Most CEOs Know Capitalism Is a Broken System
You may find this a bold statement, but truth is that most CEOs, entrepreneurs or directors have realised capitalism is no longer the way. Problem is, they don’t know where to start. It can be scary to not have a roadmap or an established structure, but in their favour, what most of them don’t know is that it all sparks with a mindset.
And before you freak out, thinking I am a socialist or a communist … this is not the case. What I stand for is social and eco-preneurship. Slightly different.
If capitalism is based on private ownership, the operation for profit, capital accumulation, wage labor and competitive free markets, it seems to me that we can still play the game but to some extent only. Social enterprises are still operating in a free market and also want to make profits, but (here is the difference) they want to serve a larger mission. They are bringing a long term solution that is prosperous, and most importantly, inclusive of all.
Social enterprises are no longer creating crappy products and marketing them well so consumers find these could solve a problem in their lives. Instead, the new trend is to make a business out of a social or environmental problem.
In this context of system change, I am excited to talk about the Third Industrial Revolution by Jeremy Rifkin. If you haven’t heard of it, it is a new economic era that moves from ownership to sharing, from profit-driven to purpose-driven; from economy to ecology.
This digital-ecological-collaborative-sharing economy will revolutionise every commercial sector, disrupt the workings of all industries, bringing with it unprecedented new economic opportunities and mitigating climate change.
The Third Industrial Revolution is like taking the crisis we are living in as a huge opportunity to slow down our reliance on fossil fuel resources, get people back to work, and support a circular economy. In this case, the Ecocide law would also be likely to move forward.
For now, the results of our capitalist system have left us with huge debt (economist and author Santiago Niño Becerra says the planet owes to itself 225 billions of dollars; translated, each of us owes 30,000 dollars — including babies and elders). Another important fact is that our production capacity has gone to the roof, and now not even consumers can catch up. Yes, it can be profitable in the short-term, but truly unsustainable in the long-term.
Capitalism Is Not Serving Our Current Needs
How I see it, capitalism has served us in the past, but it’s not serving our current needs.
Capitalism was born because a bourgeoisie needed a type of freedom that absolute monarchy could not provide. And also because there was the need of a juridic system that would protect the private property of goods produced, which were becoming more complex. Today it seems clear to me that this is far from what the current society demands (and more importantly, far from what our planet can stand).
Some actors have used capitalism for “growth at any cost” and solely “profit-driven,” which has destroyed the lives of millions of people. And it will keep doing so while only large corporations are making money out of taking resources that belong to us all, including the beautiful species on our planet. You name it: fossil fuels, lands, forests, palm oil, water resources … In this capitalist system, we have accepted behaviours that turned out to be self-destructive, lacking purpose and soul. Truth is that our current system is not meeting the needs of the majority of the population.
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The conversation that inspired me to dig deeper was the podcast of Christine McDougall and Phillip Ullmann, chief energiser at Cordant Group. This company is the UK’s second largest recruitment and services firm with revenues of £840 million employing 125,000 people. Ullmann shifted to transform Cordant into a social enterprise because even though they always had been quite philanthropic, he realised that they still were operating in a capitalist system which, in its essence, has no mechanism to distribute wealth.
Once Cordant became a social enterprise, other things happened naturally: it moved from a contractual way of building relationships to a convenient way — which basically means it treats each individual as a human being, not a transaction. It also achieved moving away from “competition for my own sake towards collaboration for the common good,” and it helped to adopt a stewardship role, going away from hierarchy, which “doesn’t give people the scope to innovate.”
Business is the only mechanism on the planet today powerful enough to produce the changes necessary to reverse global environmental and social degradation.
— Paul Hawken, Inc. Magazine, April 1992.
So by now, you would have realised that business is not “the bad guy.” In fact, if used properly, it has the power to drive change and positive impact. Watch for brands that are true pioneers of this new way of making business:
Who Gives a Crap, with just toilet rolls, provides clean water and builds toilets around the world in a sustainable way (saving water, trees, oils).
Regain, a fashion recycling app, rewards sustainable behaviour of consumers with discount codes.
Ecosia, a green and sustainable search engine alternative, plants a tree every time you search for something.
Fairphone, the world’s first ethical smartphone that is mapping out the supply chain to address unfair practices in the electronics industry.
Plaine Products develops zero waste and vegan bathroom products, thus creating a circular program and making it easy for us to move to a plastic-less life.
Piñatex, a plant-based, versatile and innovative material made of pineapple leaves, also supports the circular business model as it uses leaves that would normally be a by-product of the agriculture industry.
NOISSUE, sustainable packaging, compostable mailer and tissue for small businesses planting trees with their Eco Packaging Alliance program.
Théla upcycles trash plastic bags to create luxurious accessories.
Porze, recycling coffee grounds to create body scrubs and soaps.
Moving away from the capitalist system is like going from fear and scarcity to trust and abundance. We have the technology to use the waste and convert it into new beautiful products; to understand better our supply chains and make efforts to make them a bit more green while getting more people to live under fair trade conditions.
Many CEOs are scared of shifting their business model, but what they should be more scared of is the thriving generation of millennials, or even younger (look at Greta Thunberg).
Consumers are trying to be responsible citizens of the world, and they expect the same from corporations, which is why we’re seeing rapid growth in the ethical and sustainable market.
Today 91% of global consumers feel companies should act responsibly and put ethics over profit. And 81% of millennials believe that businesses have a key role to play in achieving the SDGs.
Social entrepreneurs are leaders of a “post-crisis capitalist system,” and CEOs, even if they haven’t said it out loud, “know that they know.” But system change can only happen if we recognise it, and it is already widely accepted that our current system is failing us. So I would encourage all those people reading to start a conversation because a new way of making business is here. What do you think about “capitalism with a purpose?”
Are you also going to be part of this transformation of our socio-economic system?