Tag Archives: Bangladesh

The Clothes Show, 24-7-52: Bangladesh ‘Becoming One-Trick Economy’!

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Filed under Economic Development

The New Life: Culture Trumps Politics as Urdu-Language TV Station Thrills India!

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Bangladesh: The New Industrial Dystopia?

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The Ultimate Disposable Society? South Koreans ‘Change Mobile Handsets Like Ice-Cream Flavours’!

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Asia: The World’s Largest Cram School?

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Is Lionel Messi the New Sachin Tendulkar?

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Constructive capitalism: impossible ideal or rational choice?

A recent piece composed by Andrew Hill, an Associate Editor and management doyen at London’s Financial Times, makes for thought-provoking reading. Society and the right kind of capitalism examines the apparently interchangeable notions of ‘shared value’ or ‘constructive capitalism’. Shared value was the subject of a prominent article by Michael Porter and Mark Kramer in the January/February 2011 Harvard Business Review; constructive capitalism is a concept which has been strongly associated with Umair Haque, author of the freshly published The New Capitalist Manifesto: Building a Disruptively Better Business.

Hill summarises that both of these ideas point to the possibility of ‘a higher form of capitalism’ that generate profits whose benefits are accrue (and citing the words of Haque) ‘sustainably, authentically and meaningfully to people, communities, society, the natural world and future generations’. However, he asserts that ultimately, capitalists – whether constructive or otherwise – are still capitalists: when confronted with diminishing returns in even the most ethical of markets, most investors will chase the higher returns available elsewhere, regardless of the negative externalities generated.

However, while possessing a certain logic, this analysis is not without its flaws:

1. It cannot explain phenomena such as the fair trade movement, a campaign which as recently as twenty years ago was a marginal entity barely known outside of some student dormitories and churches but which has now blossomed into a multi-billion euro segment of the mainstream economy. ‘Rational’ capitalists of the kind that Hill describes would never give companies that pay significantly higher wages than their competitors – purely for ethical reasons –  a second glance, yet the inexorable growth in popularity of fairly traded goods such as coffee and chocolate tells us otherwise.

2. More broadly, it fails to recognise that the separation between ethics and profits – the economic equivalent of Cartesian dualism – is making a mockery of markets and killing capitalism. The relentless quest for growth at any cost is destroying the very nature – forests, oceans and particularly agricultural land – on which humanity depends. A one metre rise in sea levels as a result of global warming would endanger over 30% of the world’s croplands; low-lying areas of cultivation, such as those in Egypt, China, Indonesia, Holland, Bangladesh and Florida, might find it impossible to sustain agriculture at all. To suggest that rational capitalists – with perfect market information! – can ignore the impact of their own actions in this context does not bear scrutiny.

In their slow-burning 2004 classic Karaoke Capitalism: Management for Mankind, Jonas Ridderstrale and Kjell Nordstrom warn that we have a simple choice in front of us: capitalism with a cause or capitalism with a curse. Aiming for the former surely precludes assuming that the limits of economic rationality stretch no further than a purported maximisation of short-run utility which may not even exist.

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