Is corporate capitalism a failing system?
One of the primary internal challenges faced by resilient investors is to decide how much faith to have in the current business-as-usual economic system. Is recent extreme market volatility the new normal, and if so, have we seen the last of hefty long-term returns? Will corporate capitalism embrace enough social responsibility to reverse the startling inequality that threatens to undermine societies or enough environmental sanity to slow the climate catastrophe? Our view is that the system can and will make the changes that are needed, with our Sustainable Global Economy and Evolutionary resilient investing strategies working together toward that end. At the same time, we recognize that the system may not be as adaptable as we think; our Close to Home strategy and a focus on Personal/Social and Tangible Assets are important hedges against that possibility, while also fostering valuable returns in any future scenario.
Gar Alperovitz is no longer asking these questions; he puts the situation in stark terms, starting one recent article with a quote from Klaus Schwab, founder and executive chairman of the World Economic Forum: “capitalism in its current form no longer fits the world around us.” Alperovitz then piles on the mainstream doubts by quoting a Larry Summers report that notes, “The ability of free-market democracies to deliver widely shared increases in prosperity is in question as never before.”
Alperovitz contends that “we are in one of those exceptional moments in history when the old ideas are demonstrably failing at a time when new ones represent a very great source of potential power and political energy.” But what would a new system look like? The article’s title suggests “a social capitalism,” while Alperovitz and his colleague Gus Speth co-chair the Next System Project, which aims to catalyze new thinking and replicate seed projects that show promise. The shift they have in mind will take decades, and would scale up from innovative projects already underway around the world. They’re definitely thinking big, imagining a “culture of community” that reorders our priorities in some pretty fundamental ways:
…we need economic arrangements that allow people the free time necessary to perform the work of teaching themselves a new way of living together as neighbours and citizens. In many ways, our current system is programmed to do exactly the opposite: chipping away at evenings and weekends with ever more work, forcing people to take two or three or more precarious jobs to survive, while millions upon millions remain jobless. Reducing the time we must spend on work is a key requirement of a next system; not just because it will make people happier, reduce unemployment and lower ecological impact, but also because without such reductions there is little chance to lay the new foundation of community and citizenship required to sustain it.
As ever, the question of how today’s fledgling models might actually blossom from the fringes of community organizing and new urban planning to become the primary principles of national and global economic life remains fuzzy at best. Alperovitz touts the example of the Evergreen Coops in Cleveland, which launched to much fanfare in 2009, with the goal of spurring the local economy with worker-owners selling services to local “anchor” institutional customers (universities, hospitals). That fine idea is still being pursued, though the path to growth and profitability has been much rockier than initially envisioned, largely thanks to unrealistic hopes about those anchor customers. Still, Ted Howard, another Alperovitz colleague and primary driver of Evergreen Coops says, “This has been a learning laboratory; it’s been an experiment. I don’t say Evergreen’s the answer, but I’d think it’s been able to unlock the imagination for people way beyond Cleveland.” Peruse the Next System website and Alperovitz’s recent article to get a fuller idea of why they see corporate capitalism as failing, and how we may find our way to more community-oriented models.