Council on Inclusive Captialism

By

 The Council on Inclusive Capitalism (https://www.inclusivecapitalism.com/) is a new group formed by CEO’s, global leaders and the Vatican that seeks to, “Capitalism lifts people out of poverty and powers global innovation and growth. But to address the challenges of the 21st century, capitalism needs to adapt. Through our commitments, actions and solutions, we will create stronger, fairer, more collaborative economies and societies, ultimately improving the lives of countless millions of people across the globe.” (Council on Inclusive Capitalism, 2020)


What does Institutional law and Economics have to say about this kind of approach? First, we need to acknowledge that this group states their normative purpose up front and are not trying to hide beneath a cloak of doing something on the grounds of economic efficiency.  This is a good thing and one can agree or disagree with the group's aims but at least acknowledge that they are upfront and transparent about them.


They make the claim that capitalism or market forces are responsible for some positive benefits including innovation and poverty reduction.  This can be argued to potentially be true but it disguises the fact there is not one type of capitalism but in fact many varieties of capitalism and that variety is based on a series of interconnected institutional alternatives.  Some forms of capitalism may do a better job than others at addressing these kinds of issues.  ILE demands that we be specific about our institutional alternatives.  The groups webpage maily cites specific anecdotes of companies doing environmentally or socially beneficial acts.  There is very little, at least to date, of specific system wide changes or institutional alternatives that the group endorses to change performance.


Another critique may be that the current form of capitalism generally in play in the world creates economic growth as defined by GDP but not in a more inclusive way.  ILE would insist on the issue of performance for whom? The group talks about being more inclusive in its very name but does not specify how that is to occur.  To be fair, the group acknowledges the limits of capitalism and does seek to address these limitations but again with few specifics to date.


The goal of group such as this is to use and channel market forces in a positive direction.  Corporations and other organizations commit to internal changes, whether better reporting, better practices or pushing of other similar entities to engage in certain practices that are believed to be linked to economic, social and environmental sustainability.  These are laudable goals of using voluntary compliance with standards to improve capitalism. Can voluntary action and more leadership be enough to change the working rules on the economy? Perhaps although history would suggest that some skepticism is in order. From an ILE perspective the question must be raised as to whether it is enough.  For every company that signs onto these standards, thousands of entities and organizations do not.  Will voluntary action be enough to change the working rules for enough organizations that will have an impact on substantive performance? Or, perhaps this group will seek collective action via other forms in the future.

Comments

Post a Comment

Popular posts from this blog

Veblens Instinct of Workmanship pg. 234-240

By
 This section starts with Veblen stating that in the handicraft era, the individual craftsman is again the dominant force in the economy.  This in turn implies three key facts that are important to Veblen.  The first key fact is that the instinct of workmanship is an important element in how humans think and act again. we can perhaps think here that the instinct of workmanship is less contaminated by other instincts in the handicraft era. Another key piece is that the "common stock of technological knowledge" is open to all and easily mastered by the individual crafts person. If we recall, Veblen wrote that this technological knowledge is always held in commons by all people but in certain eras it is dominated by a small group of individuals whereas in the handicraft era it is shared by many crafts people. The final key fact is that craft persons can easily understand technical and natural forces as they need to and machines are devised to be in accordance with the needs ...
Read more

Veblen's Instinct of Workmanship pg. 240-253

By
  This section continues Veblen's thinking regarding the evolution of the handicraft era.  The first point he wants to make is that the machine era requires a matter of fact and mechanical approach to work and workmanship as opposed to the era of human dexterity and high touch of the handicraft era. He also notes again how the crafts persons embody the nature of the economy in that era and convince many others that human craftsmanship is the best gauge upon which to assess society. He writs that,  “to serve the needs of this machine technology, therefore, the information which accumulates must in some measure be divested of its naive personal colouring by use and wont; and the degree in which this effect is had is a measure of the degree of availability of the resulting facts for the uses of the machine technology.” (Veblen, pg. 240, 1914). From this point, we observe the shift towards the machine age and perhaps of equal importance the price age.  As Veblen notes on...
Read more

Veblens Instinct of Workmanship pg. 231-234

By
 Chapter 11, the Era of Handicraft pg. 231-234 Veblen starts this chapter by noting that in his mind Eruope had not been characterized by large scale emperors but generally smaller fiefdoms and kingdoms unlike Asia for example. He felt that the Roman Empire was more of a southern European tradition.  Western and northern Europe developed with small scale industry and the handicraft system in the middle ages in particular.  This eventually changed over time as we have already explored as the technology changed and it became impractical for every small handicraft merchant to own capital. In the handicraft era, the habit was that price should be based on a labor theory of value but this changed to become based on freedom between buyer and seller as the capital intensive nature of industry changed. Over time, the owners became a smaller class of people and the workers, who were originally handicraft based, came under the dominion of the owners of capital.   This marked t...
Read more