Corporate Knights defines clean capitalism as an economic system in which prices incorporate social, economic and ecological benefits and costs, and participants know the full impacts of their marketplace actions.
It’s the belief of this publication that the power of markets can be harnessed to shape and grow an economy that is grounded in a golden rule: Business and society must succeed together. This is the path to sustaining prosperity where it exists, and achieving it where it doesn’t.
We have not, for the most part, been on this path. To continue on our current route is to erase what progress has been made over the last century and throw the global economy into irreversible turmoil.
The challenges ahead are immense, particularly around resource scarcity. A 140-page report recently released by the National Intelligence Council, which reflects analysis from 16 U.S. intelligence agencies, cited food, water and energy shortages – complicated by our changing climate – as a “megatrend” that will contribute to radical economic and political changes by 2030.
A growing global population – and rising middle class in the developing world – has led to more consumption of food than production over seven of the last eight years, while global water demand is expected to exceed sustainable supplies by 40 per cent within the next 18 years, according to the report.
“We are at a critical juncture in human history,” said Council chairman Christopher Kojm, adding that decision makers must be encouraged to “think and plan for the long term” to avoid negative outcomes and give positive ones a better chance to take root.
“We are not necessarily headed into a world of scarcities, but policymakers and their private-sector partners will need to be proactive to avoid such a future,” the report says. It comes down to living within our means.
There is a similar urgency around our growing climate challenge. World Bank president Jim Yong Kim declared in November that the global economy is on a “devastating” course. “The lack of action on climate change not only risks putting prosperity out of reach of millions of people in the developing world, it threatens to roll back decades of sustainable development,” he warned.
Governments are not approaching these challenges from a position of strength. As of year-end 2012, the world’s nations were struggling under the weight of nearly $50 trillion in public debt, according to The Economist’s “global debt clock.” At the same time, more than $35 trillion in public infrastructure projects will be necessary over the coming two decades, with a tremendous opportunity – and need – to address water, waste, energy and transportation inefficiencies. There will be great temptation to cut corners.
In the United States, talk of a “fiscal cliff” has overshadowed the reality of the global climate cliff. With the widest income gap in more than 40 years, a two-decade-high poverty rate and the health care demands of an aging population, America has put short-term economic fixes ahead of the environmental and social gains that would assure the well-being of current and future generations.
As Scottish economist Adam Smith wrote in The Wealth of Nations, published in 1776, “No society can surely be flourishing and happy of which by far the greater part of the numbers are poor and miserable.”
To date, we’ve relied on indicators such as gross domestic product (GDP) to measure wealth, but these hide a much bigger story. Growth in GDP may imply the well-being of a country’s citizens, but it doesn’t truly capture it.
“We have forced ourselves to believe that we can grow ourselves out of the multiple crises we face today,” according to the Inclusive Wealth Report 2012, jointly produced by the United Nations Environment Programme and International Human Dimensions Programme. But, it adds, “Social and ecological factors are also important determinants of well-being, and in some cases, are direct constituents of well-being.”