Over the past several years I have come to think that capitalism as practised in the western world is fundamentally broken. Even before the global financial crisis (GFC) this feeling was strong. But in the aftermath of the GFC my discomfort with modern capitalism has continued to grow. Nothing I have seen, read or heard has shifted my perception.
I know and understand the world of capitalism. I like capitalism and think that it has been good for us in many ways. I respect profit and the law of compound interest. Most of my work experience since leaving school has been with large corporations (mostly large enterprises, Fortune 500 or S&P/ASX 200) – what I jokingly refer to as ‘the belly of the beast’.
But business models that were effective for organisations in past centuries are no longer relevant to the conditions that face the world today. We must find business models that are sustainable, equitable and fair to replace them.
A few things to consider:
- Western business has been like a cargo cult for too long and has elevated shareholder return as an idol.
- What good to shareholders (a.k.a. human beings) if the profit that is returned to them comes at the price of the environment their children and grandchildren must inherit?
- What good to the shareholders if the people who work in the business to generate those returns are broken by corporate politics and are called upon to undertake immoral or illegal acts (for example #hackergate)?
- What good if those returns to shareholders are generated at the cost of social bonds and the common good?
For many years I’ve pondered: surely it must be possible to generate profit sustainably and to create social good while generating profit?
Over the years I’ve also noticed a growing number of people thinking along similar lines. These people have talked about, among other things, the idea social innovation. They have also discussed concepts such as sustainable or resilient communities (checkout the MiiU wiki); and concepts like open source innovation are becoming increasingly important.
We need to take collective action to create profit and abundance that is sustainable on a social, economic and environmental basis.
For too long we have let run rampant a corporate ideology that exalts profit as a deity and we have allowed worship at the altar of shareholder returns to dominate our thinking and ways of doing in business around the world.
It’s time to create better ways for organisations to be more sustainable, more humane, and more planet friendly.
UPDATE 7 AUG 2011
An interesting article just popped up on The Guardian from the UK: Our financial system has become a madhouse. We need radical change. Here Will Hutton argues that “As a new global crisis looms, and political paralysis worsens, genuinely bold solutions are required to overcome the malaise”. I recommend this article.