How to make capitalism work for today’s world

If you take a longer-term view than current affairs might allow right now, the outlook is not universally bleak. “There’s been an enormous increase in wealth, political freedoms have been transformed, the way we relate to each other,“ has changed and these are all signs of great progress, says Tim Harford, economist, broadcaster and Financial Times columnist, in this short film.

But at the same time no one can ignore the climate crisis, rising levels of inequality, and a host of other environmental and governance problems. A tempting response is to claim that capitalism has got us into this mess and so we need something new to save us from it. But that would be misplaced. As Harford says, “If we harness capitalism in the right way, it’s our best chance of solving the problems that we’ve got.” This is because we haven’t yet developed any other system that allows us to change the thousands of decisions that the nearly eight billion people on the planet make on a daily basis.

Learning from our mistakes and reshaping capitalism, therefore, is crucial. As Professor Jan Bebbington, Director of the Pentland Centre for Sustainability at Lancaster University, says, the capitalist system should always be under revision: “We can change it because we built it in the first place.” The way to change it, she explains, is for all of us to understand that we must bear some responsibility and for some to realise they have a much greater responsibility than the rest. Everyone needs to be what she describes as “systems literate” – they must understand what makes the capitalist system work well for many of us and poorly for others, and how we change that. 

Chartered accountants are one such profession that have a greater responsibility than most. First, they have the core role that has existed since the start of the profession: a fiduciary responsibility to provide accurate information that underpins many of the most important decisions companies, governments and countless other organisations make. This role however is changing because, as Dipak Vashi, Technical Manager, Sustainability at ICAEW points out, capitalism is changing: “The business of business is no longer just to pursue a profit in a legal way.” Many other stakeholders and much more context must be taken into account, if we are going to make systems literate decisions and shape a better world.. 

However, Vashi goes on to point out how senior chartered accountants increasingly have a second role to play in this new system as well. “Those at the top of the profession need to take a very active role in explaining why” we need to revise capitalism, he says, and crucially how to do it. At base, he says, it’s about starting to “treat markets as our servants in implementing our decisions and not our masters” who guide them.