A recent white paper lays out the basis for a new, deeper conversation about the future of capitalism.
By Francesca Rheannon
When John Elkington coined the term “the Triple Bottom Line [TBL],” many hoped it would provide the lodestar for steering capitalism into a more just, sustainable future. Twenty years have passed since and that future seems as far away today as it did then—while the time to make that transition before Total Systems Collapse grows ever short.
Elkington himself has moved beyond TBL to Zeronauts – a vision of a zero carbon emissions market economy – and called for “Breakthrough Capitalism” to bring about a “market revolution.”
It’s not that there hasn’t been progress toward this goal.
The Extinction Economy
But what I am beginning to call the “Extinction Economy” (single bottom line capitalism) is still driving our collective bus full speed ahead over the approaching cliff. And it is still parading around as the Emperor of Economic Ideology, paid slavish obeisance by pundits, politicians, academics and other arbiters of acceptable truthiness. Even when the Emperor nods in the direction of “sustainability,” we feel compelled to make the “business case for Green.” As if that’s the sine qua non for sustainability to even be considered.
But lately, the Emperor is losing his clothes. Faith in the capitalist system is fading, at least among young adults. In a much-cited survey, a majority of youth in the U.S. (ages 18-29) preferred socialism over capitalism – that means, they favored a system of which they actually have no experience to the one we have now. (It might help that conservative politicians and right wing pundits dub as “socialist” such hugely popular – among this age group – notions as universal health care and a living wage.)
And, as others and I have written about previously on Talkback, reforming capitalism is becoming an ever wider and more urgent topic—even in the business community. The question increasingly being posed: can capitalism be fundamentally changed to meet human and environmental needs?
Two individuals who have taken up the question with zeal are Canada-based Brad Zarnett (founder and director of the Toronto Sustainability Speaker Series) and Britain-based sustainability consultant Michael Townsend of Earthshine. The two began a dialogue in 2012 to explore what they call “Capitalism 2.0.”
They looked at reform models that have already been proposed, finding at least 10 “different new recipes for better forms of capitalism, including Breakthrough, Clean, Community, Conscious, Constructive, Cooperative, Mindful, Progressive, Responsible, and Sustainable.” They also discovered "visions for a New Economy, a Sharing Economy, and a Collaborative Economy.”
Eventually, Zarnett and Townsend decided to do a white paper together, distilling all they had learned into 10 basic principles for an economy of sustainability, including:
- Less growth/more well-being,
- A broader view of capital(s),
- Systems thinking,
- The circular economy,
- Shared ownership and distribution,
- Real vs. phantom wealth, and
- Systemic resilience.
The ideas they gleaned from their studies were worthy and important. But they felt something was missing; some further step needed to be taken beyond the prevailing paradigm that still underpinned so many of the visions for change.
Social Change: Obligation vs. Responsibility
I spoke with Zarnett about the white paper, Capitalism 2.0, beginning by asking him to sum up the problems at the heart of the prevailing paradigm that were crippling efforts at reform:
Capitalism allows business to effect change when there is a viable business case to do so. But many of the changes that are necessary don't have a viable business case. If you are looking at a Triple Bottom Line approach to business, there is a social component. So, a company that is in the fast food business might have an obligation to allow its employees to live above a wage that puts them in poverty.
But from a shareholder perspective, there's not much of a business case for a company to say, “Let's just increase the wages of all of our employees who work on the front lines in the fast food industry. We're not sure how it's going to benefit us, but do let's do it.” Capitalism doesn't work that way – companies don't work that way – and certainly shareholders don't, en masse, support that kind of change.
Less Growth – More Well Being
One core principle of Capitalism 2.0 is “less growth – more well being.” Zarnett told me:
There’s no correlation between maximizing earnings or increasing market share and well-being. What people want in their lives is clean water, clean air, access to great health care, affordable higher education, strong communities and good paying jobs. The GDP model that countries use to gauge success has no correlation with many of these metrics that individuals on Main Street are looking for.
Capitalism 2.0 signs on to the widening awareness that growth needs to fall to a level of consumption within the carrying capacity of the planet. Zarnett explained that this means a new paradigm to guide our consumption choices:
There is much we've been pushed toward by vested interests, who found it to be highly profitable to steer the public in this direction. For example, many citizens of North America use an automobile to get around, but that's a choice we've made because the public transit system hasn't been developed as well as it could have been. Why? Because it’s not as good for those companies who want to sell more tires, cars or gas. So we often don’t have a choice to do things in a less damaging way to the environment.
We need to have more options. If something is clearly harmful to the air we're breathing, the water we're using, it needs to be transparent and the people who are causing that harm need to be the ones who correct it. They call it a “free market economy,” but we should have a fair market, free of distortions that subsidize companies to do harm.
Measuring the "Real Value"
Zarnett and Townsend’s white paper discusses the principle of adding real value, as opposed to the phantom value – a notion they adopt from David Korten (as he wrote about in Agenda for a New Economy). Zarnett explained why it made in into the list of 10 prescriptions for Capitalism 2.0:
This speaks to the metrics we use to assess if we are living our lives in a way that brings enhanced value to our families, our communities and our well-being. That's the real value that human beings want, not the value that we saw leading up to the financial bubble, with so-called innovative financial products that create value on a computer screen and have no connection to anything of tangible value.
We're talking about the things people need and want in their lives, that enhance their lives, as opposed to balance sheet phantom value that does very little good for anyone except perhaps a few shareholders and executives.
Capitalism touts the idea of competition but as the white paper points out, what results is less competition, as capitalism eats up smaller companies to concentrate power into fewer, larger firms. Capitalism 2.0 proposes collaboration instead of competition. Zarnett told CSRwire:
In the last 200 years or less, we've been sold the case that only through intense competition can we achieve greatness and it's simply not true. The evidence is that human beings are a very collaborative species. Competition is also part of a successful economy – we're not suggesting [we] remove competition entirely from the equation. But we're simply saying that you can be both competitive and collaborative and find a benefit for the "we."
If Nothing Else, Starting a Conversation
Zarnett and Townsend don’t pretend to have a step-by-step guide for achieving Capitalism 2.0.
They hope their white paper will achieve something else – start a collective conversation that can develop that guide. Zarnett says:
I think the conversation needs to change and a deeper conversation needs to be conducted about the ways we measure success. There's an underlying cultural narrative that says if we just strive for our own best interests the capitalist system will provide for us. And it's not behaving that way. We've lost our way; we need to have a new conversation about what do we want from our economic system. Once we can put some guidelines in place, we'll be in a better position to have an intelligent conversation about how to get there.
I’ll leave you with a plea from the white paper’s authors themselves:
We’ve outlined the general design principles for what we believe to be the basis of a sustainable economy, drawing upon the incredible work of pioneers who have contributed to shape this vision. BUT there is still much work to be done. We seek your feedback – your expertise, your passion, your ideas – to strengthen the framework and how to bring the vision to life. This is how we will give people confidence to move towards something better – a credible and attractive alternative economic ecosystem.
Dowload the white paper here, and join the conversation by leaving a comment or connecting with us on Twitter or Facebook.