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“System change”, “conscious capitalism” and “new economy” are trending buzzwords these days. They come up a lot in literature and in the media when the discussion turns to sustainability, climate change, and corporate social responsibility. There seems to be a consensus around that something needs to change. Events like the Fukushima nuclear meltdown, the fire at the Dhaka factory in Bangladesh or the Global Financial Crisis of 2008 make it harder and harder to deny that something is seriously wrong with our political, economic and social system.

Although we see on all fronts such as campaign finance, electoral fraud, scandals on Wall Street, corruption in business or the health sector, we can go back to Bill Clinton for some focus. His simple statement of “it’s the economy, stupid” will certainly go down in history as his most famous quote. In order to solve these problems sustainably a serious transformation of our economic model is necessary.

In his Apostolic Exhortation Pope Francis of 2013 was very clear in his analysis:

“[…] some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system.”(1)
The present discourse on climate change and on various progressive issues is focused simply on reigning in the excesses of our economic system. For all too long a serious debate on our economic system has been stymied by the old debate of capitalism vs. communism. Maggie Thatcher convinced us over 30 years ago that “there is no alternative”. Only recently has there been more serious debate about the merits of our economic system.

In the last few years the C-word has been popping up regularly, even in the mainstream media. Funny enough, when the term is used it is usually with a negative connotation. You don’t see many people running around saying what a wonderful system capitalism is.

Today’s critique of our economic system does not simply say we need to get rid of capitalism and move towards socialism. It is also not simply a question of getting rid of capitalism and replacing it with something new. We need to begin creating alternatives today. We need a democratic process to form these alternatives. There is no master plan, no simple solution. The solutions need to be created by us.

Strolling through the economics sections of major bookstores these days you make stumble upon “Beyond Capitalism” an insightful book by Gar Alperovitz or books discussing “Conscious Capitalism”. The Boston-centered “New Economy Coalition”, an umbrella organization for groups looking for alternatives, writes on their website:

“The mission of the New Economy Coalition (NEC) is to convene and support all those who might contribute to an economy that is restorative to people, place, and planet, and that operates according to principles of democracy, justice and appropriate scale“.(2)
The organization B Corps or Benefit Corporation is calling upon business to move our economy in a people-friendly direction. They say:
“By voluntarily meeting higher standards of transparency, accountability, and performance, Certified B Corps are distinguishing themselves in a cluttered marketplace by offering a positive vision of a better way to do business.” (3)
Later in this article we will discuss another promising new organization, The Economy for the Common Good, which looks to put values before profits in the business world.

Rewriting the Rules of the Game

These voices are unified in calling for a revamping of our economic order. In a democratic process we need to redefine the priorities. We need to rewrite the rules of the game. No longer can we accept uncontrolled expansion and profit maximization as the central driving force behind our economy. Our economic order must encourage ethical behavior.

Why is this important? Why do we need to focus on the issue of changing the system?

A recent article in the Guardian Newspaper entitled “’Every little helps’ is a dangerous mantra for climate change” argues that small steps are not going to help and can make things worse. The Guardian article refers to a Scottish town that outlawed plastic bags and reports on a conference called the “Radical Plan” which took place at the Royal Society headquarters in London. The papers at the conference were united in saying that a fundamentally different economic system is required and that outlawing plastic bags is basically useless.   Outlawing plastic bags, mandating energy-saving light bulbs and enforcing emissions standards, for example, are important steps but in no way address the fundamental, destructive elements of our economic order. Such measures may actually make things worse because they fool us into thinking we just need to make things a bit cleaner and greener and more sustainable and everything will be ok. We become convinced that we can continue full speed ahead with our new and improved “green” economy.

The environmental movement too often only addresses the necessity to prevent things from getting even worse. It fails to address a fundamental error within our economic system: It is designed to encourage behavior like profit maximization and continual expansion, indicators that say absolutely nothing about compliance, health conditions, job security, customer satisfaction, etc. We need to reorient our system and encourage behavior which is of service to the common good.

In an article in the German magazine “Der Spiegel”, Harald Welzer presents a harsh critique of the strategies of the environmental movement and other protest activities. He argues that the environmental movement and Green parties tend to play into the system. They simply criticize the excesses of the system without looking at the root causes of our current problems.(5)

How effective are Consumer Activism and Boycotts?

Before looking at the strategies of the Economy for the Common Good, I would like to question how effective consumer activism and boycotts can be. One of the principle strategies of the environmental movement has been consumer activism. How effectively can this, however, influence the legislative process and decision-making in the business world? When these strategies are successful how “sustainable” is their influence? Is there a reasonable perspective that consumer decisions can affect public policy in a long-term fashion?

We could organize consumer boycotts on a massive scale and get everyone to stop buying iPhones from Apple because Apple has been found to encourage child and slave labor in China. If we were successful, thousands or maybe hundreds of thousands of consumers would turn their backs on Apple and start buying Samsung phones.

What kind of success would that be? The organizers of the campaign would certainly be praised and gets lots of media coverage. But what if we found out that most smart phone producers rely on the same unethical, exploitative business practices?

The influence of public protest on politics is also questionable. It is not only extremely difficult to organize a citizen's campaign to influence public policy-making. Even if you do have some influence it is extremely limited and short-term. Currently there are major protest actions going on against the Keystone XL Pipeline. Hundreds of thousands of citizen's are opposed to the construction. Could these protests really have an influence on Obama's decision about the pipeline? Could they even effect political decisions at the state level?

Let's pretend the protests were extremely successful and they encouraged the Nebraskan legislature to put a moratorium on any further pipeline construction. What will happen one, two or three years down the line? The protests will ebb in Nebraska. The media attention will fade. TransCanada, the principle corporation behind the project, will not sleep. They will cool down on the rhetoric for a while, make some concessions and wait for the storm to pass.

I do not mean to say that these forms of civil action are useless. They are very important in raising consciousness, of bringing attention to serious problems and in mobilizing people. I do, though, that alternatives need to be presented. We need something to believe in. We can’t always just be opposed to something.

The Economy of the Common Good as a new Strategy

The Economy for the Common Good recommends using an ethical balance sheet next to the financial balance sheet to judge the success of companies. An ethical or “common good” balance measures the social and environmental performance of a company. This will tell us much more about a business than a financial balance sheet, which provides only a small part of the crucial information about a company.

The Economy for the Common Good proposes a clear, hands-on tool to encourage companies to do more for the common good. Trained business consultants and auditors work closely with business to assist them in these evaluations. It is not an “us-against-them” scenario, but rather a narrative where all the interests of all stakeholders are taken into account.

The results of the Common Good Balance Sheet give consumers, government officials and business partners a clear picture of how well a company performs in the areas of human dignity, social justice, sustainability and transparency. This approach holds the potential of transforming business and thus the economy.

(2) Website of the New Economy Coalition
(3) Website of the B Corps
(4) Adam Corner, “Every little helps' is a dangerous mantra for climate change”, The Guardian, December 13, 2013.
(5) Harald Welzer, „Climate Summit Trap: Capitalism's March toward Global Collapse“, Der Spiegel, December 6, 2013.

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