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Continuous economic growth: Part 3

Generous capital

Published on 12 May 2021

Generous capital

Is capitalism the root of evil?

Capitalism is non-moral. It is neither greedy nor generous. It is neither oppressive nor freeing. The blaming of capitalism as the root of evil is far more a convenient means of displacing personal and corporate behaviour, and an attempt at absolving one's moral discomfort with £3 t-shirts and million-pound bonuses, than it is a valid critique of the most successful economic system in human history.

And here is the key point: As much as capitalism allows freedom for deviancy it similarly allows freedom for generosity, personal reasonability, and love for our neighbour.

Capitalism fundamentally trusts that people will do the right thing. It reflects the society in which it operates, and so reflects our own human nature.

Just as we can be prone to greed, so too we are capable of great generosity and selfless dedication to others. The very character and ministry of Jesus demonstrates such.

The question is: what will you do with your freedom?

With freedom comes responsibility

Governments must take bold moves to support, legislate for and incentive positive knowledge sharing and innovation, while also mitigating poor practice through legislative powers such as the 'due diligence within supply chains' policy currently going through parliament.

So that, as John Elkington noted in his book 'Green Swans':

'The destructive power of [immoral and unbridled] capitalism must be contained and constrained by well-enforced laws, widely accepted standards and deep-rooted values to stop it from blowing up in our faces'.

The private sector must also welcome the opportunity to meet the challenges we face with positive solutions, not only to maximise financial value generation but collective social capital too.

Take for instance the sustainability sector: the UN Sustainable Development Goals are estimated to generate $12 trillion of market opportunity by 2030 in restorative and sustainable capital. This is both commercially viable and the right thing.

However, beyond public and private sector attitudes, the greatest power for shaping a generous capitalism sits with us and our organisational leaders taking the simple choice not only to no longer cut corners and perpetuate shareholder primacy, but to accept a higher level of responsibility for the whole system within which we operate.

Restorative or generous capitalism sits at the very cutting edge of economic sustainable growth thinking, which no longer sees a conflict between affordability and socio-environmental sustainables.

This is neither degrowth nor anti-capital, but an inclusive capitalism that's able to extend its eyes beyond the shareholder return alone, and embrace the opportunities of whole system return.

Beyond shareholders

In 1970 the economist Milton Friedman wrote: 'The social responsibility of business is to Increase Its profits.' Friedman convinced the world that shareholder primacy was the most important and central tenet of capitalism. Friedman was wrong. Rather, Joseph Schumpeter understood the true nature of socio-political economics when he said: 'The essential point to grasp is that in dealing with capitalism we are dealing with an evolutionary process'.

The age of shareholder primacy and maximisation of financial return at all cost is taking its last breaths. It is for values-driven leaders committed to whole system transformation who must, as if from the primordial ooze, emerge not only to live amongst a new world, but establish the corporate culture of this new world also.

If child or forced labour in garment factories is disallowed, do we change our hiring practices, increase our wages and ensure such principles are upheld throughout our supply chain - or do we offshore our needs to those without the voices required for their rights to be heard?

Because while we wouldn't consider child labour restrictions as an enemy of free trade and capitalism today, but rather as a basic tenet of human dignity, like the cotton fields of years gone by, Unicef finds that the garment factories across south and far east Asia which service many of the clothing brands we've come to love thrive at the work of children’s hands.

It is our choice to do better and to care more.

I believe that capital and private sector innovation and investment is central to the development of a flourishing human and non-human ecosystem, and I'm confident that healthy trade with minimal restrictions is key to that.

However, the continuation of shareholder primacy, offshored, illicit and immoral ‘free trade’, which evades common responsibility and collective well-being of people and the planet, not only perpetuates poverty in its deepest sense but will, in turn, undermine the healthy growth of profitable enterprise too. 

As business leaders we are called to do more, to be better, and to pioneer greater integrity.

An evolved capitalism offers renewed hope in a more generous, prosperous and sustainable future and it is waiting for us to lead.

Read parts 1 and 2 in the series

Growth doesn’t mean Greed

Continuous economic growth: part 1

Growth doesn’t mean greed
Growth doesn’t mean Greed

Continuous economic growth: part 2

Is it human nature or systematic failure?
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