The most powerful circuit in the world

``Only connect," wrote EM Forster, little realising that the world was about to take him at his word. Connection has become the obsession of the age and Davos, once a small Swiss ski resort with supernaturally fresh air and eerily quiet TB sanatoria, has become the world capital of the connectors. For it is here that World Economic Forum holds its annual general meeting, when thousands of people who think they run the world (which they do), connect as if their lives depended on it (which they also do). The painstakingly Teutonic Klaus Schwab - a man who habitually says "nice to see you again" the first time he meets anybody - started the WEF 25 years ago. Since then it has grown to become the ultimate conference, a festival at which interest rates, life, the universe and everything are discussed and, because this is Switzerland, resolved; while, in the corridors, shiny, harshly-spoken Wall Street suits talk turkey to nervy industrialists - they have paid top dollars to climb these mountains - and jumpy diplomats.

It has to be seen to be believed - a phantasmagoria of wealth and power set in insanely adverse weather conditions. Outside, S-class Mercedes emit sinister whispers as they cruise the snow-covered streets. Inside thousands of men, wives and mistresses -all identified by barcoded plastic cards around their necks - flow and clot, occasionally diving into the plenary sessions where politicians chew the propaganda fat, or sneaking into the "interactive sessions" to learn about the integration of the worldeconomy, the nature of truth or the origin of the universe.

This year the forum's official theme has been "Challenges beyond Growth" - a clear attempt to generate debate beyond the movements of GNPs and corporate earnings. But such challenges have appeared too nebulous and varied alongside the forum's other greattheme: China. The Chinese are here in formidable force, promising that their own hyper-growth will continue well into the next century and making an obvious bid to be the lead nation of the Asian economic miracle.

Elsewhere, Jacques Santer's startling Europhilia has turned up the heat yet again under John Major and the Russians have struggled to neutralise the baleful effects of the invasion of Chechnya. One way or another an alert Martian landing in Davos could rapidly assemble an accurate economic and political world view, with every anxiety, power play and national sensitivity included.

But what exactly, wonders the bewildered, overawed observer, is it all for?

Well, first there is the compulsive reinforcement of the sense of power, the mutual assurance that this really is the global super-elite. Almost all the speakers draw attention to the quality of the audience. And, when Schwab introduces Bill Clinton on the opening day, his smooth, unstable features projected by satellite on to a giant video screen, he points out that no less than $3,000bn of corporate turnover is represented in the hall. At this, Clinton, to his credit, begins to giggle.

From this flows the need to rise to the occasion, so big statements are made by the politicians. Our own Kenneth Clarke - his clothes sense now so fabulously dismal that he looks like an hallucination - defines jobs as "challenge beyond growth", and Ingvar Carlsson, the Swedish prime minister, and Sir Shridath Ramphal, former Commonwealth Secretary General, produce a fat, solemn report on the "urgent need for a new kind of leadership", a need more incisively interpreted in the wake of the Kobe earthquake by one anguished Japanese professor as "urgent need for any kind of leadership".

With more potent urgency, Zhu Rongji, the vice-premier of China, denounces media coverage of his country and insists that everybody in the hall come to China and see for themselves. "If you have any problem, please call me," he says.

A questioner takes him at his word and asks for his phone number. "I've forgotten," replies Zhu.

This is big stuff, certainly, but it quickly induces indigestion. One begins to yearn for a touch of real astringency. And Davos supplies it in the form of George Soros, the investment fund manager whose currency trades coolly blew the ERM apart. "My purpose in coming here," he says, "is to alert you that we are entering a period of world disorder."

A shiver of awakening passes through the hall - at last some real, unmediated pessimism. The West's inability to fight for the ideal of an open society, says Soros, is a moral failing that will encourage conflict and fragmentation. We need "a common strategic view based on the principles of the open society". Soros may be right, he may be wrong, but he is undoubtedly possessed of a refined form of theatrical genius.

The smaller meetings are a weird combination of hard-faced finance and economics and strangely ambitious philosophy. I am in Davos to chair or take part in sessions on social cohesion, the search for truth, science and consciousness, and to "brainstorm" on "cultural issues". I would like to think this makes me one of the most grandly serious participants, but I suspect I'm really part of the cabaret, a conference call-girl smoothing furrowed brows with talk of issues too big to worry a banker.

But, in a sense, all the performers are a cabaret. For connecting is the business of the WEF and that happens in the corridors, at the dinners and receptions or through the computerised messaging system which swipes your barcode and then tells you that you have "no unread messages". Business cards are the currency of this trade and the fat directory of participants - CVs, phone and fax numbers and embarrassing photographs included - is its bible.

This is how the world now works. One can glimpse in these clusters of connection the spectre of the real macro-economic world order.

The point is that this ultimate conference derives its energy from the characteristically modern sense that the entire world is becoming a single, consistent system which everybody operates using roughly the same instruction book. Bond prices and capitalflows form a new universal language, an Esperanto of maximised self-interest and cold financial logic. Not a word of Communism nor a hint of the old imperial arrogance of the Middle Kingdom pass the lips of Zhu Rongji, only the new rhetoric of Asian hyper-growth and inward investment.

And, chilling as it sometimes may be, it would be crazy not to be at least a little grateful. These people are not going to go to war with each other; no missiles are being targeted in the corridors of Davos because everybody now knows the global importance of assets per share. The net of economic connection has been cast over all the old rivalries and ambitions. Conflicts will still occur, but the overwhelming self-interest of the big players, the big connectors, will stop them getting out of hand.

Davos Congress Centre, the cathedral of connection, is, in these terms, a more purposeful, less sentimental version of the United Nations building in New York. Here, what people say has a price rather than a flag attached. What the system is achieving may not be unconditionally attractive - the net of economic connection threatens a bland trans-nationalism, a destruction of local identity - but it does not demand that people be gassed, bombed or shot. And that, from a perspective of history, is a very big deal indeed.