Rethinking Economics and Business
I sincerely believe that everyone involved in the economic system — as executives, entrepreneurs, investors, employees, partners, customers, etc.— should rethink the what, why, and how of the dominant system of our time.
Why do I believe this?
First of all, the world in general and the business world in particular, are changing! Intensifying worldwide social interdependencies coupled with accelerating technological change is leading to: increased competition; a growth of research activities; a shortening of product life cycles and innovation speeds; an accelerated diffusion of innovations; and dissolving industry boundaries. The common theme of a business world entrenched in these dynamics is one of perpetual change. That’s why from 1920 to today, the average lifespan of a company listed in the Standard and Poor’s 500 index of leading US companies has decreased by 52 years, from 67 to 15 years. For many, this means uncertainty, chaos, pessimism — for me and others, this means opportunity for change!!!
Secondly, the ideologies governing our economic system and the ways we do business are increasingly under pressure as we become aware of their inadvertent side effects: climate change, resource depletion, massive inequality, neo-colonialism, and declining privacy — among others.
Soooo, I think all of this is almost automatically leading to some sort of reflection at the least, and to an entire rethinking of business theories and practice at the best.
In the following, I’d like to highlight some new perspectives in regards to economic systems and ideologies, and furthermore showcase some ideas and thoughts regarding business practices.
Rethinking Ideologies
Yuval Harari on the demise of the Liberal Story [source]:
“The story that has ruled our world in the past few decades is what we might call the Liberal Story. It was a simple and attractive tale, but it is now collapsing, and so far no new story has emerged to fill the vacuum. […]
The plot line of this story […] began to lose credibility starting with the 2008 global financial crisis. People who, in the nineteen-nineties and two-thousands, expected that playing by the rules would allow them to rise and flourish suddenly began to fear that they had been duped, and that the system did not work for them. […]
Just as the upheavals of the Industrial Revolution gave birth to the novel ideologies of the twentieth century, so the coming revolutions in biotechnology and information technology are likely to require new visions.”
“To change the economy, you have to change the story” Nerdwriter
Pavan Sukhdev on the inadequacy of neoclassical economic theory:
Guy Standing explores the 5 biggest lies of capitalism for the World Economics Forum [source]:
- “Global capitalism is based on free markets: intellectual property has become a prime source of rental income, through market power created by the spread of trademarks (crucial for branding), copyright, design rights, geographical indications, trade secrets and, above all, patents.
- Strong intellectual property rights are required to encourage and reward the risks of investment in research and development. Yet it is the public, ordinary taxpayers, who bear the cost of much of that investment. A lot of corporate cash cows derive from publicly funded research, in public universities or institutions, or through subsidies and tax breaks
- Strengthening property rights is good for growth. On the contrary, by increasing inequality and distorting consumption patterns, it has hindered growth and made the growth that has occurred less sustainable.
- Rising profits reflect managerial efficiency and a return to risk-taking. In reality, the increased profit share has gone mainly to those receiving rental income, much of it linked to financial assets.
- Work is the best route out of poverty. For millions of people in the Precariat, it’s a sick joke.”
Lynn Stout on the damaging ideology of shareholder-value maximization:
Noam Chomsky on Inequality and Capitalism [source]:
“Consider this: Every time there is a crisis, the taxpayer is called on to bail out the banks and the major financial institutions. If you had a real capitalist economy in place, that would not be happening. Capitalists who made risky investments and failed would be wiped out. But the rich and powerful do not want a capitalist system. They want to be able to run the nanny state so when they are in trouble the taxpayer will bail them out. […] And that’s what we’ve been seeing during the neoliberal era. It is a vicious cycle in constant progress. The state is there to provide security and support to the interests of the privileged and powerful sectors in society while the rest of the population is left to experience the brutal reality of capitalism. Socialism for the rich, capitalism for the poor.”
Rethinking Business Practices
Sadhguru on the power of businesses and leaders, and the fundamental purpose of business [source]:
“Whatever be the nature of business, fundamentally it has all been started in the interest of the wellbeing of human beings. The business of human wellbeing is the only real business. All other businesses are subsidiaries of that. As long as business leaders remain aware of this fact and that human wellbeing is the only purpose of doing business, business is fine.”
Businesses have the power to change the world:
Software is eating the world (see also a16z on this):
Prevent marketing and sales from taking over:
How Warby Parker is getting better results by reducing managers’ control over workers [source]: “The company invented a process that invites all of its 800 workers to help manage the business. The new system, called Warbles, lets employees across Warby Parker nominate programming projects. Managers vote on them by assigning points to the tasks they think would add the most value. The programmers then get to pick the projects they’re most interested in, but they’re rewarded if they pick the ones with the most points. Teams of computer engineers compete to accumulate the most points, and after every quarter, the winning team gets a prize.”
Internet + programming skills + time is effectively all you need:
HR-Innovation: the social media marketing company Buffer…
- …ditched its office completely! Everyone is working remote, from wherever they are. [source]
- …is completely transparent about everyone’s salary. [source]
- …tried unlimited vacation time, but nobody took vacation or only when it was too late: “By the time you need a vacation, it’s too late,” Leo, Co-founder of Buffer. So now they offer a $1,000 bonus (plus $500 for each partner and family member) to use for travel expenses around a vacation of the employee’s choice. [source]
One is entrenched in old ideologies, the other company is creating new and better ones:
“[While] Karl-Johan Persson, CEO of the clothing multinational H&M, recently warned that dramatically cutting consumption of non-essential goods by 10 to 20 percent would have a catastrophic effect on economic growth and actually increase global poverty. Patagonia’s response has been to say that their sustainability ethos would make it hypocritical for them to work for environmental change without also asking consumers to pause for thought before they make a purchase. And at least Patagonia is trying to spark a debate around these issues and encourage their customers to consider the effects of their consumption.” [source]
I am sure there are many more inspiring thoughts, ideas, examples, etc… out there. If you know of some, feel free to leave a comment.
I’d like to post stuff like this more often, shake people’s perspectives a bit and while doing so, maybe spur new ideas.
Soooo, if you enjoyed this, just follow me here on Medium or on Twitter (see below). Maybe check out my Website or hey, just comment below!!
Thanks!
