Entries in economics of mutuality (33)


Stormy weather forecast for financial markets?

Capital markets can play an important role in mutuality, as a greater percentage of people become invested in them, and as they provide a supportive environment for social investments. In a recent outlook for Bloomberg View, consultant and portfolio manager A. Gary Shilling outlines why he believes global financial markets may face severe conditions in the near future (along with a handful of factors that have the potential to soften the expected market headwinds).

The stressors include:

  • Further fallout from Brexit;
  • Low oil prices (and weak demand); and
  • A global labor surplus.

He argues further that central banks are already taking extraordinary steps with monetary policy (quantitative easing and negative interest rates), to little effect. At some point these will spark a market correction, perhaps a significant one.

Still there are factors that may ameliorate some of these stressors, including the relative value of stocks compared to government bonds, and the potential for more infrastructure investment by the U.S. in the years ahead.

-- Catalysts



A critique of Creating Shared Value

Measuring and managing non-financial performance is a cornerstone of the Economics of Mutuality. In order to develop new business models in which mutuality drives superior business performance, it is necessary to understand, quantify and track non-financial forms of "capital," such as social, human, and natural. In doing so, we seek to successfully decipher the patterns that drive shared prosperity to low income communities, among other goals.

Various theories and systems have been put forward recently related to this field, including Michael Porter and Mark Kramer's Creating Shared Value (CSV), a concept they outlined in Harvard Business Review.

CSV has received significant attention since its publication, gaining a wide audience in academic and business circles, but it has also attracted its share of criticism. Rigorous review and testing are essential to learning an progress, and we found this critique of CSV -- published by professors from a number of prominent business schools -- to be worth reading.

We suggest that the concept makes some significant progress towards enhancing attention to the social dimensions of business, and may act as a spur for better practice. However ... CSV also suffers from a number of serious shortcomings that will erode any real possibility for the more fundamental change aimed at by the authors."  

-- from Contesting the Value of "Creating Shared Value"

In it, the authors find CSV has serious shortcomings, namely: it is unoriginal; it ignores the tensions inherent to responsible business activity; it is naive about business compliance; and it is based on a shallow conception of the corporation’s role in society.



Responsible Business Forum -- Watch the Videos

A wide selection of videos from the event are now available for viewing on our Events page. Enjoy them and join the conversation.

-- Bruno Roche


It's summertime, so what are we reading?

In addition to the books that we enjoy over August, we like to use this time to catch up on the thoughts, research and analysis found in some of our favorite sources. We have handy links to many of them here.

The newest addition to the list is Devex Impact. Devex Impact is a global initiative by Devex and USAID in partnership with top international organizations and private industry. Devex is a media platform for the global development community, connecting and informing 700,000+ people.

-- Clara Shen


Measuring the risk of slavery in today's economy

A new report from the risk management firm Verisk Maplecroft issues a stark warning to businesses -- and consumers -- across the globe: slavery is rife in nearly 60% of countries around the world.

This report garnered substantial media attention this week for its assertion that nearly 46 million people worldwide are living as slaves, and that this problem is not limited countries with underdeveloped markets and struggling legal systems.

Further, while precise estimates of the number of slaves differ, there is broad agreement that there are more slaves today than any time in human history. In fact, according to a 2012 article in the Atlantic, over the entire 350 years of the African slave trade, a total of 13.5 million were taken from Africa to be slaves; that's less than one-third of the current number.

While the report notes that most multinational companies have robust systems in place to guard against slavery among their top suppliers, there is more risk further down the value chain. Some other key findings include:

  • With the exception of the US and EU, the world’s top 12 garment exporters, including China (ranked 23rd highest risk), India (15th) and Pakistan (9th) are rated ‘high’ or ‘extreme risk’
  • Over 80% of sub-Saharan African countries feature in the two highest risk categories, including Kenya and Nigeria, two of the region’s three largest economies 

Groups that we are particularly interested in, such as small farm operations, are not immune -- cocoa producers are also considered to have a heightened risk, for instance. An economic system built on mutually beneficial relationships has no place for slavery, so this is a risk that should be closely watched.


Image source: Verisk Maplesoft

-- Jay Jakub