Capitalism is flawed. But an alternative system is well within reach

A veil has been lifted as to the limitations of Capitalism, Mike Townsend tells Tom Idle, as he launches an ambitious new project that aims to bring about a better, healthier and sustainable economy.

Wall St Bull

Hot on the heels of last week’s New Economy Week in the US, whose series of events, report publications and works of art were designed to shine a light on the fact that “it’s becoming clearer every day that something is wrong in America”, comes a rather more ambitious project to co-create an alternative to our flawed global economic system.

Michael Townsend

Michael Townsend

Brad Zarnett

The Sustainable Economy Project – the brainchild of Mike Townsend’s Earthshine Solutions and Brad Zarnett’s Toronto SustainabilitySpeaker Series (TSSS) – goes in search of Capitalism 2.0.

new White Paper, written to launch the project, argues that since the collapse of communism 20 years ago, capitalism has been the only show in town.

But as a system for running economies, it is deeply flawed. “Capitalism is suffering a crisis of liquidity, reliability, and confidence – and is naturally undergoing a wise degree of introspection in these times,” it says.

The journey to this point has taken seven years, and the formal project has beenanother two years in the making, Mike tells me excitedly via Skype. It builds on his efforts to investigate sustainability in business (plenty of which has been covered in his fantastic 2degrees blog series and the common constraints placed upon companies as they bid to do business better. His perception: Yes, organizations can reduce their impacts and become more efficient. But real change can only come about through business transformation, and this can only be realised by changing the system in which they operate. “If we are to bring about systemic change, we need to develop a new system and engage people in doing that,” he says.

The Sustainable Economy Project (SEP) is an attempt to shine a light on alternative systems, bring more case studies of success to the fore and open up a debate to encourage more people to understand – and implement – potential change.

“There has been an awakening since 2008; a veil has been lifted as to the limitations of Capitalism”

Tom Idle: So, when did you first realize that Capitalism wasn’t working?

Mike Townsend: The crystallization came with the 2008 economic crash. We saw how deficient the system is.

But even before that, there was an underlying fear that people shared privately. Back in my business school days, during the 1990s, what we were being taught was built on a model of exploitation of resources and people.

That exploitation of resources leads to environmental collapse. And the exploitation of people creates a situation where the wealth lies in the hands of a small minority, and you get poverty on massive scale.

This new project puts forward some clear alternatives – some of which we have heard before. And the case for moving away from Capitalism is increasingly compelling. But are we seeing enough people – or the right people – actually thinking about, and considering, these alternatives?

People like David Korten predicted what happened. And some of those at the vanguard were dismissed by the mainstream.

But there has been an awakening since 2008 and people have gone back and re-evaluated their work.

Ed Miliband has toyed with placing responsible capitalism at the heart of his election campaigning.

Ed Miliband has toyed with placing responsible capitalism at the heart of his election campaigning.

A veil has been lifted as to the limitations of Capitalism. You only have to look at things like the Occupy movement which sprang up around world. Being said that Occupy didn’t have a clear remit or focus, but there’s no smoke without fire. Occupy wouldn’t have happened if there wasn’t some seriously disenchanted people around the world.

There has been some great work going on – John Elkington with his Breakthrough Capitalism project and the B Team – to bring the debate into the mainstream. So, it’s no longer a side issue for a few cranks or visionaries. It’s come a long way in the last ten to 15 years, accelerated by financial crisis.

But we are still very much at the start of the debate right now. The world doesn’t need another new strand of thought. What we want to do with the SEP is bring all of the different schools of thought together and convene a debate.

And is it just businesses that you want to hear from? Or does the policy-making fraternity need to be brought onside too?

Most definitely. When it comes to change management, politicians are behind the curve.

They will not win votes by saying that we need a new system. Some politicians might secretly support the creation of a new system, but it won’t be top of agendas. However, we need to bring them along; if they see it becoming mainstream, they will feel more confident to talk about it.

“Politicians will not win votes by saying we need a new system”

Earlier last year, leader of the opposition in the UK, Ed Miliband put the notion of irresponsible capitalism at the heart of one of his conference speeches. Since then, the rhetoric has died down. What can politicians do to get this onto the agenda?

I think Ed Miliband needs to let this project run its course. We can do the job of increasing awareness for the politicians.

Forgive me for generalizing, but most of the electorate believe that Capitalism is just the way it is and that we have to get on with it, even if it’s not working in our favour.

We are told that austerity is good, and that growth is good. And there’s a sense of inevitability, that there’s no other way, no other choice.

But that is wrong. Capitalism is 200 years old; we managed without it before then. Any system can change if we so desire. We need to bring it into the public realm, and increase debate and participation so that people think ‘yes, there is another way’.

Ed Miliband, and others, can then be more confident to engage in the debate.

What about the companies that have succeeded in establishing a new economy business model within the Capitalist system? Does it not help them differentiate themselves by operating alongside other companies that are well-embedded into Capitalist ways of working?

Interface is a great example. Within its vision of climbing mount sustainability, as they call it, one of its seven fronts is about redesigning commerce; they were early pioneers in changing the system.

Townsend notes the work of the Richard Branson-backed B Team initiative

Townsend notes the work of the Richard Branson-backed B Team initiative

But they have succeeded in the Capitalist system despite it, not because of it.

When you read CEO Ray Anderson’s book, Confessions Of A Radical Industrialist, you realize the struggles he had to go through in persuading Wall Street that what Interface wanted to do was not madness.

And a key enabler was that Ray had two classes of shares, and only he held the ones with voting rights – he could drive the company in the way he wanted to, and markets would have to like it or lump it. Their rights of recourse were through selling their stocks, but they didn’t need to because Interface delivered.

“Read Ray Anderson’s book and you realize the struggles he went through with Wall Street”

Had Interface been a conventional plc operating within the Capitalist framework, he might not have been able to do it.

In your report, A Journey In Search of Capitalism 2.0 – Part 1: Blueprints for a Sustainable Economy, you outline a set of ‘design principles’ that would support a ‘fit-for-purpose’ economy. There are nine of them and, as you say, some of them “might seem a little utopian”. Is what you are calling for realistic?

All of it is realistic and achievable when you look at the world in a different way.

You have to lose this belief that Capitalism is just the way it is and we have to put up with it. Put that notion out of your mind, and look at the examples outlined in section five of the report – called Cause for Hope – and you’ll see that change is going on all around.

We can wean ourselves off the twin drugs of growth and consumption. We don’t have to buy everything that the advertisers tell us. We don’t have to just chase growth as a business – just take a look at Patagonia [link].

So, how do we get these examples out of the shadows and into the mainstream?

That’s why we’re doing this project – sharing those examples and getting people to think, ‘yes, that could work’, ‘yes, that could happen’.

But rather than trying to change the current system, it’s about migrating more and more people and organizations to work within a new system.

Once you realize there’s a choice, it should become a no brainer as to which direction to go.

You have said that we need to have less emphasis on conflict and attacking the old system. What do you mean by that?

Well, there’s little to be gained by trying to make a head on clash with the old system and trying to change it.

If you try to change how established institutions work, you usually get your fingers burned. The vested interests are so powerful, they won’t let you change. From my experience, if you try to change an established organization with a deeply embedded culture, it’s doomed to failure.

“If you try to change how established institutions work, you usually get your fingers burned. The vested interests are so powerful, they won’t let you change.”

It’s better to build the new alternative alongside it, let that flourish and let people make their own choices about who they do business with, who they want to work for, where they put their money.

R. Buckminster Fuller

R. Buckminster Fuller

We use a quote from R Buckminster Fuller in the front end of the report: “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”

So, what’s the ultimate ambition of the SEP?

The ambition is to engage with all parties – business, political and Joe Public. We want to collect more stories of change and knit them altogether to create an attractive picture of a better, healthier, alternative economy.

We went in search of Capitalism 2.0 but through that process we found that there’s a lot more to it.

It may not be possible to reform Capitalism. And the reforms needed would ultimately change it into something else anyway.

If you take our nine design principles, and make those changes, it is no longer Capitalism – it becomes something else, free of political ideology and more pragmatic of what we need in the world.

That was a big realization for us; a powerful, lightbulb moment. We want people to go on a similar journey and to have their own lightbulb moments and come up with their own view of that.

For all the details, and to download a copy of the White Paper, visit the website.

This article was originally published on the 2degrees website
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Tom Idle is a writer, journalist, editor and commentator in the field of corporate sustainability, climate change policy, environmental protection, clean energy and corporate social responsibility.  He is Editor-in-chief at 2degrees network.

  • Susan Jappie

    This is an exciting first step towards the Paradigm Shift we have been awaiting over the past five years and it’s great to hear “There is an alternative to Capitalism”!
    Shout it from the rooftops!

  • Hi Susan – thanks for your support – we’re excited too 🙂

  • Reforming how we run our economy challenges us to live up to our claimed billing as homo sapiens.

    There is certainly no shortage of people trying to put forward alternatives but they all seem to stumble at some perceived barrier around ‘us vs them’.

    The task in hand is to find a way to make our economy symbiotic with the planet’s ecology because the real challenge is ‘us vs the laws of chemistry and physics’.

  • The owners convinced us, 4 decades ago, of the economic
    benefits of the trickledown theory. Yes,a trickle has come our way – after we gave them permission to legally dam the national river of income. The owners have managed to dam up over half of the national worth. People speak angrily of ‘redress’. But what the owners possess is contingent on us, as citizens and consumers. We are not required or forced in any way to conduct our lives or our business in any particular manner. We are free to spend, save and invest as we see fit. We can conduct all our financial matters without darkening the doorstep of a bank – by joining Credit Unions. We can choose energy independence for ourselves. We can join CSA’s, shop at farmer’s markets and fish markets and choose to eat what serves us best. We can join or form building co-ops.
    As to the ‘problem’ presently faced by Capitalism, The Rule of 10 should apply to all Public Corporations. This is a problem to be solved by the owners of corporations – the shareholders. The shareholders of Public Corporations need to take back control. Corporations were first conceived and developed over 400 years ago, when the shareholders ran the company. Today public corporation’s share ownership is so fragmented that the hired help – the corporate executives – are running the show. This results in incredulous pay and golden parachutes for CEOs and other senior executives who have failed utterly. What we need is the rule of 10. The highest paid person in a Public Corporation can’t make more than 10 times what the least paid worker gets – including bonuses, benefits and pensions (NO you can’t just start to contract out all the low paying jobs). When a business makes a profit, a quarter should go to the employees (proportionately) a quarter to the shareholders and half to improve the financial stability of the company. The Board of Directors should be chosen by lot – half from the pool of shareholders who express an interest and half from the employees who express an interest. Neo-cons bowels may be rising at what I just said. They will invoke Ayn with Atlas Shrugged. But Atlas Shrugged is about an inventor, innovator and entrepreneur – not a hired executive who ran a company in to the ground WITHOUT DILIGENT OVERSIGHT while paying himself whatever he wanted. The shareholders – are the ones who OWN the company, it’s time they took back control.

    Another aspect of the problem is the control of political, institutional and business organizations by psychopaths and sociopaths. This is understandable in that nearly 5% of the population has these neurological deficiencies and that these are all hierarchical organizations which are tailor made for the success of psychopaths and sociopaths. The more successful they are the badder they tend to be:

    http://www.huffingtonpost.com/eric-zuesse/studies-find-that-conserv_b_4558541.html