7 min read
Dec 2019

The Economics of Mutuality: A New School of Thought


Published December 2019

Bruno Roche has written an op-ed opinion piece about the Economics of Mutuality for Le Monde, the French daily newspaper with a circulation of over 460,000. An English translation has been included below.

What is the right level of profit for the corporation?

In the same way that Communism and Marxism collapsed with the Berlin Wall, financial capitalism could soon collapse with another wall – Wall Street. The limits of today’s profit maximisation economic model are becoming clearer as global challenges grow ever more significant, from rising inequality and social tensions to the depletion of natural resources and the impact of the digital revolution.

Companies, investors and management schools all have an incentive to rethink their approach to value creation, their contribution to society and, indeed, their very purpose. They must all be encouraged to reinvent their systems and management practices by integrating the principle of mutuality into the ecosystems in which they operate.

This year, public and economic decision makers changed direction. The French law now authorises companies to specify a raison d’être, a purpose beyond profits, in its charters. In the summer, nearly 200 CEOs from major US firms issued a joint statement through the Business Roundtable declaring the primary goal of business to no longer be maximising shareholder value. A few days later, as the G7 met in Biarritz, 34 international business leaders formed the Business for Inclusive Growth (B4IG) coalition to rethink sources of growth.

With change firmly on the agenda, a profound transformation in our understanding of performance, growth and profit is now required. The old economic model is obsolete, having been designed in the 1970s when financial capital was limited. The nature of scarcities has altered dramatically and, today, financial capital is overabundant. More than $15 trillion of government bonds currently trade at negative yields. In contrast, natural, social and human capital are in short supply. Managing these scarcities is the formidable task facing political, civil and corporate leaders in the twenty-first century.

Alongside this shift, multinational corporations have grown exponentially to the point of wielding greater influence than nation states in many respects. However, their business models are stuck in the past – once effective, but now suboptimal. Furthermore, the financial system has become predatory. It distorts the role of business in society by driving inequality and environmental degradation, which deprives companies of new opportunities for value creation and growth.

Finding a company’s true meaning requires more than simply choosing a corporate purpose. It calls for a new school of thought that can reform management practices, revamp business teaching, develop fresh value creation processes and generate new modes of profit construction. We stand at the threshold of a new era. In the words of St Augustine, ‘Let us look for those who must find and find those who are yet to seek. As it is written, whoever has come to the end is only beginning’.

This ambition has driven the Economics of Mutuality, a global movement that began in 2007 when Mars, Incorporated and Oxford University joined forces to answer a profound question – ‘What is the right level of profit for the corporation?’. Following more than a decade of academic research and business practice around the globe based on the assumption that purpose should form the backbone of a company’s strategy, some very interesting results have emerged.

If a company invests in both financial and non-financial capital using standardised metrics within a broader ecosystem that includes all of its key stakeholders as well as its shareholders, not only does wealth increase across the board, but also the company’s financial performance improves. Contrary to many people’s expectations, a mutual economy that is fair and environmentally friendly can be more profitable than an economy shaped by profit maximisation. For a company to discover its vocation, therefore, it should no longer focus exclusively on short-term financial remuneration. Continuing to do so would not be within its interests, let alone the interests of the public and the planet.

The Economics of Mutuality is already being shared as a new school of thought with present and future academic and business leaders at Oxford University, Sciences Po in Paris and Shanghai Business School. It promises to build the world we want tomorrow by transforming business performance through putting finance in service of business, business in service of the economy and the economy in service of society and the environment.


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