3. The growing focus in management on corporate social responsibility. Most global companies have forsaken orthodox economic ideologies of “laissez-faire,” unregulated markets, famously promoted by University of Chicago economists, including Milton Friedman, that “the only business of business is to make profits for shareholders.” This view, that relies on markets as self-correcting, holds that government regulations are ineffective, self-defeating, and usually unnecessary. History has already overtaken these views.

      Companies today acknowledge that globalization of information technologies has morphed into a new Age of Truth. No corporate activity, which may affect society and other stakeholders (employees, suppliers, customers, host countries, and the environment), remains unnoticed. Thousands of civic groups, like Corpwatch.org, Global Exchange, The World Social Forum, and many focused on specific issues from GMO-foods to global warming, monitor every corporate move. Their Internet reports and blogs can break a precious corporate brand and stock prices in real time.

    Thus, corporate CEOs today have installed a myriad of in-house programs, often personally overseen by vice presidents of corporate responsibility. These new activities include hewing to new standards from ISO 14001 and EMAS to SA-8000 and many other “good citizenship” accreditations, labels including the U.S.A.’s Green Seal, Germany’s Blue Angel, and many others. In a 2005 poll of CEOs by the World Economic Forum and KPMG, 70 percent said that “good corporate citizenship “was vital to profitability.”

    So it becomes clearer why these three burgeoning sectors of the U.S. and global economy have been all but invisible on mainstream financial media: a fierce paradigm war of world views is underway. Most media outlets are owned by only a few, yet very large, conglomerates: News Corp, Time-Warner, Disney, GE, VIACOM and others. These companies are deeply embedded in unsustainable, wasteful, fossil-fueled and nuclear-powered sectors of the global economy, along with global banks and firms that finance their expansion. I described this new form of government, “mediocracy,” in Building A Win-Win World (1996). These three emerging sectors, which we cover in the “Ethical Markets” TV series and in the Ethical Markets book, pose a direct challenge to the market dominance of the existing world economic players. No wonder reporting on the explosive growth of these new sectors is sparse…

     Our TV series was created to cover these three cleaner, greener, more transparent, and ethical parts of the economy, many of which are spearheaded and led by women. Along the way, it was necessary to unravel much of the now clearly obsolete thinking based on eighteenth and nineteenth century economic ideas—deep in textbooks and computer models. The word is out that economics, never a science, has always been politics in disguise. I have explored how the economics profession grew to dominate public policy and trump so many other academic disciplines and values in our daily lives.

     Economics and economists view reality through a monetary lens. Everything has its price, they believe, from rain forests to human labor to the air we breathe. Economic textbooks, Gross National Product (GNP), and the statistics on employment, productivity, investment, and globalization—all follow the money. Happily, all this focus on money exposes how money is designed, created, and manipulated. Our widespread focus on the politics of money is at last unraveling centuries of mystification.

     Civic action with local currencies, barter, community credit, and the more dubious rash of digital cyber money reveal the politics of money. Traditional economics is now widely seen as the faulty source code deep in societies’ hard-drives, replicating unsustainability: booms, busts, bubbles, recessions, poverty, trade wars, pollution, disruption of communities, loss of cultural and biodiversity. Citizens all over the world are rejecting this malfunctioning economic source code and its operating systems such as the World Bank, the International Monetary Fund (IMF), the World Trade Organization (WTO), and imperious central banks. It’s hard-wired program—the now derided “Washington Consensus” recipe for hyping GNP-growth—is challenged by the Human Development Index (HDI), Ecological Footprint Analysis, the Living Planet Index, the Calvert-Henderson Quality of Life Indicators, the Genuine Progress Index, and Bhutan’s Gross National Happiness, not to mention scores of local city indices such as Jacksonville, Florida’s Quality Indicators for Progress, pioneered by the late Marian Chambers in 1983.

      As with politics, all real money is local, created by people to facilitate exchange and transactions, which are based on trust. Events of the past twenty years have necessarily recast the story of how this useful invention, money, grew into abstract national fiat currencies backed only by the promises of rulers and central bankers. We witness how information technology and deregulation of banking and finance in the 1980s helped create today’s monstrous global casino where $1.5 trillion worth of fiat currencies slosh around the planet daily via mouse clicks on electronic exchanges—90 percent in purely speculative trading….

      In view of these abuses, the task before us is nothing less than to redefine success, wealth, and progress for our massively changed circumstances in this twenty-first century. …New broader statistics on health, education, social capital, and ecological assets are now creating better scorecards of wealth and progress—beyond money and GNP. Life is rich in many dimensions and we know that money can’t buy many of the things we most desire—such as love and happiness….

      Our quality of life has much to do with the vitality of the community in which we live. Healthy communities typically have stable families, enjoyable neighborhoods, and businesses that revitalize the local economy. Because economists have not measured the deeper, broader kind of efficiencies provided by cohesive communities and the values of families and local cultures, these local living economies have been under-valued—until they break down. Then social services, unemployment, drug and crisis counseling, caring for homeless people require huge taxpayer costs. Today, many of the smartest investors, asset managers, and pension funds are joining with local leaders in re-investing in these vital community re-development efforts as described by Michael Shuman in The Small-Mart Revolution (2006)….

      One of the most surprising aspects of the new twenty-first century capitalism is the rise of concerned, active shareholders. They invest not only for economic returns, but to help create a better world. They attend annual company meetings and challenge management meetings on a host of issues that concern them such as: fair treatment of employees, pollution, outsourcing jobs to low-wage countries, minority rights, diversity of boards and management, climate change, and corporate governance. The active shareholders are also influencing investment choices of pension funds, university endowments, foundations, and socially responsible mutual funds.

      Controversial in the 1970s, shareholder activism is now popular and widely recognized as a progressive movement in the evolution to more ethical twenty-first century capital markets. Shareholders love the extra psychological “bang for their bucks,” while the sheer power of the $2.3 trillion active investors wield is leading to a new model of the corporation managed not only to the benefit of shareholders, but all stakeholders including employees, customers, suppliers, community, and the environment. Stakeholder capitalism is the wave of the future—thanks to the millions of shareholder activists helping change the game and the scorecards of social progress and human development….

      At last, mainstream venture capitalists are following the lead of the many pioneers who have been funding companies in solar, wind, biomass, fuel cells, hydrogen, and more efficient technologies of all kinds. Leaders from D. Wayne Silby, founder of the Calvert Group, Robert Shaw of Arête, and Nick Parker of Cleantech Ventures, convey their enthusiasm for continually seeding these sustainability companies, many of which are destined to become the “IBMs” and “Microsofts” of the twenty-first century.

--Excerpted from Ethical Markets: Growing the Green Economy
 

Hazel Henderson is a world renowned futurist, evolutionary economist, a worldwide syndicated columnist, consultant on sustainable development, and author of Beyond Globalization, and seven other books. www.hazelhenderson.com;  www.ethicalmarkets.com