One of the wonderful things about the new networked globalised economy is how you suddenly discover the links which exist between one business and another. This can have both productive and detrimental effects on a business, depending upon your point of view.
For example, take Apple’s highly publicised involvement with Foxconn. The good side is that Foxconn allows Apple (and other tech manufacturers) to access the cheap Chinese technology manufacturing market. The bad side is that there has been a spate of suicides by Foxconn workers which, whether relevant or not, will stick to Apple as a negative influence upon their brand.
Another “wonderful thing” is finding out the different aspects of a corporation when you’ve only known one. Take, for example, the New Economy Network (NEN).
NEN was founded by the Tellus Institute in 2010. It comes from the same stable as the Global Reporting Institute (GRI), which is now a de facto sustainability reporting tool amongst businesses.
However, whilst many companies may support the GRI reporting regime I suspect few would put their wholehearted weight behind NEN’s Principles for a New Economy (PDF). Why? Because, like any Tellus Institute initiative they cut against the establishment’s grain. To understand this more fully, let’s look at the principles in more detail:
Measuring Progress
“Economic progress shall be measured in terms of the well-being of all human societies, other living species, and ecosystems”.
Governments now realise that GDP alone doesn’t capture people’s productivity and ambitions. This is because you cannot measure either the nation’s economy or people’s happiness in terms of money spent. Yes, to manage you have to be able to measure, but you also have to accept that it’s impossible to measure the commercial benefit gained by someone drying their laundry in the sun.
So the first principle is that commerce is not the answer, just one of the solutions which can be deployed. Money should not empirically equal power any more than guns should.
Respecting Natural Limits
“The economy shall draw from, and inject into, ecosystems only what is compatible with maintaining a healthy and resilient natural world over the long run.”
This is the fundamental point of sustainability, and as such it should stand as an over-arching principle to guide the economy. In order to dig ourselves out of the financial hole which engulfed the world in 2008 we’ve created debts for the next generation — that’s breaching natural limits.
Similarly, the green energy revolution simply replaces carbon intensive methods with rare earth minerals. This is like deciding to stop eating apples and start eating pears .. a change in the product consumed may have a short term benefit, but it has little or no impact on longer term prospects.
We are, in short, consuming too much. “STOP CONSUMING!” should be the core message of any form of sustainability.
Democratizing the Economy
“All institutions that manage, regulate and execute economic activity, including private corporations, shall be democratically controlled by all affected stakeholders in order to serve long-term societal goals”.
Consumption (consumerism) is based upon your ability to pay, not the cost to produce. A correspondent of mine recently wondered why a chocolate Easter egg wrapped in foil should cost more than the same egg wrapped in the same foil and packaged in a cardboard box.
It’s easy to demonise business in this context but the reality is that business only takes advantage of the regulatory framework they’re presented with. This is a fine line these days, when consumers happily equate business responsibility with regulatory oversight.
In short, business and government have to work together to ensure democracy reigns supreme and make sure that ” long-term societal goals” are more important than the short term profit based motive.
Ensuring Economic Progress
“Governments, on their own and in conjunction with private markets, shall work to ensure prosperous and resilient economic outcomes by making adequate investments in health, education, nutrition, shelter, physical infrastructure, and technology”
“Progress” and “growth” are pretty nebulous concepts. However, ensuring peoples’ health, education and nutrition is fundamental to any functioning economy. Their complete absence is what is commonly referred to as absolute poverty.
The fundamental question is therefore whether a business’ right to make a profit should be more important than the peoples’ right to have the best possible health, education and nutrition provided to them. In this context, “progress” takes on a perspective which has nothing to do with financial gain.
At the end of the day the economy, like any form of investment, is a long term game. It needs to be prosperous but it also needs to be resilient. Financial prosperity has been trampled over social resilience in the past few decades and it’s high time the scales were rebalanced in favour of overall economic progress.
Localizing Control
“Economic policy shall favor subsidiarity, i.e. the localization of economic decision-making and control to the greatest extent possible consistent with democracy, equity, efficiency and resilience”
One of the greatest ironies of politics is that both left and right wing governments can be dictatorial and oppressive. Both can, and do, advocate greater centralisation and greater localisation in the same breath. It’s enough to send you Monster Raving Loony.
More seriously, there is a growing realisation that localism has been trampled underfoot over the past 100 years or so. As populations have exploded so has the desire to centralise political and economic control, creating monolithic and homogenised institutions which have become “too big to fail”: from the office of Prime Minister/President down to the rapacious corporation which seeks only to “consume” its competitors.
This needs to change if we truly believe in an articulated society and economy which is *always* in tune with the needs and views of the communities.
(Part 2 will deal with the second five principles for a New Economy, Part 3 with the four things a New Economy should not be).
Picture Credit: Meeting Image B from New Economy Network website.
A former CTO, Chris has a broad and varied background. He’s been involved with blue chips, consultancies & SMEs across a wide variety of sectors and has worked in Europe, the Middle East and Australia.
In 2007 he decided to combine his knowledge of business and IT with his passion for all things sustainable and has been busy writing ever since. However, his greatest ambition remains to brew the perfect cup of coffee.
