"The coronavirus pandemic has no parallel in modern history. It is our defining moment."
Those are the words of Klaus Schwab, head of the World Economic Forum (WEF), in COVID-19: The Great Reset, the 2020 book he co-authored with Thierry Malleret.
"Many of us are pondering when things will return to normal," they write in the book's introduction. "The short response is: never."
At the latest WEF meeting in Davos, Switzerland, this January, Schwab set the tone for the conference with his glowing introduction of the opening speaker: Xi Jinping, China's president and chairman of the Chinese Communist Party
"Major economies should see the world as one community… and should coordinate the objectives, intensity, and pace of fiscal and monetary policies," said Xi in his address to the WEF.
This vision of a united globe with a coordinated economy managed by experts captures Schwab's vision of the post-COVID world. "We have to redefine the social contract," said Schwab at a 2020 WEF book launch event for The Great Reset.
These grand proclamations, the ominous book title, and Schwab's odd personal style have led many people to speculate that the "great reset" is part of a conspiracy of global financial elites and politicians to depopulate the planet so that they can more easily institute one-world government, or even that COVID was engineered to that end.
I don't buy it. Far-reaching, global conspiracies require levels of coordination and shared purpose likely to be quickly exposed and fall apart, especially in the networked age. Instead of spinning our wheels searching for a secret agenda, take a look at the one right out in the open.
"I think we are moving from short-term to long-term, from shareholder capitalism to stakeholder capitalism," said Schwab at his 2020 book event.
What Xi, the WEF, and people like Sen. Elizabeth Warren (D–Mass.) have in common is that they favor so-called stakeholder capitalism, which is a euphemism for making companies answer first to special interests. They want to reorganize corporate boards to include representatives from labor, environmental, and social justice groups. Warren proposed a bill to require 40 percent of large corporate board seats be elected by workers. In China, the state simply owns or controls a majority stake in most of the country's largest firms.
The WEF and many state leaders believe global coordination and governance is essential to manage global problems: climate change, international financial instability, and future pandemics. Ironically, it's not only Schwab's conspiratorial critics who place too much faith in central planners to manage the globe.
A crucial flaw in Schwab's theory is that it puts too much faith in the ability of governments to reengineer society in a way that better serves the needs and desires of all citizens. He wants a rethinking of capitalism that escapes "the tyranny of GDP growth" so that companies create "goods and services for the common good" instead of "maximizing profits."
But the phrase "common good" points to his fundamental misunderstanding of capitalism, which is nothing new: central planners were using this idea to maximize their own power at the expense of individual freedom back in the 1940s, when the Nobel Prize–winning economist F.A. Hayek wrote The Road to Serfdom, which would go on to sell over two million copies.
"The welfare and the happiness of millions cannot be measured on a single scale of less and more," Hayek writes, "[and] depends on a great many things that can be provided in an infinite variety of combinations."
Every single one of the billions of people who populate this planet have unique goals and desires that are impossible to reduce to a unified whole, whether that's GDP or whatever supposedly holistic metric the WEF wants to replace it with, as Hayek and his mentor Ludwig von Mises argued. Profits are a signal to entrepreneurs and investors that they are satisfying the disparate needs of their customers.
"One of the great lessons of the past five centuries in Europe and America is this: acute crises contribute to boosting the power of the state," write Schwab and Thierry in The Great Reset. "It's always been the case, and there is no reason why it should be different with the COVID-19 pandemic."
They are right that war is the health of the state, as the writer Randolph Bourne once put it, and the government's response to COVID has been similar to military conflict in terms of the cost and the chaos it has engendered. World Wars I and II and the Great Depression ushered in a powerful modern welfare and warfare state that irreversibly altered America and the world.
But is the sort of permanent expansion of state power that Schwab predicts, and which would make the world worse off in the long run, really inevitable?
I'm more optimistic this time, thanks in large part to the power of technology to provide everyday citizens with an exit. Instead of the Great Reset, in which sclerotic 20th-century institutions accumulate even more power, I think we're entering… the Great Escape.
This is possible because technological progress is outpacing the ability of the state to control and regulate it. Governments will have no choice but to abandon their efforts to construct physical and metaphorical walls. Technology can be designed to facilitate decentralization, in which the flow of money and information can't be controlled. Ideas emerge from the bottom up.
Expecting governments and international bodies to orient every large company toward some widely agreed upon "common good" assumes that many of the very institutions that bungled the COVID-19 response can competently handle the planet's most intractable problems.
My hope is that after witnessing the colossal failure of governments in the face of a global crisis, many more people will be looking for a different approach.
There's evidence everywhere of the Great Escape: The U.S. population shift away from expensive, restrictive, and poorly governed states and cities spurred by the rise of remote work, the exodus from government-run schools, the growing use of cryptocurrency, the popularity of encrypted, private communication platforms and the expanding reach of independent voices in our increasingly decentralized media.
Hayek called central planning the "fatal conceit," writing that "the curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."
And Schwab even touches on this idea, writing that "complexity creates limits to our knowledge and understanding of things; it might thus be that today's increasing complexity literally overwhelms the capabilities of politicians in particular—and decision-makers in general—to make well informed decisions."
He dubs this quantum politics but never quite explains how policy makers will realistically overcome this dilemma.
Maybe there's record-low trust in our institutions because the people running them are attempting the impossible: planning the future for billions of people.
"Humiliating to human pride as it may be," Hayek wrote in the Constitution of Liberty, "we must recognize that the advance and even the preservation of civilization are dependent upon a maximum of opportunity for accidents to happen." Policy makers could and should be more focused on securing the freedom that allows such decentralized experimentation and accidental progress to occur.
The fear of a Great Escape—of losing control—is understandable because there are systemic risks that could destroy human civilization, including future natural or man-made pandemics, runaway inflation, and ecological disaster.
"Small boats may not survive a storm, but a giant ship is strong enough to brave a storm," said Xi in his WEF address this January.
But if we're all stuck in the same large ship in the same storm, we're all going down with it when the winds finally get bad enough.
Concentrated power itself presents an existential risk: A bad intervention applied to economies of the entire world at once can bring down the entire system. But the distributed power and humble trial-and-error of markets and decentralized governance brings progress in fits and starts with less risk of total ruin.
What Schwab, Xi, and central planners around the world miss is that when securing the rights of the individual comes first, the rest tend to follow.
Written and produced by Zach Weissmueller, animation by Tomasz Kaye, additional graphics by Nodehaus
Photos: CHINE NOUVELLE/SIPA/Newscom; CHINE NOUVELLE/SIPA/Newscom; Li Tao / Xinhua News Agency/Newscom; Ken Cedeno / Pool via CNP / SplashNews; Ahmad Abdo/dpa/picture-alliance/Newscom; Ed Lefkowicz / VWPics/Newscom; Albin Lohr-Jones/Sipa USA/Newscom; Li Xiang / Xinhua News Agency/Newscom; Kyodo/Newscom; CHINE NOUVELLE/SIPA/Newscom; Li Tao / Xinhua News Agency/Newscom; Lan Hongguang / Xinhua News Agency/Newscom