October 2020 marks the 25th annual convening of Social Venture Institute, a conference that remains committed to convening, supporting, and enhancing the capacity of entrepreneurs. Thousands of alumni from across North America and around the world have experienced SVI as a catalyst of new norms of capitalism. Together, they’re part of a movement that is remaking business for the better.
Cast back another 25 years, to 1970, to the now infamous essay of economist Milton Friedman, who argued, “there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits.” So began the relentless march of shareholder capitalism, which has come to dominate discussions and planning in executive suites, board rooms, and western, liberal economic policy for half a century.
Unfettered, free market, shareholder capitalism has failed us
The global health pandemic has revealed the cracks and frailties of a system that’s flawed at its base. Today, some 26 individuals own more wealth than half of all humanity; this concentration is a logical outcome of shareholder-centricity and it is grossly unfair and inhuman. By contrast, some 300 million people are unemployed and even in advanced economies like Canada’s, most employees and small business owners are just a pay cheque or two from poverty.
The economic crisis we now face is devastating countless small businesses and forcing many larger companies into bankruptcy. And it comes as no surprise that the population groups most deeply and adversely impacted are racialized. One recent study confirmed that Black Americans, for example, are more than twice as likely to be diagnosed with COVID-19. This isn’t because they’re inherently more vulnerable; it’s because they disproportionately occupy working class roles that have been deemed essential during lockdowns and shelter in place order.
We stand at a macroeconomic turning point
Throughout its 25 year history, Social Venture Institute has been supporting a distinctive type of entrepreneur—leaders who are committed to minimizing their environmental footprint and maximizing what today we’ve come to call ‘social impact.’ Their commitments have evolved from balancing a ‘triple bottom line‘ (of people, planet, and profit) to pursuit of an integrated approach to enterprise and capitalism that puts service to all stakeholders at the heart of strategy.
SVI is just one of countless local and regional networks around the world that are rethinking the value—and the values—of entrepreneurship. These grassroots responses to the inequities and unintended consequences of shareholder capitalism are coalescing in a now global movement to reset capitalism. The terrifying challenges of COVID-19 are nonetheless opening for us all an opportunity to ‘build back better.’
It’s time to put wellbeing at the centre of economics
Listen to the daily news broadcast on the radio, or watch it on the evening news, and you’d be forgiven for taking away the impression that economics is all about growth in GDP. The gross oversimplification of economic health to the binary of growth (good!) vs recession (bad!) has always utterly ignored the environmental and social impacts of economics, as if they could possibly be divorced from the flow of money.
When we frame economics as all about growth, we trap ourselves into ignoring what economists call the ‘externalities’ of the climate emergency and vast social inequities. In reality, to vaunt growth is to pretend economics is bigger and more important than society and the planet. In reality, there is no economy without a healthy society, and there can be no healthy societies without a healthy planet. Growth-based economics has the story upside-down.
The Wellbeing Economy Alliance (or WEAll) is a collaboration of organizations, alliances, movements and individuals working towards an economic model that will deliver human and ecological wellbeing. It’s work aims to…
- Shift popular narratives around the purpose of the economy,
- Synthesize and disseminate knowledge and evidence about what a wellbeing economy looks like and how we get there, and
- Galvanize a non-elite power base through place-based hubs and a global network of individuals and organizations.
WEAll recently articulated ten principles to build back better—guidelines for economic recovery post-COVID. They include environmental, social, and political imperatives. And they’re already being implemented in cities like Amsterdam, which has embraced the Doughnut Economics model for its recovery planning, and countries including Scotland, Iceland, and New Zealand, the last of which introduced the world’s first wellbeing based budget in 2019.
Complementary to WEAll is the more activist Imperative 21, a network of business networks that spans some 70,000 businesses and more than $15 trillion in global assets. On September 13, the 50th anniversary exactly of the publication of Milton Friedman’s misguided essay, Imperative 21 launched the RESET campaign. RESET is focused on three imperatives for 21st century economics that were developed by Imperative 21 participants during spectacularly well-run conference calls of hundreds of committed business leaders and allies.
- Design for Interdependence: Recognize the interdependence of healthy people, planet, and economies; reimagine the relationships between the private sector, government, and civil society; and ensure that everyone has access to free and fair markets.
- Invest for Justice: Remove structural inequality; ensure leadership and ownership are more representative and investment more accessible; use technology to advance democratic ideals and human rights; and promote greater voice, power and opportunity for those currently marginalized.
- Account for Stakeholders: Measure success based on credible common metrics of sustainable value creation for all stakeholders; create incentives that reward business and investments creating social and environmental value; and enhance standards of fiduciary duty.
This is the economic thinking the world needs now. This is what it will mean to build back better.
I’ve been involved in this work for 12 years or so. I’ve benefited from the work of many who have been dedicated to conservation and equity for far longer. And I continue to be proud of the work I’ve done, as a coach and supporter of social entrepreneurs, as the CEO of an impact consultancy, and as a convener of Social Venture Institute, to accelerate the shift to the next economy.
What we need as we commit to building back better is an economic model that satisfies people’s needs without corroding planetary health. It’s not about relentless growth, it’s about accessible inclusion. It’s not about the challenges of environmental degradation, but about the opportunities in environmental regeneration. And it’s not about concentrating wealth in the hands of the few, but about enhancing wellbeing for us all.
This is the work of our generation. Join us, will you?
