of the century and into the 21st. Anno 2021, there are more women than men enrolled in university in many countries around the world, including the US and Saudi Arabia13(!), and women form close to half of the workforce in many countries. Despite this, inequalities related to pay and other factors remain.14
Over the course of those early post-war decades, many countries used their economic windfall to build the foundations of a social market economy. In Western Europe, notably, the state offered unemployment benefits, child and education support, universal health care, and pensions. In the United States, pro-social policies were less en vogue than in Europe, but thanks to the rapid economic growth, more people than ever did ascend to the middle class, and social security programs did grow both in the number of beneficiaries and the overall funds allocated to them, especially in the two decades between 1950 and 1970.15 Median wages rose sharply, and poverty fell.
France, Germany, the Benelux countries, and the Scandinavian countries also promoted collective bargaining. In most German companies, for example, the Works Council Act of 1952 determined that one-third of the members of the supervisory board had to be selected by workers. An exception was made for family-owned companies, as ties between the community and management there were typically strong, and social conflict was rarer.
As I grew up in that golden era, I developed a keen appreciation for the enlightened role the United States had played in my country and the rest of Europe. I became convinced that economic cooperation and political integration were key to building peaceful and prosperous societies. I studied in both Germany and Switzerland and came to believe the borders between European nations would one day disappear. In the 1960s, I even had the opportunity to study one year in the United States and learn more about its economic and management models. It was a foundational experience.
Like so many of my generation, I was also a beneficiary of the middle-class, solidarity society European countries had developed. Early on, I became very intrigued by the complementary roles business and government played in shaping the future of a country. For this reason, it was natural to write one of my theses about the right balance between private and public investments. Having worked during more than a year on the shop floor of companies, experiencing real blue-collar work, I also developed a special respect for the contribution of workers in developing economic wealth. My belief was that business, like other stakeholders in society, had a role to play in creating and sustaining shared prosperity. The best way to do so, I came to think, was for companies to adopt a stakeholder model, in which they served society in addition to their shareholders.
I decided to turn that idea into action by organizing a management forum where business leaders, government representatives, and academics could meet. Davos, a Swiss mountain town that in Victorian times had become famous for its sanatorium treatment of tuberculosis (before antibiotics such as isoniazid and rifampin16 were invented), offered an optimal setting for a sort of global village,17 I thought. High up in the mountains, in this picturesque town known for its clean air, participants could exchange best practices and new ideas and inform each other of pressing global social, economic, and environmental issues. And so, in 1971, I organized the first meeting of the European Management Forum (the forerunner of the World Economic Forum) there, with guests such as Harvard Business School Dean George Pierce Baker, Columbia University Professor Barbara Ward, IBM President Jacques Maisonrouge, and several members of the European Commission.18
The Tumultuous 1970s and 1980s
But just then, in the beginning of the 1970s, it became clear the economic miracle wasn't to last. As we gathered in Davos, cracks in the system had already come to the surface. The post-war boom had plateaued, and social, economic, and environmental issues were emerging. My hope though, was that by more actively learning about successful American management practices, European businesspeople, politicians, and academics could continue to spur prosperity on the continent.
Many European companies did in fact make the step toward neighboring international markets. The European Coal and Steel Community (ECSC), which as the name implied focused on a common market for a few key resources, had in the preceding years evolved to become the more all-encompassing European Economic Community (EEC). It allowed for a freer trade of goods and services across the continent. Many Mittelstand companies used that opening to set up subsidiaries and start sales in neighboring EEC countries. It was thanks in part to this increase in intra-regional trade that growth could continue in the 1970s.
But some economic variables with a critical effect on growth, employment, and inflation, such as the price of energy, were not favorable. Oil, which alongside coal had fueled the post-war boom, brought a first shock to the system. The price of the world's most important energy source rose fourfold in 1973 and then doubled in 1979, as the major oil-producing and -exporting countries (OPEC)—many of them former Middle Eastern and Arabian colonies of the European powers—flexed their muscles. Controlling the vast majority of the global oil supply at the time, the OPEC countries decided to implement an oil embargo in response to the Yom Kippur War. During that war, many of OPEC's Arab members opposed Israel, which during and after the armed conflict expanded its territory in the region. The embargo, targeted mainly against Israel's western allies including the US and the UK, was very effective.
It was no wonder perhaps, that the OPEC countries used their newly gained market power. In the preceding two decades, many of its members—often former European colonies in Asia, the Middle East, and Africa—had finally gained their independence. But unlike most Western countries in that era, these developing countries were often consumed by political and social turmoil. The economic boom in Europe and the United States remained out of reach for many newly independent countries in Asia, the Middle East, and Africa. The OPEC nations were among the few exceptions, as their most important resource, oil, fueled the world economy.
As economic and industrial progress had been so great in the West over the three previous decades, some people also warned that the expansion was unsustainable and that a new economic system would be needed that is more sustainable for the planet, its limited natural resources, and eventually, humans themselves. Among these voices were European scientists and industrialists of the Club of Rome, who had come to believe that the state of the world, and notably the environmental degradation of the planet, was a major problem for human society. Indeed there were great warning signs for anyone who would take heed, and at the Forum's meetings in Davos, we paid close attention. In 1973, Aurelio Peccei, the club's president, gave a keynote speech at Davos about his organization's findings, warning of an impending end to growth.
Still, after surviving multiple recessions and introducing some energy-saving measures such as daylight savings time and car-free Sundays, the world eventually returned to its familiar growth path in the 1980s. The days of 5 and 6 percent GDP growth were over (at least in the West), but growth levels of 3 to 4 percent there were not at all out of the ordinary. Other economies, including the Asian Tigers (South Korea, Taiwan, Hong Kong, and Singapore) helped to make up for the shortfall.
But beginning in the 1980s, a fundamental change in perspective started to emerge about what had enabled post-war economic growth. During the immediate post-war years, it was believed that increased economic prosperity was something that everyone had contributed to, and so it had to be shared by all. It was an industrial model of progress built on partnership between company owners and their workforces. By contrast, the growth phase of the 1980s was based more on market fundamentalism and individualism and less on state intervention or the building of a social contract.
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