January 23, 2006


By Jeff Faux

The world’s rich and powerful are heading this week to their annual
meeting in the plush mountain resort of Davos, Switzerland. Hosted
by the great global corporations (Citigroup, Siemans, Microsoft,
Nestles, etc.), some 2000 CEO’s, prominent politicians, pundits and
international bureaucrats will network over great food, fine wine,
good skiing and cozy evenings by the fire contemplating the world’s

This is not a secret cabal; journalists will issue daily reports to
the rest of us on the wit and informal charm of our financial betters.
Rather it is like the political convention of those who manage the
global economy. Call it the Party of Davos.

All markets are systems of rules that determine what sort of people
are winners and what sort are losers. Politics is largely conflict
among the different sorts -- or classes -- over who gets what. In
stable societies, a social contract provides for enough wealth to
trickle down to keep the lower orders from rebelling. Thus, in the
1950s, when Dwight Eisenhower’s secretary of defense said that what
was good for General Motors was good for America, most Americans --
including the United Auto Workers -- agreed. Within the boundaries of
the US economy, capital and labor needed each other.

But as corporations went global, the mutual dependence weakened. And
in the absence of global democracy, their owners and top managers
seized the opportunity to set the new rules without social
constraints. The first head of the World Trade Organization called
these new rules a "constitution for the global economy." It’s a
constitution that protects just one world citizen -- the corporate
investor. It prohibits effective protections for the workers,
consumers and the environment.

In America, as in most places, the party of Davos is bipartisan. It
includes Bill Clinton and Dick Cheney, Robert Rubin and Don Rumsfeld,
Madeleine Albright and Condoleezza Rice. (George Bush is also a
member, but he doesn’t like to travel). John Kerry is quoted as having
called himself a "Davos" man.

Indeed, without reference to economic class it is impossible to
explain why Democratic elites championed NAFTA, the WTO and the other
instruments of corporate protectionism, which traded away the
interests of its blue-collar industrial base in favor of the GOP
constituencies in Wall Street and red-state agri- business. Nor is it
possible to explain why Washington is indifferent to a relentlessly
rising trade deficit, and the resulting foreign debt that has put the
country’s future in the hands of the central bank of China, while the
Pentagon simulates war games with China as the enemy.

The media language we use to talk to each other about globalization
hides its class structure. The press consistently talks about national
"interest" without defining who exactly is getting what. Thus,
American workers are told that the "Chinese" are taking their jobs.
But the China threat is in fact another global business partnership --
this one between commissars who supply the cheap labor and the United
States and other foreign capitalists who supply the technology and
two-thirds of the capital used to finance China’s exports. The rest of
the world calls this "neo-liberalism," a term unknown among America’s
media "internationalists."

The politics of the global marketplace are a one-party system. The
opposition to Davos is unorganized globally. What might be called the
Party of Porto Alegre -- the NGOs who meet at the same time in Brazil
-- is politically marginal. The trade union movement’s effort to
organize the workers of the world is at best at a very early stage.

Still, there may be some bad new ahead for Davos. After a quarter of a
century, the world is beginning to resist policies that have shifted
wealth and power away from people who work for a living to those who
invest. Scarcely a day goes by without a major riot somewhere in
China, Indonesia and elsewhere in Asia. In South America, anti-
neoliberal parties have come to power in Brazil, Bolivia, Venezuela,
and Argentina -- and already have slowed down the effort to extend
NAFTA to the rest of the hemisphere. Very close to home, a leftist
candidate is leading in the campaign for Mexico’s next president.

But perhaps more important, Davos’ chief champion -- the U.S.
governing class -- is in trouble. The opposition to the War in Iraq
has demonstrated the limits of America’s willingness to send its
children to die in order to force the world’s cultures into one vast
shopping mall. And the looming crisis of America’s foreign debt will
cramp the ability of our elites to use the countries’ economic power
to support their global corporate backers. The erosion of the American
social contract -- already being reflected in stagnant wages,
financial insecurity and collapsing health care system -- could soon
force the governing class to pay more attention to Bloomington,
Illinois than to Baghdad, Iraq.

Globalization will not go away. Improvements in communications and
transportation will continue to make the world smaller for as far into
the future as we can see. Nor will economic classes soon disappear.
The question is, as always, who sets the rules and in whose interests?
So although the parties at Davos may not be over, the rest of the
world seems less willing to pay for them.

Jeff Faux, the founder and former president of the Economic Policy
Institute, is the author of the new book The Global Class War, a study
of the impact of globalization abroad and on U.S. living standards and
politics. He is a contributing editor to The American Prospect, and a
member of the editorial board of Dissent. His articles and commentary
have appeared in The New York Times, The Washington Post, The American
Prospect, Foreign Affairs en Español, The Nation, The Columbia
Journalism Review, and many other popular and professional