When I was heavily involved in the ethical investment and shareholder activist movement in the 1990s — a lesser-known contemporary of Crikey founder Stephen Mayne — they were heady days. Shareholder campaigns at big companies, invitations to pen op-eds in the business press, regular access to media and phone calls from corporate CEOs asking to chat (Mayne, for one, still gets all that, but anyway …). It seemed like change was inevitable. The unleashing of the small, individual investor — the so-called retail shareholder — looked likely to enforce a culture of greater democracy in corporate affairs, catching up with political developments that we all take for granted.

It didn’t happen. The retail sector faltered and lost, and the big institutions, as always in the past, reasserted their power and reformed the ethical investment and social responsibility debate into the boxes they were prepared to work with. The result was corporate social responsibility reports, full of sturdy hands holding seedlings, and happy African children overjoyed that their neighbourhoods were being somehow exploited. There was also something called “ethical investment funds”, a few desultory rule changes, and numerous grand statements full of hot air.

We failed, and it’s easy to feel dispirited. Which is why Jeremy Balkin is a breath of fresh air.

His book, Investing With Impact, seeks to inject a sense of obligation and sanity into the alchemic world of investment. He aims especially at Millennials, of which he is one. He writes: “As a generation millennials were economically destroyed by a crisis they contributed very little to.”

This demographic, he says, has to lead the charge to developing a more sustainable form of capitalism that serves more needs than merely economic.

“The role of Millennials cannot be under-estimated,” he told Crikey.

He says the most significant wealth transfer in human history will occur in the coming decades, as some US$41 trillion will change hands between Baby Boomers and their offspring.

In a book bulging with stats, Balkin states that Millennials distrust government and favour a smaller role for public administrators. But, he argues, they all love capitalism. This is perhaps where his views go off course.

Rather than seeing this disaffection with existing models as part of a wider discontent with the system as it is — including the current shape of liberal capitalism — Balkin argues that Millennials are looking to reshape the system so that the entrepreneurial benefits of capitalism can be linked to broader social concerns. He writes:

“This broken world does not need inclusive capitalism, conscious capitalism, crony capitalism or capitalism 2.0, because capitalism does not need to be repaired. It is human morality that needs repairing.”

The danger is that Balkin is ignoring the teeth of the capitalist tiger as he rides on its back, even as it threatens to eat him and his generation.

In being too quick to criticise governments and to talk up the positives of capitalism, it seems Balkin is ignoring one of his own central tenets: that it is people, not systems, we should be looking at. Sure, governments have failed, but so has capitalism. If both systems are to work — and they both have an equal role — then the way we all think has to change. The systems only reflect our mindset.

Books from such diverse talents as Raj Patel to Russell Brand have been able, more usefully I think, to critique the status quo more broadly and question the very nature of our collective and individual actions. Balkin falls a little too loosely into the all-is-well-if-you-get-government-out-of-the-way camp.

I put this to him, but he remained firm to his basic pitch that capitalism can work and governments have to downsize.

“Economic [government] policies have failed. The world’s in a mess. Government has run out of ideas, there’s a deficit of ideas,” he said.

The assumption is that government is the sink of bad ideas and that entrepreneurs are the way out.

This bald dichotomy, the black-and-white school of wisdom, is troubling and common. And it’s generally unhelpful. Balkin’s genuine sense of the world and his place in it seems misrepresented by his pitch.

“Only business and the private sector,” Balkin writes, “have the capacity to raise prosperity.”

But business people untrammelled by some kind of counter force — and government people may or may not be it — have the capacity to destroy the lives of billions, wreck the environment for even more, and eventually to make the planet unliveable.

“It’s difficult to deny the role of entrepreneurs,” Balkin told Crikey. “The evidence is for all to see.”

That’s certainly true. But the evidence can be both positive and negative.

The question is, he says: “Can we motivate risk takers and people who have a desire for ethical prosperity to take a different path?”

Balkin’s answer is in providing prosperity for all. The free market is how we get to better ethics. But is it?

He writes:

“Free markets have lifted more people out of poverty than anything else, ever. In fact, there has been no greater force for good in the history of humankind.”

Equating goodness with the selective material well-being free markets can provide sounds off key. It’s hard to say just what is the greatest force for good in human history, but it’s unlikely to be the free market. Indeed, it would be depressing if our best achievement as a species is to develop a system that is fundamentally about wealth creation, which means nothing outside of our own little cluster of life forms. Some legacy.

There is validity in Investing With Impact and great energy and courage about Jeremy Balkin. He is no doubt asking the right questions. But perhaps he’s getting some of the wrong answers.

*James Rose is author of Ethical and Active Shareholding (2001) and founder of Integrative Strategies, one of Australia’s first dedicated ethical investment researchers.

Peter Fray

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