| Time to put the heart back into the economy |
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| Written by Cheryl Kernot | |
| Friday, 05 December 2008 | |
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In the following article, published in the Sydney Morning Herald today, Cheryl Kernot clearly describes one of the core platforms of a successful future -- as the Futures Foundation has been arguing for the past twelve years. It should have happened earlier, but it is still encouraging to find the argument in the pages of a major daily newspaper. And as Hazel Henderson has pointed out, the current financial crisis also offers an opportunity for this kind of change.
Capitalism is more than just bruised, as some suggest. It is battered, almost down for the count. It has sustained serious brand damage after suffering the indignity of state intervention to save banks, car manufacturers and commercial child-care providers. Social businesses are the response of a critical mass of people internationally who have concluded there is a different way of doing business and a different way to harness capital - one t hat incorporates orthodox business strategies but adds a social and environmental bottom line to the profit-and-loss statement. The Grameen Bank is a well-known example. It uses micro-loans without the need for collateral to lift the poorest Bangladeshis out of poverty. Its low default rates are the envy of traditional banks and the successful model has been replicated worldwide. Services such as child care, a social necessity, should not be driven by the need to maximise profit for private shareholders. Instead, social ownership of child-care centres puts the quality of care in the hands of those who want better child care, and puts centre ownership in the hands of investors who want to see their money do more than just make more profit. Let's take a look with fresh eyes at existing successful alternatives to the private company, the symbol of capitalism, such as co-operatives, mutuals and credit unions, the top 300 of which have global assets in the order of $US30 trillion ($46 trillion) and annual turnover of $US963 billion. In economies where co-operatives and social businesses are competitive with companies, the people have the power. The unprecedented bailouts of such big banks as Northern Rock and Bradford and Bingley, both formerly British building societies, demonstrate there are risks to demutualisation where long-term stability is sacrificed for short-term capital gain. Mercury Centre research shows credit unions and mutual building societies have had limited exposure to the toxic loans now crippling lenders in the US, Britain and Europe, largely because of their reliance on member funds. They stuck to their knitting, focused on member benefits and delivered safe and competitive banking options. NRMA and AMP members might reflect on the unrealised promises of increased shareholder wealth and capital growth made to them. With the merger of St George Bank and Westpac, we might ponder the lonely journey from building society to megabank and ask: are short-term shareholder windfalls worth the flagged 5000 job losses, inevitable branch closures and reduced market competition? Faith in the capitalist system is declining. Social capital is in resurgence. Participation and social inclusion are now on the political agenda. For our society, and our planet, to survive capitalism, the design of the financial system must be challenged by innovative, market-based alternatives. Any system designed to maximise short-term gains for the providers of finance at the expense of workers' wages, the environment and the community is not sustainable. The greater social good cries out for the restoration of balance. Cheryl Kernot is director of teaching at the Centre for Social Impact at the University of NSW and a director of Foresters Community Finance. |
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| Last Updated ( Friday, 05 December 2008 ) |
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