Global crisis? Let’s rethink our relationship with wealth

When 3bn people live on less than $5 a day, 1 per cent of the population earns two-thirds of the global wealth and climate change has become a climate crisis, what do we do?

Some people - and, it’s probably fair to say, many Pioneers Post readers - argue that an effective response would be diverting some of those trillions of dollars currently whirling around the financial markets into impact investments.

However, what we actually need to focus on is rethinking the entire global financial system, according to Jed Emerson, who spoke at the Good Deals + Beyond Good Business conference held on Tuesday 21 May in London.

We think that the purpose of capital is to make more capital

Emerson, one of the pioneers of the impact investment movement, took to the stage for a discussion with Rosemary Addis, chair of the Australian Advisory Board on Impact Investing.

“I think most of us accept the world of finance as it’s presented to us,” said Emerson. “We think you have to make money, that the purpose of capital is to make more capital and then what you decide to do with your money is a personal matter.”

But, he added, “that’s a social construct”, promoted by the “high priests of Wall Street”.

Referring to themes raised in his eighth book, The Purpose of Capital: Elements of Impact, Financial Flows and Personal Being, Emerson emphasised that the focus needed to be switched to examining humanity’s relationship with wealth.

Citing examples of non-profits which took “tainted” money, Emerson pointed out that it was not good enough to just be there to help out children who had ended up on the streets thanks to an “unjust capitalist system”.

“You need to connect the dots,” he said. The idea that you could separate “economic interests from social and environmental interests” was wrong.

Emerson’s passion for promoting this argument, he explained, was fired a few years ago when he realised that many of his conversations with investors were solely focused upon investment strategies and tactics.

“We have got all this effort and energy coming up with these vehicles, but none of that matters if you aren’t clear on the fundamentals of what we are trying to do,” he said.

“We had flown by the more fundamental question of ‘why’.”

Read a more detailed account of Jed Emerson’s new theories of capitalism in our interview here