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Date: 2024-06-12 Page is: DBtxt001.php txt00011710
P-CED ...The paradox of Long Term Capitalism
Written by Jeff Mowatt

Director, People-Centered Economic Development UK in August 2016


Original article:
Peter Burgess COMMENTARY

Peter Burgess
The paradox of Long Term Capitalism

Published on August 10, 2016

In 2012 McKinsey's Long Term Capitalism initiative was a call to action, following an article in Harvard Business Review which warned of the potential crisis between business and society. It would echo the concerns made some 15 years earlier, in my late colleague's treatise for Bill Clinton, warning of social unrest:
'Modifying the output of capitalism is the only method available to resolving the problem of capitalism where numbers trumped people – at the hands of people trained toward profit represented only by numbers and currencies rather than human beings. Profit rules, people are expendable commodities represented by numbers. The solution, and only solution, is to modify that output, measuring profit in terms of real human beings instead of numbers.'
By the time I got to know about it, The awards had been made. Interestingly one of the entries described what's know as the Fourth Sector, business which operates for social benefit
'To correct the course of capitalism, we need to move beyond this singular focus on for-profit firms and advance a new breed of 'for-benefit' firms that are structurally designed to integrate social, environmental and financial value creation. For-benefits should be formalized as a fourth sector of the economy—alongside the public, private and social sectors—and we need to develop a supportive ecosystem that is tailored to their needs, similar to what exists for for-profit firms.'
I shared the story of how it evolved in 'Re-imagining Capitalism for People and Planet' becoming a formal model in the UK in 2004, when we warned again about social unrest.
“Traditional capitalism is an insufficient economic model allowing monetary outcomes as the bottom line with little regard to social needs. Bottom line must be taken one step further… by at least some companies, past profit, to people. How profits are used is equally as important as creation of profits. Where profits can be brought to bear by willing individuals and companies to social benefit, so much the better. Moreover, this activity must be recognized and supported at government policy level as a badly needed, essential, and entirely legitimate enterprise activity”
In 2013, I followed up with Re-imagining Capitalism - The new 'bottom line' including extracts from our work on a 'Marshall Plan' for Ukraine.
'This is a long-term permanently sustainable program, the basis for 'people-centered' economic development. Core focus is always on people and their needs, with neediest people having first priority – as contrasted with the eternal chase for financial profit and numbers where people, social benefit, and human well-being are often and routinely overlooked or ignored altogether. This is in keeping with the fundamental objectives of Marshall Plan: policy aimed at hunger, poverty, desperation and chaos. This is a bottom-up approach, starting with Ukraine's poorest and most desperate citizens, rather than a 'top-down' approach that might not ever benefit them. They cannot wait, particularly children. Impedance by anyone or any group of people constitutes precisely what the original Marshall Plan was dedicated to opposing. Those who suffer most, and those in greatest need, must be helped first -- not secondarily, along the way or by the way. '
So far I haven't got to the paradox. bear with me.

At the end of 2004, we'd redirected our efforts from the UK to Ukraine, arriving as a revolution was beginning. We connected with local activists who gave us access to their blog site.

In 2005, Maidan published my late colleague's article - Really Betraying a Revolution, where once again he warned of impending social unrest. It was his response to a Washington Post article claiming that PM Tymoshenko's 'state socialism' was betraying a revolution.
'Elimination of graft and corruption, and raising the overall standard of living for ALL Ukrainians rather than a few insanely greedy oligarch clans, was the main underlying and implied reason for the Orange Revolution – at least from hundreds of people, activists and otherwise, I talked with on the ground during and after the Revolution. Further, as director for any sort of peace institute, Mr. Aslund is obliged to review the connection between poverty and peace. Peace does not and cannot exist for people in poverty, unless they are harshly suppressed by government or other forces. Poverty is a horrible existence and lifestyle, and is bound to breed violence, not peace.'
It was a year later with his articles on Death Camps for Children that Terry Hallman pointed to the root cause of Ukraine's social problems:
'Excuses won’t work, particularly in light of a handful of oligarchs in Ukraine having been allowed to loot Ukraine’s economy for tens of billions of dollars. I point specifically to Akhmetov, Pinchuk, Poroshenko, and Kuchma, and this is certainly not an exhaustive list. These people can single-handedly finance 100% of all that will ever be needed to save Ukraine’s orphans. None of them evidently bother to think past their bank accounts, and seem to have at least tacit blessings at this point from the new regime to keep their loot while no one wants to consider Ukraine’s death camps, and the widespread poverty that produced them.'
Now here's the paradox. In 2007, we realised that our activities were under threat from the very people he'd identified. Terry wrote in his notes:
'As the 60th anniversary of the Marshall Plan came around in June 2007, noise was emerging within Ukraine of a certain political boss preparing a Marshall Plan for Ukraine. This person was a reputed mob boss -- exactly the sort of entity that the original Marshall Plan meant to oppose. It seemed most likely that whatever he came up with would be self-serving, hijacking the label 'Marshall Plan' and turning the whole notion on its head. I reviewed the original Marshall Plan and realized that what I had written was, in fact, the definition and spirit of the original Marshall Plan. Thus, in June 2007, I appended the original title with 'A Marshall Plan for Ukraine.' After some discussion among trusted colleagues over timing, I pu'lished an abbreviated version of the paper in two parts in August 2007 in the 'analytics' section of the Ukrainian news journal for-ua.com'
Our 'Marshall Plan' reiterated the words of George Marshall at Harvard in 1947, which today seem more relevant than ever;
'Our policy is directed not against any country or doctrine but against hunger, poverty, desperation and chaos. Its purpose should be the revival of a working economy in the world so as to permit the emergence of political and social conditions in which free institutions can exist. Such assistance, I am convinced, must not be on a piecemeal basis as various crises develop. Any assistance that this Government may render in the future should provide a cure rather than a mere palliative. Any government that is willing to assist in the task of recovery will find full co-operation I am sure, on the part of the United States Government. Any government which maneuvers to block the recovery of other countries cannot expect help from us. Furthermore, governments, political parties, or groups which seek to perpetuate human misery in order to profit therefrom politically or otherwise will encounter the opposition of the United States.'
Our concern in 2007 was news that 'Western experts' had been hired to create a 'Marshall Plan. It was 6 years later , that Bloomberg revealed the involvement of McKinsey and RBS

An article about helping Ukraine stand up for Western values, joined up a few dots:
'Election spending in Ukraine is opaque, but both Akhmetov and Firtash are widely thought to have sponsored Yanukovych’s campaigns. Even as they have supported an increasingly authoritarian Yanukovych at home, however, Akhmetov and Firtash have invested heavily in building their reputations in the West.

Akhmetov’s System Capital Management JSC is a partner of the Swiss-based World Economic Forum. It has used the services of, or attracted financing from, Germany’s Deutsche Bank AG, the U.K.’s Royal Bank of Scotland Plc and Austria’s Raiffeisen Bank International AG. Firtash has made generous donations to the University of Cambridge. This year he started financing the Days of Ukraine festival in the U.K., held at prestigious sites in London, such as the Saatchi Gallery.

The two men have also hired prominent Western consulting companies, including McKinsey & Co. Inc., to develop an economic plan for Ukraine, while bolstering Yanukovych, who is the biggest obstacle to any reasonable economic policy.'
In 2011 it was for RBS and the SE100 index that I shared our social impact report, describing our work and its impact on Ukraine
'The strategy plan described as ‘Microeconomic Development and Social Enterprise : A Marshall Plan for Ukraine’ was presented in October 2006. In this paper four components for social change were proposed and included reforms to the provision of institutional childcare, deployment of affordable wireless broadband, microfinance assistance for development of small business and a centre for social enterprise backed by a social investment fund. The overall theme was one of a new approach to capitalism in which profit would be invested for social as well as financial return.'
3 years later, at the World Economic Forum, Ukraine has just erupted into violent conflict and guess what they're talking about

In more recent times, I've learned that long term contacts, David Floyd and Dan Gregory have helped RBS develop a report on social investment.

Within the Marshall Plan which called for a social enterprise investment fund, was a proposal for social investment which seems to fall on the deaf ears of all, a plan to place children in loving family homes.

In this brand over substance world of 'long term capitalism', they will continue to die.



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