Business, Sustainable Development and Prosperity - Part I
- Arthur Dahl, author of the article
Excerpts from The Challenge of Sustainable Development and Prosperity
By Arthur Dahl, ©
This first part examines the concepts of prosperity and sustainable development and addresses the problems in the current system of business. In Part II the author will share a vision of sustainable development and prosperity for business through its alignment with moral and spiritual values.
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The concepts of sustainable development and prosperity are fundamental to business success and longevity. Indeed, the ultimate purpose of business may well be to generate prosperity within a framework of sustainable development. The question is thus how to create the conditions to achieve this purpose.
Prosperity and sustainable development
Prosperity has multiple dimensions. Increasingly, it is recognized not only to include material well-being but also social and even spiritual progress. It also includes - or should include - environmental prosperity which we can define as keeping the environment rich and productive. Moreover, prosperity must also reflect the richness of the interactions among the members of society and the spiritual dimensions of the world they inhabit. [There are several current definitions for sustainable development, b]ut what is critical about any definition is that it refer to prosperity as a state that can continue indefinitely and apply to all. In other words, sustainable development has dimensions both in time and in space. It covers not just some small segment of the planet's population but everyone everywhere. And it is not just for now but extends into the future. This requires the transmission of experience and knowledge from generation to generation, so there is an education component. Without our knowledge, the next generation would have to start over.
Sustainable development is … generally considered to have economic, environmental and social aspects, with sets of indicators reflecting the evolution within each one as society develops. Less apparent is the ethical component because sustainable development means linking its practical or material elements to human values. The act of looking at the needs of all the planet's people and considering the needs of future generations is rooted in ethics. The concept that whatever we do must be done for future generations as well as our own is an application of the principle of justice.
The role of values
- March for Social Justice in Washington, D.C.
Any effort to improve human relationships, human structures, or human institutions must begin by addressing basic values. … Looking from this perspective at our present economic and business systems, our present rules and values are seriously dysfunctional. They are driving us in extremely unsustainable directions, environmentally and socially. They also are unethical. Our underlying values are rooted in 19th century Darwinian views of species evolving through survival of the fittest. Carried to a logical conclusion, the implications of such values are unacceptable in human terms. In purely economic terms, … the unemployed and the impaired ought not to be helped because they burden society without contributing to production. Consider the recent example of a report submitted by a tobacco company to the Czech government that said tobacco use should be encouraged because earlier deaths would save considerable sums in pensions and health-care spending. When this report became public, the company apologized and withdrew it, but the episode demonstrates the ethical problems underlying purely economic thought. Business corporations are not held accountable for moral values, only for profitability. Their managers are judged only by that very narrow criterion. It is little wonder that they sometimes do extremely damaging things for society as a whole.
Problems in the present system
Our present society has fundamental structural and institutional problems that we must recognize and manage to resolve. We must change the basic operating principles and values of the structures of our society if we are to move in a more moral, ethical and spiritual direction. For instance, because the economic system only values what is marketed or traded, everything else is considered an externality of no importance to economic analysis. A fundamental problem with economics is that it maintains inadequate accounts. Paying attention only to what has monetary value, economic analysis misses much of what is happening in society. It is like trying to take care of an automobile only by keeping the tank filled and ignoring everything else necessary to keep it running safely. Moreover, society also follows the wrong economic guidelines. Take a measure like gross domestic product. GDP is widely equated with prosperity: higher GDP means greater prosperity. However, GDP also grows because more people are suffering from the health effects of pollution; it grows if more automobile accidents occur requiring repairs, replacements and medical treatment. So GDP is no accurate measure of prosperity and ought not to be used to measure it.
Another problem is the importance that economists attach to growth. To them, growth is needed for success: a company has to grow, the economy must expand. But the planet is a limited system, and sooner or later we are going to reach its environmental limits. A related problem is consumerism, the pressure, through advertising and other exhortations to go out and buy, buy, buy to keep the economy going. A system that pushes people to buy things they do not need, in a world of limited resources in which people are starving, is a system that has something structurally and fundamentally wrong with it.
The drive for increased productivity is another issue in which the logic of individual decisions has a perverse collective impact on society. Raising productivity is an economic imperative. A company must raise its productivity and reduce its labor costs to increase its profitability. Yet this ignores the fact that employees are also consumers. If the number of people earning wages declines, there are that many fewer consumers to buy products and services. It is a case of sawing off the branch you are sitting on. To benefit the economy in a real sense, why not seek to make everybody a consumer by ensuring total employment. Instead, decision-making in the corporate system moves in the opposite direction. This is encouraged by another structural problem in Western economies : the privatization of employment and the socialization of unemployment. In other words, companies reduce their labor costs in the short term by transferring to the government the cost of maintaining the redundant workers. Such a short-sighted system ignores the importance of work as a contribution to society and a spiritual obligation.
Then, of course, the economic system ignores the poor. Since they are not consumers, the poor are excluded or forgotten. Their presence illustrates a series of fundamental failures in present mechanisms for redistributing wealth within society. Any developed society considers extremes of wealth and poverty to be unacceptable. The poor cannot be left to die while the rich walk over their bodies, of course, so at least some effort is made to put the poor out of sight in some way. There is, however, a greater moral principle that requires some level of wealth sharing, and taxation systems are designed to do that. Yet, it is possible to escape taxation. With globalization, wealth creation is increasingly reported not in the countries with strong tax systems, but in the Cayman Islands, Vanuatu and other so-called tax havens. Such avoidance of taxation is logical within a system in which the first priority is to maximize profit. Multi-nationals increasingly shift their real wealth creation out of places where taxation is heavy, escaping the mechanisms that allow restoration of the social balance. One of the most fundamental crises with globalization today is the breakdown of the mechanisms for redistributing wealth.
Nor does the present economic system assign a meaningful priority to the needs of the poor. Where there is no potential income, there is no market and, therefore, no business interest. As a result, there is little incentive, in terms of the profit motive, in developing medicines to combat the diseases of the poor who cannot afford to buy them. … The profit motive, not the well-being of people or the overall benefit to humanity, pushes development towards high technology.
The questions posed by these problems are fundamentally ethical: How do we foster a new moral, ethical and spiritual foundation in business? How do we establish new ground rules for business to help it contribute to a more sustainable society? The root of the problem lies in the way in which economic institutions are structured. We need to explore how we can maintain the vitality of corporate structures and their ability to evolve quickly, but within a framework built around ethical, moral and spiritual values that will help the system work effectively for society as a whole.
