Is it time to rethink Capitalism?
Umair Haque is Director of the Havas Media Lab, a new kind of strategic advisor that helps investors, entrepreneurs, and firms experiment with, craft, and drive radical management, business model, and strategic innovation.
In an article this year on Harvard Business Review, he suggested that the question, “Is it time to reboot capitalism?“, should be at the top of agenda of every decision-maker across the economy. Why?
Haque states:
20th century capitalism is eating itself. For the first time since World War II, global growth is forecast to turn negative — and that’s an optimistic forecast, relative to the possibility of a global lost decade.Today’s leaders are plugging dikes, bailing out industries and banks as they fail. Yet, what negative global growth suggests is that the problem is of a different order: that we have reached the boundaries of a kind of growth.
Reigniting growth requires rethinking growth. The question Davos — and most leaders — are asking is: where will tomorrow’s growth come from? Will it result from oil, cleantech, bailouts, China, or Obama? The answer is: none of the above. Tomorrow’s growth won’t come from a person, place, or technology – but from understanding why yesterday’s growth has failed. The same growth models applied to new people, places, and technologies will simply result in the same crises, over and over again. We have to reboot growth: the problem is not what is growing versus what is not, but how we grow.
20th century growth was dumb. The central, defining lesson of the macropocalypse is that 20th century growth wasn’t built to last. Dumb growth is unsustainable – if the world grows the same way that developed countries did, well, there won’t be a world. Dumb growth is unfair: it’s growth that’s an illusion for many; just ask the American middle class. And, ultimately, perhaps most dangerously, dumb growth is brittle: it falls too easily into collapse, reversing many of yesterday’s gains; just ask Iceland.
“21st century economies,” Haque goes on to say, ”will be powered by smart growth. Not all growth is created equal. Some kinds of growth are more valuable than others. Where dumb growth is unsustainable, unfair, and brittle, smart growth is sustainable, equitable, and resilient.”
What does this look like? Haque describes the four pillars of smart growth:
1. Outcomes, not income. Dumb growth is about incomes – are we richer today than we were yesterday? Smart growth is about people, and how much better or worse off they are – not merely how much junk an economy can churn out. Smart growth measures people’s outcomes – not just their incomes. Are people healthier, fitter, smarter, happier? Economics that measure financial numbers, we’ve learned the hard way, often fail to be meaningful, except to the quants among us. It is tangible human outcomes that are the arbiters of authentic value creation.
2. Connections, not transactions. Dumb growth looks at what’s flowing through the pipes of the global economy: the volume of trade. Smart growth looks at how pipes are formed, and why some pipes matter more than others: the quality of connections. It doesn’t just look at transactions at the global, regional, or national level — how much world trade has grown, for example — but looks at how local and global relationships power invention and innovation. Without Silicon Valley’s relationships powering the development of personal computing and the internet, for example, the volume of trade between Taiwan, Japan, and China, would be a fraction of what it is. Smart growth seeks to amplify connection and community — because the goal isn’t just to trade, but to co-create and collaborate.
3. People, not product. The next time you hear an old dude talking about “product”, let him know the 20th century ended a decade ago. Smart growth isn’t driven by pushing product, but by the skill, dedication, and creativity of people. What’s the difference? Everything. Globalization driven by McJobs deskilling the world, versus globalization driven by entrepreneurship, venture economies, and radical innovation. People not product means a renewed focus on labour mobility, human capital investment, labour market standards, and labour market efficiency. Smart growth isn’t powered by capital dully seeking the lowest-cost labour — but by giving labour the power to seek the capital with they can create, invent, and innovate the most.
4. Creativity, not productivity. Uh-oh: Creativity is an economic four-letter word. Why? Because it’s hard to measure, manage, and model. So economists focus on productivity instead — and the result is dumb growth. Smart growth focuses on economic creativity – because creativity is what let us know that competition is creating new value, instead of just shifting old value around. What is economic creativity? How many new industries, markets, categories, and segments an economy can consistently create. Think China’s gonna save the world? Think again: it’s economically productive, but it’s far from economically creative. Smart growth is creative — not merely productive.
I can honestly say that I have seen this transition in my own life as I’ve gotten older. It is not about the money. It is about what I do with the money. I have made a pledge for the upcoming years to do the following:
- Live Simply
- Give Generously
- Love Lavishly
- Serve Selflessly
- Learn Relationally
That is because I want my life to matter. I am more concerned about making a global investment than obtaining great wealth for myself. Jesus noted this when he mentioned that where are treasure is, our heart is as well. I would like to suggest that there is a corollary: where your heart is, that is where your treasure is.
As a result, in one of my companies, we have sponsored a child through Compassion International and are giving quarterly to Living Water International to help build clean wells for clean water. I want to grow my business so that I can do more of this, to help the marginalized and make a global difference.
I love capitalism. But the consumer capitalism of the late 20th century needs to be re-thought. What do you think?
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