We have highlighted the ways to conduct responsible capitalism, we have written at length about the good practices of other organisations.  now it is time to highlight how capitalism perpetrates some of the most evil and reprehensible acts ever witnessed in the history of capitalism.  What do they do? Perhaps they make weapons and sell them to the highest bidder? No, perhaps then they create highly toxic pollutants and dump them in populated areas?  Again no.  Monsanto are an agricultural bio tech company which creates GM seeds for farmers.  They have cornered the market in America and are the largest producers of GM seeds in the world.  

You would think that the development of GM seeds would be a good thing for the worlds poorest agricultural societies, and indeed if the scientific ideals behind the development of GM crops were fulfilled by such industrial giants it would be.  GM crops should offer higher yields, less use of pesticides and fertilisers and overall should herald an age where food scarcity becomes a thing of the past.  Monsanto, however, has utilised the technology to increase the dependency of its seeds to its own propriety chemicals and fertilizers and has used its profits to impose itself on new markets and buying up all of its competitors.  

A simple analogy will expand upon why this is potentially the most dangerous and reprehensible example of raw capitalism the world has ever faced.  The company is like a heroin dealer.  It begins by offering its product at a low price and promising the end of all worries and hardships.  As the customer begins to use the product the price and reliance on the dealer takes hold and the prices rise.  Monsanto also uses its foothold in the market to eliminate all other possible suppliers of seeds and pesticides.  Remember these crops are designed to be dependant on its own proprietary chemicals.  If this expansion is allowed to continue Monsanto will hold the worlds grain supply in its hands, and can force us all to pay what it likes. 

Grain and soy products are the basis of our food chain, it is used to feed cattle and make bread and flour, the most basic foodstuffs, it is also used to create oil and increasingly to make bio fuels.  If Monsanto is allowed to continue its domination of the global seed market we will become enslaved to its ability to withdraw the needed chemical supplements by selling to the highest bidder.  It can effectively tax the food supply for profit.  

Whilst this may sound alarmist and over the top, it is impossible to imagine that any Government would have the power to force the company to change its business practices when it has such control over the food supply of their country.  Already in America Monsanto supplies almost all of the seeds used by its farmers, it has complete domination of the largest economy of the world’s food supply.  

please visit their web site at http://www.monsanto.com/

Join the campaign against them here 

worry about what they are doing, watch the video

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 At least 80% of humanity lives on less than $10 a day.

More than 80 percent of the world’s population lives in countries where income differentials are widening.

The poorest 40 percent of the world’s population accounts for 5 percent of global income. The richest 20 percent accounts for three-quarters of world

According to UNICEF, 26,500-30,000 children die each day due to poverty. And they “die quietly in some of the poorest villages on earth, far removed from the scrutiny and the conscience of the world. Being meek and weak in life makes these dying multitudes even more invisible in death.

Around 27-28 percent of all children in developing countries are estimated to be underweight or stunted. The two regions that account for the bulk of the deficit are South Asia and sub-Saharan Africa.

If current trends continue, the Millennium Development Goals target of halving the proportion of underweight children will be missed by 30 million children, largely because of slow progress in Southern Asia and sub-Saharan

Based on enrolment data, about 72 million children of primary school age in the developing world were not in school in 2005; 57 per cent of them were girls. And these are regarded as optimistic numbers.

Nearly a billion people entered the 21st century unable to read a book or sign their names.

Less than one per cent of what the world spent every year on weapons was needed to put every child into school by the year 2000 and yet it didn’t happen.

Infectious diseases continue to blight the lives of the poor across the world. An estimated 40 million people are living with HIV/AIDS, with 3 million deaths in 2004. Every year there are 350–500 million cases of malaria, with 1 million fatalities: Africa accounts for 90 percent of malarial deaths and African children account for over 80 percent of malaria victims worldwide.

A Global Minimum Wage would end all of this…….

“You might have heard on the news that RBS have now agreed to pay out £175m in bonuses. This is 7% of what they paid last year and £825 million less than its reported they wanted to pay out this year. So I think this is a 93% victory for people power, common sense and Government intervention.”

Indeed it is a victory, as during the early parts of the hearing the banks were insistent that the bonuses represented a fair and just settlement for staff who had hit targets.  However a lesser known part of the campaign was also to negotiate a better deal for counter staff at banks, which leads one to the question, who were these bonuses for in the first place.  It can only be surmised that the bulk of the £1 billion was to pay for investment bankers bonuses, and in that case justice has certainly been served.  

Where next though?  Well Lloyds TSB the troubled High Street bank is also under pressure, both in terms of its failing share price and unstable balance sheet, and its plans to hand over similar bonuses to staff.  The Campaign continues apace and as Prescott states 

“…the bigger prize now is the fundamental review of our banking system to ensure we put fairness and stability right at the very heart.”

We couldn’t agree more, there are now 33,000 or so members of the campaign and growing, it is time to harness this people power and demand responsible capitalism.  

Lloyds TSB’s acquisition of troubled HBOS, a deal brokered by Alistair Darling has been blamed for its recent downgrading by credit agency Moodys.  This video gives a great introduction to the merger and we will be following up the actions of Llyods since the takeover closely to demonstrate how irresponsible capitalism is costing us a fortune in tax revenues, and whether or not the government is enabling a new and fairer system to be put in place

The banks have acted in this way because of the risk models which have been used over the last few years.  These risk models have been designed to bypass what would ordinarily be considered infeasible opportunities for such institutions in the past and have focused on maintaining ever higher returns for stockholders.  What is most reprehensible in the corporate behaviour over the last ten years is that the banks have been posting record profits year on year which if taken together and added up amount to a sum which dwarfs the current losses posted.  A question that we should all be asking is not only why are these banks paying bonuses to traders, but also where are these profits, and why have they been paid out as profits to investors in the form of dividends.  Sadly the banks have not done anything illegal in returning this money in previous years to investors.  This is due to the way that debt is valued on the open market and how these figures are then reported in accordance with generally accepted accounting principals (GAAP).  GAAP and the banking code are legislative measures put in place by statute and enforced by act of Parliament, and they have allowed this situation to occur.  So whilst a great deal of attention is paid to the bonus culture must we not also pay attention to our legislature and enact root and branch reform of both statute and GAAP to ensure that the ability of institutions to pay out profits on complex financial instruments reflects the inherent risk involved, and that some contingency is made in the accounts to reflect risk.  this would allow for a fairer situation and engender more care by bankers in the investments they make as, if the investments are sound investors will receive profits eventually, and if they are not the public and other stakeholders are protected from the fall out.  Risk is a complex issue and enough risk needs to be acceptable to investors to drive profits, but in recent years bankers have thrown out the sensible approach to risk in favour of a devil take the high-most attitude which is directly responsible for the economy imploding.  We the people demand change.

Prescott raises awareness on the petition to stop bonuses and points out the enormous power we all have in shaping the new economy. Support him.

gIt is easy to become blinded by such arguments to one very simple fact.  The existing model of risk and reward has already led us to disaster and beyond.  Whilst economists and bankers refer to a ‘perfect storm’ of conditions which have coalesced to produce a devastating economic collapse it cannot and will not be refuted that the behaviours of the largest banking institutions have led directly to this situation.  To then suggest that by demanding that these practises stop immediately is wrong because it might make things worse is the same as suggesting that an alcoholic should be given all the drink he wants because it might be difficult for him to stop drinking.

Risk is a much misunderstood concept, especially by investment bankers.  The use of risk modelling over the last few years has allowed a hardcore group of investment bankers to take risks which any sensible person with at least a modicum of financial acumen would baulk at.  Indeed the rewards culture has encouraged it.  Rewarding risk taking behaviour is a vicious circle, the more risk taken the higher the rewards, the higher the expectation that these levels of return are sustainable.  It is interesting to note that those investment funds which eschewed the ‘at any cost’ approach to returns are still managing to make a return on investment.  The banks have become addicted to short term-ism and the cure is a root and branch reform of all banking practices.  

Most people are slightly risk averse in nature, and whilst risk is an important part of investment, to suggest that banks will become risk averse is the same as suggesting that they are taking the ball away if they dont get to play the game by their rules.  It is time to stand up and be counted in the fight for proper regulation of international banking practices, do not forget that it is with our money, our wages and savings, that these people play with the money markets and have ultimately destroyed our economy.  Join the fight here.

The real question is central to the concept of responsible capitalism, as corporate behaviour is dictated by the maximisation of wealth, CSR needs to be much more than a pricked corporate consciousness.  It needs to become a part of how a company makes a profit.  To a certain extent this is already true, as the Washington Post recently reported that there seemed to be no difference between socially responsible companies stock price and the stock price of corporations deemed less responsible.  Indeed, a marked trend which has appeared over the last ten years is that those companies deemed to practise CSR well have lower risk and better return on assets than those who don’t.  but will this trend continue as bottom lines become more and more tight?  The main changes which have driven the change in corporate behaviour are unchanged by the recession.  A corporations behaviour is dictated by the stakeholders in the company, and one of the most significant changes to take place in terms of CSR is the understanding by shareholders and management of the fact that society at large has a stake in the actions and performance of a company.  No longer does a company have to satisfy only its shareholders.  Institutional investors realised long ago that to ignore the wider society was to invite huge risk and uncertainty into the equation.  Driven by the environmental lobby the public has realised that it has an enormous amount of power over the behaviour of its corporate entities.  This will remain so, it is the equivalent of the opening of Pandora’s box, once in our social consciousness it will not be diminished by recession.  

The second main change is the speed and accuracy of information transfer.  Corporate entities have no where to hide with the advent of the internet and 24 hr news by a dedicated professional and equally dedicated amature body of reporters.  A collective mind set of outrage greets news of the Enron scandal, of the last Exxon spill, of the news that Bankers took such risk with our deposits, and this outrage finds its way into the mass media and into our mindsets.  This is a revolution of CSR and will ensure that one of the survival conditions of a corporation becomes its commitment to CSR, because it will attract lower risk, smarter management and ethical capital investment.  All because we the people demand it.  Your opinion, whether stock holder or citizen matters more than it ever has.

Recent reports of the reduction in Malaria deaths in Africa have incited arguments about the figures used to support the initial claim.  The Bill and Melinda Gates Foundation reported that:

  ’Several African countries have made progress against the disease using low-tech methods such as bed nets and indoor spraying. In Ethiopia, for example, 70 percent of households in high-risk areas now have at least one insecticide treated bed net and indoor spraying, and effective medicines are available nationwide to treat malaria.

In less than three years, Zambia has seen a 50 percent drop in the number of children infected by malaria parasites and a 29 percent drop in overall child mortality, which experts say is almost certainly due to the wider distribution of insecticide treated bed nets.’

Whilst William Easterly claims these figures may have been erroneous.  The differences come from figures used in the Foundation’s reports and the WHO Malaria Report for 2008, and several editorials on the subject have questioned the effectiveness of the Foundation’s work with Malaria.  One of the most significant problems with any new concept which utilises a whole system of new rules for capitalism is the ways in which we measure success.  Indeed there is so much ambiguity about measuring success in mainstream capitalist organisations, changing the fundamental rules which guide the economic principal is going to have inevitable measurement problems.  

Whilst it is easy to use statistics to justify, or discredit such schemes, isn’t the fact that malaria nets and medicines are now more widely available in problem areas a good thing.  Should we not be praising this scheme?  It is really a battle between optimism and pessimism, and if it is what is the best outlook to have?  In the fight for a better world it is very easy for those of us on the side of Responsible Capitalism to become embroiled in divisionist arguments amongst ourselves.  Indeed it is often promoted by those who have a vested interest in the status quo.  Whilst debate is important and integral fro the movement to succeed, so is action.  Bill & Melinda gates have rolled the dice, and have committed an enormous sum of capital to improving the world.  They have also given us, along with other modern thinkers,  a template for how all capitalist entities can follow them.  It is not perfect, it cannot be no self organising system is, and it will always need to be change responsive, but it is action and it is sorely needed in the world.