Hundreds of thousands of people, young and old, employed and unemployed, black and white, men and women, have come together in a continuing and lasting global unity, partaking in a dialogue of civilisations and peoples in consideration for the common good. This global movement has risen in a thousand cities, in 82 countries on six continents, from Zuccotti Park in New York to Oakland, California; Wall Street to St. Paul’s in London; Frankfurt to Madrid, Rome to Athens, Chicago to Sydney and more, rejecting neo-liberalism as depicted in the US’s economics and business model, demanding a better, kinder and more humane world. The crises of ecological devastation and glaring social and economic inequality are pushing the planet to the brink of catastrophe. Perhaps this revolt against the US Economic and Business model is occurring just in the nick of time.
Given the context of the times, we invite you to reflect on the two very important points highlighted below:
1 - On October 13th 2011, The Economist in its ninth ranking of international MBA Programmes, ranks the world’s top 30 programmes, and identifies the top 20 to be from the US.
2 - The first Nobel Prize in Economics was awarded in 1969. Between that year and 2011, 42 Nobel Prizes in Economics have been awarded. Out of these prizes 26 have been awarded outright to US citizens (62%) and a further 9 have been awarded to US citizens jointly with other nationalities.
At this point the pertinent Question is: if 20 of the 30 top MBAs and Business Schools are in the US, and 62% of the Nobel Laureates in Economics have been awarded to US Citizens then why is it that the US business, economic, social, environmental, healthcare, education, banking and finance, politics and international relations, Wall Street,..., and much more are all so discredited? Why is it that the policies, thoughts, and values that shape and guide the US economic system and Business school model are so unable to explain either the scope or severity of the crises we face, so ill-equipped, out of touch with, and unable to explain the revolt which is permeating the globe?
In our judgement, Business Schools, MBAs, and top Economics programmes have failed in three distinct ways.
They have failed to adequately address questions of values, ethics, social customs, traditions, and spiritual dimensions and their role in under girding a healthy economic system.
They have failed to inculcate in students a sufficient appreciation of market failure in the cases of a lack of competition, asymmetrical knowledge, public goods, and externalities.
Finally they have failed to adequately instil in students the understanding that even when markets are efficient, that they will likely lack social and ecological justice and that these extra-efficiency standards are worthy social goals.
We need to question the functionality of the existing economic system that has created a massive and widening gap between a few super rich and the many in abject poverty. We need to examine the soundness of extracting growing profit from a highly leveraged and unsustainable real sector in the face of massive numbers of disenfranchised people who are deprived of a potentially prosperous economic life. We need to question the ability of mother earth to support the extravagance of our blind and ignorant consumerism. We also need to put self interest in perspective, and balance it with concern for the common good and for other species and the earth.
We should recall the wisdom of Adam Smith, “father of modern economics”, who was a great moral philosopher first and foremost. In 1759, sixteen years before his famous Wealth of Nations, he published The Theory of Moral Sentiments, which explored the self-interested nature of man and his ability nevertheless to make moral decisions based on factors other than selfishness. In The Wealth of Nations, Smith laid the early groundwork for economic analysis, but he embedded it in a broader discussion of social justice and the role of government. Today we mainly know only of his analogy of the ‘invisible hand’ and refer to him as defending free markets; whilst ignoring his insight that the pursuit of wealth should not take precedence over social and moral obligations, and his belief that a ‘Divine Being’ gives us ‘the greatest quantity of happiness’. We are taught that the free market as a ‘way of life’ appealed to Adam Smith but not that he thought the morality of the market could not be a substitute for the morality for society at large. He neither envisioned nor prescribed a capitalist society, but rather a ‘capitalist economy within society, a society held together by communities of non-capitalist and non-market morality’. As it has been noted, morality for Smith included neighbourly love, an obligation to practice justice, a norm of financial support for the government ‘in proportion to [one’s] revenue’, and a tendency in human nature to derive pleasure from the good fortune and happiness of other people.
Building a new economics system will demand challenging and novel ways of thinking, perspectives that encompass the broad swath of human experience and wisdom, from the natural sciences and all the social sciences, to the philosophical and spiritual values of the world’s major religions and of indigenous peoples as well. The task before us is a daunting one, and wisdom in how to proceed will come from a multiple of sources, and must embrace the panorama of cultural and disciplinary perspectives. Practical steps are of the essence and we therefore propose some for you to consider. We also ask for your suggestions in expanding this list of practical steps, so that we can begin a dialogue on where we go from here in building a better world for ourselves and for future generations.
A few practical steps
1. a guaranteed income or meaningful job to all by society
2. a tax on financial transactions
3. access by the poor to credit markets
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4. reigning in executive pay in financial firms
5. taxing capital gains and dividends at the same rate as wages and salaries
6. elimination of too big to fail
7. massive use of usury free lending to provide basic human needs, and expand the quality of human life in ways that are environmentally friendly
8. a resurgence of financial regulations to reduce moral hazard, adverse selection, and to improve the flow of information to consumers
9. a serious global commitment to dramatically reduce carbon emissions, preserve habitat for endangered species, and to price goods and services with environmental costs in mind
10. an increase in funds for education at all levels, with education as a right
11. the grounding of Business and Economics education in social, moral, and ethical values and principles
12. a dramatic reduction in global military budgets and a significant reduction in the U.S. military presence throughout the world
13. creation of an International Fund for Peace, recognizing approximate words of Pope Paul the Sixth, ‘that without Justice there can be no Peace,’ that true peace must spring from the access of all to the means of life and the ability to be fully functioning members of the global community
14. the strengthening of multilateral global institutions and structures, the development of new ones, and the gradual elimination of the right of veto by major countries at the UN
We call upon you to support this "Call to Action" by adding your name, affiliation and the country of residence, and any suggestions for additional practical steps to the end of this message and send it back to Kamran Mofid. Please forward this message to your friends and network. We suspect that you are as concerned as we are with these alarming trends in environmental destruction and growing inequality yet are finding encouragement in the chorus of voices rising against the existing financial and economic system. Please join us.
To endorse this statement please send your name, affiliation and country of residence to Kamran Mofid at email@example.com