"The system is broken": the billionaire investor who fears a return to the 1930s.

I am prompted to write in response to article by Dominic Rushe in the Guardian on the 9th February 2020. @dominicru

Rushe, writing from New York, describes how Ray Dalio, founder of Bridgewater Associates, worries about the system that created that wealth.

“ 'This period is very similar to that of the 1930s', says Dalio. 'We’re at each other’s throats when these are the best of times. The world has gone mad, and the system is broken.

" 'The gap between rich and poor has grown too wide, and most people have not seen real income growth in decades. The economy is stacked against those at the bottom. Education, healthcare, the tax system, the prison system and political deadlock present an 'existential risk' to the US and the rest of the world.

" 'The Great Recession has left a pool of seething resentment in its wake. Nationalism is sweeping the world and the political order is being overturned. As Eric Hoffer pointed out, the French and Russian revolutions came not at economic and social nadirs, but as living conditions were improving.' "

Rushe quotes Dalio's concerns about the future of society: 'I think the capitalist system needs to be reformed, because first of all it’s not fair. And secondly, it’s not optimally productive.'

"The relentless pursuit of profit over people has created a structural flaw that threatens to bring the whole system down. 'All systems should evolve. We all need to evolve. We need to be reformed constantly,' says Dalio.

" 'If we are to find a way out of this mess', he says, it’ll be 'with the collective involvement of people who bring not only different perspectives, but different skills to bear on the problems.

“ 'Generally speaking, the capitalists focus on increasing the size of the pie, but not on dividing it well. Socialists focus more on dividing it well, not on how to increase its size.

“ 'I think that we have to work together and this all has to be done in a bipartisan or not partisan way, because I think that right now you’re producing such anger and division and that is our greatest risk', he says."

Rushe records that the reaction to [Dalio's] capitalist critique from fellow billionaires has been 'overwhelmingly agreement, although not open agreement. I’ll tell you what the fear is. It’s not that they will be taxed more. That’s interesting, because I think most people think that that’s their main fear. The main fear is that the system of making productivity work will be hurt,' he says.

So: the system is broken and the resultant nationalism contains some of the seeds of revolution, even as economies are doing well. Capitalism needs reforming, and that reform should be done by socialists and capitalists working together, so as to stop the anger and division that is our greatest risk, and replace it with a system that creates a healthy pie and ensures that it's divided fairly. Meanwhile, evidently, the biggest fear that capitalists share is the breaking of "the system that makes productivity work."

Is anyone apart from me confused?

Dalio seems to be advocating something like democratic socialism, or managed capitalism, or capitalism with a human face. It seems to have worked well in Scandivian countries, where populations are small, the middle of the road is seen as the best place to be, and there is a strong tradition of community.

But those are political structures. If Dalio's premise is correct, then we have to reform capitalist systems and, not least, business systems.

But, as so many from Rick Haythornthwaite to Goran Gennvi have pointed out, you can't reform systems and structures without changing behaviours. And this means, surely, changing the way we imagine our society, which in turn means changing the way in which we imagine ourselves and our purposes. And it seems to me that if you are going to change those in order to reform by collaborating across deep political divides, then you have to let go of any fear of 'hurting the system that makes productivity work.'

Because the system that makes productivity work is, at present, based on the notion that profit should come before people. Yet Dalioa and others are saying that this is the very system that is failing people.

I think we can learn a lot from supermarket chains. Notwithstanding its size, a supermarket is still basically a shop, where the happiness of the customer depends to a great extent on the happiness of the staff. Now, let's assume that we're talking about a supermarket whose goods are high quality. The staff in those supermarkets are happiest when they enjoy human relationships with their fellow workers, feel valued by the boss, and are able to make friends with all customers of all kinds. Shopping is, as we are so often told, therefore primarily an emotional transaction. The warmth of that transaction exists within the context of the monetary transaction. In other words, although the purpose of the supermarket chain is profit, the profit is achieved not at the expense of human qualities, of people, but because of them.

It's very easy indeed to lose this focus, and we all know what happens when it is lost. Customers and staff alike feel undervalued or frustrated, as perhaps with Marks and Spencer clothing, and the profits dive.

In the supermarket business, the happiness of people drives profits. In the pharmaceuticals business, for example, profits drive people, and the happiness can come later, with something called 'the work/life balance.' Go and see HR. They'll maybe help you.

In my view, before the system is changed, the attitude to productivity and people has to change. I believe this is to do with what Frederic Laloux has called a shift in human consciousness, and there are plenty of people out there exploring what that means. What I think it means for business leaders is a complete shift in priorities towards, shall we say, finding happiness in being inspired by everyday experience (not just with families, but at a deep individual level), and then acquiring the skill to (a) pass it on through communication and (b) incorporate it into a business strategy that is based on putting human happiness at the centre of a business's purpose.

Some are making a start on this, notably the idea of the 'B' corporation promulgated by my friend Marcello Palazzi. That is, if you like, a change of system based on a change of attitude and an advance in awareness of what is important in life.

It isn't utopian to ask for this. Nor is it all that hard. But goodness knows, it's necessary.

www.martin-best-thecodeofinspiration.com