On Purpose Blog

A New Economic Model?

Many forces across the profit, non-profit and government sectors are looking at ways to rethink our current economic model. A recent event hosted by Oasis Charities Parliament brought together Secretary of State for Business, Vince Cable, Occupy London representative Richard Paton and Sir Stuart Etherington, Chief Executive, National Council of Voluntary Organisations (NCVO) to debate this issue, and the growing idea of Responsible Capitalism.

For me, one of the most interesting discussions was why some felt the traditional model of Capitalism had broken down.  The lack of appropriate consideration for the social implications of certain financial decisions and the lack of moral self-restraint in risk taking were two issues that particularly resonated. Yet the idea of completely abandoning Capitalism remains difficult to fathom, especially when there is an absence of clear alternatives.

Responsible Capitalism seems to offer a middle way.  This model would enable the needs and well-being of employees and consumers to be taken into account as well as the long-term impact of financial action.  In addition, advocates of Responsible Capitalism argue that motivation for self-improvement and market demand would drive innovation.

But what can we do in the short term to address the problems brought about by overzealous capitalism? Some suggestions are to increase diversity of boards and to review the market motivations of financial institutions and ratings agencies.  We could also look at how alternative models such as co-operatives and mutual societies can instil values of responsibility and accountability.

However, in my view, this will mean nothing if we do not learn lessons from the past.  Particularly, we should ask why some of these alternative models haven’t been more widely used and what is different about today’s climate that can make them work.

For further exploration of Responsible Capitalism, visit The Social Investment Consultancy blog and Charities Parliament podcast from the event.