If the politics at home hardly inspires cheer, the global outlook is far bleaker. As share prices tumble and the credit crunch squeezes consumer confidence, the financial markets look even less able to cope with a new set of economic pressures.
Oil prices continue to rise, despite China’s extraordinary decision a fortnight ago to cut subsidies and ease demand. Food prices everywhere have risen exponentially. Preoccupied with inflation like our own central banker, the European central bank raises interest rates; in a desperate attempt to protect what we have, the system’s lever-managers simply tilt the lurching bandwagon away from inflation to stagflation.
Leading economic commentators ostentatiously try to avoid ”talking us into recession”, but for many analysts it’s not recession but depression that is the likely name of the upcoming game.
The numbers are stark. Whether oil has ”peaked” or not, there is a consensus that carbon emissions are the cause of global warming. But China’s economy doubles in size every five years. India’s is not far behind.
Having taken a million years to reach one billion people, the planet’s population now grows by a billion every eight or nine years. At current rates, it will increase from 6,5-billion to nine billion by 2050, mainly in vast new cities.
Add to this the political insecurity driven by a (barely concealed) resource war and the climate injustice that hits the poor hardest but which is now — finally — concentrating middle class minds, and you have a critical mass of drivers of huge social insecurity and upheaval.
Put it this way: even for South Africans who went through the depths of despair of apartheid and the crisis of the mid-1980s, it is likely that the next few years will be as demanding as they are unpredictable. Nassim Taleb’s ”Black Swan” theory will become a reality; to survive, we will have to develop a new intuition for predicting and understanding and thereby coping with the truly extraordinary event because the ”extraordinary” will become the ”ordinary”. Of this, 9/11 is the archetypal example.
For the global middle class of my generation (I turned 44 this week), I am now convinced of this: when, in old age, we look back at our lives, the decade we are beginning will stand out as by far the most difficult and painful. After all, we have had it good. Very good, in fact. Sustained — though entirely unsustainable — growth; the benefits that (renewed) economic globalisation has brought to the skilled, in terms of professional opportunities and travel; the entertainment value and convenience of fantastic technological developments; and an absence of world wars of the sort that intruded so comprehensively on the West in the first half of the last century. Where conflict has broken out, we have been largely insulated from it.
Arguably, economic growth is a core part of the problem. Google Paul Gilding’s ”Scream Crash Boom” letter from a couple of years back. A sequel is on the way, which I dare not preview, but the former director of Greenpeace’s essential thesis is that an engorged and complacent world has run out of time. We will not emerge unscathed — far from it — but because of humankind’s combined instinct for survival and innovation, we will emerge different and possibly a lot better.
To get to that point, however, things are going to have to get a whole lot worse before they can improve because the radical reforms that must now be taken will be too late to prevent the period of turmoil and catastrophe to which we must now be subjected.
What is to be done? Plenty, of course. The biggest thing is to re-calibrate our thinking and open our minds to a new way of doing things. We will certainly have to adjust deeply entrenched preconceptions — for example, our attitudes to the corporate world. Yes, big business has been a part of the problem, but to regard the corporate world as an evil empire that is beyond redemption is just plain silly. Get over it.
Businesses are made up of ordinary human beings just trying to make a buck, increasingly led by a new brand of CEOs who are not only younger but more attuned to modern thinking on sustainable development and the role of the corporation in society.
And for an even more drastic step, prepare yourself to jettison ”corporate social responsibility” for being the very bad idea that it is. I am not arguing that business should be socially irresponsible, but that the most socially responsible thing it can do is to do what it does best, namely, innovate products and services that create new opportunities, especially for the poor.
Last week the United Nations Development Programme published an important new report on what it calls ”Growing Inclusive Markets” (Creating Value for All: Strategies for Doing Business with the Poor). It adds new data to the chorus of voices that suggest that there is money to be made out of the ”base of the pyramid” — the four billion people who live on $8 a day or less. ”Business with the poor can be profitable,” the report says. ”It can also lay the foundations for long-term growth by developing new markets, driving innovation, expanding the labour pool and strengthening value chains.”
The report will no doubt be dismissed by the left as further evidence of capital’s inexhaustible need to find new markets in the global South because of oversupply in the global North. But it is just not that simple. There is a growing list of case studies where businesses have developed new business models that have significantly helped poor people — not by selling them things they don’t need, but by innovating products and services that help them climb out of destitution. The creative partnership between cellphone companies and local banks in East Africa to enable economic migrants to safely and securely transfer remittances home is just one, better-known example.
Enlightened self interest, rather than misplaced charity, is the way forward. Of course governments must be strong and more assertive in regulating to protect the vulnerable from exploitation and harmful commercial conduct. Indeed, it is very telling that, on climate justice, corporations around the world are all calling, in an unprecedented fashion, for regulation. But at the international level, states are failing to deliver the new rules of the game that business craves to know in order to plan ahead.
One of the dangers of the upcoming recession/depression is that it will nip in the bud the new thirst for innovation and radical thinking from business leaders. Last week, leading United Kingdom retailer Marks & Spencer, which set out its stall on sustainability two years ago, issued a profit warning and its CEO was facing a very rough ride at the company’s AGM this week. To help business leaders think beyond the next quarter, shareholders, including pension funds, are also going to have to re-adjust their expectations and demands, with a grand new vision — a more equitable, sustainable world. Social upheaval always delivers progressive reform of some sort. The welfare state emerged in Europe out of the ashes of World War II. We must hope that the current disarray delivers system change on an even grander scale, and we must act and innovate accordingly.