Since the collapse of communism, more than twenty years ago, capitalism has been, more or less, the only show in town. As a system for running our economies, it is widely acclaimed for having delivered an era of unprecedented growth and prosperity.
But the limitations of capitalism are also blamed for their contribution to the longest and deepest global financial crisis in living memory. Capitalism is suffering a crisis of liquidity, reliability, and confidence - and is naturally undergoing a wise degree of introspection, in these challenging times.
Seeing through the illusion?
There are many issues we see exposed. We start to see through the illusion of growth and how, through speculation and bubbles, we have been creating what author David Korten calls phantom wealth. We also see how the trickle-down-effect isn't really working, and that wealth is in fact concentrating in the hands of the few. Even shareholder returns are not what they seem.
Furthermore, with its convenient exclusion of so-called externalities, capitalism is not mindful of environmental or physical limits, the adverse impacts on our communities, or the capacity of our planet to support western lifestyles. Collectively, we will need two planets by 2030, to sustain our current consumption trajectory. This is not sustainable, by any measure.
There are also some serious design faults underlying these symptoms, including our addictions to growth and consumption, our narrow obsession with short-term results, our failure to account for natural capital, and our dysfunctional money systems.
Can we hope to reform and revive our current system, or do we need a more fundamental and radical shift, towards a new model for a more sustainable system of economy and commerce?
With these questions in mind, we set out on our quest, in collaboration with TSSS, in search of Capitalism 2.0: looking for a better way...
It is pleasing to see that the ground is fertile, with many schools of thought emerging. We have found at least at least ten different new recipes for better forms of capitalism, including: Breakthrough, Clean, Community, Conscious, Constructive, Cooperative, Mindful, Progressive, Responsible, and Sustainable. We have also discovered visions for a New Economy, a Sharing Economy, and a Collaborative Economy. As one might expect, some of the new proposals are more radical than others.
Building on the good works of the leading thinkers in this space, we have developed an initial synthesis of nine design principles in support of a sustainable economy:
- Less growth, more wellbeing.
- A broader view of what capital means.
- Based on responsible enterprise, adding real value, where it is needed.
- Holistic systems thinking; aligned with the circular economy.
- Enabled by a well-functioning money system.
- Away from speculative bubbles, towards creating longer-term real wealth.
- Shared ownership and distribution of resources and wealth.
- Based on collaboration and striving together.
- Founded on new institutions and greater systemic resilience.
There is no doubt that these nine principles, if taken together and fully implemented, would have a dramatic impact on the ways in which our economies work. Some might argue that such changes would mean getting back to the roots of capitalism, with more emphasis on genuine free trade, local economies, re-localised production and owner-managed businesses. It would certainly be less about rigged markets and unhealthy corporate domination. For those with a genuine disposition towards free markets, this might be a good thing - reviving the dream of entrepreneurship.
While there are risks with this transition, there are certainly many opportunities for businesses that create genuine value, in meeting the real needs of people, our communities, and the environment, in universally affordable and sustainable ways.
But there are many, particularly within the business world, that urge us not to throw the baby out with the bathwater; they argue that businesses and entrepreneurialism still provide strong powerhouses for wealth and job creation and that they can change, in order to meet the challenges of our time. And so we see a growth of initiatives that seek to address the criticisms of capitalism and show the real capabilities of businesses. Sir Richard Branson's B Team provides a prominent example.
Many of the new recipes for capitalism seem to be primarily concerned with how we can get capital to flow better, to where it is needed, in order to deliver more sustainable outcomes. And of course, that would be a great start: if we could just get the capitalist machine to work better; if we could get the investment community thinking and acting in right-minded ways, stimulated with the right incentives, then perhaps all will be well?
Same old, same old
But there is still a problem. Many of these prescriptions are largely configured on the same old paradigm, with the core tenets of capitalism largely untouched. The principal aims are still all about growth and consumption, even if they might be delivered more eco-efficiently. We already know that we can't keep on growing forever.
We also see that these proposals leave the money system and ownership models pretty much untouched, and so we are likely to see very similar problems associated with the concentration of wealth and power.
As such, many of the approaches seem skewed towards appeasing the Money Men, rather than providing something more balanced and progressive, in meeting the needs of the full range of stakeholders - including our communities, and our planet.
Without any real mandate to challenge the traditional approaches of those who control the supply of money, and without any clear power to influence their agendas, one can start to question whether these approaches - in their current format - offer any real possibility of a much-needed economic shift?
Even John Elkington questions whether capitalism, left to its own devices, could ever fully reform itself: "self-discipline and voluntary initiatives can only take us so far."
With only incremental tweaks and changes, it seems highly likely that the problems we continue to experience will not go away. Five years after the collapse of Lehman Brothers, there are serious fears that the risk of another financial meltdown is still all too real.
Perhaps we need to look further, beyond the current paradigm and imagine what a viable, attractive, sustainable economic ecosystem could look like?
Evolution, not revolution
Despite the very real challenges involved, there is cause for hope. We have found a huge amount of good practical work already going on - with many people and organisations exploring new possibilities, in search of better forms of economy - towards a fairer and more sustainable world.
They are creating a surprisingly cohesive and consistent picture. It is almost like watching the pieces of a very interesting jigsaw coming together, bringing into focus an attractive picture of a new operating system.
We also need a new model for change - with less emphasis on conflict, or attacking the old system - but more engaged with peaceful participation in making a credible, vibrant and attractive new system become a workable and enjoyable reality.
One can get a sense of an evolution that is already taking place, enabling people and businesses to migrate towards a better system. Perhaps, if we can promote greater awareness of the issues and the possibilities - and give a sense of hope, for what might be - we can all become the change we want to see?
Please join us on our journey: starting next week - download and read our new paper, A Journey in Search of Capitalism 2.0, and join the debate and our worldwide design team at The Sustainable Economy Project.