There is no doubt that consumerism is an economic force that has both positive and negative aspects. As a society we almost certainly consume too much of our resources and with insufficient care. Globally there is unacceptable disparity between rich and poor and it may simply not be possible for the planet to sustain a uniform level of access to resources if the emerging world is to enjoy the same standard of living as the developed world. Both sides of the wealth divide will have to make adjustments – both to expectation and utilisation.
In general, however, I believe that a free market-based approach is the only way to cut across the geographical, cultural and political diversity of our planet. We are all part of a global marketplace and although there are certain areas that warrant certain forms of cooperative international regulation, to ensure that scarcity doesn’t distort (destroy?) the market (clean water, air, an intact food chain, biodiversity), most activity should be fair game and competitive.
My opinion is that a free-market economy (capitalism) is a fairly democratic forum and a forum that everyone can “vote” in. If companies are transparent about their policies on environmental, labour, diversity, etc. then this vote can be knowledge-driven and powerful. Media and online access to information to some extent increasingly ensures this and arguably there is very little place to hide with social media. However, it also involves a social contract that business adheres to the expectations of society, with or without government policy dictating the boundary conditions. Business is not a parallel world or a microcosm with its own set of rules, it has to be something built on top of our broad set of values. This is not without challenges when businesses regionalise and social values adjust, but as a planet we have to be moving towards shared notions of environmental sustainability, gender equality and basic human rights.
In some cases, it should be noted, companies do it better than politicians – and can be part of the solution for creating global standards.
I believe, perhaps somewhat optimistically, that our best companies already do this – they understand that their products and services lose value if they are found to be in violation of our conduct expectations. Moreover, organisations that demonstrate leadership in actively improving the world we live-in, the “triple-bottom line”, ultimately do better than their peers who do not, whether it is their productivity, their performance in the marketplace or internal efficiency (cost) due to things like labour turnover. This is not necessarily intuitive, nor the data absolutely bullet-proof, but there is growing evidence that this is the case.
This means that money has actually two functions. Firstly, it is a means to acquire/transact products and services, and service debt – something most people understand. Secondly it is a vote cast in favour – or dissent – of the conduct of the product or service provider. Too many people look at the bills in their wallet and fail to understand that money is far more than just the ability to procure, it is the secret to changing the world. We no longer have twinkies – because they are unhealthy for our kids and we don’t buy them. Tobacco consumption is on the decline, because understand that smoking causes disease and we are not buying their products (taxation/policy is, of course, an accelerator of this impact). We expect our products and packaging to be more environmentally friendly. Of course, education and transparency are key to unlocking that monetary “vote”.
For example, I drive my wife insane because I refuse to buy chicken and eggs that are not free-range/organic. Not because I really believe that it is healthier (there is plenty of evidence that organic produce has little health benefit compared to the cost) but because I believe that when I vote with my wallet, I both enable the growth of more appropriate animal husbandry practices and I put financial pressure on the battery hen farms that I object to. I realise that not everyone has the luxury of being able to cast that vote, but I also believe that those who can, should – and ultimately if an industry can be “tipped” it will eventually produce a benefit to everyone.
By the way, this is the best answer I can give to the retort that poorer people have fewer monetary votes… and I concede that this is a problem if the interests of the rich do not consider the needs of the poor.
… But there are also smart people thinking about solutions this problem.
I had breakfast ten days ago in NYC with a friend and fellow YGL, Jeremy Balkin, who has started a private equity fund with the goal of “doing good and doing well.” His passionate belief is that the concept of the financial vote should apply even more aggressively to the large pools of capital that really influence market dynamics. Our investment banks, mutual funds, pension funds and sovereign wealth funds need to be the paragon of this concept and should eschew investments that do not conform to the needs of our world, today and tomorrow. They should also be managed by the our brightest people with the highest moral commitment to this mission.
These large funds – that represent our collective wealth – need to be at the forefront about asking tough questions about what is best for the future of everyone…
… And act now.