The publication of two significant works within the past fortnight signposts a welcome shift in conversation about New Economics and ‘new’ business models in the wake of the great crises of our time.
It was encouraging to see the World Economic Forum’s report on The Consumption Dilemma capture the spirit of Citizen Renaissance and occasionally even give credit to the same. Jules Peck has posted on this elsewhere. Meanwhile, the UK version of The Economist’s Matthew Bishop and Michael Green’s excellent ‘Road From Ruin’ applies citizen-centric thinking to the currently very British (or, at least, Cameron) notion of the Big Society. Indeed, it boasts something of a Ronseal sub-title: ‘A New Capitalism for a Big Society’ and quotes Niall Ferguson telling us that this has ‘some persuasive suggestions’ about where we all go from here.
The Road from Ruin covers much of the ground discussed in the 2008 edition of Citizen Renaissance and in subsequent blog posts (for a quick twitter resume of the entire book, visit Citizen Renaissance in Tweets). To summarise some of the key points in the UK edition of the Bishop/ Green book:
- Systemic reform has, historically, been rooted in box-ticking compliance, rather than a more fundamental re-examination of principles
- Business needs to return to its (British) roots of being values-based, rather than purely profit-driven
- Citizen shareholders can and should play a more active and empowered role in a re-born capitalist model
- A reformed capitalism must speak to long-term value and ownership models; it is not just about share-owning populism
- Mutuals and co-operatives are pretty much a good thing (with a nod and a wink to Phillip Blond’s Red Toryism)
- Most institutions need fundamental reform: from UK government to the legacy organisations of Bretton Woods
- Financial literacy must be improved across the board
- Coalition is essentially an optimistic force for good and can serve as a more democratic model for the new capitalism
- This new capitalism needs a soul and should essentially be citizen-led
- Citizen-led capitalism can, in turn, drive material wellbeing and ultimately happiness.
I was also privileged to be a guest at a private dinner hosted by Matthew Bishop at The Economist this week, where the book’s contents were the subject of forensic examination by some the of the great and the good of the worlds of media, economics and politics (you can read the Enlightened Economist’s musings on this Chatham House Rule event here).
However, what puzzled me throughout the evening – without, of course, revealing sources or specific content – was how the conversation kept on coming bank to banks and bankers – as though only a supply-side solution could indeed lead us forth on the much-vaunted road from ruin. The Vickers Report – with its likely split of the investment and retail banks – loomed large throughout. One sensed that not all blood had yet been let and that, unless and until the bankers apologised (properly and with due contrition) society could not move on. The dinner guests seemed unable to break free of this weighty neural anchor. The call to citizen actionism was respected (and even welcomed) by many present – but then we returned once again to the banks and the bankers.
The truth is that the world needs to draw the proverbial line. Waiting for the bankers’ apology is futile and distracting. Likewise, whether we agree with the Vickers recommendations or not, we have a duty to shift the debate from structure, regulation and rule compliance to one about societal ethics, behaviours and responsibilities. Bishop and Green are right when they say that capitalism needs a soul – this soul-searching must begin with a fundamental re-examination of business and corporate principles and an appreciation of the new mutuality that can and should emerge between government, business and citizens. Citizens properly hold institutions to account. They (we) need to be encouraged and empowered to do this deeper, more often and in more dynamic ways. This is the demand-led solution to the capitalist problem. The citizen voice has to raised and properly respected. Governments must properly activate this – not just pay lip-service through Big Conversations or Big Society dramatics.
It was no accident that Will Hutton was a fellow guest at the Monday night dinner and a delightful coincidence that Edelman had just published its (our) 2011 Trust Barometer, which chronicles the continued shift from short-term, shareholder return to longer-term, stakeholder values. Of course, Hutton’s ‘The State We’re In’ called much of this fifteen years ago. It is one of the sad consequences of the failure of Blairism to take root that the Hutton mantra did not become more widely and more speedily adopted. A true appreciation of the positive implications of a more genuinely democratic stakeholder society somehow got lost in the post-Iraq transition squabbles. Real structural reform back in the late ‘90s honeymoon years would at least have set us on a road that may have mitigated ruin, if not avoided it altogether – a decade before Dick Fuld became everyone’s Satan. Maybe an exemplar, in Europe at least, lies in Germany (Greek matters notwithstanding) – with its supervisory boards; its powerful, growth economy; and its higher-than-average trust levels.
Bishop & Green write, too, on ‘Coalitionomics’ – and see this as a possible miracle cure. Citizen Renaissance has always called for more consensual bases for government (and is an ardent proponent of genuine voting reform in the UK). But UK ‘coalitionomics’ is not this. Rather, it is a political expedience – thrown together by two parties who failed to win an election outright. It is dangerous to be misled into a false sense of reform. We must wisely separate the verbiage from principled action, of which we have seen little evidence to date.
The consensual model – mutualised and more broadly based beyond a capitalist elite – speaks to the vital concept of shared values and shared interests. This chimes – at a most fundamental level – with the realistic, modern framework of a digitally-empowered and increasingly literate and engaged citizenship. Engaged citizens recognise a networked world, where shared interests are advanced together. As we argue in detail in Citizen Renaissance, no one party or institution can do this alone. A new tripartite agreement (call it a new Trust Compact) needs to emerge.
Beyond the bankers, this demands new operating models for business and new behaviours from our corporate leaders. Politics may be occasionally visionary but is institutionally incapable of embracing genuine long-termism. History tells us that business has likewise followed the same, failed model: chasing quick wins and immediate return. Now is the time to break free of this madness and to recognise long-termism as the only real way to take the road from ruin. This, in turn, necessitates a proper understanding of shared interests and shared value between citizens and the institutions that serve them – politics and business alike. Paul Polman at Unilever (disclosure: an Edelman client) is taking a brave leap forward when he speaks of doubling size and halving environmental footprint while abandoning short-term reporting – but his remains a relatively lonely business voice for now. He de facto recognises the power of the engaged customer/ consumer/ citizen within the paradigm: citizens can and will drive reform of corporate behaviour which, in turn, will lead to the systemic transformation of the capitalist model, where (financial institutions), business and politics converge. He is ahead of the game.
The 2011 Trust Barometer mischievously asked a question about a cutely paraphrased version of Milton Friedman’s infamous quote. It was answered with something of a 50-50 split across the 20+ countries surveyed – but offers evidence enough that the appetite clearly exists for business to reform itself to properly advance societal interests on a more equitable footing. Likewise, Bishop & Green delightfully mis-contextualise Thatcher’s ‘no such thing as society’ to make a similar point: shared value is where it is at.
The case for Citizen Capitalism is at once vital and compelling. It may be a mix of Bishop and Blonde, Green and Stiglitz, Hutton and Blair – but the authors and the origins matter little. Capitalism with a soul has the citizen at its heart. It is the citizen, not the banker, who can lead us all on the road from ruin.