ART, CULTURE & GLOBAL BUSINESS

Snapshots from the World Economic Forum

Harry Hillman Chartrand  © 
Journal of Arts Management, Law & Society
Volume 22, No. 1, Spring 1992

Introduction

The World Economic Forum (WEF) was established in 1971.  Headquartered in Geneva Switzerland, it is a not-for- profit foundation contributing to world economic and social progress by fostering global cooperation through personalized interaction among leaders of global business, politics and academia.  WEF is the ‘brainchild’ of Klaus Schwab, Professor of Business Policy at the University of Geneva. Professor Schwab is both the WEF founder and president. WEF is engaged in seven activities: 

a) an Annual Meeting held in Davos, Switzerland;

b) Industry Fora, e.g. Automotive, Energy, Engineering & Construction, Finance, Food & Agriculture, Health, Information Technology and Textiles Fora, held after each annual meeting;

c) Country Fora, held around the world, bringing together heads of state, economic ministers, corporate chief executives and academic experts in industry and finance;

d) Initiatives involving select groups of world leaders in a ‘fireside’ atmosphere to examine issues of mutual concern and initiate or support new global projects, e.g. the World Arts Forum (more later); 

e) Welcom, a private, high security electronic mail and ‘online’ conference service; 

f) World Link, a global bimonthly magazine received by over 35,000 prime ministers, chief executives, scientists and opinion-makers; and,

g) World Competitiveness Report, an annual publication prepared from two principal sources: (i) the collective statistical resources of the International Monetary Fund (IMF), World Bank (WB), the Organization for Economic Cooperation and Development (OECD) and other statistics agencies; and, (ii) a Business Confidence Survey of 12,000 CEO’s around the world. The report ranks the performance of 33 countries (23 developed and 10 developing) according to 330 economic and demographic criteria (World Economic Forum 1991). 

Art & Culture Connection

Through its Initiative program, the World Economic Forum was instrumental in establishing the World Arts Forum (WAF) in 1990.  Like the economic forum, WAF is a not-for-profit, Geneva-based foundation.  Its mission is to enhance the role of the arts in cross-cultural cooperation and encourage mutual understanding in a world of cultural diversity.  The WAF credo is ‘global unity through cultural diversity’.  The first meeting of WAF, co-hosted by Professor Schwab and Italian Foreign Minister, Gianni De Michelis, was held in Venice, August 29-31, 1991 (World Arts Forum 1991).  Over 200 artists and leaders of various global arts constituencies attended including:

Helen Ahrweiler, Princess Wijdan Ali, Adrienne Clarkson, Johnny Clegg, Alain Dudoit, Aprad Goencz - President of Hungary, Joseph Kosuth, Quincy Jones, Jack Lang - French minister of culture, Lorin Maazel, Sir Yehudi Menuhin, Rodion Shchedrin, Vladimir Spivakov and Adelina Von Fuerstenberg.

The Forum established an eight part action plan:

a) draw attention of governments, at all levels, to the importance of
              the arts in education;

b) create a global cultural monitor pinpointing each year the positive
           and negative developments affecting the arts in all major countries;

c) engage all Council members in networking in support of key
            challenges facing humankind, e.g. the environment;

d) create an exhibition and establish an award to encourage the media
               to play a more positive cultural role;

e) set up a body to work with media entrepreneurs for creation of a
              World Arts Channel;

f) develop a feasibility study and program for a World Arts Village;

g) create or sponsor a centre for interaction between modern
                technologies and the arts; and,

h) reinforce networking among members of the Council of the World
              Arts Forum by producing a short video presenting each 
              of its members.

In the conduct of the action plan, Professor Schwab became aware of my cultural economic research and databasing of the arts and their economic implications.  This perspective was alluded to by Jack Lang, French minister of culture, during the Venice Forum, when he said:

I remember the indignation that confronted me when I dared to say: ‘culture and economy, the same battle!’ For some I was a traitor to culture; for others I was a farceur.  But today, these two worlds - the economic and the aesthetic - hold a forum together (World Arts Forum 1991). 

Accordingly, the Professor invited me to attend the World Economic Forum to discuss development of a world arts report.  Through a grant from the International Cultural Relations Bureau of External Affairs and International Trade Canada, I was able to accept the invitation.  This article reflects my assessment of global business attitudes towards, and perceptions of, art and culture expressed at, or by, the WEF annual meeting.  I will also outline developments concerning the World Arts Forum with particular attention to the proposed World State of the Arts Report (WSAR).

Participants

First, who’s who? Held in Davos, a ‘jet-set’ ski resort in eastern Switzerland, the 1992 World Economic Forum lasted 8 days from January 30th to February 6th 1992. At any one time, there were over 1,000 persons in attendance.  The Forum was chaired by Henry Kissinger, Sony chairman Akio Morita, former Bundesbank president Karl Otto Poehl and former chairman of the U.S. Federal Reserve Board Paul Volker.  The rapporteur was former French Premier Raymond Barr.  The theme of the meeting was ‘Global cooperation and megacompetition’.  

In addition to plenary and briefing sessions, global corporate executives such as the Presidents of Aerolineas Argentinas, Barcardis, Black & Decker Powertools, LTV Aerospace, Kelloggs, Olivetti, Pepsico, Porsche, Sony and Swissair met, informally, with government leaders such as the Prime Ministers of China, India and Pakistan; the presidents of the newly independent republics of the former Soviet Union, Eastern Europe and Yugoslavia; President de Klerk, Chief Buthelezi and Nelson Mandela of South Africa; Sir Leon Brittain, the European Commissioner for Competition Policy; and, His Royal Highness, the Prince of Wales.

Heads of world leading universities, research institutes and trade organizations attended and participated including: the Academy of National Economy Moscow, the French Ecole Poly-technique, Hungarian Academy of Sciences, Johns Hopkins University, London School of Economics and the Universities of Chicago, Geneva and Zimbabwe; the Canadian Business Council on National Issues, Confederation of Indian Industry, Federation of Swedish Industries, International Chamber of Commerce, Japan Association of Corporate Executives, and the Russian Union of Industrialist and Entrepreneurs; and, the American Enterprise Institute, German Institute for Economic Research, Korea Development Institute, Keil Institute of World Economics, Japan Centre for Economic Research, Mexican Centro de Estudios de Competitividad, US National Bureau of Economic Research and the Swedish Institute for International Economic Studies.

In short, WEF was a world summit of academia, business and government.  Security, provided by the Swiss armed forces, reflected the power, wealth and wisdom there assembled.

THE 1992 WORLD ECONOMIC FORUM

In his opening address, Professor Schwab noted the fundamental shift from a bipolar to multipolar world, but went on to say: “All is not dead, and all that is to come, is not yet born”.  He declared 1992 to be a turning point in history with conclusion of the current round of the General Agreement on Tariffs and Trade (GATT) negotiations, convening of the United Nations’ Earth Summit in Brazil and final dissolution of the USSR into the Commonwealth of Independent States (CIS).  He hoped the Forum could bring together business, government and academia to face seven challenges: 

a) define Asia’s role in the ‘New World Order’; 

b) develop support to assist the CIS and newly democratic states of Eastern
              Europe in the transformation to democracy and market economies;

c) assist in formation of a post-apartheid South Africa;

d) assist in the rebirth of a democratic South America;

e) restart the engine of the global economy;

f) foster a renaissance of the global value system; and

g) use the ‘spirit of Davos’ to solve regional conflicts such as 
                 that in Yugoslavia. 

Geopolitics

From this opening speech, the Forum broke out into 8 days of plenary addresses, discussions, suppers, lunches and over 100 ‘briefings’. The sense of the Forum will be summarized with respect to geopolitics (Thorsell 1992: D-1 & D-4), geoeconomics and geocultures. With respect to geopolitics, six observations are offered: The Asians; CIS & Friends; Cultural Nationalism; Havel’s Show Stopper; Political Culture; The South Africans; and, The South Americans.

The Asians

Asian leaders including the Premiers of China, India, Pakistan and Japan (former Prime Minister Takeshita) delivered a clear two-pronged message:

a) Asia is aiming at greater economic parity with North America and Europe.  In this regard, former Japanese premier Takeshita noted that the population of North America (USA, Canada and Mexico) is about 320 million, the European Communities about 360 million and East Asia, excluding China, about 510 million.  Their annual economic output was: North America, $US 6.2 trillion; the EEC, $6.5 trillion; and, East Asia, $3.7 trillion. Current annual economic growth was: North America, 2.8%; the EEC, 3.1%; and East Asia, 5.4%.  On a straight line projection, East Asia will catch up to North America by 2011 and to the EEC by 2016; and,

b) there are many different paths to democracy and the market economy.  They warned against attempts by the West to impose its own path upon historically and culturally different nations struggling towards democracy, a market economy and human rights.

The power of Japan was everywhere to be heard. Tension between Japan and the USA was evident.  The Japanese were not defensive, however, about their collective, feudal success contrasted with the distress of a relentlessly individualistic Industrial America.  The President of Sony mockingly asked if Japanese companies should be required, by international law, to pay higher dividends to shareholders, to force workers to work shorter hours and exercise less quality control as in America. Henry Kissenger said:

The Americans believe they will be the centre of the New World Order; the Europeans believe they will be the centre of the New World Order; the Japanese know they are the centre of the New World Order.

Another Asian issue was competition for the hearts and minds of the newly independent Islamic states of the former Soviet Union.  Turkey is using enhanced international broadcasting to ‘secularizie’ Turkomen-speaking republics from the Turkish border to China.  Pakistan is trying to link up with these same republic but through orthodox Sunni Islam as the cultural tie. Iran is reaching out to ethnically related republics such as Azerbajan.  It was noted by a Russian delegate that Kazakistan has become the first Islamic nuclear power and India and China are the last colonial empires. 

CIS & Friends

The deputy Prime Minister of Russia, 7 presidents from newly independent republics as well as the Presidents of Bulgaria, the Czech and Slovak Federal Republic, Hungary and Romania attended. Presidents or prime ministers from most of the warring Yugoslav states were also in Davos. All are open for businesss; all expressed mutual distrust and ethnic hostility. Western business was not eager to go where angels fear to tread. No mention was made of the skilled artists and artisans in these new democracies and the traditional craft skills they retained ‘under the surface of totalitarian boredom“ (Havel 1992).

Cultural Nationalism

Nationalism was a constant subject of discussion at the Forum. During a briefing chaired by Richard Pipes, Professor of History at Harvard University, Pipes opened by saying the last unintended gift of the Soviet Union is awareness of the cultural dimension of global transition.  The 19th century, liberal-imperialist state is gone. In the European Communities, the policy of ‘subsidiarity’, roughly translated as support for government closest to the people, is fueling fragmentation of the European nation states by fostering regional cultures of the Basques, Catalons, Scots and Sicilians; each actively seeking self-realization. Yugoslavia and Armenia show the lengths to which some ‘nations’ will go for independence.  Even the threat of economic collapse is insufficient to stop a people, who want to be a people, from struggling for independence.  How do we get ‘real’ national expression without new nationalism? 

Pipes went on to say that the world lives in different historical time zones.  Once upon a time ‘nations’ were isolated and called themselves simply ‘the people’, e.g. Deutsch.  But mass communication and education is making all ‘peoples’ aware of their distinct identity and their relative geoeconomic well-being.  This has created three clearly defined cultural areas resulting from dominance by the ’Big 3’ - North America, Europe and Japan. 

Padma Desai, Professor of Economics at Columbia University, argued that the enforced linkages of the old Soviet Union must be replaced by voluntary ones.  But, she added, even a city-state such as Singapore can survive through trade.  The lesson of the break up of the Soviet Union is threefold: economic ties are not necessarily sufficient to hold a country together; nationalism is an irrational force; and, there is a need for consensus and wisdom.

Galina Starovoitova, Cultural Advisor to Boris Yeltsin, noted that nationalism in the Soviet Union is simply part of the struggle against totalitarianism.  At its core, nationalism is a question of language and, to a lesser extent, religion. In this sense, India is the last empire.  She stressed that a ‘nation’ is the basis for building civil society and a state is simply a mechanism for establishing such a society.  Thus the state is a means; civil society is the end. She noted that the European Communities and the Soviet Union are moving towards the middle from opposite ends.  In the Soviet Union forced integration has led to independence while in Europe, independence has led to integration.

No mention was made of the fact that culture has emerged from recent trade negotiations relatively exempt from requirements for ‘free trade’.  Existing international trading agreements distinguish and exempt commercial cultural goods, e.g. motion pictures. With respect to the General Agreement on Tariffs and Trade (GATT), four provisions permit such a distinction to be made (Articles XI, XII, XX a, f and XXI).  Consider Article XX sub (a) which permits import restrictions to protect public morals.  To the degree public morals form a distinct part of national culture, then to that degree foreign cultural goods can be restricted.  The most obvious example is Islamic societies which hold fundamentally different values from the West concerning relationships between men and women.  The USA has not, to my knowledge, publicly objected to prohibition of its film products by ‘fundamentalist’ states.  But even in Western nations, concern about sex and violence in books, film, video and TV has traditionally justified import restrictions on cultural goods from more ‘liberal’ countries, e.g. Swedish ‘kiddy-porn’. Similar cultural exemptions exist in the Canada/USA Free Trade Agreement and in the Treaty of Rome establishing the European Communities.  

The implications of exempting cultural sales and services from ‘free trade’ are significant, particularly in an era of accelerating change.  If political sovereignty has been progressively reduced through Cold War military alliances and economic sovereignty by the integrating effects of international trade agreements, then cultural sovereignty has become the last frontier for national preference in international affairs.  

Havel’s Show Stopper 

The plenary address by President of the Czech and Slovak Federal Republic, Vaclav Havel, was the most powerful presentation - a show stopper. His speech has been reprinted on page E-15 of the Sunday, March 1st, 1992 New York Times.  The death of communism means the end of the modern age; an end to faith in scientific rationality to solve the technological nightmares it has created.  Havel, a playwright, implied that art and culture are the vehicles for expressing the subjective truths of the human heart (Chartrand 1988: 5-39). 

Havel was followed by His Royal Highness, the Prince of Wales.  HRH was simply upstaged.  Professor Schwab concluded this emotional plenary session with: “We need not only liberalization of economics but also a liberalization of man!”.  

Political Culture

The Forum highlighted recent changes that have altered our world: the end of the Cold War; the collateral death of communism as an ideology capable of mobilizing masses of people; the disintegration of the Soviet Union; the emergence of regional conflict such as the Gulf War as the primary threat to world peace; revitalization of the United Nations as a vehicle for collective security; and the emergence of cultural identity and sovereignty, education, the environment, religious fundamentalism and mass migration as major international issues.

But many of these global political changes can, at least in part, be attributed to cultural factors.  The ‘global village’ argument contends that experiences shared on a global scale through communications media transcends differences among citizens of separate nations or regions.  Some observers point to developments in the Soviet Union, Eastern Europe and China as responses to values of freedom, dignity and prosperity transmitted through penetrating networks of global mass media and communications.  Young people ‘rock'n roll’ to the same beat and watch the same music television around the world. 

Another outcome noted at the Forum is that the presidents of Lithuania, Hungary and the Czech and Slovak Federal Republic are artists.  It seems the search for vision has led the electorate, in some newly democratic Second World nations, to look to academics and artists for leadership.  In this regard, the ‘hard-nosed’ capitalist audience was left speechless when President Havel said:

It is my impression that sooner or later politics will be faced with the task offinding a new, post-modern face.  A politician must become a person again, someone who trusts not only a scientific representation and analysis of the world, but also the world itself.  He must believe not only in sociological statistics, but in real people.  He must trust not only an objective interpretation of reality, but also his own soul, not only an adopted ideology, but also his own thoughts; not only the summary reports he receives each morning, but also his own feelings.  Soul, individual spirituality, first-hand personal insight into things, the courage to be himself and go the way his conscience points, humility in the face of the mysterious order of Being, confidence in its natural direction and, above all, trust in his own subjectivity as his principle link with the subjectivity of the world - these, in my view, are the qualities that politicans of the future should cultivate (Havel 1992).

The South Africans

President de Klerk, Chief Buthelezi, Nelson Mandela and Jay Naidoo the head of the South African trade union movement all appeared on the same stage.  The ‘capitalist’ Forum responded warmly to de Klerk ‘economic reasonableness’ but cooly to Mr Mandela’s ‘politically correct’ posturing.  Overall, however, a sense of hope concerning the future of South Africa permeated the audience. 

The South Americans

The Presidents of Columbia and Venezuela warned of shifting attention from the Third towards the Second World, i.e the former Soviet Empire.  Failure to invest and develop the Third World threatens environmental degradation, nuclear proliferation, drug trafficking and mass migration.  After his speech, the President of Venezuela returned home to face a military coup (suppressed) and, next day, received a resolution of solidarity from the Davos Forum.

Geoeconomics

Among the many economic issues discussed at the Forum, five observations can be made. These are: Competitiveness through Culture; Corporate Culture; Creativity as the Ultimate Resource; The Italian Economic Miracle; and, Trading Blocs

Competitiveness through Culture

 Comments were made throughout the Forum concerning culture and competitive-ness.  It was suggested European agricultural subsidies and Japanese non-tariff barriers - issues stalemating current GATT negotiations - are as much cultural as political or economic in nature.  Agricultural policy in Canada, Europe, Japan and the USA are justified as protecting a way of life “the family farm’, not just another instrument of economic policy.  Similarly, Japanese tradition favors small local stores creating a barrier to trade which is cultural, not political or economic in nature.  

Other than agriculture, GATT negotiations are floundering because of disagreement about intellectual property rights such as copyrights, industrial designs, patents and trademarks.  GATT discussions have run up against a cultural problem, i.e. differing concepts of ‘creator’s rights’ in English Common Law and European Civil Code traditions.  The Civil Code recognizes creators have inalienable rights extending far beyond those recognized by common law copyright.  These rights limit the power of corporate entities to exploit intellectual properties. The American position is that civil code rights granted to individual creators should be extended to corporate copyright holders. The Europeans disagree (Unesco 1991). Canada is unique because it is the only country in the world with both common law and civil code traditions. 

Product design and product quality were also discussed. According to the World Competitiveness Report (World Economic Forum 1991), the United States, among 23 developed countries, ranks 1st in population with at least one university degree and 1st in advertising expenditure per capita but 8th in product design; 11th in worker motivation; and 12th in product quality.  The result is the most highly educated work force in the world is made up of unmotivated workers producing poor quality and poorly designed goods.  To rub salt into wound, the United States then spends more money than any other country advertising its domestic goods which can not compete with European and Japanese products which successfully marry aesthetic and utilitarian value.

Corporate Culture

One notable change in corporate culture was reflected in a language shift from ‘multinational’ to ‘multidomestic corporations’.  Business recognized that to do business in different countries requires awareness, sensitivity and responsiveness to those cultures.  Furthermore, it is necessary for global business to use art and culture to foster tolerance and mutual understanding between various ‘multidomestic’ markets and thereby insure stable international markets. 

The need to be sensitive to different cultures was linked to the need for independent local CEO’s of global enterprise.  This was highlighted by Donald Kendall, co-founder of Pepsico who recounted two stories.  The first concerns Pepsi’s operation in India.  For years, the company had not been permitted to operate in that country.  When the ban was lifted a local CEO was appointed who knew the country, its culture and its language. Without notice, however, the Government of India passed a decree prohibiting Pepsi from using its brand name in the Indian market.  The local CEO quickly changed the name and arranged to have new bottles produced and an advertising campaign initiated.  Just as this program was to be launched, the Government withdrew its decree and the company began using its internationally recognized brand name.  The former Pepsi president, nonetheless, praised the local CEO for the quick action required to save the company’s operations. 

The second story concerned last year’s aborted coup in the Soviet Union.  After taking refuge in the Russian parliament, Boris Yeltsin and his supporters were surrounded by KGB troops.  After three days, the democrats had no food. One of Yeltsin’s advisor called the Moscow Pizza-Hut (owned by Pepsico) and ordered 300 pepperoni pizzas to go.  The local manager knew if he filled the order and the coup was successful then the business was finished and he could be sent to Siberia or shot.  Nonetheless, the order was filled and delivered through rows of tanks and KGB troops .  Two cases of Pepsi were provided free.  After the coup failed, the Yeltsin advisor phoned the manager and said: ‘Thank you, we will not forget.’ 

Creativity as the Ultimate Resource

Akio Morita, the founder and chairman of Sony, was asked how Sony dealt with ‘megacompetition’ He answered: ‘What competition? Sony invents and innovates new products; there is no competition”.  

In a more philosophic vein, a community, region or nation will eventually run out of raw materials and lose comparative advantages based on traditional sources of wealth generation.  Only creativity can conjure up a substitute which turns lead into gold, sand into silicon chips or a first novel into billions in book, movie, T-shirts, toys, records, tapes and other ancillary sales and royalties.

Today, there are as many people in American regional centres as there were in ancient Athens, Renaissance Florence or Shakespeare’s London.  All that is lacking is a civic psychic alchemy that cultivates talent and genius.  How much is one Edison or Armani worth to a national, regional or local economy if he or she is attached to that community by ties of care and culture? 

Italian Economic Miracle Revisited

In a debate between Donald Kendall, co-founder and former president of Pepsico and the president of Olivetti, Carlo De Benedetti of Olivetti stressed the need for a European industrial plan.  The former Pepsi president argued state intervention would not work and noted the political instability of Italy - 45 governments in 45 years.  De Benedetti, in effect, retorted: ‘You’re wrong!  Italy has the most stable government in the West.  At this moment in Rome, the same men sit around the cabinet table who sat there 45 years ago!  What other government can claim such stability! And why? Because 1/3rd of the electorate consistently voted Communist throughout this period; the 2/3rds majority knew a Communist government did not mean a simple change of government, but rather change of the entire system.  Accordingly, elected representatives of the 2/3rds majority simply rotated ministries - this year foreign affairs, next year the ministry of agriculture and, someday, the prime ministership. The results of this stability has been the growth of the Italian economy to a higher Gross Domestic Product per capita than the United Kingdom - in 1989, $USA 15,051 versus $14,642, respectively (OECD 1991). How has Italy achieved economic success?

The basic point is a simple one, and it applies to the widest range of industrial products: after things work well people want them to look well. After utility comes design. And design depends not alone on the availability of artists; it involves depth and quality of the whole artistic tradition. It is upon this that industrial success comes to depend.

Proof is wonderfully evident once we learn to look for it. One of the miracles of modern industrial achievement has been Italy. Since the war Italy has gone from one public sector disaster to another with one of the highest rates of economic growth of any country in the western industrial world. No one has cited in explanation the superiority of Italian engineering or science. Or of industrial management. Or the precision of the Italian government policy and administration. Or the discipline and cooperativeness of the Italian unions and labour force.

The Italian case is only the most vivid one. The industries of Paris, New York and London - textile and furniture design, building construction, dress manufacture, advertising, film-making and theatre - all survive in these otherwise economically inhospitable surroundings because of their juxtaposition to the arts. And there is ample indication that they survive better in consequence - are less vulnerable both to the competition of the new lands and the devastation of modern economic policy - than the solid industrial establishments of traditional economic achievement: the steel mills, automobile factories and coal mines. It has been little noticed that in the older industrial countries those industries and cities that best survive are those that co-exist with a strong artistic tradition (Galbraith 1983).

Trading Blocs

The consensus at the Forum was that fear of ‘trading blocs’ like Fortress Europe is generally overstated.  Cross-investment by international firms is so great and intra-firm pricing so common that ‘nationalistic’ barriers are a declining threat to the stability of world trade.