We need to rewrite the function of business for an age where interdependence is the reality and independence an illusion.
The current generation of parents from large Western economies are the first to think that their children could end up worse-off than themselves. This crisis of confidence is rooted in a post-crash economy in which ‘progress' is no longer the experience of the majority.
Politicians and the powerful are also falling prey to this pessimism, as is reflected in their rhetoric and a retreat to so-called ‘safe havens’ with their money.
This loss of confidence has become endemic. Politics is no longer about power, but powerlessness. The problem with the politics of powerlessness is that it creates a vacuum - and vacuums suck up all sorts of nasty things from down the back of the sofa.
Stopping the machine
Think about the slogans and narratives that shape our political debates: “There is no alternative”, “tackling climate change will cost jobs and wealth”, “there is no magic money tree”, “there aren't enough jobs / money / houses / services to go around”.
These statements reflect our current sense of powerlessness, and our acceptance that the various crises we face are the inevitable consequences of the system. We are powerless because we forget that we are the creators of that system, we make and shape our economic and social reality.
This system can be made to work in our interests. We have the hardware to change the world, but we have a software problem: making financial and economic systems work for the good of people and planet without reprogramming the software that controls them is like trying to write a poem with Excel.
We need to rewrite the function of business for an age where interdependence is the reality and independence an illusion.
We may have the capital, technology and creative minds to change the world for the better but our best minds are still working on the socially useless rather than the socially useful.
In 1909, E. M. Forster wrote ‘The Machine Stops’, a short novel about a future humanity that ends up worshipping technology like a God, forgetting that they created it. When the technology fails, mankind fails.
Business innovation
Who controls the way these machines work? We do.
In 2008 our own machine crashed and we performed the IT equivalent of turning it off and on again and upgrading a few of the security settings.
All business and financial activity functions on the basis of a social contract created from our own politics rather than some economic law.
Before 1844 it was illegal in the UK to set up a formal company structure without a charter from the monarch. Until then business was about people working informally with each other, with myriad competing forms of cooperation and collaboration.
The law only got involved to make that process work more efficiently, but it had the effect of making business innovation a political rather than social function.
Social capital
We have the power to re-write the constitutions of companies to work for profit and the social good.
We have the power to constitute a finance system that no longer thinks purely about its own internal stability, but which takes account of the costs of climate and social volatility.
Rather than thinking about purely maximising profits and outsourcing the costs, companies should have to think in terms of the social benefit they produce.
Economics is about the allocation of resources. Businesses are no special case when it comes to the use of those resources.
Finance is about channelling those resources through space and time. The business of money is not a neutral player but a seeker of profit and self interest.
Social contract
All businesses, financial or otherwise, need a new social contract that aligns their goals with those we have for society.
It is not enough to limit your ethical governance to an internal slogan and inspirational kitten posters. We need to rewrite the function of business for an age where interdependence is the reality and independence an illusion. Where profit without purpose is a loss to society.
This is why Abundance is now empowering our customers to take a stake in our business and become shareholders - because they know better than anyone that you can have profit with purpose, and because you are the best people to help us get there.
This Author
Bruce Davis is managing director of Abundance Investment, which advertises with The Ecologist.
