LSE : The Capitalist System is Broken
“The capitalist system, in its current form, is broken. In this lecture, Nobel Peace Prize-winning economist Dr Muhammad Yunus outlines his radical economic vision for fixing it, as explored in his new book A World of Three Zeroes”
In 2009, in the wake of the 2008 financial crisis, a pioneer of business for social purpose addressed the opening plenary of the international Economics for Ecology conference at Sumy State University:
“At this point, the simple fact is that regarding economic theory, no one knows what to do next. Possibly this has escaped immediate attention in Ukraine, but, economists in the US as of the end of 2008 openly confessed that they do not know what to do. So, we invented three trillion dollars, lent it to ourselves, and are trying to salvage a broken system so far by reestablishing the broken system with imaginary money.
“What is not guesswork is that the broken — again — capitalist system, be it traditional economics theories in the West or hybrid communism/capitalism in China, is sitting in a world where the existence of human beings is at grave risk, and it’s no longer alarmist to say so.
“The question at hand is what to do next, and how to do it. We all get to invent whatever new economics system that comes next, because we must.”
He may have been optimistic with that final assertion. Returning in 2010, he delivered the core argument from his 1996 treatise on People-Centered Economics:
“Among three main areas of economics, the financial sphere remains dominant over social economics and environmental economics. The reason for this is very simple: in order for any system of economics to be sustainable over time, it must first be financially sustainable. If a system costs more than it produces, it requires infinite inputs over time. Infinite inputs are not available in a finite world, and we live in a finite world. If we pursue a system that costs more than it produces financially, it must and will necessarily collapse. But now, the financial system itself is broken: it costs far more than it produces.”
Several years before the economic crisis we’d set up in London to develop a business plan to tackle poverty which came with a warning:
“The opportunity for poverty relief was identified not only as a moral imperative, but also as an increasingly pressing strategic imperative. People left to suffer and languish in poverty get one message very clearly: they are not important and do not matter. They are in effect told that they are disposable, expendable. Being left to suffer and die is, for the victim, little different than being done away with by more direct means. Poverty, especially where its harsher forms exist, puts people in self-defence mode, at which point the boundaries of civilization are crossed and we are back to the law of the jungle: kill or be killed. While the vast majority of people in poverty suffer quietly and with little protest, it is not safe to assume that everyone will react the same way. When in defence of family and friends, it is completely predictable that it should be only a matter of time until uprisings become sufficient to imperil an entire nation or region of the world. People with nothing have nothing to lose. Poverty was therefore deemed not only a moral catastrophe but also a time bomb waiting to explode. “
“P-CED will approach social enterprise academic programs at London School of Economics and Oxford University to fill the core administrative and network management positions. P-CED aims to include committed social entrepreneurs in its work force insofar as possible. Sourcing from emerging social enterprise academic programs for these workers will also serve to interface fledgling academic programs with real world issues and challenges, thus providing useful and engaging experience to both the UK academic community and to P-CED. This will in turn serve to enhance the efforts of both contingents.”
You can guess how far we got with that.
“Elimination of graft and corruption, and raising the overall standard of living for ALL Ukrainians rather than a few insanely greedy oligarch clans, was the main underlying and implied reason for the Orange Revolution — at least from hundreds of people, activists and otherwise, I talked with on the ground during and after the Revolution. Further, as director for any sort of peace institute, Mr. Aslund is obliged to review the connection between poverty and peace. Peace does not and cannot exist for people in poverty, unless they are harshly suppressed by government or other forces. Poverty is a horrible existence and lifestyle, and is bound to breed violence, not peace.”
His strategy paper, a ‘Marshall Plan’ for Ukraine was published in full online in August 2007, when a centre for social enterprise was one of the major components. It described how profit can be used to resolve a wide range of social problems rather than being returned to shareholders.
In 2010 I’d responded to a social business ideas competition, sharing our proposals with Grameen Creative Labs and Erste Bank. In 2008, It had been shared with USAID and others in the US political circuit.
McKinsey’s Long Term Capitalism challenge gave the opportunity to describe the story so far, as The New Bottom Line.
By then Muhammed Yunus had joined Richard Branson’s B-Team.
Within 6 months of the Long Term Capitalism Challenge, Yunus and Branson were on a panel at Davos hosted by one of the “insanely greedy oligarchs” and chaired by Tony Blair , the man who made support for social enterprise government policy. They were reading back what the ‘Marshall Plan’ had argued about capitalism with social as well as financial returns.
Violence had just begun. Over the next four years it would include the lives of MH17 passengers and 18,000 Ukrainians killed in a conflict with Russia. Not to mention the economic orphans described in ‘Death Camps, For Children’