Living Dangerously

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More fundamentally, globality confronts us with two sets of issues. At the national level, the role of governments has to be redefined. As their ability to influence business activity is increasingly constrained and their margin of maneuver shrinks before the overwhelming power of financial markets, governments are under pressure to enlarge their roles in two key domains: on the one hand, they must strive to provide through their policies the most propitious environment and framework for economic activity, for knowledge generation and for greater competitiveness; on the other hand, they must equip their citizens with the skills and expertise needed to face the unrelenting pressures and requirements created by globalization.

Governments will also be judged more and more on their ability to address the social repercussions of the globalization process and to find ways to balance its destabilizing impact. The new globality means a tremendous emphasis on speed, flexibility, versatility and permanent change--in some respects, insecurity. But, in most societies, the level of civilization is a function of the degree of security and predictability governments can provide for their citizens. Managing the trade-off between the unpredictability associated with flexibility and the desire for security will increasingly present a challenge.

We must get rid of the fallacy that globalization somehow means the end or the shrinking of the role of governments. Instead, it forces a substantial transformation of that role. The penalty for failing to adapt will be social instability and political backlash as people come to rely on nongovernment channels to express their fears and aspirations.

At the international level, the developments of the past 18 months and the backlash against globalization raise the issue of what kind of economic and social model the new globality will produce. Any attempt to reduce the globalization process to a mechanical extension to the world economy of the U.S. model is bound to create increasingly adverse reactions. Of course, there is an absolute need for common denominators in the institutional framework required from each country that wants to be part of the global economic system. But globalization will not work on the basis of any imposed model. The only way to avoid a prolonged backlash against it, and to make globality lead to sustained economic growth, is to take into account the different interpretations of the way the capitalist system should function.

Globalization has truly unleashed the potential to generate well-being in an unprecedented way on a worldwide basis. Creating a responsible globality will require a tremendous conceptual effort and commitment from political as well as business leaders. It will also require the full involvement of the leaders of civil society. Recent events are a warning sign of what we may expect if we don't face up to the challenge.

Claude Smadja is managing director of the World Economic Forum, whose annual meeting is held in Davos, Switzerland.