In 2004, in my book Spiritual Capital, I wrote:
Our capitalist culture and the business practices that operate within it are in crisis. Capitalism as we know it today—an amoral culture of short-term self-interest, profit maximization, emphasis on shareholder value, isolationist thinking, and profligate disregard of long-term consequences—is an unsustainable system, a monster set to destroy itself.
I did not expect my prophesy to come true so quickly, but our current financial and economic meltdown demonstrates the truth of what I said. Capitalism is, indeed, in crisis, and the monster has destroyed itself. But now the question facing all the world’s leaders is, what can replace it? On the answer depends not just the soundness of our economic system, but the sustainability of advanced human culture itself.
The answer to the present crisis being suggested by virtually everyone is more regulation of the markets and of the business practices used within them. But a few extra regulations won’t bring about the change that we need. We’ve tried Keynesian economics and socialism in the past, and we know that both dampen down the creativity and output of the markets. As both George Soros and I have pointed out, our global capitalist system is a self-organizing system poised at the edge of chaos. When such systems are exposed to outside control, they seize up.
No, to change capitalism in a way that sustains the freedom and creativity of the markets, capitalism must change itself, from the inside. This kind of change will require a radically new leadership ethic, one driven by a new set of motivations and a broader understanding of wealth.
Capitalism as we know it has been driven by the lower motivations of greed and self-interest. Business leaders have been out for themselves, and their own drive to increase their personal and corporate material wealth. Nothing good can ever come from actions driven by negative motivations. They only evoke and reinforce other negative motivations, in this case fear and anger.
Customers, consumers, home owners, and the capitalists themselves are filled with fear today, and all but the capitalists are angry that the present situation has been allowed to happen. Those capitalists with any conscience are now filled with still deeper negative motivations of guilt and shame.
The only thing that can change behaviour driven by negative motivations is behaviour driven by higher, positive motivations—exploration, cooperation, personal and situational mastery, generativity and higher service. Business leaders must become servant leaders, leaders who serve not just themselves and share holders, but leaders who serve employees, customers, the community, the planet, humanity, future generations, and life itself. This new leadership ethic will require a revolution. Not a revolution with guns and bullets, and, God forbid, not a regulatory revolution, but a revolution in thought, and a consequent revolution in moral behaviour. Business must become a vocation, like the higher professions, and capitalists’ sense of wealth creation must expand to include spiritual capital—wealth accrued by acting on our highest aspirations and deepest values.
The foot soldiers of this necessary revolution are the external consultants and internal executives who run transformation programmes. These change agents must themselves bring a sense of meaning and purpose to bear in their work, helping business leaders to work from vision, values and higher service. And leadership networks like The Rotary, the YPO, the Lions, and The World Business Academy could become the revolutions’ knights. If they were to renew their core values and inspire their members to build genuine sustainability, they could play a significant role in saving capitalism from itself.
(This article first appeared in At Zero, issue 2, 2008.)