A New Approach to Capitalism

by Dalisu Jwara

In 2008 the world was hit by a global recession-the worst of its kind since the great depression that occurred in 40s. The financial crisis brought financial contagion to global markets. The recession revealed underhanded behaviour by investment professionals, particularly in the investment banking sector. A credit default crisis fuelled by reckless gambling in the markets, substandard loans and asymmetrical rating standards brought the world economy to its knees. It is now 2014, with the past 6 years characterised by sluggish economic growth. It seems that economies are rebounding, but the crisis tarnished the reputation of large corporations, and it has forced us to rethink our models of capitalism and made us question the broader role of companies in society.

Whilst capitalism has made great strides to lift many individuals out of poverty and deliver higher standards of living across nations, some may argue that it has increased the rate of inequality and short term profit thinking, at the expense of ordinary citizens who may have invested their life savings in a large financial services institution. Yes, the arguments against capitalism are innumerable, and many do have merit – however, I must admit that I am a capitalist and am excited by the prospects of working in the corporate world someday.

Throughout my university career I have been probed about my indecisiveness on where I stand on big business: it seems to me that we have been taught to view the world of business and society in two different baskets. I am of the view that these two concepts are not mutually exclusive. A company deploys financial resources and human capital in order to create economic value in society, higher economic value results in better opportunities for individuals, this I believe creates social value. Further, my view of how businesses should operate is infused with an indelible social moral obligation. I believe that individuals or institutions that have large pools of capital and influence have the responsibility to use these tools in order to make the world a better place.

But we have often missed the plot. Industry leaders have often misled their boards into questionable activities and infringed on workers’ rights. This is wrong. If the model is applied correctly I do believe that there can be fundamental shifts in how we view corporations and their interactions with the broader world.

We live in a world where individuals are increasingly becoming concerned with sustainability, positive social impact and long term value. This new world will require new thinkers, new leaders and in the business sphere it will require those who will infuse the spirit of capitalism with a balanced view of social ills that plague the world. Instead of asking how much profit margin a product will make, the boards of the future will measure its social and environmental margin and this will dictate the success of the enterprise. A new dawn is awakening and a new brand of business leadership is coming to light. I have two examples of this ground breaking brand of business leadership.
A month ago, I was privileged to have been selected to represent South Africa at a global business challenge called the Future Leaders League in Singapore, I was part of 69 participants selected from over 300 universities globally. The 23 participating countries had to introduce a new innovation for a Unilever hair product. I really enjoyed the business challenge, but I was even more fascinated by Unilever’s Sustainable Living Plan. It is a plan to double their revenue whilst halving the environmental impact and increasing their social impact. They have also launched a new initiative called Project Sunlight [here’s the link].
Paul Polman, Global CEO of Unilever, and Dalisu Jwara, in Singapore
This new strategy was fuelled mainly by one man – CEO Paul Polman. I have looked up to him ever since I was in 2nd year and when we asked him what had motivated him to redefine their business model, he said that as one of the largest companies in the world -Unilever had the power to do good, and that they have to ensure that future generations will inherit a better world, and they were just doing their part.
Back home in South Africa, I have been honoured to have been selected as one of 18 young student leaders onto the South Africa-Washington International Programme”SAWIP”, this will see us live and work in Washington DC for 6 weeks during the summer, and also seeks to develop young leaders who will serve South Africa with humility and integrity whilst inspiring future generations.
In the past week, we visited a wine estate called Solms-Delta in Franschoek this is in the Western Cape Region of South Africa, and Richard Branson recently purchased a wine farm nearby. Solms-Delta was purchased by Neuro-Science expert Professor Mark Solms in the early 2000s. Our tour guide was a lady named Sandy, she lived and worked on the property before Professor Mark Solms purchased it. She told us of the squalor living conditions they once lived in before he became the owner, they used to struggle to put food on the table and were poverty stricken.
Some lived in a horse stable, and the 10 families on the property shared a house, our tour guide remembered a time when she had to carry her 6 year old son across the river in order to try and secure food with her in-laws across the banks, she recalls nearly having drowned.
Mark Solms came into the land and started an excavation process-he did this in order to understand the origins of the property in conjunction with the families. Thereafter he established a 3-way equity structure, both he and his business partner own a third respectively, the remaining third is owned by the community through a trust. A third all of all profits made my Solms-Delta are ploughed back into the trust, this has been used to build homes for the workers, it’s also been used to educate their children and provide a dignified living for all who live on the property.
During our session the CEO of Solms-Delta -Craig MacGillivray broke down whilst telling us the story of the wine-estate, he told us how he had left his role of Managing Partner of a large accounting firm and had found his purpose in running the wine estate, because he can see the difference he is making daily.
I hope that these two accounts give us hope for future. A large corporation head quartered in London can be big and can also be good, and its impact can be experienced globally. A medium sized wine estate located in the southernmost tip of Africa can change the game by thinking differently about land ownership, worker treatment and broader social responsibility. The common factor here is the presence of a leader who is willing to challenge the status quo and redefine the game.
Dalisu Jwara and Solms Delta Tour Guide-Sandy
South Africa Washington-International Team
Capitalism has to be rethought. I believe that it can be used as a force for good, a critical ingredient of this will be the leader of the team.
In July this year-100 student leaders from around the world, will convene in Glasgow, Scotland at 33fifty – the Common Wealth Youth Leadership Programme, our task is simple but daunting we have to propose how “Young People can play a role towards creating green economies”.
I hope that we keep this in mind-economies can grow sustainably and induce positive social impact, the two aren’t mutually exclusive and it is our responsibility to make sure that this is heard- we have to leave the world in a better state for future generations and we have to be BOLD about this!!
I am because we are…
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