AN INQUIRY INTO THE NATURE AND CAUSES OF THE PROSPERITY OF NATIONS

Updated: Jan 4


2020 will see the 244th anniversary of the publication of Adam Smith's Inquiry Into the Nature and Causes of the Wealth of Nations. The Strategic Management Forum plans to host a conference to inaugurate a decade-long "Inquiry into the Nature and Causes of the Prosperity of Nations".


I changed the word "Wealth" to "Prosperity", because the connotations associated with "wealth" are now almost exclusively financial and material. Prosperity has broader connotations. But, to be clear, I define prosperity as sustainable and widely shared human flourishing and wellbeing. What Aristotle called Eudaimonia.


Adam Smith is regarded as the father of capitalism, an economic system that has created far more prosperity than any other. But there are many forms of capitalism and the current form, based on neoliberal economic ideology and dogma, is fundamentally flawed and has lost all legitimacy and credibility. Even the former advocates of it now recognise this.


So, capitalism needs to evolve to a form that delivers prosperity as I have defined it (above). But how will that be achieved? Over the Christmas and New Year holiday period I came to the conclusion it will only be achieved by a multi-disciplinary inquiry that changes the narrative, the mindset, the methods and tools - of economics, finance, accounting, business, institutional investors, policy makers and others.


In an effort to bring about such a collaboration, on a large and global scale, I decided a major initiative is required. Not an inquiry into how we fix a broken system with new regulations and compliance requirements that encourage gaming. But an inquiry that focuses on a motivating vision and the provision of a practical pathway to an evolved version of capitalism, that delivers sustainable widely shared prosperity and wellbeing. But let me also provide some context.


The Prosperity of Nations and the Sustainable Development Goals

The inquiry will link to, but not limit it to, the Sustainable Development Goals - "not limited to", because I don't see sustainability as the goal. I see human flourishing and wellbeing as the goal. Sustainability is a necessary condition, and achieving the Sustainable Development Goals by 2030 would be just a milestone indicator that we are on the right path.


The Millennium Development Goals


On Thursday 3rd February 2005, some 15 years ago, Nelson Mandela, then very frail, aged 86, and retired from public life, could not resist the invitation to call for justice. Not racial equality, but an end to poverty. He spoke just before the G7 summit to review what progress had been towards achieving the United Nations Millennium Development Goals in the first five years.


Mandela added his voice to the call to Make Poverty History, part of the Global Campaign for Action Against Poverty. He said, “Massive poverty and obscene inequality are such terrible scourges of our times - times in which the world boasts breath-taking advances in science, technology, industry and wealth accumulation - that they have to rank alongside slavery and apartheid as social evils”.


He also said, “like slavery and apartheid, poverty is not natural. It is man-made and it can be overcome and eradicated by the actions of human beings. And overcoming poverty is not a gesture of charity. It is an act of justice. It is the protection of a fundamental human right, the right to dignity and a decent life”.


About progress towards the development goals he said, “the promise is falling tragically behind” and called on leaders to “honour their promises to the world’s poorest citizens”. He urged them, “do not look the other way; do not hesitate. Recognise that the world is hungry for action, not words. Act with courage and vision.”


Appealing to the young people of Britain he said, “Sometimes it falls upon a generation to be great. You can be that great generation. Let your greatness blossom. Of course, the task will not be easy. But not to do this would be a crime against humanity, against which I ask all humanity now to rise up”.


The Millennium Development Goals which ended in 2015 were not realised and poverty did not become history. The Millennium Development Goals Report 2015 acknowledged, “uneven achievements and shortfalls in many areas” and stated, “the work is not complete, and it must continue in the new development era”.


The Sustainable Development Goals


The Millennium Development Goals were replaced by the Sustainable Development Goals - 17 global goals designed to be a "blueprint to achieve a better and more sustainable future for all". They are supposed to be achieved by the year 2030.


The Sustainable Development Goals Summit 2019 took place at the United Nations in New York on September 24th and 25th. Its purpose, “to follow up and comprehensively review progress”. It was the first review of the goals which 193 countries committed to in 2015. As an outcome of the summit “world leaders called for a decade of action to deliver the SDGs by 2030 and announced actions they are taking to advance the agenda”.


The United Nation’s Secretary General, Antonio Guterres, presented a progress report. He warned, “the shift in development pathways to generate the transformation required to meet the Sustainable Development Goals by 2030 is not yet advancing at the speed or scale required”. He added, “It is cause for great concern that the extreme poverty rate is projected to be 6 per cent in 2030, missing the global target to eradicate extreme poverty; hunger is on the rise for the third consecutive year and little progress is being made in countering overweight and obesity among children under the age of 5; biodiversity is being lost at an alarming rate, with roughly 1 million species already facing extinction, many within decades; greenhouse gas emissions continue to increase; the required level of sustainable development financing and other means of implementation are not yet available; and institutions are not strong or effective enough to respond adequately to these massive interrelated and cross-border challenges”. (my highlights)


Guterres also warns, “Population groups with documented disadvantages largely remain excluded. Globally, youth are three times more likely to be unemployed than adults. Children are over represented among the poorest people – one child in five lives in extreme poverty. Rural and urban differentials are also evident in such areas as education and health care. Persons with disabilities and those living with HIV/AIDS continue to face multiple disadvantages, denying them both life opportunities and fundamental human rights.”

The list of problems seems endless as he adds, “gender inequalities also persist. Women represent less than 40 per cent of those employed, occupy only about a quarter of managerial positions in the world and (according to data available from a limited set of countries) face a gender pay gap of 12 per cent. About a fifth of those aged 15 to 49 had experienced physical or sexual partner violence in the past 12 months. There is simply no way that the world can achieve the 17 Sustainable Development Goals without also achieving gender equality and the empowerment of women and girls”.


In addition to these persistent problems he goes on to say, “there is no escaping the fact that the global landscape for Sustainable Development Goal implementation has generally deteriorated since 2015, hindering the efforts of Governments and other partners. Moreover, the commitment to multilateral cooperation, so central to implementing major global agreements, is now under pressure.”


Specifically, “conflicts and instability in many parts of the world have intensified, causing untold human suffering, undermining the realisation of the Sustainable Development Goals and even reversing progress already made. With developing countries hosting more than 85 per cent of the 68.5 million people who were forcibly displaced in 2017, pressures on existing support systems are immense”.


On top of these problems, “direct economic losses from disasters have increased by more than 150 per cent over the past 20 years, with losses disproportionately borne by vulnerable developing countries. Without a surge in mitigation, global warming will continue at a rapid pace, amplifying the challenges of adaptation and entrenching a sense of vulnerability and insecurity among large population groups”.


Worrying, because it means we have less chance of dealing with the above, “Global economic growth is anticipated to remain slow and uneven across regions amid lingering trade tensions and unsustainable levels of household and corporate debt. Debt vulnerability in low-income countries has increased substantially in recent years. In addition to an expected slowdown in emerging economies, lower growth rates are projected in developed economies in general. And several Governments are taking more protectionist approaches across the board, risking growth rates, poverty reduction and economic diversification.”


Also, on the economic front, “rising income and wealth inequality risk undermining efforts to achieve the Sustainable Development Goals. They threaten to erode social cohesion, entrench insecurity and dampen productivity growth. Rising intolerance in many parts of the world threatens fundamental human rights and human progress. The nexus among inequality, injustice, insecurity and lack of sufficient trust in Governments and institutions can further hinder the necessary conditions for advancing sustainable development.”


This is the context in which Guterres called on the world leaders gathered at the summit to have “an honest and frank reflection on the world’s current direction of travel” He asked for “A renewed commitment to multilateralism, to prevention and to diplomacy” and said a “much greater urgency and ambition regarding Sustainable Development Goal response is required.” And, “this is especially the case when it comes to the response to the existential threat of climate change, where a failure to meet the goals of the Paris Agreement will directly threaten the attainment of all other Sustainable Development Goals”.


He called on “all countries and all Sustainable Development Goal partners to do more, and faster” having identified “a series of systemic gaps in the overall response to the 2030 Agenda”. Systemic gaps that call for, “a special focus on the most vulnerable to ensure that as countries progress, they leave no one behind; ensuring adequate and well-directed financing; strengthening institutions and making them more effective and inclusive; bolstering local action to accelerate implementation; strengthening economies and building resilience; strengthening collection, access and effective use of data for the Goals; and harnessing science, technology and innovation with a greater focus on digital transformation for sustainable development” (my highlights).


Note: The parts highlighted illustrate why I believe the inquiry must be a multi-disciplinary initiative


A Decisive Decade

He concluded by saying the next decade “will be decisive for both current and future generations and for all life on this planet. It is the world’s responsibility and within its power to make it a decade of action and delivery for sustainable development.”

It is clear that without radical coordinated and urgent action 30 years will have passed since the Millennium Development Goals were agreed and still there will be many problems to be solved. So, it falls upon another generation to end the “crime against humanity” if we are not, as Mandela said, to deny hundreds of millions of people their fundamental human right, the right to dignity and a decent life.


An Advisory Panel

At this stage I am designing the Inquiry and planning the Inaugural event. To help in this process I am starting to form an multi-disciplinary Advisory Panel, and a line-up of speakers for the event. If you would like to propose Advisory Panel candidates I would love to hear your suggestions: paul@thesmfglobal.com


The Inaugural Conference


Currently I have a provisional booking for the event to take place in The Great Room at The Royal Society of Arts (RSA), London on June 8th. Adam Smith was a Fellow of the RSA, so it is an appropriate venue. Further details will be announced soon. The availability of tickets will be announced via the mailing list.








Join the Mailing List

For further details on the initiative, the inaugural event, and the availability of tickets please join the mailing list.


Support the Initiative


The initiative will need supporters. If you are interested in providing support of any kind please email paul@thesmfglobal.com


About the Strategic Management Forum


Visit: www.thesmfglobal.com

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