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30 June 2015

Remember, Capitalism Is Not Too Big to Fail!

Lady Lynn Forester de Rothschild delivered one of the best lines of the day at the recent Conference on Inclusive Capitalism in London arguing “capitalism is NOT too big to fail.” Indeed.

Capitalism may be shooting itself in the foot at almost every opportunity but even the most hardened cynic would have found it difficult not to be impressed by all the earnest zeal for reforming capitalism that was on display from all quarters. Bill Clinton’s closing plenary provided enough concrete, granular examples of inclusive capitalism at work to counteract any risk that the day would amount to little more than lofty rhetoric.

The conference, which was attended by a list of dignitaries including Fortune 50 CEOs and the world’s wealthiest man Carlos Slim, revealed the enormous practical obstacles and barriers which stand in the way of investors taking more aggressive and decisive action. Conservative trustee boards, peer pressure for conformity, and the pernicious, intermediating effects of investment consultants were favourite complaints from asset owners and investors.

Corporate CEOs bewailed the short-termism of investors. In a fundamental sense, though, what it all came down to is this: the biggest enemy of progress remains what are arguably the two most inexhaustible, infinitely renewable forces on earth: personal, individual intellectual inertia and cognitive blinders on the one hand, and its inevitable concomitant on the other: collective organizational inertia. But with that said, the potential firepower and positive impact inherent in re-orienting $ 25 trillion in investment assets that were represented in the room make any and all efforts to overcome those obstacles well worth the price.

Business as usual is clearly not going to get us where we need to go, certainly not in the time frame we require.

What’s needed above all else is a willingness and determination to innovate, and to lead. Capitalism hasn’t failed yet, but on its current trajectory of social inequality and exclusion and environmental degradation, it is living on borrowed time. Investors of the world: unite!

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