Re-forming the economy

In the hours between running a nonprofit and doing errands to keep my life on track, my mind wanders to some of the big issues of the world. I just can’t help myself. One issue that has intrigued and perplexed me for some time is whether our current capitalist economic model will survive or whether it will have to morph into some variation that takes into account the three catastrophic risks that confront the human race: resource depletion, climate change and over population.

This isn’t a new question. Over the past 20 years, corporate circles have engaged in a dialogue about a triple bottom line (people, planet and profits) resulting in some ground-breaking changes in a few of the largest U.S. corporations. (Example: the Starbuck’s cocoa I drank for breakfast claimed it is “ethically sourced.”) With all the dialogue, it seemed that at last the triple bottom line would find its way into our collective decision making and re-form our economic system and policies. But such solutions have proved elusive; this stuff isn’t easy to figure out.

Every January, the leading economists of the world are invited to gather in Davos, Switzerland, for the World Economic Forum (WEF) to explore answers to deep economic issues. The five-day meeting ends today. U.S. Treasury Secretary Timothy Geithner is in attendance. This year, the topic in Davos is the future of capitalism. The 73-year-old founder of the WEF, Klaus Schwab, is clear on the need for this dialogue.

“Capitalism in its current form has no place in the world around us,” Schwab said. “A global transformation needs to take place urgently, and it must begin by restoring a form of social responsibility.”

They have tackled this theme before in Davos but haven’t made much headway on the problem. Like politics, everybody has a different idea of what is the best approach to stronger, more equitable economies.

With the U.S. recovery from the recession still very soft, a higher-than-desired unemployment rate and Occupy movements continuing around the country, the search for new solutions seems critical. I’m not a person who gives up easily, and I’m idealistic enough to believe that solutions are possible.

The Nov. 30 issue of the Harvard Business Review contained a summary of a new book, “Capitalism at Risk: Rethinking the Role of Business,” by Joseph L. Bower, Herman B. “Dutch” Leonard and Lynn S. Paine. They contend that capitalists themselves are best positioned to find a fix for the economic morass. They stated that:

“Executives cited 10 major systemic problems that have created a break in trust between business and society, including a breakdown in the rule of law, environmental degradation and weakened oversight of the financial system.

“With government regulators and politicians unable to address these problems effectively, it’s up to business leaders to step up.

“Even as the market system has created threats to its own sustainability, it can also reward enterprising companies of any size that can turn these problems into opportunities.”

The authors go on to state that it is the business sector that is best positioned to generate the changes needed to re-form our economic system.

“Our book argues that if we don’t begin to address, in a systemic way, the issues and problems and the negative outcomes and challenges (of market capitalism), then we are likely to see a lot more movements like Occupy Wall Street,”co-author  Leonard wrote. This involves mobilizing business leaders to seek and find answers.

It will also mean a serious commitment to take into account local and global needs of people and to put the concept of profits into perspective.

In my view, the approach suggested in the book, while worthwhile, puts too much responsibility on business. We as individuals can also play a role in crafting solutions. changing collective consciousness and the way our economy works.

One of the lessons of the recession has been that in difficult times, people change the way they survive. Barter systems are re-emerging as a viable way to secure needed goods and services without any money changing hands.

Development of a local alternative “currency” is being tried in a number of areas. The “currency” is used between individuals but also can be used at shops that agree to recognize its value. Having a local “currency” is a way of ensuring that financial resources keep circulating within the local economy.

Kaua‘i has seen the development of community-supported agriculture programs (CSAs) where community members commit to buying a box of produce for a set price from a local farmer. This provides a guaranteed income for the farmer and fresh, nutritious food for the buyer.

These are just a few examples of what could be done. The growing interest and actions being taken toward increasing Kaua‘i’s self-sufficiency will increase opportunities to develop alternative economic solutions. At the same time, they offer a way for us to enhance our sense of neighborliness and community.

Finding a way out of the current economic conundrum should not fall to any one sector. Individuals, business, nonprofits and government all have a role to play. The important thing is for everyone to take a long-range global view and think about how to mitigate the three big issues of resource depletion, climate change and overpopulation. Never has the bumper sticker “Think Globally, Act Locally” seemed so true.