian sponsor was immediately on his feet, talking rapidly into the nearest microphone: “What we have heard, gentlemen,” he said, “is exciting news. Stability in Moscow, flexibility in the regions, higher confidence for ’98. A bumpy road, meine Herren, but in the end, great riches.”

The buyers weren’t so sure. What they had heard about Russia inclined them to think that foreign money had as much chance of surviving a Russian winter as did the armies of Hitler and Napoleon. Seventy-nine bankers had been shot to death in Moscow or St. Petersburg over the course of the last four years, and some of the other Russians in Davos—not the bureaucrats but the ones who arrived by helicopter with flashy blond women and suitcases of American currency—didn’t seem to have acquired, at least not quite yet, a proper sense of capitalist decorum. They preferred vodka to mineral water, they didn’t attend the sessions about the prudent management of long-term corporate growth, and their feminine companions didn’t sign up for horse-drawn sleigh excursions to the picturesque village of Clavadel.

Small windrows of doubt drifted across the foreheads of the participants gathering their notes and making ready to depart for the next round of briefings. An oil-company executive said that in Russia the criminals were easier to deal with than the politicians (“At least they stay bought”); somebody else said, “Can you imagine meeting those three guys on a road twenty miles west of Sverdlovsk? They’d make a joke of forcing you to choose between giving them your wife or your car.” The editor of a financial newsletter explained that it was no easy trick getting the oil safely away from the Caspian basin. No long-distance pipelines had been put in place, and the possible routes (via the Caucasus to the Black Sea or the Mediterranean, from Kazakhstan to China, through Iran to Khark Island, via Pakistan and Afghanistan to India and the Arabian Sea, through Russia to Ukraine) were all, in the editor’s word, “problematic.” “We’re talking about bandits,” he said. “About people draining oil out of a pipeline in the same way they would take milk from a goat.”

Napoleon Crossing the Alps, by Alphonse François, 1851. The Metropolitan Museum of Art, The Elisha Whittelsey Collection, The Elisha Whittelsey Fund, 1949.

The worries about security—security for private investment, security for regional capital markets and corporate communications systems, security for public institutions, for civil society, for Western civilization—bulked large in the conversation at Davos, in the scheduled sessions and the small talk at the tables in the Sanada Cafe, and on reading through my notes on Friday evening, I noticed that a surprising number of the observations pointed in the same anxious direction. The participants wished to live in a world governed by clearly established rules: rules of contract, rules about the transfers of money and information, rules about the polluting of rivers and politicians. The exact wording of the rules mattered less than a willingness among the interested parties to obey the same rules. But how was the wise statesman to proceed, and what was the good corporate citizen to do, in a world bound only by the rule of profit and loss? And if the wealth of nations came and went at the pleasure of the “free market” (in many ways great and glorious but as mindless as a ball bearing), then what became of the dream of reason, and what happened to the fond belief that it was the corporate magi gathered in solemn assembly at Davos who controlled the engine of the global economy and not the other way around?

The questions kept coming up in different contexts, different conference rooms, different languages, and by the end of the day on Friday answers were in short supply. But tomorrow was Saturday, and on Saturday the forum would call upon the wisdom of George Soros and Bill Gates, and surely one or both of those gentlemen would know how to invest Leviathan with a Christian conscience and a human face.


To feed men and not to love them is to treat them as if they were barnyard cattle. To love them and not to respect them is to treat them as if they were household pets.


At the end of last month’s episode an impressively large cast of gratifyingly important people, no fewer than two thousand leading politicians and prominent businessmen from 150 countries, was milling around on the set of the World Economic Forum in Davos, Switzerland, halfway through its annual performance of the passion play that in Bayreuth or Oberammergau might have been presented in medieval costume under the title “The Agony of Mammon.” Most of the company had been in town for two days and three nights, diligent in their study of the script, faithful to their program of exits and entrances—attending the procession of conferences in the Congress Centre (on topics as diverse as “Cross-cultural Moral Judgments” and “The Outlook for Kazakhstan”), carrying forward the discussions over lunch or dinner at picturesque resort hotels, conferring on cellular phones (with their secretaries in Brussels or New York, with their helicopter pilots marooned in the fog over Zurich), examining maps of the South China and Caspian Seas, buying champagne for the attractive young ladies (elegant proofs of the great theorem of globalization) who had come from as far away as Iceland and the Canary Islands.

My own part in the proceedings was that of a supporting player, temporarily raised by the forum’s sponsors to the rank of “Media Leader” and awarded the distinction of a white badge (faced with my name, affiliation, and passport photograph) that granted access not only to the forum’s numerous meeting rooms but also, without first having to arrange an appointment, to any of the other participants. The latter privilege was helpful but not without its difficulties. The print on the badges was too small to read at the decisive distance of four feet, and because protocol forbade too crass a weighing up of a fellow participant’s prospective worth, random encounters in a coffee bar or hotel lobby offered something of the excitement of an Easter-egg hunt. One was obliged to open the conversation without knowing the significance of the person to whom one was already in the midst of making a pleasant remark about the chance of snow or terrorism. It was possible to discover the Australian finance minister or the chief executive officer of Dassault Aviation; it was also possible to blunder into another media leader almost as poorly informed as oneself.

But for the most part I’d been lucky in the discussions that I’d come across during the first two days of the forum, and by Friday evening I could make out the broad trend of the general concern. Not surprisingly, given the ample wealth and assured status of most of the participants, the worry was about the future. For the time being, the good old invisible hand could be relied upon to distribute very handsome stock options, quite a few of them in denominations of $10 and $20 million, but how long would the good fortune last, and if it wasn’t going to last, where on the horizon could one expect to see the heralds of doom? Speaking in which language and bringing what blood-soaked remnant of whose severed head?

Not that anybody doubted the sacred truths of laissez-faire capitalism or questioned the sublime wisdom of the bottom line, but some of the more anxious members of the troupe lately had begun to wonder whether they remained (as their advertising agencies assured them they did) the masters of their fate and the captains of their destiny. The free market, of course, was another name for God, but then again, when one got to thinking about it, the market, like God, didn’t always answer everybody’s prayers.

The abruptness of last year’s financial collapse in Asia had come as something of a nasty surprise, and maybe the world was a more uncertain place than one might guess sitting here on the terrace of the Berghotel Schatzalp, enjoying the plum cake and admiring the view of the Rinerhorn. Just read the newspapers or listen to one of those policy-institute intellectuals at the Congress Centre talk about Rwanda or the Balkans, or about the Russians raffling off their inventories of nuclear weapons, or that awful story this morning in the Herald Tribune, the one about the Italian businessman kidnapped eight months ago in Brescia. The family had been slow with the ransom money, and the kidnappers were sending little pieces of the businessman’s ears (last month the left ear, yesterday the right), as reminders of the outstanding debt.

No sir, it wasn’t always easy to justify the market’s ways to man. Not that anybody knew how else to proceed, but the market was damned hard to figure, and sometimes it could be downright mean. Which was the reason for all the walking around with the badges and the briefing books—to see if it might be possible to come up with a means of teaching the market how to behave in a civilized manner, maybe tempering its cruelty (which wasn’t the market’s fault, but merely a fact of its nature) with some sort of ethical component. A large project and a complex task, and not one to be addressed lightly, but if the men of Davos didn’t undertake it, who else would? Here they were on the same majestic alp to which Thomas Mann had given the name of “The Magic Mountain,” and although they couldn’t draw upon the novelist’s acquaintance with the music of Richard Wagner and the writing of Friedrich Nietzsche, they were, like Hans Castorp, heirs to the dream of the Obermensch, and they had brought with them in their hand-sewn luggage what the correspondent for London’s Financial Times estimated at “roughly 70 percent of the world’s daily output of self-congratulation.” Having achieved their success by virtue of their talent for organization, they defined the dilemma of postmodern capitalism as a problem in management rather than a question of politics. Politicians were by definition untrustworthy, belonging to one of only two familiar types—light-minded demagogues stirring up crowds, or “pesky legislators” constantly bothering people with demands for bribes. Markets might have their flaws, but government was worse. Political interference wrecked the free play of natural distribution, and government never knew how to manage anything—not roads, not dairy farms or gambling casinos or capital flows. All would be well, and civilization much improved, if only politics could be manufactured in the way that one manufactured railroad cars or tomato soup.

The Lake of Zug, by J.M.W. Turner, 1843. The Metropolitan Museum of Art, Marquand Fund, 1959.

But before the assembly lines could produce a healthy brand of salt-free politics (packaged in bottles or cans, available in drugstores and ballparks) the lords of capitalist creation first had to establish a safe commercial environment, and no conversation at Davos failed to touch upon the question of how to sow the wilderness of the free market with the seeds of moral scruple. At session number fifty-three, “International Corruption: How Can Companies Play by the Rules and Still Win?” the participants assembled in the Salève Room reviewed the lessons of bitter experience. Seated in round, cream-colored leather chairs, they began by exchanging cautionary tales about the legendary rapacity of Nigerian oil and finance ministers, about the different ways of laundering money in warm and cold climates, about the competitive advantage enjoyed by German manufacturers, who could write off their annual payments of $2 billion in bribes as a tax-deductible expense. The several narratives prompted a number of general observations. Corruption was more prevalent in those countries that insisted on stringent forms of government regulation, because no poorly paid public servant in one of the dustier places of the earth could refuse a gratuity of $50,000 from a handsome CEO wearing Italian shoes and a British suit. The poor man would find it hard to look the CEO straight in the eyes, probably would think that he was looking into the face of Quetzalcoatl.

Even so, systematic bribery was preferable, at least in the short term, to random bribery, because “then it becomes a rational cost.” But in the long term, bribery under any of its aliases was the enemy of global freedom and bad for economic growth. Bridges and dams collapsed (because the money allocated for steel beams financed the prime minister’s harem or the general’s zoo), and people died in large numbers, which didn’t improve local attitudes toward international business corporations. The habit of paying bribes also corrupted the people on the high side of the money. Learning to deal dishonestly with others, even graduates of Harvard Law School too easily became dishonest with themselves, and sooner or later their own annual reports began to read as if they had been composed under a ceiling fan in Abuja.

Further concerns about the barbarism of the free market appeared in a conversation over lunch at the Seehof Hotel in a sequence of questions and answers arranged around the topic of corporate espionage. Once again the participants came up against the problem of “transparency”—i.e., the need for people to tell one another the truth, not only about their business dealings but also about their deficit spending and their bank credit. Some of the civilized countries could rely on clean and well-lighted regulatory agencies, but as the markets for the world’s trade became increasingly competitive, the prudent businessman was well-advised to take precautions. Every technique known to government intelligence services during the long, dark night of the Cold War (electronic surveillance, blackmail, disinformation, telephone intercepts, timely traffic accidents) had been privatized by unscrupulous corporations willing to steal their competitors’ customer lists and product design. Any company of sufficient size should assume that in somebody’s mind it was “a fat target,” its computer system probably invaded, its proprietary information almost certainly being sold (at prices running to six and seven figures) by executives recently downsized. The kingdom of organized crime meanwhile was beginning to resemble the Holy Roman Empire, and if its several subsidiaries were to be merged or pooled under the flag of a single, sovereign state, the sum of its collective enterprise would exceed the GDP reported by most of the world’s countries.


As was to be expected, much of the conversation at Davos anticipated the advent, in January 1999, of the new European currency, the euro. The signatories to the terms of the Maastricht Treaty had agreed to reduce government expenditure on the comforts of everyday life—free education and health care, generous unemployment benefits, etc.—because the suppliers of their commercial enterprise no longer could afford to pay the carrying costs. Not if they wished to keep pace with the Americans and the Asians. The argument in favor of the euro presented it as a deus ex machina guaranteed to make the European economy more competitive in the world market, and its promoters projected an immense upwelling of surplus energy—more jobs, less dependence, greater profits, braver hopes, a vigorous rising from the velvet sofas of the welfare state. The changes, of course, wouldn’t take hold at once, and during the brief period of delay (while the benevolence of the public sector was being transferred to the no doubt equally benevolent offices of the private sector) a certain number of people might experience “disruptions” and “dislocations,” possibly even a few moments of temporary “discomfort” and short bouts of “austerity.” The inconvenience couldn’t be helped, and it certainly wasn’t anything to worry about—more like the few minutes of turbulence encountered on a weekend flight from London to Biarritz than like a bread riot in Weimar Germany.

American Bankers Association Convention, 1901. Library of Congress, Prints and Photographs Division.

The benefits accruing to the accounts of European corporations could be clearly foreseen; the social and political consequences were less clear, and a few of the more historically minded participants confessed to a vague sense of uneasiness. On Thursday evening in the bar at the National Hotel, a French industrialist wearing a turtleneck sweater and a tweed suit didn’t find it hard to imagine barricades in the streets of Paris and Marseilles. To a lovely young lady who admired his watch but missed his references to Talleyrand, he explained the Maastricht Treaty as an economic means to a political end—a government by fiat, a new social contract drafted by corporate lawyers and administered by a bank in Frankfurt. Wonderful in theory, but possibly not so wonderful in fact. Suppose the common coinage of the euro didn’t result in the happy set of circumstances envisioned by Louis Vuitton and Chancellor Helmut Kohl? Suppose the good news was a little slow in coming, like the money for the Italian businessman’s ears? What then?

The question seldom came up at the plenary sessions in the Congress Hall, where the consensus projected on the handsome television screen was invariably as sunny and bright as the blue alpine sky, and never more eloquently stated than on Friday morning by Li Lanqing, vice-premier of the People’s Republic of China. Sympathetic to the concerns of his capitalist friends confronted with the prospects of a little deprivation, the vice-premier observed that China was no stranger to the “challenges” of “economic restructuring and enterprise reform.” In China, 87,000 state enterprises were on the way to being privatized, which meant that 112 million workers probably would be scrapped. Not an easy or pleasant task, said Mr. Li, but one that had to be squarely faced. For how else do countries find their way into the garden of prosperity if not by crossing the river of austerity?

“On the one bank of the river,” he said, “we have the traditional planned economy; on the other, the socialist market economy. Now, most Chinese enterprises have crossed the river and are doing well after adapting themselves to the environment and law of the market economy…But some other enterprises are still struggling to cross the river by various means: some by swimming, others by boat, and still others by building bridges. I believe that in three years’ time, most of them will get on shore successfully. However, since this is a river crossing, some may be drowned.”

The audience in the Congress Hall welcomed Mr. Li’s parable with grateful applause. A village tale, so simply and inspiringly told. Drowning in the Weser or the Marne maybe wasn’t as instructive as being washed away in the floodwaters of the Yangtze, but the lesson was the same and well worth bearing in mind when the bus drivers in Maim or Lille began to complain about the loss of their paid vacation days.


The word democracy didn’t impose itself upon many of the conversations in Davos; neither did the phrase social justice, and so when John J. Sweeney, the president of the AFL-CIO, stepped up to the podium in the Congress Hall on Saturday morning, the audience was predisposed to listen to another ten minutes of government-inspected clichés, resolute in their recognition of the “challenges” presented by the problem of “economic restructuring and enterprise reform.” If a Chinese Communist could find his way out of the desert of Marxism, surely an American labor leader could do the same.

But Sweeney turned out to be one of the few people at the forum willing to give public voice to the constituencies of private alarm. Like everybody else in Davos, he acknowledged the feats of modern technology and the miracles of corporate production, but he failed to see how the enormous sums of new wealth had been made to serve the needs of the many as well as the pleasures of the few.

“Look around the world,” he said, “Japan mired in recession, Asia in crisis…Russia plagued by a kind of primitive, gangster capitalism, Europe stagnant, Africa largely written off…Latin America adrift.”

Nor did Sweeney take much comfort from the proofs of American prosperity proclaimed by the rising prices on the New York Stock Exchange. Yes, the United States was an economic success story, and some people were doing very well indeed, but one child in four was born to poverty, the schools were a shambles, and so were the hospitals and the roads. Unless the profits generated by the global economy were more evenly distributed and equally shared (in America as well as in the rest of the world), the theses to which the forum had chosen to devote itself (i.e., “The Priorities for the 21st Century”) were likely to be those of the four horsemen of the Apocalypse.

“lf labor has no role,” Sweeney said, “democracy has no future.”

The observation evoked murmurs of disagreement and an impatient rustling of programs and briefing books. A Dutch banker rose to suggest that perhaps Mr. Sweeney hadn’t been paying close attention in the conference rooms, perhaps had missed the news about the restorative tonic of privatization sure to cure the illness of the Asian and European economies by making them more fiercely competitive. “What you are talking about,” he said, “is protectionism, some sort of gift to American labor.”

“No,” Sweeney said. “Not protectionism. A fair division of the spoils. At the moment the workers get the austerity and little else. The speculators get the prosperity.”

Sweeney’s rejoinder dropped like a pebble into a well of indifference, and his remarks would have been dismissed without further notice if he hadn’t been followed to the podium by George Soros, the American financier as famous for his political philanthropy in Russia and Eastern Europe as he was venerated for his vast fortune. Who could fail to heed the utterance of George Soros, the voice of wealth incarnate and therefore omniscient? At Davos he was the man whom everybody wanted to see, the patron saint of Prague who had earned one billion dollars in one week in 1992 by speculating against the British pound, a mystical figure not unlike the Hofrat Behrens, who presided over Mann’s tuberculosis sanatorium, handing out the certificates of life and death. Sweeney’s words were of as little consequence as a scattering of sand, but Soros’ words were as heavy as the stones on Easter Island, and Soros was as bleak as Sweeney.

Only fools believed in the conscience of markets, Soros said, fools and tenured professors of economics. Markets were as dumb as posts and as blind as bats, inherently unstable because dependent upon what people wish for, not what they have in hand, and therefore impossible to maintain in a state of equilibrium.

“Imagine a pendulum,” Soros said, “a pendulum that has become a wrecking ball, swinging out of control and with increasing speed, knocking over one economy after another. First Mexico, then Indonesia and South Korea, and who knows what happens next? Maybe Brazil. Maybe Japan.”

Savoie, by Bisson Frères, c. 1860. The J. Paul Getty Museum.

The tone of the murmuring in the Congress Hall turned suddenly apprehensive, and the pretty girls with the handheld microphones found themselves besieged by participants wishing to offer an objection. The questions echoed the indignation of the Dutch banker. What had happened to the blessings of privatization? To the infinite wisdom of the good old invisible hand?

“Market fundamentalism doesn’t work,” Soros said. “Without the intervention in Asia of the IMF and the World Bank, the whole system would have fallen apart.”

The questions persisted until the time expired, Soros responding to them with an air of cheerful pessimism. Left to its own devices, he said, the global market undoubtedly would destroy itself. Not for any ideological reason (not because it hated rich people or neglected to vote Republican), but because it obeyed the laws of motion rather than the rule of reason, and it didn’t know how to do anything else except destroy itself. Yes, it would be nice if somebody could construct a set of international institutions capable of restraining the market (maybe something in the spirit of the old Bretton Woods agreement), but of what would those institutions consist, and from whom would they derive the patents of authority? Soros smiled and didn’t know the answers, and when the plenary session ended in what was still a clamor of anxious voices, he abandoned the company to its further researches and bid them all a fond farewell.

The sessions continued for another three days, but to the best of my knowledge nobody found a secret computer password (at least none that was posted on the electronic message board) answering the riddle of the global economy or justifying the market’s ways to man. It wasn’t that the participants didn’t look. God knows, they looked—peering at documents, attentive to the simultaneous translations into Russian and Japanese, steadfast in their consumption of the plum brandy—but they never managed to discover the binding formulas of advanced technology that might reconfigure the vagaries of the global economy to the parameters of a video game.

Several prominent speakers, most of them American, offered miracle cures and magic remedies, and on Sunday morning Newt Gingrich, the Speaker of the House of Representatives, appeared before the club of media leaders in the Post Stubi in the Posthotel, resplendent in his song-and-dance man’s character of the man who knows too much. Genially dismissive of the doubts that troubled the common herd of lesser men, Gingrich boasted of America’s unparalleled place in the world—its possession of supreme military and economic power, its immense spending for scientific research, its unquestionable capacity to shelter the nations of the earth under the eagles of what Gingrich called “the Pax Humana,” a phrase and a concept that he thought more faithful to the geopolitical facts than the previous “Pax Americana,” which carried with it the old, outmoded connotations of brutality and greed. From this time forward the nations of the earth should be encouraged to think of themselves as living in a “polycentric, multipolar paradigm,” instead of merely inhabiting the unsanitary and sometimes dangerous slum once known, much too simply, as the world.

Gingrich departed in a bustle of self-importance, and the company moved into the adjacent Carigiet to listen to Bill Gates, the richest man in the English-speaking world and therefore an oracle competent to dispute, with a second and preferably more hopeful opinion, the judgment of Soros. But although Gates brimmed with buoyant optimism, speaking in a high, piping voice and bestowing on the company the boyish smile that graced his endorsement for Callaway golf clubs, he lacked a reassuring aura of gravitas. He mentioned the “big ideas” looming just below the horizon of the twenty-first century, and he described some of the “neat stuff” being put together by the honor students back home in Seattle in the classrooms at Microsoft, but the impression was that of a precocious child armed with a set of Star Wars dolls, and Gates in the part of Luke Skywalker clearly was no match for Soros in the part of Darth Vader.

By Monday evening the forum’s revels had all but ended, and the more thoughtful of its participants understood, instinctively if not by virtue of close analysis or extended argument, that even they, the men of Davos, danced like trained monkeys to an organ-grinder’s merry, witless tune. Maybe next year the seers who made their pilgrims’ way to the summit of the magic mountain would bring with them the secret of the universe, but in the meantime the variables were too many and too hard to calculate. Even if the questions could be reduced to orderly rows of digital code, the answers coming back from the Congress Centre’s message service presumably would read like the ones issued by the fortune-telling machine in a penny arcade—sell gold, buy Islam, be home before midnight, and don’t play Monopoly with Japanese banks.