WEF 2020: Realising stakeholders capitalism will require a new breed of leaders in Africa
JOHANNESBURG – Capitalism, Socialism and Democracy is one of the great classics in twentieth-century social science and I continue to look at this well-penned book as the greatest to provide solutions that emanate from radical capitalist and radical Marxist theorists and practitioners.
Economist Joseph Schumpeter’s book novel the view of democracy; its heretic analysis of the workings of the capitalist economy; and its provocative argument that capitalism is bound to disappear—not because of its failure, but because of its success.
Economist and Engineer, World Economic Forum (WEF) Founder and Executive Chairman, Professor Klaus Schwab is partly in agreement with the views of Schupetter on the theme of Redefining capitalism.
Schumpeter highlights that capitalism collapses in every ten to fifteen years and it will always develop new models on how to regenerate its existence in society and negotiate to mainstream new faces that are generally embraced by society to front them in national podiums as directors of their companies and so on.
Communities and youth in Africa need corporates that have great societal values to operate with mindfulness and have a sustainable relationship with all stakeholders. Corporates in Africa don’t respect government and society, it doesn’t invest in youth mainly during this fourth industrial revolution era where retraining is the main solution to drive society and economies forward.
Redefining capitalism will be embraced in America and Europe, but the same corporates in those markets will not implement those values that will be resolutions of the Davos conference expected to produce a Davos manifesto 2020 January 20 till 24.
The Davos society has shaped debates in several themes that seek to address economic challenges on global competitiveness, shared value, corporate citizenship, now shareholder capitalism which will lead corporates and society to consciousness and mindfulness for ethical considerations in business.
It’s so profound when young Schumpeter, who was born in 1883 in the small town of Triesch, the son of a textile manufacturer, writes a compelling case joining three facets of Capitalism which we can agree that he comes from that womb and he might have observed the injustice of capitalism and his love for society made him to embrace socialism and suggest a model of democracy for parties to have inclusivity on matters that govern us all.
The world had proven to us all that there is no better capitalism and also there is no better socialism, however, when integrated thinking and mindfulness is prioritized, a mixed version of the two, create a system that values society and also ensure that capital is served with its expected bottom line.
Capitalism is an economic system which the government plays a secondary role. People and companies make most of the decisions and own most of the property... The means of production are largely or entirely privately owned by individuals or companies and operated for profit.
Every 10 years we witness leaders in Asia, Africa, Europe and Americas setting up political economy strategies to bring about relief, recovery and reform, economic crisis such as trade wars, geopolitics, but the fast-changing world exposes leaders four-month after elected as presidents that situations had changed and the past solutions cannot be applied to solve current and future challenges.
Presidents, Ministers, Premiers and other members of parliament are expected to possess a high level of wisdom and knowledge in the times we are living at, the criteria of selecting such leaders must change as the global problems continue to be more complex every five years.
There is a huge gap between government leaders and corporate leaders, these create problems in society as corporates always negotiate better propositions and government will realise that BEE transactions failed in 20 years, while large corporates benefited massively. We have more reasons to give society to elect great leaders now, after seeing the excuses of creating jobs being huge in South Africa, Nigeria and the rest of Africa markets.
We will not realise shareholder capitalism or shared growth and value while negotiators from governments are always weaker to their corporate counterparts, signalling remain a painful exercise, power always plays a vital role.
The enormous dimensions of finance capital concentrated in a few hands and creating an extraordinarily dense and widespread network of relationships and connections which subordinates not only the small and medium, but also the very small capitalists and small masters, on the one hand, and the increasingly intense struggle waged against other national state groups of financiers for the division of the world and domination over other countries, on the other hand, cause the propertied classes to go over entirely to the side of imperialism.
African youth unemployment rate is very high including South Africa and Nigeria, youth needs jobs and corporates reserves are higher the past 15 years in South Africa and also global institutional investors asset under management are about 120 trillion dollars as per McKinsey reports 2017, which is not sustainable for our future, mainly because such funds are placed in passive investment that is not impacting communities.
Our global priority must be to solve poverty and inequality challenges that create sustainable lifetime problems, mainly having youth that has great education and energy, but without work because of leaders that cannot create solutions. Do we have to finish five years with presidents that can’t create jobs or we need to have guidelines for them to prove themselves in 24 months, which is enough time for any in-service training for any role people take in corporates and government.
Nearly half the total population in Nigeria lives in extreme poverty, Some 93.7 million Nigerians live in extreme poverty, according to the World Poverty Clock, a data-gathering team that monitors the global progress against poverty. This year's figure is 6.8 million higher than in 2018 and by 2050, Nigeria will be the third biggest nation, statistically, is also projected that poverty will be increasing at a high pace.
I, therefore, recommend for them to have a national birth policy limit to balance their resources with the population. The population at Nigeria is a problem and the discussion of shareholder capitalism and shared value needs to be discussed uniquely. We can build a scenario that 93.7 million people have no basic needs and therefore, they are unable to have savings for their pensions, this will increase social welfare with more than a Century in Nigeria.
Young Economists at Nigeria and South Africa must research about economic reforms to swallow this catastrophic poverty and inequality, results for the next decade will change because of new interventions and mechanisms introduced in economies. Continuous innovative knowledge research can build new structures to pave them to competitiveness. It will need too many sacrifices but it will pay off for future generations.
John Denver song lyrics, Plant a tree for your tomorrow, It's your tree that clears the air, plant a tree, trees for Africa, plant a tree today for all the world to share. Shared growth or shared value must be our core value in our personal mission statement before we adopt the institution's mission statement.
Socialism is economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods; a system of society or group living in which there is no private property; a system or condition of society in which the means of production are owned and controlled by the state and lastly, a stage of society in Marxist theory transitional between capitalism and Communism which is distinguished by unequal distribution of goods and pay according to work done and in that heaven state, there is equality of opportunities.
Africa needs to realise socialism first and depart from great societal values in development as currently, inequality, poverty and unemployment are opportunities that are available above 50 percent in Africa.
Shared Growth is based on the concept of shared value, a corporate strategy based on policies and practices that enhance competitiveness by addressing social and environmental issues. With its focus on multi-sector participation access, upskilling the economy and financing solutions to global challenges and turning social purpose into corporate strategy. Corporates that adopt shared growth are basically in a pool of corporate citizenship and inclusivity is their principle to redress the impurities of the past, mainly in the African continent, reflecting on its colonial and post-democracy capture.
“People are revolting against the economic ‘elites’ they believe have betrayed them, and our efforts to keep global warming limited to 1.5°C are falling dangerously short,” said Professor Klaus Schwab, Founder and Executive Chairman at the World Economic Forum. “With the world at such critical crossroads, this year we must develop a ‘Davos Manifesto 2020’ to reimagine the purpose and scorecards for companies and governments. It is what the World Economic Forum was founded for 50 years ago, and it is what we want to contribute to for the next 50 years.”
This decade will require a change in businesses, governments and civil societies at large. We expect the global economy to expand largely because of the industrial revolution manufacturing machines that will encourage more resource efficiency, reuse, recyclable, circularity and remanufacturing products.
Governments will have to be clever in crafting legislation covering the new paradigms as the fast-changing nature of technology, for instance, demands nimbleness of response. Existing legislation hampering growth stimuli must be swept away. South Africa, for example, is overhauling all laws blocking entrepreneurs and small businesses from growing and creating jobs, the implementation of the new systems can see South Africa attractive again, and the opposite will have its results as well.
The purpose of a company is to engage all its stakeholders in shared and sustained value creation. In creating such value, a company serves not only its shareholders but all its stakeholders – employees, customers, suppliers, local communities and society at large. The best way to understand and harmonize the divergent interests of all stakeholders is through a shared commitment to policies and decisions that strengthen the long-term prosperity of a company.
A company is more than an economic unit generating wealth. It fulfils human and societal aspirations as part of the broader social system. Performance must be measured not only on the return to shareholders but also on how it achieves its environmental, social and good governance objectives. Executive remuneration should reflect stakeholder responsibility.
A company treats its people with dignity and respect. It honours diversity and strives for continuous improvements in working conditions and employee well-being.
Inequality in Africa is very high, multinationals and corporates need to rethink on how corporates are expected to live with all stakeholders for a sustainable future.
Many global institutional investors have signed the United Nations Principles for Responsible Investments, Impact investments and some are founded by human rights philanthropists, so with that said, we need to all guide our investments and corporate mission statements to align with managing for stakeholders value, managing for societal value, managing for shareholder value and that of managing for strategic value to ensure that all stakeholders live in harmony and there is enough social license to operate in all industries, that will reduce geopolitics, trade wars and trade unions rebelling against corporates.
The South African mining sector is a living scenario of corporate leaders who don’t uphold rightful values society expects and we are left with all parties losing, employers losing bottom line and employees losing a better life, unemployment has risen and automatically, inequality increased.
Miyelani Mkhabela is an Economist and director at Antswisa Transaction Advisory Services. He is contactable at: [email protected]