Capitalism is probably one of humanity’s greatest inventions.
The World’s GDP has quadrupled in the last fifty years, while population doubled. The average GDP per capita is now over $10,000, more than enough to provide each person on the planet with enough food, shelter and education[i]. During 2000 and 2012 the rate of absolute poverty in the world fell by 50% and the poor in the world are getting richer unparalleled in human history.[ii]
For the past 70 years the free-market economy and ensuing economic growth attributed to the current quality of life that humanity. In 1950 Norway had the world’s highest life expectancy at 72.3 years. Now the global average is higher than 72.6 and in Africa where it was the lowest, life expectancy it is growing at a rapid pace. Since China has introduced more market-oriented principles more than 1.2 billion people have been elevated form extreme poverty[iii].
While capitalism has served us enormously well, there is a palpable anger and mistrust in the system and the role that business play in our society. In the well-known Eldeman Trust Barometer published in 2019 a survey of 34,000 people of various countries was conducted of which 56 percent believed capitalism was doing more harm than good globally[iv] The amount of resources that we currently use is 1.5 times the world’s resource capacity. A billion people still go to bed hungry every night while the richest 85 people has more wealth than the bottom 3,5 billion people.[v] Power is disbursed but wealth is concentrated. Is this model sustainable and how do we navigate the tension? And more importantly how do we as business leaders, being benefactors of this system respond.
The immediate temptation is to allow the proverbial capital pendulum to swing towards socialism where the means of production are socially owned, used to meet human needs and not to create profits. Walking down this path will unfortunately lead you to the socialism graveyard, littered with the bloodstained tombstones of communist Nazi Germany, Chavez-Maduro socialism of Venezuela and Maoism of Communist China to name but a view.
Capitalism, Greed & Governance - I was first confronted with these paradoxical concepts in the late nineties, when I started my career as a litigation attorney representing corporations and individuals in commercial disputes. My professional obsession with these concepts was not conceived from books or academic theories, but from a front-row seat in dimly lighted courtrooms. The deconstructive hostile environment cultivated my passion to use my abilities more constructively. I became a merger and acquisition lawyer where I could constructively structure commercial transactions and use my influence as advisor, investor and business executive to bring about reform.
For the past 20 years, I have studied governance structures form various jurisdictions, consulted experts and implemented good governance structures in corporate structures locally and internationally, only to realise that a new bridle will not change the nature of the beast. In the next couple of articles I will invite you on a journey to explore these concepts in depth, but I need to disclose my agenda upfront- I have no intention to publish more information in cyberspace. My primary intention is to ignite you to deeply consider these issues to enable you to lead, innovate and bring about change that only you can bring.
[i]https://data.worldbank.org/indicator/NY.GDP.MKTP.CD; https://data.worldbank.org/indicator/SP.POP.TOTL; https://data.worldbank.org/indicator/NY.GDP.PCAP.CD. [ii] https://www.heritage.org [iii] https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-case-for-stakeholder-capitalism# [iv] “2020 Edelman Trust Barometer,” Daniel J. Edelman Holdings, January 19, 2020, edelman.com. [v] https://www.mckinsey.com/business-functions/sustainability/our-insights/business-society-and-the-future-of-capitalism
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