Capitalism is a powerful engine of prosperity. Now, more than ever, we need it to flex its job-creating muscle. At the same time, as American billionaire hedge-fund manager Ray Dalio recently acknowledged, “capitalism is a fundamentally sound system that is now not working well for the majority of people.” He warned that “the income/wealth/opportunity gap is leading to dangerous social and political divisions that threaten our cohesive fabric and capitalism itself.”
That gap threatens the social contract in Canada and around the world, particularly as environmental impacts grip our planet. To heal those divisions, Canada will need to close the political-posturing gap between western and eastern politics through meaningful, inclusive economic policy. To do so, we’ll need leadership that goes beyond platitudes and party politics, setting partisanship aside to put people ahead of political ideology.
Corporations are already on board. Driven by investment firms and pension funds, much of the business community has been rewiring capitalism and pivoting to a low-carbon economy and committing to purpose beyond profit. According to the Global Sustainable Investment Alliance, more than 40% of all professionally managed assets (US$47 trillion worth), as of 2018, use some form of social-responsibility criteria. Canadian banks, insurance companies, building companies, agriculture companies and energy firms are committing to disclosing their climate risks and improving their performance on environmental, social and governance (ESG) metrics. We need to go much further; it’s where the smart money is going. We just need competitive government policy to catch up.
Corporations are already on board.
We just need government policy – and leaders – to catch up.
As Harvard Business School professor Rebecca Henderson writes in her recently released book, Reimagining Capitalism in a World on Fire, “I’m not talking about a distant utopia. It’s possible to see the elements of a reimagined capitalism right now, and to see how these elements could add up to profound change – change that would not only preserve capitalism but also make the entire world better off.”
A just transition to a net-zero world underpinned by fierce capitalism (capitalism that prioritizes inclusive growth across our country) requires an economy and society where no one is left behind, be that working mothers or energy workers. The components of an inclusive transition should include removing barriers to employment systems, providing access to education suited to the new marketplace, and increasing the availability of affordable housing, as examples. But this is where political ideology, political rhetoric and partisanship can get in the way. Instead of the “S” in ESG being the launch point to depolarize discourse, it becomes the wedge between left and right.
Depolarizing the process is difficult. The divisions caused by gender, racial and economic inequality and inequity are threatening to boil over, and COVID-19 has only deepened those fissures. The only way to move forward is for businesses to continue to recognize that shareholder success is intertwined with societal equity, for our political leaders to usher in policies that reflect the time and pave the way for a sustainable, inclusive future.
Henderson writes, “Reimagining capitalism through the push to create shared value, rewire finance, and find new ways to cooperate will make an enormous difference, but on their own they are not enough to build a just and sustainable society. Effective government action is the missing piece.” Our world is changing, yet our political processes, deal-making and lobbying remain the same.
Being inclusive with a reimagined capitalist framework that is uncompromising in its efforts to win at both social and environmental issues and private-sector growth is what it’s going to take to have a thriving society.
Changing capitalism so it’s a system that works for the majority will require leadership, conviction and, above all, the will to effect change. By embracing fierce capitalism that prioritizes inclusive growth across our country, Canada can set the stage for an economic resurgence the likes of which we have not yet seen.
Sandip Lalli is a business strategist based in Alberta.
This article is part of a series of stories from our Winter Issue cover package: What it will take for us to get the climate message before it’s too late.