This week, the Nelson Mandela centenary celebrations took centre stage across the country as erstwhile US president Barack Obama delivered the annual lecture. As expected from a man known for his oratorial skills, his speech was widely accepted as a fitting tribute to the legacy of our former president, especially his focus on “inclusive capitalism” as the best way for humanity to create a more equal society.
Whilst the definition of inclusive capitalism remains largely fluid, the general consensus seems to be a form of capitalism that seeks to put society rather than profit at the heart of decision-making and action by business. This has to be contrasted with contemporary capitalism which places profit at the centre and argues that somehow society will benefit.
Despite its universal appeal, classic capitalism has resulted in the super-rich and the super-poor, and a widening inequality gap across the world. It has led to an economic universe where the benefits of capitalism are amplified for the minority and its shortfalls felt by millions of poor and marginalised people.
Curiously, and clearly not by mistake, Obama managed to deliver his speech in the one country where perhaps the inherent limitations of modern capitalism are more acutely observed than anywhere else. As the country with the dubious distinction of the world’s greatest inequality quotient, a crisis of youth unemployment and a lack of upward mobility for millions of its citizens, ours is the ultimate exhibit of the pitfalls of capitalism in its current form.
The captains of capitalism – big corporates and wealthy individuals – are being found engaging in corruption and dubious business practices that seek to prioritise profit at the expense of society. In a society so polarised by the ongoing consequences of its history, this only feeds into the growing sense of resentment that the general public has against those seen to have economic power.
In this form of capitalism, business has the imperative of maximising internal wealth and doing little to advance society. Inevitably, it falls upon governments and regulators to put in place guidelines to keep capitalism in check. Such guidelines range from compulsory regulations – workplace safety standards for example – to optional ones such as corporate social responsibility. And yet even such interventions have failed to bend the arc of capitalism towards something more equitable and reflective of a shared prosperity. Partly because even when complying with guidelines, the primary focus of business remains profit.
Consequently, businesses see compliance as a burden rather than a primary conduit for enabling them to achieve their desired economic outcomes in a thriving society.
The BP oil spill of 2010 and the ongoing crisis in mining in South Africa are examples of this problem. When the BP oil rig explosion occurred, it not only cost human lives but also had profound negative effects on the environment. Since then, BP has had to pay over $65-billion in settlements. This resulted in BP shareholders bemoaning the cost of settlements rather than insisting BP place society and the environment at the heart of its business.
Similarly, South Africa’s mining community is experiencing the highest level of fatalities since 2012. Last week six people died in an underground fire at Palabora Mining’s copper operation. The 54 lives already lost this year in the industry indicate the sector has failed to prioritise workers’ safety.
Unions blame management’s undue focus on profits over lives. Management claim they do all they can but accidents are exactly that, accidents. Government keeps tightening its regulations on safety, while industry cries foul over undue shutdowns.
At Sibanye, where the majority of fatalities have occurred, the company has pledged to work with the government and unions to form a plan to tackle health and safety. Naturally, for a company whose risk profile is obvious for all to see, it is disturbing to hear that a plan to tackle safety is yet to be created and implemented. What was happening all along? What about all the other mining companies? Does this mean they don’t have a plan?
This indicates the prevalence of silo thinking in relation to a matter where collective collaboration ought to trump individual business considerations. Whilst competing and outperforming peers is a central tenet of contemporary capitalism, the mining fatalities show how capitalism can fail business and society.
A wide-ranging commitment, and more importantly decisive action, to maintain safety standards would go a long way towards shifting mining companies to position workers and society at the heart of their operations.
Regrettably, when regulations are not properly monitored we end up with a convergence of capitalism and regulation that fails to achieve social outcomes necessary for a more equal society.
For as long as this persists, the legitimacy of capitalism itself will remain at a crisis point.
This article was originally published in the Business Times.