Last week, I attended the Toronto Sustainability Speaker’s Series event on Capitalism 2.0. In a room with 100 of Toronto’s sustainability leaders, we discussed how a new economy is emerging. A colleague challenged us to define what the heck Capitalism 2.0 looks like, so here is my attempt.
Let’s begin by defining Capitalism 1.0. The word flew into public consciousness after Marx & Engels published the famous Das Kapital series. By Marx’s definition, a capitalist is someone who owns private property and participates in a free-market economy. The stereotypical capitalist is primarily concerned with leveraging each dollar to create as much additional money as possible. In modern speak, we talk about maximizing return on investment (ROI). Capitalism is a model based on the assumption that more capital is better, and that it is honourable (or at least rational) for everyone to strive for a wealthy life.
Moving forward, we need to acknowledge that we live in a complex system and expand our notion of capital. Systems thinking tells me that I operate as part of a more complex system – as part of multiple complex systems, actually. For example, I participate in the economy. I make money, I buy things, I save up, and I invest. Each interaction strengthens my relationship to the economy and builds a mutual dependency. I need it, and it needs me. In the same way, I’m part of various social systems. I belong to many circles, including my family, friends, office, neighbourhood, city, country, etc. I often identify with these circles, and they help make me who I am. I put a lot of time and energy into my social life, and receive many benefits in return. It provides me with subsistence, protection, affection, and helps satisfy so many of my fundamental human needs. Lastly, I am a part of the global ecosphere. I depend upon clean air, water, and soil for my survival. Human society and all of our economies are but subsets of the ecosystem. I’m not so sure the ecosystem needs me, but I do my best to give back and create a symbiotic relationship.
Capitalism 2.0 is about honouring these relationships, and ensuring that they are not exploitative. It is putting financial capital on the same level as human, social, and natural capital. Where every decision – from a consumer’s choice about coffee to a corporation’s choice of business strategy – considers the impact of that decision on all of our systems. It’s about aligning intent and action with a deeper purpose that considers the impact, be it positive or negative, on everything around us. Imagine a world where there’s a biologist on every accounting team, helping to quantify the impact of a factory on biodiversity. Picture a supremely productive company that understands how to maximize human potential. There’s a classroom and a gym in every office, and employees are incentivized to keep learning and keep moving to make them smarter and healthier. All of our devices would be smart, not just our phones and grids. Lights turn off automatically, and the indoor temperature will drop or rise (depending on the season) when nobody is using the space. Every resource will be used as efficiently as possible. And when there’s waste, it will be used as an input for a different industry.
This new form of enlightened capitalism will assume that individuals consider their choices from several different perspectives, and allocate their time and resources to projects that provide the best possible outcome to themselves, their society, and the ecosystem combined. Competing projects will be prioritized based on this new form of full-cost accounting, and we will arrive at a more optimal level of collective utility.
This new vision of capitalism extends across the entire economy. Every sector and industry will adapt and evolve in their own way. However, principles of equity, sustainability, and biomimcry will provide a common set of core values that will guide our expectations of a rational person.
Am I dreaming? Probably. Is it a beautiful dream? Certainly.
Timothy Nash is President of Strategic Sustainable Investments, and teaches economics at Sheridan College. As an expert on the green economy and socially responsible investing, he has been featured in The Globe & Mail, Advisor’s Edge Report, and Maclean’s magazine, and has appeared on CBC’s The Lang & O’Leary Exchange. Timothy is the lead researcher for Ethical Market’s Green Transition Scoreboard® research report, which details more than $3.6 trillion of private investments in the global green economy since 2007. He lives full-time in Toronto, Canada and is often found working at the Centre for Social Innovation.