by AMcKenzie21
March 24, 2023

from Archive Website







Video and transcript extracted from

'Strengthening Collaboration in a Fractured World'

by the Institute of Politics Harvard Website.


The Founder and Executive Chairman of

the World Economic Forum Klaus Schwab, MPA 1967,

presented it at the Malcolm H. Wiener lecture

on international political economy.


Schwab delivered a keynote address

discussing the interaction between the business community

and social progress, economic inequality, globalism,

and understanding cultural and social differences.





Transcript of bottom page Video

- Thank you, Klaus. We're definitely privileged and thankful that you've come back.

And we want to thank you not only for what you've done for this school, but for what you've done for the world.


You've devoted your life to making the world a better place. Something which goes to the heart of what the Kennedy School is all about.

It's been striking to us as we've had the pleasure, and this goes back to Dean Elwood, that when you brought the Young Global Leaders program here for executive education and then the Schwab fellows, but there are two countries in the world now in which the Young Global Leaders have emerged.


Tell us just a bit about that in terms of the governance.

- Yes, actually, there's this notion to integrate young leaders as part of the World Economic Forum since many years.

And I have to say, when I mentioned now names like Mrs. Merkel, even Vladimir Putin, and so on, they all have been Young Global Leaders of the World Economic Forum. But what we are very proud of now, the young generation like Prime Minister Trudeau, president of Argentina, and so on, that we penetrate the cabinets...


So, yesterday, I was at a reception for Prime Minister Trudeau, and I know that half of his cabinet or even more than half of his cabinet are actually Young Global Leaders of the World Economic Form.



- Right, and that's true in Argentina true to, wow.


- Yeah.


- Sorry.


- That's true in Argentina as well.


It's true in Argentina, and it's true in France now. I mean, with the president, with the young global leader. But what is important for me is those Young Global Leaders have an opportunity to come here.



- Right.


- And we have established a course now since several years. And I think it has, this corporation has a tremendous impact because being here for a week really creates a strong community.


And we, in addition to the Young Global Leaders, we have now the Global Shapers in 450 cities around the world.

I just wonder, is there any Global Shaper here? Yeah, see, see. Global Shapers here.



- Terrific. (laughs)

- And what is astonishing is to see how those young people really have a different mindset.

And I have great admiration because when I have a group of Global Shapers in the room and then ask them, are you thinking in global terms or national terms? The majority would say in global terms.


If I ask them what is more important for you, to make money or to serve society? More certainly, 80% would raise their hand and would say serving society. So, I'm very optimistic about the future of the world.

Because with the young generation, I think we can build what I call a new renaissance, particularly using technology, solving all the issues moving forward.


- Let's talk a bit about technology and its impact. You've written a book, which I would commend to all of you called, it just came out a couple of years ago,
The Fourth Industrial Revolution.

It sold over a million copies around the world, over a million copies. And it is essentially, Klaus argues that there were three earlier revolutions.

One late 18th century, early part of the 19th century, then late 19th century, early 20th century.

Then a third one starting in the 1960s with the digital age, and now since the advent of the 21st century, a new industrial revolution that's even more influential. Can you describe this revolution to us as you see it?

- Yes, very often people would say, it's not really a revolution. It's a prolongation of the computer age which came into being in the '80s. The last century already.

But it's much more. If we look at this revolution, it's not characterized by one technologies, you have so many technologies. You have nano technology, brain research, you have, I mean, you name it.


In essence, in the long run, what is very essential is to see if this new revolution will lead to a fusion of our biological, our digital, and our material existence. And look at, for example, the Internet and things and many other, let's say, new technologies.

Say, what is very important, say do not just set another difference.

Do not just influence or improve what we are doing moving faster in the traffic, or whatever it is. But that has an impact on us, say change us.

Just look at how the Internet has already changed, or big data is now changing the behavior of people.

So, say affect our identity. And when we look for an explanation of the problems we have now in terms of BREXIT, or whatever you take, I think a lot has to do with the search of identity in a situation where you are confronted with the technology which most people do not always, technological wave, and changes which most people do not understand.


Now I am coming to a third characteristic of this revolution: the speed...


I wrote the book (The Fourth Industrial Revolution) 2 1/2 years ago, actually or just two years ago. And when I look at certain elements, I mentioned, for example, block chain. Two years ago I had to explain to everybody what block chain is.

Today every major bank has a research team to look how block chain could impact the business model.

If you look at let's say self-driving cars, two years ago, people assumed this will be reality. Some were around '20, '25. And now, even in Switzerland, you have the first self-driving bus in one of these small cities in Switzerland.


And you have one of the cantons now in Switzerland, canton of Zug, which is introducing block chain for all financial transactions, tax declarations, and so on. So the speed is enormous.


And all those elements together, I think, create a revolution which affects us, which is not just a technological revolution. It's an economic, it's a political and it's a social revolution.


- The book is fundamentally optimistic. You call yourself a pragmatic optimist in the book.

There was one area where you seem to be worried. And that was the question of jobs and inequality as it relates to jobs. You're worried about the women in jobs. And you pointed out that in 1990, the three biggest companies in Detroit had a market cap value of $36 billion.

And had 1.2 million employees. And two years ago, the top three employees in Silicon Valley have a market cap of over $1 trillion, and only 1/10 as many employees, just 137,000 employees.

How do we best address this? Because one hears it again and again and it has entered into our politics, as you well know, not only in this country but in Europe.


- We don't know, frankly, yet.

I mean, we use words like we need upscaling, rescaling, but, actually, let me address this issue from different angles.


First, if you look at the magnitude of this issue, I just take two figures.

In the U.S., as far as I know, more than 10 million people are driving vehicles. And more than 10 million people are working as cashiers in the distribution system, in retail.

Those shops will probably have gone to a large part in the next 10 years. So what we see in a erosion of the lower middle class.

And, of course, and we do not know yet, like in the past revolutions, we had new jobs in the service sector, first in the industrial sector when we moved from agriculture to manufacturing and then from manufacturing to service.


There were new jobs created over time.

Now we do not know yet where those new jobs are coming from. Not everybody can say, let's say, a drone dispatcher or a robot polisher. I mean, we have no, of course, we will need more engineers.

So this will create a kind of fraction in the society.

You have the people, like a bus driver, who knows that he may lose his job in the next 10 years. And in the first revolution, in the first industrial revolution, you had this level of society which was called proletariat.

Today you have this new class of society, which is called precariat because they know they are in a precarious situation, or they are already working in a ublized situation, where they don't know where they'll still have an income tomorrow.


So, we don't know.

What I know is that probably one of the consequences will be that we have to redesign, we need an educational revolution 4.0.

I think the whole educational system has to be moved much more into the direction of life-long learning of a good combination of face-to-face and digital transmission of knowledge, and so on.

But we haven't thought it through yet. And a last remark, more optimistic now, we may go through this transition phase. We in Switzerland, we had, two years ago, we had a, you know Switzerland is a country of referendums, so we had a referendum on, should we introduce minimum guaranteed incomes?

And even in, my wife, Hilda, when we talked about it, she said no way. We're living in Geneva, we have a pucatanian attitude.

So, how could someone get money from the government without working?

And I was asked by the media what I'm thinking about. And I said, it may be a good idea. We are just not yet arrived for it. Maybe in 10, 15 years.

And when you argue, let's say with someone who has a job at minimum income, and instead of having this job in minimum income he gets a guaranteed income, and he can choose the job.

You could make the argument, let's take a nurse, or whatever it is, I don't want to pick out one job, but that's take a nurse as an example. Who is working, I don't know the salaries in the states, but I take it in Switzerland, she is working for 4,000 Swiss francs, she will feel underpaid and will not have a necessarily great job satisfaction.

Now, if she gets a minimum income which is guaranteed and she chooses not to stay at home, but to do some work, she will do it with much more enthusiasm.

So, I feel we may go into a kind of new renaissance where we see out of the fourth industrial revelation, a fourth sector. So, we have a evolving, we had, of course, we had the agriculture sector.

We had the manufacturing sector. We had the service sector. Mainly as consequence of revolutions.

And now you may find the creation of a fourth sector, which is the social service sector. So you don't worry anymore about your income, but you are free to serve society.

And I'm sorry to be long, but that's the reason why I am so much engaged in fostering social entrepreneurship because we feel social entrepreneurship has to become a mainstream in society, not just being something marginalized good idealists, no, it has to become a pillar of society for two reasons, to provide the jobs for those low, I wouldn't say, for those who will lose their job in the fourth industrial revolution.


But second, also, I'm coming from the U.N. General Assembly.


There was a lot of discussion, of course, on how to implement the social development goals. And I think the social development goals, of course, government action, new technologies, but it needs mobilization.

We have to do it on the ground. We have to do it, everybody of us is challenged.

So I'm an optimist. We may go into a new renaissance, where people serve society, where people are free also to exercise creative professions, being an artist. Hopefully we have many, many Yo-Yo Ma's.

Nobody will reach your level of professionalism.


- You said in the book too, that governments themselves might move in this direction of service and become public service centers.


- Yeah.



- That was an interesting idea.

- Yes, I think governments will be much more measured on the basis how they really fulfill the individual needs of citizens. And we see the first governments moving into this direction.


Singapore, for example, is a good example of a government which perceives itself not so much in pure political terms, but how much it can really optimally fulfill the expectations of citizens in terms of health, in terms of education, in terms of social services.



- In terms of looking at countries that might be models or certainly suggest directions about preparing people for jobs, Germany, would Germany stand out? Or are there other countries that stand out?

- I would say Germany has a long tradition in embracing the concept of stakeholder democracy. When I grew up, the keyword was social market economy.

Germany is certainly a good example. Switzerland is a good example.

But we don't have too many examples yet, good ones.



- Not enough.


- Yeah. Not enough, we're still struggling with this question.


- You read about the importance of governments becoming more agile, and I know you have a particular concern about the regulatory state and how regulations are now written and how that process might be revised.


- I think this is one of the biggest challenges which we have because the technological progress is so fast, the governments cannot catch up anymore.

And, by the way, it has also an impact on competitiveness.

I remember I organized a meeting for, I mentioned here, for Chancellor Merkel with some of the real CEOs of the highly advanced digital economy companies.


And I asked her afterwards, what is your impression?

And then she says, I see now the difference of Silicon Valley with Europe. So, I asked her, what is it? She said, look, in Silicon Valley, everything which is not forbidden is allowed. And in Europe, everything which is not explicitly allowed is forbidden.


(David and audience laugh)


So, that's the situation which we have.

And when you look at the let's say difficulty or incapability of governments to follow the technological progress, you have a situation where society loses the control over the technological progress. And you see it here in the discussion on big data.

Last year, the conflict between Apple and the government, and so on. - Right. - So we coined, I coined in the book the notion of agile governments.


And what it means that the today with the fast technological progress, you cannot set regulations anymore, create regulations anymore in the old fashion where you have an innovation, you go through a parliamentary government commission treatment process, and after some years, you come out with the necessary framework.

You have to work together on an ongoing basis to create self-binding protocols and principles and rules. Look at artificial intelligence, look at the ownership of big data, and so on and so on.

So what we have done in the World Economic Forum, we created a campus in San Francisco to bring, to have a platform where governments and business continuously could cooperate, also with civil society, to make sure that those new technologies are human centered because we have to have an objective, and the objective would be they have to serve humankind.

So we work on artificial intelligence, we work on precision medicine, on drones, Internet of things, and so on.


And our dream or wish is to create a whole network for such an approach because it has to be based on the ownership of governments around the world.

And to have such centers in each city or in those cities really technological progress is eminent. So I could imagine maybe when we meet again in five years or in three years, or with the speed of The First Industrial Revolution, maybe in one year that we have our center here.



- But your center of focus in terms of, I've heard you say, if you want to predict a future of a country, don't look anymore at its GDP growth.

Look at its rate of innovation.


- That's right. And I also, I was very much in the news because I coined another expression. I said today we have moved, we are not anymore in the age of capitalism. We are in the age of talentism. Which means it's, capital is abundant.

If you have a good idea, you have so and so many investors who run after you, but what is scarce, if you look what is very scarcity, it's good ideas, it's in talents.

So talent is in some ways replacing, even conceptually, capitalism. And it leads also to this gap of wages, of minimum wage for talents versus non-talents.

And this polarization, to a certain extent, of society. So, certainly, I think we will see conceptually. I mean, talking here, it's a Wiener Lecture, I should also say something about economics. (laughs)

I feel that we need completely new concepts.

We also haven't yet, maybe here, it's the Kennedy School. But I haven't found yet the right answers what economic policies we really need in times of shared economy, in times where there's less materialism among the young generation, and so on.

How do we deal with this situation?



- We should go to the floor here in just a moment.

But I have one more question for you. But if you do have a question, we're going to have a short time with Q and A from the floor.

So you might want to hang out now. But let me ask you this question finally. And that is, we have at this school in this audience
some of the most promising members of the new generation, of the rising generation.


What advice do you have for them about preparing for lives of service and leadership in this new world?

- I would say, if I would characterize, and I did it to a certain extent in the book, and I do it more in the new book which comes out end of the year, which is called Shaping
The Fourth Industrial Revolution.

I think we need two capabilities.

It's emotional intelligence and contextual intelligence.

Today where everything is interdependent, we have to learn to think in ecosystems, which people like to, how shall I say, particularly also in the academic world, to define in narrow lines specific issues.

But today everything is interwoven. And so, contextual intelligence, to be able to link the dots, to bridge the dots, I think becomes what young people should learn. And the other one is emotional intelligence.


Because creativity, productivity, and I would say personal satisfaction comes mainly out of preserving your own identity but living in a diverse society. And if I look around here, it's such a diverse scope.

But if you are embedded into a diverse community, you really have to understand what are the motivations behind the behavior of the people you deal with.

And this needs emotional intelligence. And maybe one word because I'm very often, particularly when I'm with young leaders, and I remember a day when we had a similar discussion several years ago.

I'm always asked, you have met so many leaders in your life.

What creates really leadership? And I would say it's very simple, it's just five things. So many books, and I was a professor, of course, I had to read all those books.


(David laughs)

But now after having met so many people, I would they there are five very simple elements. A leader needs brains, soul, heart, muscles, and nerves.

Let me explain, let me explain. You have to be a professional.

I mean, you all are professional, you have to be the best at what you're doing, or at least among the best. That's the brains, but you have to have values.

You have to be you have to have a vision long term based on values, that's the soul. You have to do with passion what you're doing in compassion, and that's the heart. But you have also to translate your vision into action, that's the muscles.


And, of course, you have to have good nerves.


- (laughs) Why good nerves? Why good nerves? Unpack that.

- Some people ask me, usually, who is fulfilling those five criteria?

(audience laughs) Now I will give the question back to you.

Do you know any leader who really fulfills the five criteria?


- It's a little bit like the German answer, not enough.


- Not enough, and I have met very few. I would say for me, I had the great fortune because I met him. I was the first to visit him when he came out of prison.

Nelson Mandela certainly incorporated all five of those dimensions. But then it becomes very difficult. Usually one or two dimensions are missing.

So, I would wish you brains, soul, heart, muscles and good nerves.


(David and audience laugh)


- Perfect, let's go to the floor...








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