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blasé
I was a very young corporate CFO quite early in my career, and back then it was very clear to everyone in our top management that our business goal was more profit and a higher stock price for our investors. Computerized management information systems were emerging as a way to make better decisions so that we could optimize for profit, During this period I learned how powerful management information could be to achieve improved profit performance.
I also learned how incredibly important it was that there was a market for the company's products, and indeed a growing market. Markets grow when consumption grows, and as a corporate CFO it was good to see consumption going up because I was going to find it easier to manage for higher profits.
Stock markets also have learned this lesson. When consumers are consuming more, investors understand that profits are likely to increase and stock prices to go up.
So those who are investors advocate for more consumption, and people in the corporate world not only advocate for more consumption, but then go on to advertise in all sorts of ways to encourage consumption and sell more products.
None of this management for profit improvement and stock market price increases takes into consideration either the real impact on people in society or the impact on the environment.
The fact that consumption directly connects to more stress on the environment is not part of the typical management data dashboard. In one of the richer modern economies, more consumption produces more profit but more consumption does not produce a significant amount of better quality of life. People who slow down and 'smell the roses' may well be happier, but a smaller consumption is bad for profit.
In poor societies, more consumption usually results in a better quality of life, but this correlation is not valid to the same extent in rich societies. This is a very important point and not obvious from much of the economic commentary flowing through the media.
When looked at from the perspective of (ordinary) people and from the perspective of the environment, the US socio-enviro-economic system is incredibly inefficient ... a huge amount of social capital (happiness) and natural capital (environment) has been compromised in order to make more and more profit and create more and more financial wealth. Worse most ordinary people are workers who rely on pay from employment which has stagnated since the early 1980s while a rather few people own financial capital which has soared in value because new and amazing technology has been mobilized to increase productivity and increase profits while reducing the need for people and payroll.
All of this has been enabled by the way we do the numbers ... accountants know how to do the accounting for money and profit, but they have very little training or understanding of what needs to be done to have effective accounting and accountability for social and environmental performance.
A growing number of people at high levels in modern corporations understand the importance of making major changes in the way companies get to better corporate performance ... and I argue that for this to be facilitated there needs to be something of a revolution in the way the numbering gets done. We need to know not only how corporate decisions make for more profit, but how all the decisions in our socio-enviro-economic system go into optimizing the way the system works, not only for the owners in the present generation, but for all of us that live on the planet today and our children and grandchildren that need a livable planet in the years ahead!
Poor people will benefit from more consumption, but rich people need to figure out how to be happy while consuming a whole lot less! Companies need to be held accountable not only for profit performance but also their impact on society and on the environment. All sorts of establishment norms have to change ... including the core message that is embedded in conventional business school training!
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