Beyond our current form of capitalism

Last year two fantastic articles in the Financial Times, one by John Plender, and FT Senior Editor and one by Andrew Edgecliffe-Johnson is the FT’s US business editor were looking beyond the current form of capitalism.

Plenders column is titled, “Shareholders are being dethroned as rulers of value” and Edgecliffe-Johnson’s is titled, “Beyond the bottom line: should business put purpose before profit?

Anyone that has read the previous articles I posted on Linkedin will understand why I think these two articles are important. Both highlight the problems with our current form of capitalism, and speak of some of the challenges of fixing it. They also suggest that perhaps it cannot be fixed and we need to evolve to a better model. This is the conclusion I came to some time ago, when I started developing the ideas of Valueism and, more recently, Social Contract Accounting. There is no point trying to bandage up a sick patient if the problem is cancer.

The comment I made on Edgecliffe-Johnson’s column gives you more of a sense of where I am heading with my ideas and initiatives in 2019……..

This is a great article and business leaders that do not see the opportunities it highlights should not be running a business. However, as the author points out the opportunities do not come without challenges. The “soft underbelly” is perhaps the biggest challenge. A lack of good and generally agreed metrics that also facilitate comparability make it difficult for investors to do what they know they must and make sustainable long-term investments. Currently, the accounting professions response has been inadequate, and I don’t see that changing since their thinking is underpinned by assumptions that stem from the false ideas of neoliberal economics.

The best of the FT’s columnists — Martin Wolf, John Plender, John Kay, and now Andrew Edgecliffe-Johnson, have been saying as much as for a long time. And I think they are concluding we won’t fix the problem by trying to repair a fundamentally broken system, which neoliberal economics inspired financial capitalism is.

Beyond recognising the problems and the emergence of a range of disjointed new ideas, we need to design a whole new system based on a holistic vision and practical approaches. Referenced in the above article is Colin Mayers book, Prosperity. As Founder and CEO of the Strategic Management Forum, which promotes the professional practice of strategic management, I recently proposed that prosperity should be the noble cause of the profession. And I define prosperity in terms of human flourishing.

Prosperity should be the goal of the accounting profession too. But both accounting and management take their cues from the theories of economists. So, first we need to ensure economics has a purpose and that purpose should be the creation of economic value as defined recently by Martin Wolf at the Drucker Forum in Vienna — sustainable widely shared prosperity.

Later this year the Strategic Management Forum will be hosting “Prosperity as the Purpose”, a two-day working conference. Separately I am developing Valueism as a new management theory and practices. And I am also working on the development of the Social Contract Accounting standard, initially with large institutional investors, to be further developed as an open source project. Anyone interested in learning more can reach me by email paul@thesmfglobal.com

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Paul Barnett

Paul Barnett

Advocating the purpose of all enterprise should be contributions to sustainable widely shared prosperity measured in terms of human flourishing and wellbeing.