The world is at a historic crossroads. Market extremism, often labelled neoliberalism, which has shaped our national and global policies for the past three decades, has become a toxic fuel for the stuttering engine for global growth. It has also generated polluting side effects that are no longer tolerated by large portions of society.

Yet market-driven globalization has lifted over a billion people out of poverty and has been an overall driver of improved standards of living. In its present form, however, it is no longer fit for purpose in our current – nor particularly our future – context.

What are the reasons?

First, the global economic system has moved from focusing on meeting the needs and aspirations of crucial segments of society who feel they are living in a precarious situation, to focusing on the optimization of the system itself. As such, individuals want to regain control of their livelihoods and seek out more than material satisfaction. People are searching for meaning and purpose in their lives – lives that are not solely defined by economics and business, but which also encompass social and cultural affinities. Many people feel spiritually isolated in a globalized world and long for a socio-economic context in which greater emphasis is placed again on shared values and less on impersonal rules.

In addition, the legitimacy of a purely market-driven global economy was undermined by a growing number of systemic challenges, such as:

The transition from a unipolar to a multipolar world, and consequently, to a world with competing societal concepts which challenge “Western” thinking;

Market power, corrupt practices and speculative financial practices distorting the fairness of markets and the process of real long-term value creation;

Transformation of production processes, emphasizing automation, capital and innovation over manual, and soon intellectual, labour;

The serious threat to the preservation and regeneration of our environment, caused by the excessive use and erosion of our natural resources.

Unheeded warnings

Since the 1980s, I have drawn attention repeatedly to the deficiencies of neoliberal globalization. For example, in an editorial for the International Herald Tribune (now the New York Times) more than 20 years ago, I wrote:

“Economic globalization has entered a critical phase. A mounting backlash against its effects, especially in the industrial democracies, is threatening a very disruptive impact on economic activity and social stability in many countries … This can easily turn into revolt …”

Even though the World Economic Forum emphasized the importance of social responsibility in its programmes in Davos and around the world, these warnings were not taken seriously enough.

Today, we face a backlash against that system and the elites who are considered to be its unilateral beneficiaries. The danger of this backlash is that it overlooks the fact that the search for innovation and competitiveness is still the main driver of economic development, and ultimately social progress. It is not the market-based system itself that is the issue, but rather its implementation. It is the lack of adequate and trustworthy principles to maintain a social contract inside it, which is indispensable to a fair, prosperous and healthy society.

Moreover, the tendency to resurrect national borders and other obstacles to global interconnectivity overlooks the fact that the world has become a community of shared responsibility. Global cooperation cannot be undone without causing major damage to all involved. We depend on each other when confronting the challenges of pollution, migration, space exploration, terrorism and crime – to name but a few.

It is also true that some of the elites were at the origin of aberrations in the system, just as others triggered a popular outcry over excessive abuses of this power. But any society that wants to remain dynamic needs people who assume responsibility for political and economic successes and failures alike. In a fast-changing world, where our very notion of identity is being challenged, the ideological choice is no longer between left and right, but rather between open and closed – with one of the consequences being that people are increasingly opposing “cosmopolitan” elites.

Thus, the ideological battle currently raging should not be between defending the “old” system against the current forces offering simple answers to very complex sets of challenges. Instead, this impasse must urgently be overcome – to not only be responsive to the grievances and anger of large portions of society, but also to move forward. Failure to do so will only result in a further shift towards more polarized societies and a breakdown of the norms that are fundamental to social cohesion.

The future challenge: the Fourth Industrial Revolution

There is no new replacement or ready-made ideology that can be conveniently taken “off the shelf”. Our priority should instead be to redesign our economic and social systems, taking into consideration that humankind, thanks to global interconnectivity and the growing impact of the Fourth Industrial Revolution, is becoming more sophisticated, and the individual more emancipated.

The Fourth Industrial Revolution will completely alter how we produce, how we consume, how we communicate and how we live. It will redefine the relationship between citizens and the state. It will provide us with great opportunities for enhancing the lives of individuals and societies. It will allow, if we get it right, a much more human-centred approach, fostering not only material satisfaction, but also genuine individual and societal well-being for all.

The present focus of our economic and political discussions seems to completely miss the mark. We have now a historic window of opportunity to shape technological breakthroughs, such as artificial intelligence and gene editing, in the service and for the benefit of humankind. We have two options. We can either fully use the opportunities of the Fourth Industrial Revolution to help lift humanity to new heights, or we can allow ourselves to be controlled by the forces of technology and end up in a dystopian world in which citizens will have lost their autonomy.

Mastering the Fourth Industrial Revolution is a global challenge. The tension between globalism and nationalism is artificial. We have to manage our future based on the fact that we are simultaneously local, national and global citizens with overlapping responsibilities and identities. The best way to develop a sustainable future is through the stakeholder concept, which I developed more than 40 years ago, and which forms the base of the Forum’s philosophy.

The basic principle for the success of the stakeholder concept is to find long-term solutions based on dialogue, and endorsed by the commitment and willingness to achieve the best outcome in the shared long-term interest of all stakeholders. As the international organization for public-private cooperation, the World Economic Forum is committed to serving this purpose as a catalyst and convener.