Buon Dia! Obrigada!
Obrigada – for the great honor of addressing this Eco Awards Luncheon to pay tribute to such exemplary leaders of Brasil’s business community. These leaders are role models and their companies are exemplars illuminating the evolution of markets in our 21st century toward higher ethical standards. I congratulate all these wonderful enterprises: Astro Café, Fundacao Iochpe, Colgate-Palmolive, Grupo Sol Embalagens and Fundacao Orsa – winners of this year’s Eco Awards!
Today’s global Information Age has already become The Age of Truth – where careless corporate actions can destroy a global brand in real time. Brasilian business leaders have led in promoting the idea of good corporate citizenship, both here at home and globally and through their work to strengthen the U.N. Global Compact. Brasil is becoming increasingly powerful in the world and a force for good in many arenas: the UN Security Council, the WTO, in this hemisphere and around the globe.
The stages of human development are illustrated well in this diagram by my friend, futurist Duane Elgin (See Figure 1, Evolutionary Inflection). We are also entering the Age of Light (See Figure 2, The Age of Light). As we humans shape this current global stage in our development, our new awareness of our beautiful planetary home is calling forth the expanded identity I call “planetary citizenship.” (See Figure3,Toward Planetary Citizenship). This larger identity enfolds and gives deeper meaning to our identity with our family, our community and companies, and the country of our birth. We cherish the uniqueness of our culture and nature’s endowments – even more, as we are enriched by the unique expressions of so many other cultures in our world. We savor their art, dance, music, literature and especially their cuisine! This human mutual appreciation for diversity is the starting point for planetary citizenship.
Role models are vital for human learning. All of us remember those people whose lives provided examples to us – who inspired our dreams for what we could become – for what we could achieve. These men and women, who inspired our lives, were whole human beings. We could relate to them and their lives – body, mind, heart and spirit. It is this wholeness that our role models exemplify. They balanced their achievements in the marketplace, in science, technology, as social innovators in the public sector – with wisdom, compassion, love for their families and communities, service to society and visions for a better future for all humans.
My first role model was my mother. As for so many of us, she taught me how to love and care for my brothers and sister – and those in our town of 3000 people. She was a tireless volunteer at the local clinic, the hospital and bringing the “meals on wheels” she cooked for elderly and bed-ridden neighbors. I have discussed in my new book, Planetary Citizenship, my many other role models, scientists, business people, spiritual leaders who have inspired me and guided my life.
We celebrate today’s Award winners as role models helping to guide the evolution of humanity in the marketplace and society. Let us take a moment to look back at the history of this social innovation. For markets were created by humans, not by any deity. Adam Smith’s “invisible hand” was in reality our own human invention, as recognized by historians of science1 – but which persists in many economic textbooks!
The organization of markets by the British Parliament (in the country of my birth) three centuries ago fostered the rapid evolution of industrialism. These early markets described by Adam Smith in his Wealth of Nations (1776) sparked many innovations. The British laws that legitimized markets and protected property rights led to a revolution of individual entrepreneurship, creativity and innovation, which spread across the Atlantic Ocean and Europe. This 300 year-old wave of industrialism spread around the world and today is still changing Japan, China, India and reaching the other ancient cultures of South East Asia from Vietnam and Cambodia to the Islands of Polynesia.2
The early markets of the Industrial Revolution and their business leaders created the platforms of concrete, steel, electricity, mechanized production, shipping, roads and ports that still undergird today’s societies. But the market freedoms provided by social legislation limiting companies’ liabilities, enforcing property rights, upholding their patents to their inventions, also brought great harm to less fortunate, vulnerable members of society. Who can forget the history book horrors of those early sweatshops: the children chained to spinning machines in textile factories, the women dragging carts of coal on their hands and knees in Britain’s coal mines. Britain’s Enclosure Laws drove countless thousands of peasants off their ancestral common lands. As production moved from homes and villages to factories, hoards of hungry people called “tramps” and “vagrants” wandered around the country begging for food and shelter.3
In every country where industrialism took hold, the “tortoise” of social innovation lagged behind the “hare” of technological innovation. The history of the industrial revolution with all its good and bad news has included the lagging response of social rules and regulations to repair its social costs and environmental damage. Yet, the leaders of this revolution in human production methods in the US, from Andrew Carnegie to John D. Rockefeller, evolved from their single-minded accumulation of money and material goods – into philanthropists who pointed publicly to the sin of hoarding. They gave away all their gains to foundations that to this day promote peace, education, health and the alleviation of poverty and exclusion from the benefits of access to both markets and society.
The economist, Joseph Schumpeter best described these processes of “creative destruction” that also drove this greatest period of technological innovation in human history.4 The Information Age superseded industrialism itself in the mid-20th century. This new wave of innovation has produced all the good and bad news of today’s globalization of markets and technology.
Today, all economies are still mixtures of public and private sectors, two sides of the same coin. But these two top layers of the “cake” of total productivity rests on 2 lower layers ignored by economists: the Love Economy of unpaid work and Nature’s Productivity (See Figure 4, Total Productive System of an Industrial Society). Mass communications and the Internet helped spawn the new Third Sector: the citizens non-profit groups, charities and foundations of global civic society. Brasil has led in this new civic sector by launching the World Social Forum, which has focused the global debate about new paths to sustainable human development. The “cultural DNA” of societies always determines the size and scope of public, private and civic society sectors: based on their unique history, values, goals and beliefs that energize their people. The one-size-fits-all economic theories of development, such as the “Washington Consensus” have been discredited as they encountered the realities of the Love Economy, diverse cultures, topography, climate, agriculture and the basic productivity of ecosystems.
The “cultural DNA” driver in development is still primary in all societies – even though overlooked in economic textbooks, theories and the statistics they generate. In fact, these economic textbooks and models are now over a hundred years out of date. We must remember that economics is not a science, but a profession – with less quality control than many other professions. Economic models are still based on the Newtonian “clockwork” ideas of general equilibrium. Thus, they are also blind even to the dynamic change and technological evolution engendered by the very markets and industrialism on which economists claim to focus and interpret! These dynamic changes are now mapped by other disciplines: chaos theory, system dynamics, physical and behavioral sciences and game theory.
Today, economists are beginning to focus on this colossal error and awaking to the fact that general equilibrium economic models cannot be used to guide macro-economic policy in rapidly-evolving technological societies. A shocking account by MIT-trained economist, John B. Perkins, Confessions of an Economic Hit Man (2004)5 documents the misuse of economics to exaggerate GDP-growth projections to justify the huge World Bank and IMF loans to many developing countries in the 1980s, which ensnared them into unrepayable debt. The best-known economists in the USA are admitting these and other errors, including Paul Krugman, Joseph Stiglitz and Jeffrey Sachs. Unsung women economists led the way in pinpointing these errors and devising more realistic models – from Sweden’s Alva Myrdal, Denmark’s Esther Boserup, to Argentina’s Graciela Chichilnisky, Brasil’s Aspasia Camargo and futurist Rosa Alegria, Germany’s Inge Kaul, New Zealand’s Marilyn Waring and many others in the USA and other countries.
Today, as a result of Brasil’s leadership, your country is also becoming known for innovation in its international relations and its creative policy inputs as a member of the UN Security Council. Brasil is not only the leading player in the UN Global Compact, but also leading in helping the World Trade Organization toward greater fairness and the IMF to recalibrate their out-dated business and economic models and statistics. These statistical revisions, including those to overhaul GNP and GDP national accounts were pledged by 170 governments at the Rio de Janeiro Earth Summit in 1992. (See Figure 5, Gross National Product Problems). They were recommended by the largest-ever global convening of statisticians of sustainable development and Quality of Life (ICONS) in Curitiba, October 2003, co-hosted by the Instituto Ethos, NEF, IPD, ARPEL, IBQP, COPEL and the Governor of the State of Parana, together with Brasil’s highly respected non-profit REDEH and companies including Nutrimental, Natura and Boticario. (See Figure 6, ICONS).
Such statisticians have also repeatedly recommended that GNP and GDP record national assets: the value of public infrastructure investments in roads, public health facilities, sewage-treatment, ports, airports, schools and universities that underpin the productivity of modern economies. In too many countries, these asset accounts, which properly balance the public debts undertaken to construct such vital infrastructure – are not recorded! Such public works, buildings and facilities are immensely valuable and should be amortized over their lifetime of use – often over a hundred years! Try running a company like this, where your balance sheet could not include the value you of your factories and capital assets! The USA made some of these needed corrections in January 1996 and these “stroke of the pen” corrections accounted for one third of the budget surplus of the Clinton administration. Canada followed suit in 1999 and went from a deficit to a $50 billion budget surplus.6
Today, in our Information Age, we acknowledge the value of investments in Research and Development, management education and employee training programs. Accountants are learning to account for intangible assets, goodwill, brands and other reputational risks and benefits. Risk-analysis models, such as those of Innovest Strategic Value Advisors now calculate social and environmental risks overhanging a company’s balance sheet – which if not recorded, can be overlooked and lead to sudden loss of shareholder value. Multi-billion dollar US public pension funds now require companies in their portfolios to disclose their plans to mitigate risks of climate change. Similar disclosures are mandatory in the European Union. Another area is corporate advertising, which in the USA is coming under increasing public criticism. In connection with the independent media company Ethical Marketplace, I have founded the non-profit Ethical Marketplace Institute, which will recognize advertising campaigns that inspire and enhance the human spirit with the “EthicMark” certification. (See www.ethicalmarkets.com)
The World Bank is catching up with all these statistical innovations – beyond macroeconomic models to multi-disciplinary systems approaches – using all the multiple metrics beyond money to map these diverse aspects of human development and progress. This is the approach I and my partner, The Calvert Group of socially-responsible mutual funds use in our Calvert-Henderson Quality of Life Indicators, updated regularly at www.calvert-henderson.com (See Figure 7). At last, the World Bank is also going multi-disciplinary – replacing some of its macroeconomists with sociologists, anthropologists, epidemiologists, educators – and even civic society representatives.
In its 1995 report on the Wealth of Nations, the Bank acknowledged that 60% of this wealth is comprised of human capital and 20% ecological capital. Financial and built capital (factories and monetary assets) represented only 20%. For 50 years the Bank focused most of its attention on “economic” growth of this 20% of countries’ wealth. Now, the Bank is shifting its focus to that 60% of human capital with health and education investments – recently citing the education of girls as a country’s best investment.
Yet the Bank has not, so far, campaigned to add even public asset accounts to GNP/GDP. Neither the Bank nor the International Monetary Fund (IMF) require the addition of asset accounts, even for infrastructure assets, let alone for education and health – the most vital investments to maintain that 60% of the human capital comprising the wealth of nations. Brasil is helping the IMF to correct its GNP/GDP accounting. In April 2004, the IMF agreed with Brasil that its vital backlog of infrastructure investments in rapidly-growing urban areas for basic sanitation and other public facilities should not be accounted for in ways that would increase the public debt. However, the IMF only agreed to these corrections as a “pilot project,” an intellectually absurd position!7 A few days ago, we hear that the IMF is still trying to reject these corrections! No doubt there is great pressure on them from Wall Street bond holders, banks and other financial special interest groups. Perhaps this issue can be advanced at the next WTO round, with the Group of 20 and the G-77.
I and other critics of the IMF’s many mistakes over the past decades are now calling for the permanent overhaul of their GNP/GDP and all other macro-economic models. The IMF should not only set up proper accrual accounting of assets for all investments in public infrastructure – but should re-categorize education and public health from “consumption” to “investment” in human capital. The World Bank and the UN System of National Accounts (UNSNA) should make similar corrections and add nations’ public investments in education and public health to these asset accounts and amortize them over 20 years – the time it takes to raise a child to a healthy, well educated, productive adult.
As these statistical innovations reflect the technological changes in our information-based societies, and are reported in mass media, citizens in all democratic societies will align with these evolving values. Citizens will understand and place education and self-development as the best investment individuals, companies and societies can make in a better future for all. Educators and public health professionals and the majority of citizens will support these sectors so crucial to their children’s futures. Teachers will be better paid and schools will no longer have to fight in annual government budgeting with other expenditures for needed police, fire protection and other public services and in national budgets, even military weapons.
As all such new score cards of real wealth and human progress are implemented, societies and companies can steer themselves on sounder paths toward order and prosperity. Companies will identify avoided costs in full-cost pricing, life-cycle costing and risk-analyses – while fully crediting their intangible assets and investments in R&D. For big companies, these changes are less arduous than for smaller companies. So it is important to also recognize the efforts of small and medium-size enterprises and salute their progress.
The new GNP/GDP asset accounts will end today’s egregious over-stating of public debts and the excuses it offered for excessive interest rates, sovereign bond yields and currency speculation. Developing countries in the HIPIC group are already being relieved of un-repayable, often odious debt. Former IMF economist, Kenneth Rogoff, suggested many reforms in his article in The Economist, July 24, 2004.8 The IMF’s new President, Rodrigo Rato is accepting the need to change many of its socially disastrous policies and to write off more un-repayable debt – in response to the pressures of global civic society and the world’s new superpower: global public opinion.
In this new century, long-held ideas are changing. The European Union is a new model of integration of formerly warring countries. Negotiation, cooperation and multi-lateral agreements are the way forward. The wars in Afghanistan and Iraq have revealed the many problems that even politicians and military leaders now admit, are not susceptible to military solutions. New approaches to terrorism now favor funding education and building schools in countries where poor parents have no choice but to send their children to fundamentalist “madrassahs” where they are taught the ways of “jihad” and suicidal “martyrdom” to kill others in the name of God.
Indeed, in our age of weapons of mass destruction, wars are the most dangerous and ineffective options. We see already in our 21st century that the new weapons of choice are currencies, as well as better diplomacy, intelligence and widely shared information. Insurance policies for peace-keeping forces can reduce military budgets for countries wishing to follow Costa Rica, which abolished its army in 1947. The proposed United Nations Security Insurance Agency (UNSIA), a partnership of the Security Council with insurance companies would assess country risks and collect premiums that would be pooled to train standing UN peace-keeping and humanitarian forces.9 The upcoming UN General Assembly will take up many such alternative financing mechanisms to implement the Millennium Development Goals. They include global taxes on arms sales, currency trading, airline tickets and e-mail to provide global public goods: education, health care, sounder international financial architecture and peace-keeping. (See Figure 8, Millennium Development Goals)
The human family numbering now over 6 billion is clearly the most biologically successful species on planet Earth. (See Figures 9, 10, 11) We have evolved from our birthplaces on the African continent to colonize every part of Earth, consuming 40% of all its primary photosynthetic production – leading to the current and mass extinction of other species. We have conquered the oceans, the Moon and outer space and now set our sights on Mars. To continue our spectacular technological success and preserve the options for our grandchildren’s survival, we must now face ourselves and fearlessly diagnose our major failures: the persistence of war and poverty. As you are all aware, the UN Millennium Development Goals provide the agenda. Fulfilling these Goals can employ every willing man and woman on earth and expand global prosperity.
Reappraisals of the work of Charles Darwin together with new evidence from historians, archeologists and anthropologist point to the evolution of human emotional capacity for bonding, cooperation and altruism.
10 (See Figure 12, Darwin) Competition, territoriality and tribalism, rooted in the fears of our past, served humans well in their early trials and vulnerability. So did cooperation and the ability to trust and bond with each other – controlled by the hormone oxytocin. Higher levels of this hormone during pregnancy and lactation bonds women to their children over the extended developmental period to maturity.11
Charles Darwin saw this human capacity for bonding, cooperation and altruism as an essential factor in our successful evolution.12 How otherwise could we have gone from the experience of over 95% of our history lived in roving bands of 25 people or less 13 – to today’s mega cities: Sao Paulo, Shanghai, Mexico City or Rio de Janeiro? (See Figure 13, Sao Paulo and Figure 14, Rio de Janeiro) These improbable metropolises, along with global corporations and governance institutions such as the United Nations and all its agencies, the European Union, now expanded to embrace 25 formerly warring countries – could never have emerged without humanity’s capacities for bonding, cooperation and altruism.
So as we have evolved into our complex societies, organizations and technologies of today – we need to re-examine our belief systems and the extent to which they still may be trapped in earlier primitive stages of our development. Why for example do we underestimate our genius for bonding, cooperation and altruism – seemingly stuck in our earlier fears and games of competition and territoriality? (See Figures 15, 16) Why do we over-reward such behavior and still assume in our economic textbooks and business schools that maximizing one’s individual self-interest in competition with all others is behavior fundamental to human nature?
Why is our equal genius for bonding and cooperative behavior – even altruism not taught in business schools as the true foundation of all human organizations and our greatest scientific and technological achievements? Our competition and territoriality as every business executive knows, is channeled within structures of cooperation and networks of agreements, contracts, laws and international regulatory regimes that allow airlines, shipping, communications, and other infrastructure to undergird global commerce and finance.14 Thus, the formula for humanity’s success has always rested on cooperation while embracing competition and creativity.
What do these deep, primitive beliefs about the primacy of competition and territoriality have to do with poverty and war? All are rooted in these ancient human fears – of scarcity, of attacks by wild animals or other fearful bands of humans. Rooting out these fears – deeply coded in our “us-versus-them” political and economic textbooks – is the essential task of our generation. We must move beyond this economics of our early reptilian brains – to the economics of our hearts and forebrains! These old fears underlie today’s continuing cycles of oppression, poverty, violence, revenge and terrorism. Indeed, if we humans do not root out these now-dysfunctional old fears, we will destroy each other. Meanwhile, the fantastic potential we have created for further successes and fulfilling the UN Millennium Development Goals of building prosperous, equitable, sustainable human societies is now within our grasp.
Why then, do we continue to allow these old textbooks with their Manichean mantras of competition, global economic warfare, balance-of-power, eye-for-an-eye geopolitics – all amplified in mass media – to dominate our lives? The new superpower of global public opinion is already rejecting these old dysfunctional dogmas. Over ten million of our fellow humans demonstrated peacefully worldwide against the now-patently misguided war on Iraq. Yet as Thomas Kuhn described in his Structure of Scientific Revolutions old dysfunctional beliefs often persist long after they have been disproved.15
So it is with today’s economic textbooks and the entire paradigm underlying the “Washington Consensus” model of development. We have evidence of its bankruptcy all around us: widening poverty gaps, the digital divide, unbalanced, unsustainable economies mired in debt – breeding despair and terrorism, diverting resources from enhancing human life to military weapons, death and destruction! No, all this is not a flaw in human nature – but a flaw in our encoding of our past in that set of dysfunctional beliefs that deny humanity’s true genius – those cooperative, bonding and altruistic skills that have undergirded all our progress to date!
These human skills now have laid before us a rich array of potentials for astounding, widespread, shared prosperity, peace, restoring and our planet’s ecosystems as I describe in my Além da Globalização. Our old competitive drives are already transcending former materialistic goals – toward new visions and values such as those laid out in the Brasil Vision 2020 (See Figure 17) agenda developed by the Economic and Social Council in Belo Horizonte, October 2003; in the United Nations Millennium Development Goals, in the UN Global Compact (See Figure 18); in the Prague Declaration on Humanizing Globalization; the Report of the Commission on the Human Dimensions of Globalization; and the 16 principles of the Earth Charter (See Figure 19), now ratified by hundreds of municipalities, companies and NGOs in over one hundred countries. I have been privileged to participate in many of these visioning exercises, where even heads of state, high-ranking ministers, academic and business leaders have stilled their minds, cleared their calendars and in-boxes in order to address the important issues of our global common future.
Such thoughtful leaders, many of them in this room, know the technologies of A1, Appreciative Inquiry, meditative and disciplined visioning of preferred futures, such as those produced by Vision 2020. As we all shared our visions for the further evolution of humans and their social progress, our breathing became deeper and we energized all our bodies’ cells with oxygen. (Montage – see Figures 20-25) It is well for humans to remember that this life-supporting oxygen is another gift along with our daily food from the green plants and trees on this planet. They can live well without us – but we could not survive for a single day without the oxygen they manufacture from our exhaled waste: carbon dioxide. Plants also invented one of the greatest technological breakthroughs in the history of our planet: photosynthesis – the basis of our food chain.
As we evolve more consciously into our full human potential and the social progress we know is achievable – it is well to remember our past and how we humans co-evolved with plants and other life forms. (Montage – see Figures 26-31) Whatever our faith, traditions, we can acknowledge Nature as the mother designer and the inspiration for many if not most human innovation. (See Figure 32, Human Technologies Mimic Nature) (Montage – see Figures 33-39) At last we recognize that the real wealth of nations rests on the biodiversity of our ecosystems – in which Brasil is endowed with riches unparalled in the world. Brasil is also a young country – a huge demographic advantage. Indeed, as I have pointed out, when the full statistical evidence of Brasil’s human, social, economic, cultural and ecological assets are accounted, Brasilians, on a per capita basis, are among the richest people on Earth. May your leadership continue in corporate social responsibility and benchmarking the global ethical marketplace of our new century!
Photo credits, with thanks to:
Brasil Terra Virgem, Brasil Aventura Series, Suzano
Brasil Singular and Plural, Banco do Brasil
State of Santa Catarina, Letras Brasilieras
List of Figures:
Figure 1, Evolutionary Inflection
Figure 2, The Age of Light
Figure 3, Toward Planetary Citizenship
Figure 4, Total Productive System of an Industrial Society
Figure 5, Gross National Product Problems
Figure 6, ICONS
Figure 7, Calvert-Henderson Quality of Life Indicators
Figure 8, Millennium Development Goals
Figures 9-11, Montage
Figure 12, Re-appraisals of Charles Darwin’s Origin of Species
Figure 13, Sao Paulo
Figure 14, Rio de Janeiro
Figures 15-16, Montage
Figure 17, Brasil Vision 2020
Figure 18, UN Global Compact
Figure 19, Earth Charter
Figures 20-31, Montage
Figure 32, Human Technologies Mimic Nature
Figures 33-39, Montage
1 See for example, Robert Nadeau and Menas Kafatos, The Non-Local Universe: the New Physics and Matters of the Mind, Oxford University Press, UK, 1999
2 David Landes, The Wealth and Poverty of Nations, New York, Norton, 1998
3 Karl Polanyi, The Great Transformation, Beacon Press, Boston, 1944
4 Joseph A. Schumpeter, Capitalism, Socialism and Democracy, Harper and Row, New York, 1942, 1947.
5 John B. Perkins, Confessions of An Economic Hit Man, Berrett-Koehler, San Francisco, forthcoming, Fall 2004
6 H.Henderson, Além da Globalização, Editora Cultrix, Sao Paulo, 2003
7 Folha de Sao Paulo, April 26, 2004
8 The Economist, “The Sisters at 60,” Kenneth Rogoff, July 24, 2004
9 H.Henderson, ibid.
11 H. Henderson, “G-8 Economists In Retreat,” InterPress Service, Montevideo, NY, Rome, June 2003
12 See for example, David Loye, Darwin’s Lost Theory of Love, ToExel, New York, 2000
13 Joseph Tainter, The Collapse of Complex Societies, Cambridge University Press, NY (1988)
14 See for example, R. Axelrod, The Evolution of Cooperation, Basic Books, NY (1984); Robert Wright, Non-Zero, Pantheon, NY (2000); H. Henderson, Building A Win-Win-World; Berrett-Koehler, San Francisco (1996); James F. Moore, The Death of Competition, Harper-Collins, NY (1996)
15 Thomas S. Kuhn, The Structure of Scientific Revolutions, University of Chicago Press, Chicago (1962)