Valueism will restore trust in business and help save capitalism

If you have read my recent news in the Strategic Management Forum newsletter you’ll know I recently spent five days in Edinburgh, at two conferences on new thinking in economics. As I said in my previous report on them, I was there for several reasons: “First, I wanted to discover if those doing the new economic thinking have the answers to the problems of the economy. Second, I wanted to see how my idea of Valueism – “business and capitalism focused on value creation” – might relate to their current thinking. Third, I have been impressed by the global student-led movement that is challenging the stale and discredited old syllabus that still dominates. I wanted to see what progress the movement was making”.

In the report, and in other past articles, I explained that I believe economics is where we need to look if we want to discover the root causes of the 2007/8 Global Economic Crisis and the subsequent Great Recession. It was bad economic ideas, called neoliberal economics, that de-railed capitalism in the 1970’s.

In her book Doughnut Economics, economist Kate Raworth talks about “the authority of economics”. She argues however we tackle the challenges we face, “one thing is clear: economic theory will play a defining role. Economics is the mother tongue of public policy, the language of public life, and the mindset that shapes society”. Economists have an authority that means they are, “rarely far from the ear of power”. This explains perfectly the reason I wanted to understand what those economists are saying about 'new economics', and what they are thinking.

Raworth also suggests the revolution in economics has begun but argues, “Its success depends not only on debunking old ideas but, more importantly, on bringing forth the new”. Again, I agree. And she makes a great contribution to the shaping of the new ideas. But it is important to say that the ideas also need to be shaped into a coherent narrative and evolve into a new ideology.

Neoliberalism is not just an economic idea. It is an ideology, built on the foundations of a number of ideas from Neo-liberal economists. And these ideas were adopted by, and became the core of the political ideology adopted by, Margaret Thatcher and Ronald Reagan. The Constitution of Liberty by Hayek was referenced by Margaret Thatcher who declared “This is what we believe in” at a meeting in 1975, for example.

Neoliberalism may have had its roots in the ideas of economist Friedrich August von Hayek (1899-1992). And, some will argue his ideas come from Adam Smith (1723-1790). They would be wrong. To link Adam Smith’s ideas to those of Hayek and the neoliberal economists would require a complete misinterpretation of what Smith said. A point that was made repeatedly at the conferences in Edinburgh.

More of a case can be made for the claim that the real influence was ‘Scientific Management’, based on very un-scientific research by Frederick Winslow Taylor (1856-1915). That built on the idea of the division of labour, a subject that Adam Smith wrote about, but did not advocate. Nor was he the originator of the idea. References to it date back to Plato. And Adam Smith even warned of the consequences of it saying it would cause, “the almost entire corruption and degeneracy of the great body of the people. … unless government takes some pains to prevent it."  

The Division of labour idea provided the foundation of Taylor's thinking, and what came to be known as Taylorism. It evolved at the time of the Industrial Revolution, mass manufacturing, and the separation of ownership and management, linked to the birth of the Joint Stock Company and the limited liability of investors. These developments made it easier for those with wealth to make money from money, rather than the production of products and services.

All these developments matter because, as Raworth points out, “Humanity’s journey through the twenty-first century will be led by the policymakers, entrepreneurs, teachers, journalists, community organisers, activists and voters who are being educated today, But, these citizens of 2050 are being taught an economic mindset that is rooted in textbooks of the 1950's, which in turn is rooted in the theories of the 1850’s.”

This view is also one I expressed when explaining my decision to pull out of a project to write a textbook on strategic management for Oxford University Press. My decision was made when I learned that the book had to cover a syllabus, and the syllabus is rooted in the theories of the neoliberal economists and, therefore, the theories of the 1850s. My conclusion on this matter is summarised well by Raworth’s conclusion on what is being taught in economics, “Given the fast-changing nature of the twenty-first century, this is shaping up to be a disaster.”

Pointing towards a solution she says, “What if we started economics not with the long-established theories, but with humanity’s long-term goals, and then sought out the economic thinking that would enable us to achieve them?”

In developing the concept of Valueism – “business focused on value creation” – this was my aim exactly. In Valueism, "value" does not mean only profits, but also humanity’s long-term goals i.e. sustainable prosperity for all.

Valueism is a word I made up. A combination of "value" and "capitalism". I use it to describe what I hope will be “the next evolution of capitalism” and “a positive direction for capitalism”. I offer it as an idea because I firmly believe that we must attempt to try and save capitalism from the neocapitalists. The problems we face are not caused by capitalism, but by this particular form of it, which is corrupt and corrupting in so many ways.

Fortunately, many already see neoliberal capitalism as discredited and its legitimacy is undermined daily. The consequences of it are the loss of trust in business and all other associated institutions, rising inequality, democracy being undermined, and the rise of populism. But these issues can all be addressed.

My intention is to offer the concept of Valueism as a potential challenger to neoliberalism. It represents a new mindset, a new set of principles and practises, a new framework and a new ideology. I hope it may become a movement for change, embracing many positive initiatives, that would collectively have a greater impact.

To be clear, it is not entirely new. It builds on an earlier form of capitalism that was practised by a certain group of industrialists, the Quakers and Protestant Capitalists, who's strong values drove them to a more enlightened approach to business. They practised what is today called Shared Value, by Michael Porter. They built social capital in the form of model villages with schools, hospitals and houses for their employees for example.

Valueism is also grounded by strong values, not those of any particular religion, but by human-centred values. Where business is seen as a means to an end, and the end is the prosperity.

In her book, Raworth quotes cognitive linguist George Lakoff who talked of the power of verbal framing and the absolute necessity of having a compelling alternative frame if the old one is ever to be debunked, “Because simply rebutting the dominant frame will, ironically, only serve to reinforce it. And, without an alternative to offer, there is little chance of entering, let alone winning, the battle of ideas.”

Valueism, and the ideas and concepts related to it, offer new verbal framing. And Raworth in her book contributes new visual framing – new visual models and diagrams - for economics. The key diagram looks like a doughnut, hence Doughnut Economics as the title of her book. I will introduce it in another article to give it the focus it deserves.

In this article, I hope I have explained clearly why I think it is important to introduce the word Valueism as an alternative verbal framing to that associated with neoliberal economics. Despite being discredited it is still dominant. And we cannot afford to let it continue to dominate. The world is full of jargon already, but I do not apologise for introducing Valueism as more ‘jargon’. I think it is absolutely essential to at least attempt to win the battle of ideas.

My hope is that Valueism provides a verbal frame for talking about the “radical change in management theory and practise” I called for in an article for this year’s Peter Drucker Forum, which was on the topic of “Inclusive Growth and Prosperity”. This should be the goal of economics, in contrast to “divisive stagnation and inequality” which is the consequence of neoliberalism.

Acutely aware am I, that my words are likely to be twisted by those who may wish to defend the status quo. So, I wish to state, as clearly as possible, “I am not anti-capitalist. I am only against the neoliberal form of it.” I see neoliberal capitalism as a temporary and corrupt form that needs to be replaced by capitalism focused on human-centred value creation and sustainable prosperity for all.

The messages delivered by Charles Handy in his closing address to the Drucker Forum explored several of the themes I have discussed above. I urge you to watch it when you have a little time to spare.

I would also urge you to read all the books Charles Handy has ever written in his eighty-five years. You will see much of his thinking was way ahead of its time, and he warned of many of the mistakes that we went on to make.

In all that I do and say, my hope is to share whatever wisdom I may have picked up from my understanding of Charles Handy, Peter Drucker and other thinkers like them. I hope my ideas may have a fraction of the impact of theirs. And Valueism, for whatever it may be worth, is my contribution to the calls for change that Charles Handy has been making.

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The “Facets of Valueism” will be explored in a two-day international conference in London on April 23rd & 24th next year, and further conferences are already being planned for other parts of the world. There is also a new Linkedin group to explore Valueism. Detailed announcements regarding all events will also be posted to the group.