Wealth requires a rethinking of our societies


Bevorder aanhoudende, inclusieve en duurzame economische groei, volledige en productieve tewerkstelling en waardig werk voor iedereen

Some thirty years ago free-market thinking rapidly gained firm ground. It was truly disruptive thinking, allowing short-term financial performance to be the dominating component in the definition of welfare. The theory said that investors should be given almost unrestricted powers in deciding the fate of corporations and the activities of governments alike. This role eventually became institutionalized and enshrined in many national regulations, multilateral treaties and trade pacts.

New institutions were created or enhanced in their roles of assuring compliance with this new paradigm. The superior compensation these jobs offered attracted talent to those very institutions. The influence of leadership in traditional institutions like corporations and governments was transferred to shareholders and a newly created regulatory context. Executives and governments legitimized their new position by being compensated through, among other things, higher executive pay and proceeds of privatisations. The price they paid was giving up influence to decide the destiny of the organization they represent.

Industrial capacity was transferred from the West to emerging markets, partly because of lower wages and partly because of looser social and environmental regulations. The new markets also provided new consumers, initially helping Western companies generate above-average growth and flows of cash in both emerging markets and the Western world. Employment in the West was kept high by replacing industrial jobs, emerging markets became industrial powerhouses and government loss of power was compensated for by the proceeds of privatisations. Credit fuelled consumption and propped up the illusion of wealth until the crisis of 2007 spoiled the fairy tale, but the effects of the paradigm shift of free market thinking affects our ability in facing future challenges.

The measures taken during the 2007 crisis to a large extent confirmed the power of the finance sector and its shareholders. The pursuit of maximum return created a plethora of non-sustainable investment. The debtors however ended up fully paying the bill for the crisis, putting governments and private households in crisis. The massive monetary support led above all to a recovery of asset prices, but failed in fuelling value, creating industrial activity and providing income to large parts of the population. Without genuine value creation, there is a bubble waiting to burst.

Market thinking has also lead to monopolistic positions in the finance, commodity and information sectors, parties that leverage their position to maximize their (short-term) income and position to decide the fate of industrial corporations, citizens and governments. Our pension funds have transferred a major portion our citizens’ wealth to asset managers; funds that issue massive cheap finance to disruptive firms making marginal or no profits. Those funds are collecting all details of our lives and intelligence from our societies at no charge and with marginal investment. The cost of the transition comes entirely to society, not only in cash, but also in the dismantling of its institutions. This ‘modus operandi’ is legitimized by treaties, legislation and regulatory bodies that are tailored to their needs.

It deprives societies, individuals and its institutions of the freedom and means to decide and invest in their own fate in freedom; the freedom to create value and shape, maintain and defend ethical values to their liking. Ultimately it leads to a small elite harvesting the most, a philosophy advocated, among others, by several of the owners of those very Internet giants. In our pursuit of increased consumption, we have given away the control of our lives and destiny to a happy few. Their position is currently further enhanced by addicting ourselves to their devices, forcing a lifestyle, resource consumption and perspective that is not necessarily to our liking.

We assume today continued availability of, for example, engineers, farmers and teachers in sufficient number and quality, as a given. The same applies to materials and alternative materials whose availability is limited; this in a world that defines increased wealth in terms of a growing need for consumer goods. The metrics of free-market thinking deny to a large degree consequential implications on material and immaterial wellbeing over time. Indicators that factor in limitations in availability of resources or tipping points causing disruptive events are not factored in. Where efficiency has been the norm, resilience should be the norm going forward.

Transition by definition is a process of destruction, repair and reconstruction. Such a transition process requires deep understanding of the complexities and interdependencies of actors, value chains and processes. It requires the ability to define solutions in other than mere financial metrics.

The financial crisis has demonstrated that finance, with its limited expertise, accountability and engagement, failed to deliver sustainable wealth creation. The crisis evidenced the overvaluation of the ability of cash to deliver change and resilience. This overconfidence could well apply to the information giants.

Transition starts with leadership in adapting institutions and individuals to understand system thinking and with that same leadership accepting and embracing complexity. Local and regional embedding is as important as implications on a global scale. Trade-offs need to be made to enable actors to continue their engagement to change. New methods and metrics will be needed to understand the implications of decisions early on, providing actionable insight in defining sustainable economic return and wealth. Hence there is no alternative other than to invest in the long path of institutional and systemic change.

Setting sustainability targets is important, creating the context for sustainable transition is even more important in shaping a liveable world for generations to come.

Samer Mansour

Samer Mansour

University of Wageningen, Forestry Faculty

Founder CEEDS®, a platform for sustainable transition

Velse GGZ
Member of the supervisory board psychiatric clinic

Atlas Invest Holding BVBA
Advisor to the Executive Board

Executive Interim Partner