Date : Aug 26 , 2019 | Opinion
Arun Maira writes about the fallacy of pursuing economic growth without working on building a system that ensures sustainable benefits for all humans as well as for Nature.
I am on a journey of learning, and also unlearning, many theories of economics and business management. My co-learners are a growing movement of young people and many older people who ‘have been there and done that’ successfully, who want to transform the world. They are not pursuing their rational self-interests as economic theory would expect them to. They are hearing another drumbeat calling them to care for nature and for all humanity.
When India’s water needs are expected to become twice its depleting water resources within 10 years , what use will a $5- trillion economy be?
These irrational people are not turned on by the many millions of dollars they could make, or the expectation that their country will soon be a $5-trillion economy. Because their heart says, ‘What about the billions still struggling to live in dignity?’ And their head questions, ‘When India’s water needs are expected to become twice its depleting water resources within 10 years (according to the country’s national planning institution), what use will a $5- trillion economy be? Are we not like Nero fiddling in our palaces while Rome burns around us?’
What turns on my co-travelers is an aspiration to change the shape of the system, to make it more just for everyone and more ecologically sustainable, too. We need a new ethical toolkit: founded on principles of benefits for others, not material self-interest; benefits for our grandchildren in the future, not gratifications in the next quarter or even in our own lifetimes. The new toolkit includes three disciplines: systems thinking, ethical reasoning and collaborative enterprise design.
The European Enlightenment began a scientific revolution in the seventeenth century. Scientific knowledge advanced with objective examination of the facts and insights into the fundamental particles that constitute matter. It advanced through specialisations. In the study of the material world into physics, biology, chemistry, geology, astronomy, etc. In the study of human society, into specialisations in economics, sociology, anthropology, psychology, etc.
And, as science advanced further, these fields broke into sub-specialisations, with more experts who knew more and more about less and less. Universities broke up into silos of thought, and governments and large organisations into silos of functional disciplines.
The huge problems that are now stirring up movements for change are systemic problems that require knowledge of all parts of the system to be combined. Solutions to environmental problems will require combinations of knowledge of many physical sciences. Solutions to problems of human development and unequal opportunities require combinations of knowledge of many social sciences. Indeed, environmental problems and human development problems cannot be isolated from each other. Therefore, combinations of physical and social sciences are required to solve the huge problems that are laid out in the 17 Sustainable Development Goals.
Humpty Dumpty had a great fall with the scientific revolution. The unintended consequence of the advance of the scientific way is fragmentation of knowledge about the whole system: about how the parts fit together and work together. Now, all the King’s horses and all the King’s men must put Humpty Dumpty together again. For which, a science of ‘whole systems thinking’ must be learned, taught and applied, along with siloed expert knowledge.
With advances in science, human beings have acquired great abilities to harness Nature. They believe they can command the tides, which King Canute could not because he did not have the technology required. Humans have discovered how to release the power within tiny atoms with which they can destroy the Earth if they will to.
With great power over Nature has come great hubris too. With evidence that human footprint on the Earth is becoming too heavy and that the hydrological system of the planet will not provide the water forever, they now assume they can find another technological solution. Or, that they can develop a rocket to take them away to another planet with water.
The golden rule of human civilisation, taught by all religions, is to do unto others as you would have done unto yourself. It is not ethical to use a common resource for your personal needs in a manner that would deprive others, in the present or in the future, of what they need. Contrarily, Economics 101 says that human beings must pursue their self-interests, and that it is ‘rational’ to do so. It says that if everyone looks after themselves then some ‘invisible hand’ will ensure that everyone will be better off. So, it is good to be selfish.
Ethical reasoning says you should do good because it is good to do it and because it benefits others, not because it is good for you.
Economists attempt to prove that corporate social responsibility is good by showing that in the long run shareholder value is increased if corporations act responsibly towards others. In other words, do good to others because it is economically beneficial for you. This, however, is not ethical reasoning. Because ethical reasoning says you should do good because it is good to do it and because it benefits others, not because it is good for you.
Collaborative enterprise design
Just as any well-designed product must be fit for its purpose, an enterprise must be designed to fulfill its purpose. The pursuit of self-interest has been institutionalised in the design of the capitalist business corporation. Its board is legally bound to protect its own investors’ interests rather than the concerns of others.
Sustainable progress of humanity requires the development of enterprises designed for the needs of diverse stakeholders, not just their investors, and enterprises that respect the environment which gives us life. Concepts of ‘social enterprises’ are emerging for meeting these needs.
These new forms of enterprise require disciplines of systems thinking to design their programs, understanding their impacts on the sustainability of the whole system. For example, well-intended aid programs to deliver food to poor African countries had the unintended consequence of reducing local production capabilities and increasing dependence on external assistance, because they did not understand the whole system.
Sustainable progress of humanity requires the development of enterprises designed for the needs of diverse stakeholders, not just their investors, and enterprises that respect the environment which gives us life.
The design of the governance of social enterprises requires the discipline of ethical reasoning. The democratic principle is that an enterprise for the people must be of the people and governed by the people too. In an enterprise governed by the principle of property rights, it is just that one dollar invested gives one vote and ten dollars gives ten. Whereas in a democratic enterprise, every human in the endeavour is equal with an equal vote. Therefore, the beneficiaries must be included in the governance of social enterprises.
Governance would require abilities to listen to diverse views, to arrive at consensual decisions that benefit all stakeholders. Good governance should give a veto to the poorest if they fear the enterprise will cause them harm, and not just a right for the wealthy to decide what is good for the poor, while pursuing their own satisfaction of scaling up their own social enterprises, and the glory of increasing the national GDP while water disappears.
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