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Economy

Capitalism 2.0 in the advent of the growing income gap

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There is something in the air. Collaborative working spaces, social innovation, crowdsourcing and crowdfunding, impact investing, social impact bonds, venture-philanthropy, social enterprises, triple-bottom lines, social return on investment and social entrepreneurship are all on the rise.

Organisations like the Hub and the Centre for Social Innovation in Canada are flourishing with social entrepreneur memberships and incubating various start-ups or social enterprises; IndieGogo and Kickstarter are just two of the dozens of crowdfunding platforms now available; MaRsDDthe Rockefeller foundationDeloitteFinanceForGood and many others are all exploring the notion of social impact bonds, impact investing and other new innovative ways to fund initiatives for impact; funders like the Ontario Trillium Foundation are looking for non-profits to demonstrate a social return on investment and are encouraging them to act more like enterprises; and philanthropists are even being encouraged to act more like socially-minded investors.

These shifts in business are not occurring within silos; they are all a part of a larger movement – a movement that is gaining traction and may be referred to as Capitalism 2.0.

Click here to read The Guide to Philanthropy & Giving 2013

At the time of this writing there is no accepted definition of Capitalism 2.0, nor a Wikipedia article regarding it. However, the Toronto Sustainability Speaker Series (TSSS) held an event at the end of 2012 to convene thought leaders “to discuss how to create a better form of capitalism: Capitalism 2.0”.

As a result of this event, TSSS has committed to release their first volume of a Strategy Manual in early 2013 called Capitalism 2.0: Strategies for the 21st Century Enterprise.

The manual will provide strategic guidance on how organisations can thrive in a new economy – an economy that they are calling CAP2. I imagine this report will speak to many of the terms that were mentioned above. However, in the advent of a ‘new economy’, perhaps it is important to talk about more than just the usual suspects.

One term that ought to also be part of the CAP2 conversation is the growing income gap, as I am concerned it has the potential to undermine the development of this ‘new economy’.

It is the elephant in the room that no one in the social space wants to talk about. No one in this new exciting movement of doing good and making good, wants to think of the growing income gap as being a factor in this movement or even influencing it.

Capitalism 2.0 promises greater sentiments for social and environmental factors in the private sector, a world where business and governments work together to achieve common goals and an economy that fosters growth both locally and on a global scale. The growing income gap, however, is so harmful to our social democratic foundations and principles of justice that I fear any social, environmental or economic gains by Capitalism 2.0 will be overshadowed.

This growing income gap which is slowly obliterating middle-income earners represents the monopolistic forces of big corporations, the hoarding of money for private gain, the disconnect between people, their jobs and their country, and, perhaps worst of all, the societal acceptance that such an oligarchical system is inevitable and even good.

The top 1% of America has 40% of all the nation’s wealth, and the bottom 80% only has 7%. The average income of the richest 10% of the population is about nine times that of the poorest 10% across the Organisation for Economic Co-operation and Development (OECD).

In order to understand how the growing income gap is related to the development of CAP2, we need to explore why the shift to Capitalism 2.0 is occurring, if it is indeed occurring. Assuming this change is simply because our generation ‘cares more’ is naive; there are always multiple forces moving in complex systems, and if we are going to champion this movement, we have an obligation not only to promote it, but also to understand it.

To accomplish this task we need to ask the more difficult questions. For instance, is it possible that Capitalism 2.0 is gaining traction because of the lack of opportunities in our current state of capitalism? Do collaborative working spaces represent a defensive response to big corporations and the weakening of other social bonds? Are crowdfunding and impact investing a reaction to the lack of venture capitalists? Are social impact bonds, venture-philanthropy and the emphasis on social return on investment effects of modern funding constraints? Are social entrepreneurs and the focus on the triple-bottom-line regressive attempts to reinstate the loss of local markets in the face of globalization? More broadly speaking, is Capitalism 2.0 a proactive movement reflecting a fundamental shift in values and aspirations, or a form of survival-adaptation within a framework that itself is undergoing material change?

By answering these sorts of questions we will gain a better grasp of this new movement and what it is means for our future. For example, if we view this movement through the lens that not-for-profits are participating in social enterprises as innovative ways to produce sustainable products and services, then we can rely on this movement to guide the developments of such a shift in the economy.

But if not-for-profit social enterprises are completely the result of funding cutbacks, and not intrinsic values to produce a sustainable good, we need to understand what outcomes that may produce in the long-term.

It is conceivable that encouraging not-for-profits to endeavour in cost-recovery enterprises will build the disparaging case for more future cutbacks, as the expectation to participate in such ventures would be the new established norm. Or consider a social impact bond, which is a contract with a public sector commissioner in which it pays an investor for improved social outcomes.

If investors are using their money to introduce new capital into the social sector by taking on risks that governments are not willing to, then we can be more confident those investments will generate positive outcomes. However, if investors are approaching social impact bonds as just another opportunity to increase their net-worth with public dollars or pounds, such a financial instrument will likely lead to exploitation.

If CAP2 wants to establish itself as a new economy, the driving forces cannot be mere by-products of capitalism, but rather must be novel foundational pillars that lead to significant and real improvements.

In order to do this, champions of Capitalism 2.0 cannot ignore the lingering effects of the growing income gap or they are just going to perpetuate the current economic trend of placing more money in the hands of the few and distracting change makers from making an impact that would actually see better outcomes for more people.

Mitchell Kutney’s work focuses on reimagining the roles of philanthropy and social change to create sustainable solutions. He has spearheaded a number of successful non-profit initiatives in Canada and holds a master’s degree from Carleton University in Public Policy. This article originally appeared on his website.

Further reading:

Philanthropy is what sustains the charitable sector, not money

We salute capitalism’s disruptive insurgents

Can we have capitalism back now, please?

Are capitalism and conservation incompatible?

The Guide to Philanthropy & Giving 2013

Economy

How Going Green Can Save A Company Money

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going green can save company money
Shutterstock Licensed Photot - By GOLFX

What is going green?

Going green means to live life in a way that is environmentally friendly for an entire population. It is the conservation of energy, water, and air. Going green means using products and resources that will not contaminate or pollute the air. It means being educated and well informed about the surroundings, and how to best protect them. It means recycling products that may not be biodegradable. Companies, as well as people, that adhere to going green can help to ensure a safer life for humanity.

The first step in going green

There are actually no step by step instructions for going green. The only requirement needed is making the decision to become environmentally conscious. It takes a caring attitude, and a willingness to make the change. It has been found that companies have improved their profit margins by going green. They have saved money on many of the frivolous things they they thought were a necessity. Besides saving money, companies are operating more efficiently than before going green. Companies have become aware of their ecological responsibility by pursuing the knowledge needed to make decisions that would change lifestyles and help sustain the earth’s natural resources for present and future generations.

Making needed changes within the company

After making the decision to go green, there are several things that can be changed in the workplace. A good place to start would be conserving energy used by electrical appliances. First, turning off the computer will save over the long run. Just letting it sleep still uses energy overnight. Turn off all other appliances like coffee maker, or anything that plugs in. Pull the socket from the outlet to stop unnecessary energy loss. Appliances continue to use electricity although they are switched off, and not unplugged. Get in the habit of turning off the lights whenever you leave a room. Change to fluorescent light bulbs, and lighting throughout the building. Have any leaks sealed on the premises to avoid the escape of heat or air.

Reducing the common paper waste

paper waste

Shutterstock Licensed Photo – By Yury Zap

Modern technologies and state of the art equipment, and tools have almost eliminated the use of paper in the office. Instead of sending out newsletters, brochures, written memos and reminders, you can now do all of these and more by technology while saving on the use of paper. Send out digital documents and emails to communicate with staff and other employees. By using this virtual bookkeeping technique, you will save a bundle on paper. When it is necessary to use paper for printing purposes or other services, choose the already recycled paper. It is smartly labeled and easy to find in any office supply store. It is called the Post Consumer Waste paper, or PCW paper. This will show that your company is dedicated to the preservation of natural resources. By using PCW paper, everyone helps to save the trees which provides and emits many important nutrients into the atmosphere.

Make money by spreading the word

Companies realize that consumers like to buy, or invest in whatever the latest trend may be. They also cater to companies that are doing great things for the quality of life of all people. People want to know that the companies that they cater to are doing their part for the environment and ecology. By going green, you can tell consumers of your experiences with helping them and communities be eco-friendly. This is a sound public relations technique to bring revenue to your brand. Boost the impact that your company makes on the environment. Go green, save and make money while essentially preserving what is normally taken for granted. The benefits of having a green company are enormous for consumers as well as the companies that engage in the process.

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Economy

Report: Green, Ethical and Socially Responsible Finance

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“The level of influence that ethical considerations have over consumer selection of financial services products and services is minimal, however, this is beginning to change. Younger consumers are more willing to pay extra for products provided by socially responsible companies.” Jessica Morley, Mintel’s Financial Services Analyst.

Consumer awareness of the impact consumerism has on society and the planet is increasing. In addition, the link between doing good and feeling good has never been clearer. Just 19% of people claim to not participate in any socially responsible activities.

As a result, the level of attention that people pay to the green and ethical claims made by products and providers is also increasing, meaning that such considerations play a greater role in the purchasing decision making process.

However, this is less true in the context of financial services, where people are much more concerned about the performance of a product rather than green and ethical factors. This is not to say, however, that they are not interested in the behaviour of financial service providers or in gaining more information about how firms behave responsibly.

This report focuses on why these consumer attitudes towards financial services providers exist and how they are changing. This includes examination of the wider economy and the current structure of the financial services sector.

Mintel’s exclusive consumer research looks at consumer participation in socially responsible activities, trust in the behaviour of financial services companies and attitudes towards green, ethical and socially responsible financial services products and providers. The report also considers consumer attitudes towards the social responsibilities of financial services firms and the green, ethical and socially responsible nature of new entrants.

There are some elements missing from this report, such as conducting socially responsible finance with OTC trading. We will cover these other topics in more detail in the future. You can research about Ameritrade if you want to know more ..

By this report today: call: 0203 416 4502 | email: iainooson[at]mintel.com

Report contents:

OVERVIEW
What you need to know
Report definition
EXECUTIVE SUMMARY
The market
Ethical financial services providers: A question of culture
Investment power
Consumers need convincing
The transformative potential of innovation
Consumers can demand change
The consumer
For financial products, performance is more important than principle
Competition from technology companies
Financial services firms perceived to be some of the least socially responsible
Repaying the social debt
Consumer trust is built on evidence
What we think
ISSUES AND INSIGHTS
Creating a more inclusive economy
The facts
The implications
Payments innovation helps fundraising go digital
The facts
The implications
The social debt of the financial crisis
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Ethical financial services providers: A question of culture
Investment power
Consumers need convincing
The transformative potential of innovation
Consumers can demand change
PUTTING FINANCIAL SERVICES IN AN ETHICAL CONTEXT
An ethical economy
An ethical financial sector
Ethical financial services providers
GREEN, ETHICAL AND SOCIALLY RESPONSIBLE ISSUES IN FINANCIAL SERVICES
The role of investing
Divestment
The change potential of pensions
The role of trust
Greater transparency informs decisions
Learning from past mistakes
The role of innovation
Payments innovation: Improving financial inclusion
Competition from new entrants
The power of new money
The role of the consumer
Consumers empowered to make a change
Aligning products with self
THE CONSUMER – WHAT YOU NEED TO KNOW
For financial products, performance is more important than ethics
Financial services firms perceived to be some of the least socially responsible
Competition from technology companies
Repaying the social debt
Consumer trust is built on evidence
Overall trust levels are high
THE ETHICAL CONSUMER – SOCIALLY RESPONSIBLE ACTIVITIES
Payments innovation can boost charitable donations
Consumer engagement in socially responsible activities is high
Healthier finances make it easier to go green
SOCIALLY RESPONSIBLE COMPANIES
37% unable to identify socially responsible companies
Building societies seen to be more responsible than banks….
….whilst short-term loan companies are at the bottom of the pile
CONSUMER TRUST IN THE BEHAVIOUR OF FINANCIAL SERVICES COMPANIES
Overall trust levels are high
Tax avoidance remains a major concern
The divestment movement
Nationwide significantly more trusted
Trust levels remain high
CONSUMER ATTITUDES TOWARDS GREEN AND ETHICAL FINANCIAL PRODUCTS
For financial products, performance is more important than principle
Socially conscious consumers are more concerned
CONSUMER ATTITUDES TOWARDS TRANSPARENCY
Strategy reports provide little insight for consumers
Lack of clarity regarding corporate culture causes concern
Consumers want more information
THE ROLE OF FINANCIAL SERVICES FIRMS IN SOCIETY
The social debt of the financial crisis
THE SOCIAL RESPONSIBILITIES OF FINANCIAL SERVICES FIRMS
For consumers, financial services firms play larger economic role
Promoting financial responsibility
CHALLENGER COMPANIES AND SOCIAL RESPONSIBILITY
Consumer trust is built on evidence
The alternative opportunity
The target customer

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