The central focus of entrepreneurial capitalism has shifted, with worldwide recovery strategies focusing on environmental investments and innovations to build a stronger economy. By Dr. Rebecca Harding
One year on from the collapse of Lehman Brothers, the developed world is said to be pulling itself away from the brink. In the heady days of the immediate aftermath of the collapse, when governments across the world were effectively nationalising banks and providing huge fiscal stimuli to keep their economies moving, commentators started to argue that something was wrong in the state of capitalism. We needed a new model, our pursuit of, in Gillian Tett’s words, ‘Fools Gold’ had revealed the money markets for what they were: a mechanism for rampant profiteering and financial hedonism. Even the Financial Times was talking about the future of capitalism as if something fundamental had to shift.
Against this backdrop, the World Entrepreneur Society organised its annual summit in March 2009 to inject some positive thinking into the debate. ‘Why waste a good crisis?’, we argued. Schumpeter’s vision of creative destruction would mean that heroic entrepreneurs and entrepreneurial thinking would provide a beacon of hope – a route out that was sustainable and focused on the future of the planet rather than the future of a few City bankers.
As the months have gone by, the debate has become more muted. There is still an acknowledgement that something has to change. Witness, for example, the fact that recovery strategies all over the world focus on environmental investments and innovations as a way of building a positive future. But the talk this week is of bonuses returning, of a few lucky Lehman Brothers employees who changed their lives as a result of the collapse, and of a return to growth in key economies. We are faced with public sector cuts to rival the austerity of the early 1980s: our punishment for allowing our governments to spend their way out of the downturn.
This, of course, will be the legacy. Not the white-collar redundancies – they are relatively low compared to the impact on young people and unskilled or blue-collar workers across the globe. Those in vulnerable employment will feel the tightening of contracts and the jobless growth that we experience over the next few years as firms increase productivity without increasing workforce numbers. We will still be able to count the time we have left to avoid climate catastrophe in years rather than decades and we will still have unacceptable income inequalities with the developing world excluded from participating in the world economic order, no matter how chastened capitalism might be.
New vision
My recent research with business leaders, policymakers, entrepreneurs, employers and employees across the world suggests that our new vision of capitalism should include not just financial capital but, equally as importantly, social capital, human capital, financial capital and knowledge capital as well. The risks of the labour market and economic activity have been passed down to the individual: we can no longer rely on an employment contract offering us a job for life or a social security safety net to rescue us when we fall. Our young people leaving the safety of full-time education need to have the flexible skills base to manage their own employment security rather than job security.
To navigate through a longer career than ever before, we need to teach people how to create work and change for themselves. This is a more brutal and more frightening form of entrepreneurial capitalism but, potentially, a more exhilarating one as well. Whether we are in employment, unemployed or self employed, we are all entrepreneurs now. Managed properly, it gives our policymakers and our businesses the scope to build sustainable enterprises and allow the private sector to take the role it should in leading, rather than pulling, ourselves out of the crises we face.
Dr. Rebecca Harding is the Managing Director of Delta Economics (http://www.deltaeconomics.com) and Founder of the World Entrepreneur Society (http://www.wessociety.com)
Dr. Rebecca Harding
Article Source: EUCOMMERZ 3 March 2010
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