Capitalism is being threatened. But these words are not my own. More and more experts are rallying around the idea, management specialists are writing articles in the Harvard Business Review and even the most influential economists are leaning in that direction. Yes, the capitalist model is deficient and needs a major overhaul. Over the past few years, our world has slowly but surely been sinking into an abyss of consumption and debt. This is as true for business as it is for Mr and Mrs Citizen who mistakenly believed in the gift from on high: bold risks must be taken but alas they neglected to take on the responsibilities that came with them. Then all of a sudden, another crisis! But this time, it may spell the end of an era.
Gucci Capitalism. An expression originated by Noreena Hertz, a leading economist in the UK, to designate the ideology that left shareholders at the center of all economic activity allowing “the invisible hand” to take care of the rest. Gucci capitalism is the craving for insatiable greed fed by bulimic and ostentatious consumption. Hertz stated that the average American consumer has about nine credit cards, which are used to pay for purchases that are, for the most part, insignificant and superficial, and used to demonstrate some alleged social status.
For Hertz, this type of capitalism is agonizing on its deathbed. In fact, there is a pressing need to adopt a systemic approach to the economy, one that will have to take into account social and environmental concerns. And because the current economic crisis is also an ecological crisis producing a cascade of effects that don’t seem to want to stop, this essentially compromises everyone’s quality of life. Furthermore, there is a loss of trust. Markets are too volatile. In this state of unrest we call upon State intervention: we acknowledge that it must play a structuring role, a role that has sadly been deserted by “the invisible hand.”
However, and this is where Hertz sets out a new point of view, there are the ensuing consequences of globalization and of the new geopolitical configuration. Globalization propelled emerging countries to the rank of new locomotives, which redefine the dynamics of the planet’s game play. These countries, noted Hertz, are cultures that are completely different from our own. Brazil, for example, has given itself the goal of lessening the existing disparities of its people, or China, which, despite a very controlling State apparatus maintains its openness and is slipping into Gucci capitalism, which could very well slow its progress.
Interesting detail: Hertz mentioned that, within BRIC (Brazil, Russia, India and China) countries, some 15% of the population are members of a cooperative enterprise, while only 4% of them are stakeholders in capitalist endeavours. Will this new business paradigm feature more cooperatives? Good for us! In a globalized economy we are all connected. The collapse of one is no longer without consequences for the other. The notion of a more cooperative-centered economy is something we should applaud. The purpose of cooperation is to improve the people’s quality of life rather than encourage them to over-consume in an effort to boost GDP that, in essence, is proof of nothing more than the intensity of national production.
Hertz announced a reformed capitalism, one that she referred to as cooperative capitalism. What a great oxymoron! Nonetheless, a cooperative economy is based on a win-win relationship and it can help stabilize international markets. Furthermore, a cooperative economy is both patient and prudent; it remains focused on the true needs of the people instead of manipulating and creating new ones. And that is good for our planet. So it’s a go for cooperative capitalism. It’s still better than a capitalist capitalism don’t you think?