We’re all familiar with the by now rather worn narrative of power shifting inexorably away from the West towards the emerging economic giants of the East. But the passage this week of the new Companies Bill in India, which enshrines in legislation for the first time a requirement that all companies above a certain size spend a proportion of their profits on philanthropic/CSR initiatives, is the latest signal of another shift from West to East that is less well documented but just as important for the future of our planet: a shift in the source of enlightened thinking.
For hundreds of years, since the Enlightenment of the seventeenth and eighteenth centuries, we have focused almost exclusively on Europe and the US as the places where we expect enlightened ideas to emanate from. I’m not saying that Eastern thought hasn’t also been influential – from Zen Buddhism to the pacifist activism of Ghandi, Eastern spiritual-cum-radical political traditions have long been admired across the globe. But for the most part, when it comes to the big questions about how to organise our economies and our politics, and what are the rules we want our societies to be governed by, most of us have relied more or less exclusively on Western models and ideas.
That is now changing. The system (particular the economic/financial system, but also arguably the political system) built based on Western principles is fundamentally broken. And I don’t believe we’re going to fix it (as opposed to patch it up so it can stagger on drunkenly for a few more decades) without another revolution in the way we think about economics and politics on the scale of the Enlightenment of the seventeenth and eighteenth centuries.
The next Enlightenment will not have its roots in France or Scotland or the US though, but in India, China and the other so-called emerging markets. And I think we are already seeing the beginnings of this Enlightenment. Take for example this staggering comparison of the priorities that determine how companies across five countries are run (taken from a survey of middle managers in France, Germany, Japan, the UK and the US conducted by Japanese academic Masaru Yoshimori in the mid-90s – quoted in Colin Mayer’s latest book, Firm Commitment):
“In the UK and US, 71% and 76% of respondents respectively saw their company as being run for its shareholders rather than its stakeholders more broadly, while just 22% in France, 17% in Germany and 3% in Japan viewed it in this way.
“Likewise, in the UK and the US, 90% of respondents thought that their CEO regarded dividends as more important than retaining their workforce, whereas 60% in France and Germany and 97% in Japan thought that their CEO viewed job security for employees as more important than dividends.”
It’s not just on the question of how to run a company that the US and the UK are lagging behind in this new Enlightenment. Take renewable energy. While the US and the UK are busy salivating over the possibilities opened up by fracking and shale gas, the new economic powerhouses of India, China and Brazil are taking up the slack when it comes to renewables.
This, to me, is fascinating because it completely undermines the obviously self-serving narrative we sometimes hear from the American Right in particular, which is that the problem with international energy agreements (like the Kyoto protocol) is that it’s not fair to lumber developing economies with rules and regulations that didn’t exist when we in the West were developing. The truth is that developing economies are leading the way in renewables, while we in the developed world drag our feet.
And why is that you may wonder. It’s certainly not because their industrial policy is being decided by a bunch of tree-hugging hippies (I’m not an expert on India, China or Brazil, but that much I do know). It’s because when you take a long-term view of the energy question, investing in renewables is just plain old good sense and pragmatism. Oil is going to run out at some point, or at least it’s going to become too expensive to be a viable energy source to rely on as the lifeblood of your economy, so, when your goal is to grow your economy for the next few decades (not just the next few months and years), why on earth wouldn’t you invest in renewables?
That there is an important cultural difference between West and East in terms of our ability to think long term was illustrated for me recently by a passage I came across while reading Alistair Darling’s rather good book about his time as Chancellor of the Exchequer, Back from the Brink. He recounts a visit to Beijing and a meeting with the Chinese vice president responsible for financial affairs in the middle of 2008. Darling confided that he was worried about the medium-term prospects for economic growth and his opposite number replied that “he was also worried about the medium term: the next hundred years, he said, could be very difficult.”
It’s a throw-away line that’s meant to be funny, but I think it gets to the heart of a very important point about the difference between Eastern and Western thinking. If there’s one idea that is the wellspring of what I’m calling the next Enlightenment, it’s a shift from the chronic short-termism of our current system, to the pragmatic long-termism that is beginning to take hold in the global South and East.
I should add a quick caveat at this point. Despite my apparent infatuation with all things Indian and Chinese, I’m not trying to deny for a second that they each have their own massive problems to do with oppression, corruption, lack of freedom and inequality. And I do understand that long-term planning has been badly tainted by its association over the last hundred years with totalitarian government. Nonetheless, I do believe that history (or rather the future) is on the side of the enlightened long-term planners.
I’m reminded of a story I read as a child, about the king who wanted to touch the moon. He ordered his servants to build a tower out of all the boxes in the kingdom. When they did so, the king climbed the tower and the moon was within inches of being within his grasp. “Bring me one more box” he cried, but his servants replied that there were none left. “Then take the box from the bottom of the tower and bring it up to me,” he shouted. The king’s servants protested, but the king was adamant and threatened to chop their heads off, so they did what they were told. And that was the end of the king.
This story is, I think, a pretty good allegory for the way our thinking has atrophied in the face of greed and ambition (and in the case of the servants, fear and obedience). The next Enlightenment is all about seeing the king for what he is: a madman so absorbed by his proximity to achieving his goal that he’s forgotten the importance of solid foundations.