A new economic mindset

[juzme123]

A very interesting read about future sustainable economic growth and consumpion as an engine of growth.

http://www.sd-commission.org.uk/data...ummary_eng.pdf

I currently short of time but I will post a more elaborate comment later. I think there are lessons to be learnt and be applied. Here is an excerpt:

This report sets out a critical examination of the relationship between prosperity and growth. It acknowledges at the outset that poorer nations stand in urgent need of economic development.

But it also questions whether ever-rising incomes for the already-rich are an appropriate goal for policy in a world constrained by ecological limits.
Its aim is not just to analyse the dynamics of an emerging ecological crisis that is likely to dwarf the existing economic crisis. But also to put forward
coherent policy proposals (Box 1) that will facilitate the transition to a sustain able economy. In short, this report challenges the assumption of continued economic expansion in rich countries and asks: is it possible to achieve prosperity without growth?

[Xusein]

Unfortunately in our society, prosperity and sustainability are mutually exclusive.

[juzme123]

o.k i finally have a chance to make a proper comment about this subject.

The reason why I posted this article is because I believe that as Somalis, there are lessons to be learnt that we can apply in the reconstruction and re-organisation of the Somali Republic.

As you may all be aware, due to recent events there is an increased probability of improved and more durable political stability - and thus a better environment for economic development. Although the private sector has flourished since the fall of the socialist dictatorship, as we slowly but surely move forward from years of conflict particularly in the Southern regions, there is a renewed opportunity for rebuilding the economic [as well as the political, social and legal] ideological and philosophical foundations of our country. It is these foundations that will determine the successes we shall or shalln't achieve in our endeavours to build a country that shall be prosperous, equitable, sustainable and on a path of continuous political, social and economic development. It is these foundations that shall determine the long-term stability of our country.

Originally Posted by Xusein

Unfortunately in our society, prosperity and sustainability are mutually exclusive.

I understand your point and to a certain extent I agree (or at least I did before reading this report). But on reflection I think that that is a defeatist perspective and that there has to be another way. This report has quite thoroughly dissected the issues surrounding economic sustainability that the world faces, and has shown that there are alternative perspectives. The currently accepted idea/definition of prosperity or affluence is dominated by an inherently inefficient material dimension of excess and wealth hoarding. Rather than prosperity per se, it is the currently accepted idea/definition of prosperity or affluence that is unsustainable.

In the case of the Somali Republic, we will have to take that into consideration in terms of our national planning of economic recovery. Considering the clean slate that we have to work with, I think we would do well to develop from the outset, a long term plan of economic development that enshrines sustainable development, efficient use of resources and equitable results. The open ended question that remains and shall remain is: how should the need to achieve this type of development be operationalised?

IMO a particular focus should placed on:

- A Sharia compliant (free of interest, among other things) based banking and financial system

- Sustainable and ecologically friendly energy sourcing and methods of manufacturing

- Embedding the Kaizen philosophy in society & all economic actors.

- A strong focus on science, engineering and research etc.

Then we need to reconfigure the perception of prosperity. This through the use of education, information provision, media. Through legislative and structural redesign we need to gear the Somali consumer, private sector and public sector's perceptions of prosperity and affluence to be one of a sustainable and equitable kind. We need to take the best lessons that are to be learnt from other countries - whether they be the U.S.A or Cuba and apply them.

[juzme123]

Porter & Kramer's Shared Value Approach.

Full Article: http://www.waterhealth.com/sites/def...ared_Value.pdf

Capitalism is an unparalleled vehicle for meeting human needs, improving efficiency, creating jobs, and building wealth. But a narrow conception of capitalism has prevented business from harnessing its full potential to meet society’s broader challenges. The opportunities have been there all along but have been overlooked. Businesses acting as businesses, not as charitable donors, are the most powerful force for addressing the pressing issues we face. The moment for a new conception of capitalism is now; society’s needs are large and growing, while customers, employees, and a new generation of young people are asking business to step up.

Companies are widely perceived to be prospering at the expense of the broader community. A big part of the problem lies with companies themselves, which remain trapped in an outdated approach to value creation that has emerged over the past few decades. They continue to view value creation narrowly, optimizing short-term financial performance in a bubble while missing the most important customer needs and ignoring the broader influences that determine their longer-term success. How else could companies overlook the well-being of their customers, the depletion of natural resources vital to their businesses, the viability of key suppliers, or the economic distress of the communities in which they produce and sell? How else could companies think that simply shifting activities to locations with ever lower wages was a sustainable “solution” to competitive challenges? Government and civil society have often exacerbated the problem by attempting to address social weaknesses at the expense of business. The presumed trade-offs between economic efficiency and social progress have been institutionalized in decades of policy choices.

The solution lies in the principle of shared value, which involves creating economic value in a way that also creates value for society by addressing its needs and challenges. Businesses must reconnect company success with social progress. Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the center. We believe that it can give rise to the next major transformation of business thinking.

The purpose of the corporation must be redefined as creating shared value, not just profit per se. This will drive the next wave of innovation and productivity growth in the global economy. It will also reshape capitalism and its relationship to society. Perhaps most important of all, learning how to create shared value is our best chance to legitimize business again.


The concept of shared value, in contrast, recognizes that societal needs, not just conventional economic needs, define markets. It also recognizes that social harms or weaknesses frequently create internal costs for firms—such as wasted energy or raw materials, costly accidents, and the need for remedial training to compensate for inadequacies in education. And addressing societal harms and constraints does not necessarily raise costs for firms, because they can innovate through using new technologies, operating methods, and management approaches—and as a result, increase their productivity and expand their markets.

[juzme123]

Rethinking Capitalism, Michael E. Porter.