CAN BUSINESS SAVE CAPITALISM?
The Philippines has the highest rate of economic and social inequality in Southeast Asia, according to the ASEAN Trade Union Council.
Capitalism today is going through a major crisis, one which is characterized by a gradual disintegration of the global economic and political order that was painstakingly built by the world’s political and economic leaders soon after the guns of World War II fell silent. There is an emerging consensus, moreover, that the current crisis faced by capitalism, today’s universally accepted form of economic organization, is the most serious yet in its nearly 250-year history.
Capitalism’s current crisis is not the result of threats from without (although there is certainly some of that, notably from extremist groups bent on establishing alternative systems of political and economic organization, or drastically altering existing ones). Rather, the existing threat to capitalism has arisen mainly from forces embedded in the system. According to Nobel Laureate Joseph Stiglitz, the current crisis “… has uncovered fundamental flaws in the capitalist system, or at least the peculiar version of capitalism that emerged in the latter part of the 20th century in the United States.”
By far the most serious flaw of capitalism as an economic system is its failure to distribute the benefits of economic prosperity equitably to all segments of society, and its inability to make economic opportunities equally accessible to everyone.
The yawning disparity in the economic fortunes of people across the globe in the face of phenomenal growth, along with the unequal access to economic opportunities, are ranked by business leaders at the recent annual meetings of the World Economic Forum as among the greatest risk to the global economy today. This realization has led them to call for a form of capitalism which is more socially responsible, one that benefits all and not just the wealthy few.
Oxfam, an international organization of NGOs focused on the alleviation of global poverty, has shown that the world’s richest 1% now have more wealth than the rest of the world’s population combined. It also noted that the world’s richest eight individuals own more wealth than half of the world’s population (close to $500 billion, by my rough calculation).
Looking at our own backyard, I have noted in an earlier piece that the yearly increases in wealth of the 40 richest families in the Philippines have accounted for nearly all of the increases in GDP in recent years.
THE FAILED STATE AND THE CRISIS OF CAPITALISM
The increasing disparity in income and wealth between the very rich and the very poor in most countries of the world today stems largely from the failure of the state to perform its traditional functions in a manner that is equally beneficial to all members of society. This is especially true in developing economies where social inequality in the face of increasing economic prosperity remains to be a major issue.
The Philippines is a case in point. According to the ASEAN Trade Union Council, an association of 18 national trade confederations in nine ASEAN states, the Philippines has the highest rate of economic and social inequality in Southeast Asia.
BUSINESS AS A SOURCE OF CHANGE
There is widespread belief that the state should play a major role in saving capitalism from its impending demise. I believe, however, that the business sector is better positioned to initiate change in our floundering economic system. I have three reasons for thinking so:
1. Considering the decrepit and dysfunctional condition of most government and multilateral institutions, and the relative indifference — or ineptitude — of those in the other sectors of society, it is reasonable to expect that social change is more likely to emanate from the business sector rather than from any other segment of society.
2. The preponderance of today’s most progressive, innovative, and visionary leaders come from that sector, an elite group of corporate managers that includes such luminaries as Google’s Sergey Brin, Facebook’s Mark Zuckerberg, Tesla’s Elon Musk, Microsoft’s Bill Gates, and our own Jaime Zobel de Ayala, to name but a few. These iconic corporate managers and other business and economic leaders have, at various international forums, sounded the clarion call for the need to reinvent the economic system which, by all indications, has outlived its usefulness.
3. Among the various institutions that comprise modern society, business organizations have proven to be by far the most adaptive to emergent technological, market, political and cultural change, and are more focused on the future directions that they will take rather than on pursuing dated objectives and preserving their hard-earned competitive advantage.
Be that as it may, it cannot be denied that business, by its singleminded pursuit of, and obsession with shareholder wealth maximization, has been a major contributory factor in the prevailing economic inequalities and inequities in most countries of the world today. It is therefore heartening to note that progressive business leaders themselves have been quick to realize this, and have expressed their willingness to take up the reins for change.
The article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the MAP.