We are all part of, and subject to, an economic system that has been around since the first shareholder companies were created about two and half centuries ago. This system has wrought enormous progress for all those countries that employ this approach to the economy.
The only other comparable system in the world today is the state capitalism of China. It too has lifted millions of Chinese out of poverty and changed the face and nature of the world’s most populous nation forever.
But both approaches to economic activity have brought with them enormous social, economic and environmental downsides.
On the social front there has recently been rapidly rising tension between the haves and the have nots in both systems and the attendant dissatisfaction with highly visible differences that exist in and between communities. Covid has exacerbated the problem with the really rich becoming richer, and the poor poorer.
Economically, the rapid growth in inequity, in wealth, income and opportunity has reached a level of unsustainability for the systems as a whole,
Perhaps the most devastating effect of these two systems has been the devastating mass degradation of the environment. A vast percentage of species is now extinct and many more are severely threatened. The interconnectedness of species and the sustainability of the Planet are inextricably interwoven. Just one example of what has happened in our world is the fact that over 90% of world’s population now breathes air deemed by the WHO to be unsafe; and the 20 most polluted cities in the world are all in Asia.
Clearly, the imperative for the sustainability and future well-being and health of humanity must be economic, social and environmental good governance.
Klaus Schwab is a brilliant man. It is he who started the World Economic Forum 1971 and remains a driving force in that most influential movement.
He started thinking about our economic system at around the same time and his thinking has evolved to the point where he is campaigning for a rethink of the way our economies are run. He has pointed out both the positives and negatives of our current systems. He maintains, however, that the current systems are unsustainable in the longer term. Many influential leaders around the world have started to adopt his way of thinking and in the USA and elsewhere a group of Senior CEOs of major corporations are beginning to move their strategies in that direction.
In short, it is being more and more widely agreed that the chase and drive for short term profits no longer works for the majority of the people in the world, and not for the Planet. Inequity is on the rise all over the world which does not augur well for world peace, harmony and a sustainable future for all of us and our Planet.
Schwab’s proposal is that we move from short term shareholder capitalism to stakeholder capitalism; a system where all the stakeholders of an enterprise benefit in one form or another from its activities. From the enterprise point of view this would entail making conscious decisions about the level of engagement and benefit that should accrue to all stakeholders; in short, the interests of all stakeholders are taken into account. Of course, this is complex and a challenge, but the benefits that flow will ensure that all the stakeholders will have a vested interest in the ongoing success of the enterprise and therefore add momentum and positive support and energy to its efforts.
What does this mean for South Africa?
At the societal and community level we should apply the principle of stakeholder capitalism in our daily interactions to ensure the long-term growth and positive development of our communities. We should insist that our Town and City Councils approach their responsibilities with this concept in mind.
At the national level, our government should invest massively in infrastructure development. The focus should be on a few primary areas:
- Make it as easy as possible to start and run a small business with state support
- Invest hugely in alternative, sustainable sources of energy. These are quicker and less costly to instal than lumbering power stations that belch CO2 which harms everyone and costs a fortune, not only to build, but in healthcare afterwards as people breathe in the poison.
- We must invest strongly in developing our water and fresh water systems. We absolutely should not be using drinking water to irrigate gardens and farms!
- We should build no more roads but make sure the roads we have are in pristine condition.
- The days of the internal combustion engine are limited. We will soon not be able to afford to run them and we can no longer afford their emissions. This means government must invest massively in public transport. We need high speed trains between all major metros and excellent commuter services, including buses at the local level
- We must fix our harbours and freight rail system; we cannot afford to have thousands of super-link trucks rolling between the ports and the Gauteng industrial hub any longer
- We must strongly incentivise and encourage people to invest in and enter the green economy
- Our number one priority is to completely overhaul the education system to make it relevant, dynamic and exciting for learners, educators and our country!