Critical decade for the transition to sustainability:
crises and opportunities for redefining the enterprise
Arthur Lyon Dahl
International Environment Forum
Closing keynote at the ebbf - European Bahá'í Business Forum event
"Redefining the enterprise", Ericeira, Portugal, 7 October 2012
What are you going to do on Monday morning to co-create prosperity?
We know that the enterprise of today is rooted in materialism. The early twentieth century materialistic interpretation of reality has become the dominant world faith in the direction of society. This dogmatic materialism has captured all significant centres of power and information at the global level, ensuring that no competing voices can challenge its projects of world wide economic exploitation (UHJ 2005).
This critical decade
Already forty years ago, the report "The Limits of Growth" commissioned by the Club of Rome and updated twice (Meadows et al. 1972, 1992, 2004) described models that showed that continuing business as usual without regard to the sustainability of planetary resources would lead to the collapse of civilization in the middle of this century. The most recent comparison of this model projection with real data shows that we are following the curves closely toward that end. The only thing that has changed is that the alternative paths to sustainability are no longer realistic options (MacKenzie 2012).
To achieve sustainability, we have to stay within the planetary boundaries to the life-support system of the biosphere, but we have already overshot those for climate change, biodiversity loss and the nitrogen cycle and are rapidly approaching some others (Rockstrom 2009, Gaffney 2009).
This decade is critical for the transition to sustainability. The financial crisis is the most immediate threat to world stability. Climate change is accelerating faster that the worst predictions of the Intergovernmental Panel on Climate Change in its last report. UK Chief Scientist warned in 2009 that the world faces a 'perfect storm' of problems in 2030 as food, energy and water shortages interact with climate change to produce public unrest, cross-border conflicts and mass migrations (Sample 2009). The World Business Council for Sustainable Development, in its "Vision 2050" report backcasting from the goal of a sustainable economy in 2050, identified the "turbulent teens" as the critical decade, with significant steps towards sustainability necessary by 2020 (WBCSD 2010).
A recent study by mathematical ecologist Peter Turchin demonstrated the rise and fall of civilizations on a 200 year cycle. He assumed that a civilization or empire depends on social cohesion, using as an indicator the level of collective violence. In a variety of civilizations, growth in population and technology led to an oversupply of labour which was exploited by an expanding upper class until the masses were driven into poverty. The poor are unable to revolt, but the increasing concentration of wealth leads in the next generation to the falling into poverty of the educated young who no longer benefit. The resulting factionalism leads to anarchy and collapse, before the cycle begins again. Based on this model, he predicted political instability and an impending crisis in Western Europe and especially the United States, peaking by 2020. The only way to avoid this outcome, he said, would be to reduce social inequality (Turchin 2012).
Failings of the present economy
"The economic life of humanity has recently embroiled so many people. Injustice is tolerated with indifference and disproportionate gain is regarded as the emblem of success." (UHJ 2012)
We are caught in a growth-debt trap. Economic growth today is largely fueled by consumer, corporate and government borrowing. As long as the growth rate is higher than the interest rate, reimbursement is possible. If growth slows or stops, defaulting is inevitable. The consumer society was a necessary creation to maintain the economic growth/debt paradigm. Some of the past drivers of growth have been an increasing population, cheap energy from fossil fuels, new resource discoveries, and technological innovation. However many populations are ageing, and growth in energy and resource consumption cannot continue much longer because of planetary limits. Technology is limited mainly by its environmental and social impacts. Material civilization must be moderated rather than expanded.
Behind this all is the consumption business model. Many businesses encourage consumption. Anything increasing consumption was good for business: planned obsolescence, aggressive advertising and marketing, encouraging addiction, carefully orchestrated changes in style, etc. Information technologies and media have globalized this and created a generation of passive consumers. People expect constantly increasing purchasing power, as this is the only way to keep borrowing and consuming, but returning to consumption-driven growth is unsustainable.
Social impacts of the consumer culture
Social relationships in the consumer society emphasize an extreme individualism, in which social status is acquired through possessions responding to images of success defined by the media and advertising. These materialistic goals of human progress are ephemeral and transitory, as each object is rapidly replaced by something newer and better. In addition, social relationships are increasingly mediated by technology, so even direct human contact has less importance.
The consumer culture degrades and replaces moral and ethical values in society. It provides immediate benefits for the small minority of people who can afford its lifestyle. The breakdown of traditional morality has led to the triumph of animal impulses and hedonism. Selfishness has become a prized commercial resource; falsehood reinvents itself as public information; greed, lust, indolence, pride, violence are broadly accepted and have social and economic value (UHJ 2005).
"Materialism, rooted in the West, has now spread to every corner of the planet, breeding, in the name of a strong global economy and human welfare, a culture of consumerism. It skilfully and ingeniously promotes a habit of consumption that seeks to satisfy the basest and most selfish desires, while encouraging the expenditure of wealth so as to prolong and exacerbate social conflict. One result is a deepening confusion on the part of young people everywhere, a sense of hopelessness in the ranks of those who would drive progress, and the emergence of a myriad social maladies (UHJ 2010).
Rethinking the enterprise
Some recent suggestions from Bahá'í sources can help to orient our thinking about the role of enterprises in our society.
We need a new standard for economic conduct. "Eschew... dishonesty in one's transactions or the economic exploitation of others. There should be no contradiction between one's economic conduct and one's beliefs. By applying in one's life principles of fairness and equity, each person can uphold a standard far above the low threshold by which the world measures itself." (UHJ 2012)
"Social justice will be attained only when every member of society enjoys a relative degree of material prosperity and gives due regard to the acquisition of spiritual qualities. The solution, then, to prevailing economic difficulties is to be sought as much in the application of spiritual principles as in the implementation of scientific methods and approaches." (UHJ 2010)
Vigilance must be exercised in distinguishing "means" from "ends”. The acquisition of wealth is acceptable and praiseworthy to the extent that it serves as a means for achieving higher ends: providing people with basic necessities, fostering social progress, promoting the welfare of society, and contributing to the establishment of a world civilization. To make the accumulation of wealth the central purpose of life is unworthy. (UHJ 2010)
"Regrettably, a number of today's leaders--political, social, and religious--as well as some of the directors of financial markets, executives of multinational corporations, chiefs of commerce and industry, and ordinary people who succumb to social pressure and ignore the call of their conscience, ...justify any means in order to achieve their goals." (UHJ 2010)
"Wealth is praiseworthy in the highest degree, if it is acquired... in commerce, agriculture, crafts and industry, if the measures adopted... in generating wealth serve to enrich the generality of the people, and if the wealth thus obtained is expended for philanthropic purposes and the promotion of knowledge, for the establishment of schools and industry and the advancement of education, and in general for the welfare of society." (UHJ 2010)
"...the acquisition of wealth should be governed by the requirements of justice.... An employer and employee, for example, are bound by the laws and conventions that regulate their work, and each is expected to carry out his or her responsibilities with honesty and integrity." (UHJ 2010)
If the deeper implications of justice are to be realized, other preconditions to the legitimate acquisition of wealth must be taken into account, and prevailing norms reassessed in their light:
- the relationship between minimum wage and the cost of living, especially in light of the contribution workers make to a company's success and their entitlement to a fair share of the profits;
- the wide margin, often unjustifiable, between the production costs of certain goods and the price at which they are sold; and
- the question of the generation of wealth through measures that enrich the generality of the people (UHJ 2010).
"...certain approaches to obtaining wealth--so many of which involve the exploitation of others, the monopolization and manipulation of markets, and the production of goods that promote violence and immorality--are unworthy and unacceptable." (UHJ 2010)
Today, a number of important economists and thinkers are recognizing that the problem is rooted in the very structure and purpose of enterprises and corporations. Just as GDP is an inadequate measure of economic progress and human well-being (Stiglitz 2009), profit is an insufficient measure of corporate purpose. Some social benefit also needs to be included in the measures of business success. Pavan Sukhdev has recently published a new book "Corporation 2020" with his vision of what the corporation must become by 2020 if we are to move towards sustainability (Sukhdev 2012). The Global Transition Initiative is preparing a draft position paper on the Architecture of Enterprise. Michael Porter of the Harvard Business School has called for reinventing capitalism, to return to an effective private sector and restore its legitimacy, by creating shared value (Porter 2011). The ebbf event on "redefining the enterprise" in Lisbon, 4-7 October 2012, has added the spiritual dimension to this new vision (http://www.makeitmeaningful.org/).
An alternative to the consumer society
We need an alternative to the consumer society that is sufficiently attractive to overcome resistance and habit, and makes it worthwhile to sacrifice the superficial for what is deeper and more fundamentally rewarding. The effort required will be comparable to religious conversion. To be effective in changing behaviour, it will need to combine individual transformation with social action, as each reinforces the other.
Behind this must be an acknowledgement of a higher human purpose. " How... can we resolve the paralyzing contradiction that, on the one hand, we desire a world of peace and prosperity, while, on the other, much of economic and psychological theory depicts human beings as slaves to self-interest? The faculties needed to construct a more just and sustainable social order―moderation, justice, love, reason, sacrifice and service to the common good―have too often been dismissed as naïve ideals. Yet, it is these, and related qualities that must be harnessed to overcome the traits of ego, greed, apathy and violence, which are often rewarded by the market and political forces driving current patterns of unsustainable consumption and production." (BIC 2010)
To give this vision form, we need a new economic model that furthers a dynamic, just and thriving social order, is strongly altruistic and cooperative in nature, provides meaningful employment, and helps to eradicate poverty in the world (BIC 1998).
Recent research has shown that a transformed social order is both possible and more effective than the present system, challenging the assumptions underlying modern economics. Michael Karlberg, for example, has demonstrated how a social order characterized by competition, violence, conflict and insecurity needs to give way to one founded on unity in diversity (Karlberg 2004). A summary of 20 years of research and mathematical modeling has demonstrated that cooperation rather than competition is the best foundation for social and economic progress (Nowak 2011).
A global society requires world order, including such elements as a world federal system with authority over natural resources and their equitable distribution, and mechanisms of collective security to prevent war and its miseries. Such a system could organize the exploitation of all the available sources of energy on the surface of the planet (Shoghi Effendi 1936). In a global market, enterprise needs a level playing field, and only a system of global governance can provide it.
Such a fundamental change in society cannot occur over night, but must be the result of a gradual evolution. This means a pragmatic approach to major change through small steps taken with a clear vision of the necessary future direction. Effective systems take time to evolve. Just as in natural ecological systems, we should aim for higher levels of integration and efficiency, with form following function. Rather than imagining a utopia and trying to build it, we should set in motion processes that can anticipate future growth and changing needs.
The enterprise cannot ignore social relationships. Humans are social organisms, and our institutions of society need to acknowledge the importance of extended family relationships, and the value of dignity, friendships, and a role in a group. The foundation of any society is strong and united communities, in which each individual is accepted and has a place. At a larger scale, we need functional institutions of governance, economic production, education and culture.
One of the flaws of the present system is to favour productivity of capital over employment. The new system should create work for everyone. We need a renewed concept of work, not just to earn of living, but to be of service to society and to acquire human virtues. In this broader perspective, idleness and unemployment are a denial of human purpose. It follows that society has an obligation to train everyone in some skill and to give them the opportunity to use that skill for the benefit of all. Work done in a spirit of service is an essential part of individual development. This provides the foundation for a more human and sustainable definition of wealth creation in which everyone participates. The enterprise should therefore give priority to job creation.
Present economic growth has been driven largely by population growth, cheap energy and the discovery and exploitation of natural resources as free goods, all of which are coming to an end. Only innovation through science and technology can provide a sustainable driver of human progress. Science should not longer be restricted to an educated elite; everyone should learn the scientific methods of experimentation, rational proof, cause and effect. Local communities should be empowered to find their own culturally and environmentally appropriate solutions to their problems.
Science and technology are instruments of social and economic change so powerful that they must cease to be the patrimony of advantaged segments of society, and must be so organized as to permit people everywhere to participate on the basis of capacity. The required education should be available to all who are able to benefit from it. Viable centres of learning should be established throughout the world to enhance the capability of the world's peoples to participate in the generation and application of knowledge. All of the earth's inhabitants should be able to approach on an equal basis the processes of science and technology which are their common birthright (BIC 1995).
A Culture of Change
Redefining the enterprise requires a culture of change from consumerism to sustainability. We need to ask what is natural and just. A public dialogue should be organized on the ethical foundations of the necessary systemic change. We need to take an integrated systems view beyond sectoral approaches, aiming for a social order founded on unity in diversity. The work has to start at the community level, as that is where people can learn how to work together in new ways (BIC 2009, 2010). Enterprises can also experiment with innovative approaches based on their goals, priorities and capacities.
"The development of a global society calls for the cultivation of capacities far beyond anything the human race has so far been able to muster. The challenges ahead will require an enormous expansion in access to knowledge on the part of individuals and organizations alike. Universal education will be an indispensable contributor to this process of capacity building, but the effort will succeed only to the extent that both individuals and groups in every sector of society are able to acquire knowledge and to apply it to the shaping of human affairs." (BIC 1998)
"Education must be lifelong. It should help people to develop the knowledge, values, attitudes and skills necessary to earn a livelihood and to contribute confidently and constructively to shaping communities that reflect principles of justice, equity and unity. It should also help the individual develop a sense of place and community, grounded in the local, but embracing the whole world. Successful education will cultivate virtue as the foundation for personal and collective well-being, and will nurture in individuals a deep sense of service and an active commitment to the welfare of their families, their communities, their countries, indeed, all mankind. It will encourage self-reflection and thinking in terms of historical process, and it will promote inspirational learning through such means as music, the arts, poetry, meditation and interaction with the natural environment." (BIC 1998) In this context, it seems logical that the enterprise should take on a larger role in education for change.
There are other social roles that large corporations have the potential to address. "...it is the concentration of wealth in the hands of the few that is in urgent need of attention. Indeed, the tremendous wealth generated by transnational corporations could be an integral part of the solution to tackle poverty, through strict regulation to ensure good global citizenship, adherence to human rights norms and the distribution of wealth for the benefit of the larger society." (BIC 2008)
For an enterprise to move in this direction, it should adopt an evolutionary strategy. This could include making progress in areas where there is the least resistance, and building the new enterprise in small steps while learning through action, reflection and consultation. It will take some time to build confidence in the community, and with business partners, stakeholders and clients. But given the urgency of starting the transition towards sustainability, business and civil society should take initiatives now and not wait for governments to act.
The Rio+20 conference in June 2012 showed that the present international system of sovereign governments is incapable of making the great transition towards sustainability in time to avoid disastrous consequences. However we can all start to take small incremental steps in scientific assessment, sustainable consumption and production, sustainable development goals, civil society participation, and the implementation of ethical principles. Enterprises can take initiatives to demonstrate workable proposals. Together we can build momentum towards sustainability before it is too late.
Creative enterprises with a wider vision of human purpose and prosperity can turn crises into opportunities. You have about 400 Monday mornings left before the end of the decade.
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Last updated 27 October 2012