SoCap09: Punishing Short Term Exploitation
Published September 02, 2009 @ 10:53AM PT
In a world that is heaving under the pressure of resource constraints and increased consumption, "sustainability" shouldn't be a bonus, a marketing tool, or even an option. For the sake of the world, companies should not be able to trade the future for short-term gain. That was the sentiment of the first panel at SoCap09 this morning. But while there are opportunities for resource maximization, there will be actors ready to exploit. The question is, how to change the rules of the game?
The morning panel was called "Forecasting a Marketplace," and featured Charly Kleissner from the KL Felicitas Foundation, Dan Cristafulli from the Skoll Foundation, Amit Bouri from the Global Impact Investing Network and SoCap convener Kevin Jones.
There was a lot of optimistic common opinion about what happens next. All the panelists agreed that there were good indications that impact investing was going to grow, and that there would be more collaboration between funders who were looking for different types of impact and returns.
There was also a sober recognition that the major challenge is that while there are opportunities for short-term resource maximization, there will be actors ready to exploit those opportunities, even at the expense of the future. Kevin Jones shared an anecdote of speaking with an investor at a birthday party who was making a financial bet today that the US would be less valuable in 20 years. When Kevin asked whether this investor felt like that was shortchanging his children, the investor said it was about making money now, and he wouldn't think any other way.
This mindset terrifies me. I think one of the major jobs of this movement is to figure out how to change the rules of the game not just to reduce incentives for this mindset, but in fact, to punish it.
I think there are a few ways.
1. Create alternative incentives. The more capital flows to sustainable businesses, the more highly those businesses are valued versus their more exploitative peers, the more that there are real, financial bottom-line incentives for companies to be responsible stewards.
2. Work Internally. BeDo founder and former Chief Marketing Officer of Coca-Cola Marc Mathieu made the comment during the panel that employee values should make us optimistic about our ability to work with corporations, and I couldn't agree more. We have an entire generation of young people coming into the work force who are less and less willing to work for a company that doesn't share their values and indeed, express their values in an active way. There is major leveragable power here.
3. Punish brands that do bad. Brands have never been more exposed than right now. As consumers we have an obligation to kick, scream, and direct our dollars elsewhere in the loudest fashion possible when a company is selling our future or perpetrating injustice right now.
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Comments (6)
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Where P-CED started was to define the terms of engagement, with a white paper describing the business model with primary social objectives, the means by which it could be propagated with a social investment fund and how it could be deployed through the new vehicle of the then dawning information age.
http://www.p-ced.com/about/history/
Before our work began in Russia, there was widespread anger over Nike's practices in the developing world.
Founder Terry Hallman called Nike's then-CEO Phil Knight out in Chapel Hill, c. 1998. He arrived within three days. UNC students were roundly condemning Nike's business practices as part of anti-Nike sentiment sweeping universities married to the Nike logo via contracts with their sports departments. For whatever reason, he decided to appear at UNC ahead of the multitudes of other schools on the warpath.
Activism has continued. Speaking out about corruption in government and most recently the influence of organised crime on institutional childcare.
Our ongoing approach has been to deliver strategy plans which leverage social enterprise to target poverty and foster democratic governance from the bottom up. Inversion of the preceding "Chicago school" approach which helped establish organised crime in the first place.
Posted by Jeff Mowatt on 09/03/2009 @ 11:42PM PT
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Excuse me, but the destructive incentives of international commerce are built into the legal structure of corporations (LLC's). What would YOU do if 1) You were legally required to make profit every three months 2) You had all the rights of an individual person 3) but you had less accountability?
And to top it off, you've been steeped and trained your entire life in the mythology, the rationale, and the practices of domination, conquest, and empire, so that the above three conditions of your social and productive existence make perfect sense to you?
The answer? You would do ANYTHING. It wouldn't matter anymore, because you must, you can, and they'll let you. They'll bring in guns to help you get away with it. They'll kill, poison, kidnap, devastate, defraud tens of millions if necessary. They will, they have, they do.
I think if you keep this straight, then you maintain an outside chance of solving the particular problem under discussion. If not, not.
Good luck.
Posted by Andrew Durham on 09/21/2009 @ 02:51PM PT
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As you say Andrew:
"Corporations are legal structures created as legal entities to carry out the business - financial - objectives. Under US law, corporations are a legal person. What sort of person? According the psychological assessment measures in the Diagnostics and Statistical Manual, Fourth Edition (DSM-IV) used for personality assessment, corporations meet the strict clinical definition of a psychopath. "Psychopath" is another word for lunatic, or, someone who is legally, criminally insane."
http://www.p-ced.com/projects/ukraine/sumy/
Jeff
Posted by Jeff Mowatt on 09/21/2009 @ 03:37PM PT
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Jeff, that's what I'm talking about: institutionalized and sanctioned mass psychopathology.
So, to address the question in the article more directly, I would say: abolish the corporation. Or rewrite the laws that govern it. (But then, what do you need corporations for that regular company structures can't handle?).
But since, without global systemic collapse, neither of these is possible in the short term, due to the psychopathology Jeff mentioned, one is left with the basic and potentially revolutionary demand placed on all business: deliver something qualitatively better, and you can sieze the market. Don't be stupid, and you can keep it. Which is one of many promises of social entrepreneurialism.
Like Bill McKibben said, "The only way to subvert people anymore is to have more fun than they do." Open up opportunities for subversion with goods/services orders of magnitude better than what the blood sucking corporations offer. Which shouldn't actually be that hard, because the irrational pursuit of money makes people stupid.
An example? the hexayurt (http://hexayurt.com), Vinay Gupta's open source autonomous shelter design. Absolutely puts conventional approaches to refugee shelter to shame in terms of cost, beauty, usefulness, livability, durability, adaptability, etc, etc.
Posted by Andrew Durham on 09/21/2009 @ 04:33PM PT
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More on Rodney's points:
1) You're talking about organizations that are, again, legally required to do things like make decisions strictly based on comparing the costs of doing the right thing to the cost of paying punitive damages.
2) This reminds me of Ward Churchill's "Little Eichmanns" comment about the people who died on 9/11. Nazi bureaucrats were just decent, efficient Germans doing their job. Coca-Cola employees are as clueless or blind as Coca-Cola's customers about the routine, destructive practices behind the curtains. Here's an organization whose principal product is straight, non-nutritive poison. It blithely drains the ground water of towns in India where it makes its swill and then ships it out, leaving locals to die of illnesses arising from poor sanitation. How do you swallow this stuff, man?
3) Punish organizations for doing what they're legally required to do? That doesn't seem fair to me. We asked for it. This is the nature of the beast, including the international system of exploitation that grew up around it for the last several centuries. This statement of yours seems shot through with denial. As if a major corporation could compete at that level without learning the tricks of the trade. As if the act of corporation can be cleaned up when it is, in fact, fundamentally corrupt and the ultimate embodiment of empire.
Have you read the indispensible _Confessions of an Economic Hit Man_ by John Perkins? What did you think of it in connection with this discussion?
Andrew
Posted by Andrew Durham on 09/21/2009 @ 05:49PM PT
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Andrew, I've not read Perkins. I know of the content and know that my colleague who delivered his ethical social business model into the public domain 13 years ago, has written about Economic Hit Men. A few weeks ago, I described in a blog how the concept had evolved.
http://www.ecademy.com/node.php?id=132188
In the links at the end of that blog you'll find references to further impact. The recent discussion on Social Edge may also interest you. We're both there describing corruption in our experience of social enterprise. This includes how a paper we delivered to governmment and how the bare bones of one part of it ended up as an "acheivement" for USAID.
http://www.socialedge.org/discussions/responsibility/who-will-build-a-more-efficient-marketplace
Jeff
Posted by Jeff Mowatt on 09/21/2009 @ 10:08PM PT
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