Wednesday, 24 September 2008
Stories and Structures
At Greengaged yesterday Dave from Howies told me a story that he said had been formative in his thinking about what's wrong with the world that social ventures are trying to put right. He said it came from a Tom and Jerry cartoon. And it goes like this. Tom & Jerry are marooned on a desert island. There is a wall up the middle of the island and (for some reason - perhaps it is 'all a dream') Tom has to do whatever Jerry asks. More specifically every time Jerry rings a bell, Tom has to fetch him a Pina Colada. Over time the cartoon shows pineapples being harvested, trees being chopped down... until of course in the end there is nothing left on that side of the island. But Jerry just keeps ringing and ringing the bell.
I was at a tomorrow's company event today where the chairman of HSBC and a number of other city luminaries (all outstanding leaders, with the highest moral standards - but potentially therefore not exactly representative citizens of the wild west of speculate-and-run capital markets)... discussed the topic of responsible investment. And David's story came back to mind. Mindful of already being the only person in the room not in a suit, i was wary about starting with 'Tom & Jerry', so I framed it a bit differently....
Is there any such thing as responsible investment? Isn't it likely that more than half the evil ever carried out in human history was the direct result of one party giving resources to other another party, with no oversight, and demanding results. Think about how horrified Levi's must have been (winners of the Martin Luther King award in recognition of their labour relations in the USA) when they discovered that their jeans were being stitched by slave labour in chinese prisons! How horrified the board of BP would have been at the possibility that their cost cutting edicts played a part in the refinery accident in Texas.
When investors demand returns in a time when the economy is tanking - can they be surprised at what may result? For instance - from the stampede by their VC and Hedge fund agents into buying agricultural land in the developing world?
The criticism that was leveled at the joint stock corporation from the start was that divorcing ownership from management responsibility and a full living knowledge of what was actually involved in running the business was a recipe for trouble.
My view of what's up at the moment is not only that there are deeper structural (primarily environmental) forces at play, but that the question about financial markets is really a crisis of capitalism. Communism 1917-1989. Capitalism 1830-?