Nine visions of capitalism

FIFA’s corruption scandal shows capitalism is in crisis

4 June 2015 by in Business and finance, Current events, Football Business, Nine visions of capitalism

Suggestions of corruption at FIFA are nothing new. It’s been well known for years that millions of dollars have changed hands between the mighty football organisation and sponsors, governments and powerful individuals. However, it’s always been something that was known about but not spoken of, the inevitable side effect of having such a large and influential organisation at the heart of the world’s most popular game.

Now, with the arrests of several FIFA execs and the resignation of Sepp Blatter, it is apparent that even the mightiest corporations can fall. FIFA has, in the minds of many, been associated with enormous wealth, lucrative sponsorship deals and a popular game. But if it emerges that FIFA has given the World Cup to countries that may not be able to sustain it accusations that there has been too much emphasis on the profit of football rather than the game itself may start to ring true.

‘It’s only a game’ they say, but it’s been a game of cat and mouse for the FBI, Swiss investigators and the alleged wrongdoers at FIFA. It was astonishing to many of us that after the arrests that Blatter was once again elected as the FIFA president. Finally, those accused of corruption must answer for their actions and if found guilty take responsibility for running the game in the interests of the highest bidder.

Nobody in England is in doubt that this country was robbed of the 2018 World Cup in favour of ‘corrupt’ Russia, but we may not be the most unbiased arbiters here. It seemed ridiculous at the time, when the UK is already host to stadiums with large capacities and football teams known about and supported the world over. To the casual English observer (and many less biased onlookers) it appeared that the home of Manchester United, Chelsea and Arsenal had been robbed of the chance to bring football ‘home’ simply because Russia could pay more.

However, one must now begin to question not only the morals of bowing to corruption and power, but also the human cost that comes from it. The 2022 World Cup was assigned to Qatar, a country that is far too hot to host a summer football event and one that is in no way equipped for a sporting event on such a grand scale. Tourists will descend on Qatar, demanding alcohol in a dry state, and proving to the world that football hooligans and Qatar perhaps are best kept apart. That is not the worst of it, though. It emerged that last year, a construction worker died every other day on the building sites in Qatar. How has FIFA been able to ignore this unimaginable failure of humanity?

Whether those arrested are found guilty is still to be decided, but one hopes that FIFA can be reformed. If nothing else the revelations of potential corruption suggest that FIFA’s internal workings are extremely old fashioned and display to the world the worst face of capitalism. But FIFA is far from the only big organisation out there that needs to be reformed. The Anglo-American form of capitalism may have had its day if recent banking and other corruption scandals are anything to go by. Once Blatter has left, the organisation must ensure that it takes steps to distance itself from its past. One way of doing this might be to embrace a new approach to business where benefits besides financial gain are given weighting in the decision-making process and where the wealth of the football community at large is prioritised ahead of the profits of a few very rich investors. Capitalism the way we know it almost inevitably leads to the few profiting at the expense of the many, but it doesn’t have to be this way as smaller movements around the globe, such as crowdfunding, the Conscious Capitalism movement and the Cambridge Phenomenon are proving. Big businesses the world over can learn valuable lessons from such organisations.

On the Total Irrelevance of electoral politics to the UK’s economy and its problems

29 May 2015 by in Business and finance, Current events, Nine visions of capitalism

By Charles Hampden-Turner, author of Nine visions of capitalism along with Fons Trompenaars and Tom Cummings.

Huge amounts of energy, shouting, amateur dramatics, exaggeration, triumphalism, disastrous disappointment, were featured in the recent election. Reputations were made and shattered, decent people demolished, hopes raised and dashed. Democratic politics substitutes verbal jousting for physical force and that is to the good. Many nations still kill each other. But the verbal fisticuffs need to be relevant to real problems facing the nation and they are not. We need to argue about ideas that might make the economy grow and such ideas are nowhere to be seen. Of course governments take credit for any economic rise and avoid blame for any economic fall, but the truth is that they have not a clue about what to do and recipes are mostly debating points and not solutions. They resemble a man waving his fingers over the keyboard of a player piano where the tune has been punched upon a scroll by unseen hands.

The UK is going to slip ever further behind economically and politicians will continue to turn our milk sour unless they start to face the reality of sagging productivity, chronic under-investment, de-industrialization, the decline of the working class, the stagnation of wages, ever-climbing inequality, growing child poverty and mounting debt, to mention but a few. The “choices” we are asked to make, between more or less government, more of less power of employers over their employees, the extent to which those on welfare should pay for the banking crisis, whether the rich should be further taxed and whether we should exit Europe, has almost nothing to do improving the economy or improving its functions. Politicians are not simply helpless in the face of our economic decline they are part of the problem.

Business is not an adversarial process it is a process of agreement, co-creation, engagement, innovation and forming relationships that generate wealth, so all parties have more money than they began with. There would be no companies if it paid to scratch each other’s eyes out rather than cooperate. We create surplus value through mutual comprehension of each other’s needs and from making provision.  Yet politicians trap up is their world of Either/Or, More/Less, Victory/Defeat. Left/Right, Government/Private Enterprise and First-past-the-post or Resign in disgrace.

But of course government is not the enemy of free enterprise, but its impresario, its coach and its cheer-leader. The contracts it offers play a crucial role. Instead of giving ever more power to employers to subdue employees why not favour companies that empower their people? Why not demonstrate that paying people more raises their productivity so that both employee and employer win? There are companies, not many but some, whose employees are engaged, who repay their employers generosity in spades, who have made their work-place meaningful, memorable, innovative and exciting. Why not celebrate these?  Why not have them teach us? What does Rolls Royce have that most other industries lack?

We are being overtaken at frightening speed by countries who believe in cooperation rather than conflict, mutual understanding rather than insults, who engage minority views rather than out-voting these, disempowering them and inviting them to oppose. The language of adversarial jousts is antithetical to the growth of enterprise. The crowd out there funds you, it does not howl you down. What can we do about this?

One possible remedy is to take certain issues out of political discourse and create bi-partisan support for them. All politicians need the economy to grow, to create, to innovate, to prosper and for employees to be well not poorly managed. Several Parliamentary Committees have reached common understanding of why manufacturing is important, how supply chains are better managed, how environmental concerns can be turned to profit, how industry around universities like Cambridge can flourish, why on-the-job training and apprenticeships are so important, how women might be more fairly treated, why and how crowd-funding could take off.

These committees meet privately in many cases so they do not need to show off or substitute ideology for thought, or undermine opponents. They are inquiring into matters all of us desire but find hard to generate. Their detailed and agreed recommendations should be above politics. Something that will work because people with diverse views have agreed on them and can bring their workers or their managers to the table to work together.

What about honouring the trade union whose cooperation has contributed most to higher productivity and wealth sharing? What about getting Google to explain how giving employees 20% of their time to follow their own devices, actually increases innovation and that more emerges from that free time than from managed time? Why not fete those who develop free internet products and seek to give gifts to the on-line community? Why do we not thank them publicly? Why are they more creative than paid help? What does this mean for the huge bribes we pay failing bankers? If politicians would start to think and forge cross-party policies we might start to admire them! They might disgust us less.

To find out more about Charles Hampden-Turner and Fons Tromenaars, and their company, please click here.

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Crowdfunding as the antithesis of electoral politics

20 May 2015 by in Business and finance, Current events, Nine visions of capitalism

We have just had to endure another stomach-turning electoral contest in which fear, venom, character assassination, unfunded promises and unproven assertions wrestled with each other and which those we collectively abhorred the least eventually won. Thank God we endure it for only six weeks in five years, yet it does us immense damage and sours the public mood. Rarely, if ever, has politics been so bereft of ideas, so sterile in its jousting, so destructive in its name-calling, so locked into rival ideologies that its partisans can no longer think, much less create.

Yet there is another movement afoot, one that is growing at astonishing speed, faster even than the digital revolution. Computer power has been credited with doubling in size every eighteen months but crowdfunding, sometimes called peer-to-peer lending is doubling every three months. But are we comparing like with like? Surely crowdfunding is just one additional way of getting investment funds, a way suited to smaller, maverick projects and can not even lay claim to political significance. We hope to show that it could change capitalism profoundly; it may not be overtly political but it has social and political repercussions of a very meaningful kind.

Crowdfunding is for the moment confined to the Internet. It uses various platforms, such as Kickstarter and Crowd Cube, to put ideas before a ‘crowd’ of on-line investors. A project is described and a request for enough capital is communicated. The crowd either meets the minimum capital needed to launch the project or it does not (money for under-subscribed projects is never collected). About one third of all projects are fully funded and go forward. Those receiving insufficient backing may have failed in any case and it is better for everyone that little loss was incurred at this early stage. However, a project may be relaunched in the future with a revised prospectus. We believe it is a matter of time before this development is picked up by mass media with millions of viewers and becomes a variety of Reality TV with totals raised broadcast during the programme, and with the whole culture celebrating innovation as a way of life. Commercial TV could find a new source of revenue by taking 5% of the total raised.

So let us compare the ‘democracy’ of our electoral process with the democratic potentials of crowdfunding. How do these contrast?

Electoral process Crowdfunding process
The first-past-the-post system gives big advantages to the majority parties at the expense of all minority interests, e.g. it takes 3.9 million UKIP voters to elect one solitary MP. Most funds go to small minorities, enabling them to nurture new ideas that go viral on the Internet, with the potential to change everything through daring novelties and life-changing creativity.
One party wins and another loses nearly everything in a zero-sum game wherein gains and losses cancel each other out and power is wrested away from opponents in life-shattering ways. All parties win where the project succeeds, entrepreneurs, investors employees, customers and the community. Ideas have been transformed into new realities beneficial to their instigators and the crowd of enthusiastic supporters and cheerleaders.
The game is to achieve power over people, get the electorate to buy your promises, attack and rubbish your opponents and consign them to opposition benches. The game is to achieve power through people, use their funds to keep your promises and realize the ideals in your prospectus with their money and their moral support. You seek to convert all those involved to your viewpoint.
The system is fiercely and relentlessly adversarial. We are right and our opponents wrong, foolish, dangerous and destructive. The least feared and hated party wins. The Devil vies with the Deep Blue Sea. The system is cooperative and co-creative with investors as midwives of procreation and with only projects that are truly needed receiving funds. Investors are seeking to improve their society, and where they succeed they profit.
The system requires millions of pounds to operate large organizations. This puts the electoral systems at the mercy of rich donors who buy access and expect a return for their money. The system operates by funding thousands of good ideas and small organizations. Funding goes not to power but to potential, to the idea whose time has come, to those with dreams to realize.
Large amounts of money from very few people buys continued dominance and conformity to what rich people demand. Small amount of money from a wide variety of people, fund a very diverse range of new ideas, which change us radically.
Large investment portfolios tend to the lowest risk possible and to markets where prices can be administered by market domination. Small investment portfolios can afford to stake less but risk much more on changing society for the better. Dramatic success is possible.
The viewpoint in almost entirely quantitative. Everyone wants just one thing and the answer is more. The viewpoint is almost entirely qualitative. Everyone wants to help their society but in different ways.
The attitude to minorities is that now they have been beaten, they should yield to majority control. They are losers and should be marginalized. The attitude to minorities is that they are a potentially creative resource and come up with ideas the majority would never hazard. Diversity is infinitely precious.
The whole purpose of politics is to realize your own economic self-interest and asserting these aggressively is enough to win. The whole purpose of crowdfunding is to realize meaningful ideals by offering these to the public for sharing with you.
Ideological politics is sterile because everything within one polarized extreme has been tried and one is not allowed to borrow from the rival viewpoint. It is off limits. Crowdfunding is an industry espousing radical ideas and hence borrows the vehicle, private enterprise, from the Right while the ideals are largely from the Left. Any new political idea is a hybrid of Right and Left.
The argument is about redistribution and the power of government. Can it confiscate what others have made? What will this do to enterprise and motivation? The argument is about pre-distribution. Might companies who promise their crowds to be fair, to promote women, to pay good wages, train their people, and be sustainable, gain better access to crowdfunding?
Competition is the life-blood of both politics and business. We we all want more and some of this must be taken from our weaker brethren. Diversity is the life-blood of both politics and business. Where we are sufficiently different invidious distinctions vanish and nearly all can succeed on their own terms.

What is unique about crowdfunding is that it starts even before a product or service has been made or any unit of currency spent. It is an idea, an abstraction and a value in our mind’s eye. We can share it with others, discuss within the ‘crowd’ what sort of world we want, producing any number of wealth development and satisfactions. It is a potential rebirth of the Puritan ethic insofar as it begins with the reason for our being and what we should do on earth and whom we should serve with the one life we have. It is the potential sheet anchor of the Innovative Society. Members of parliament have powers to help redesign capitalism as a beneficial force in our nation and insist that it builds industries which engage and develop us all. Where every organization performs before an appreciative crowd the world is changed.

Charles Hampden-Turner and Fons Trompenaars are the authors of Nine visions of capitalism (with Tom Cummings). It will be published on 7th September 2015. To preorder, please email info@infideas.com.

To find out more about Charles Hampden-Turner and Fons Tromenaars, and their company, please click here.

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