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  • Writer's pictureJustine Braby

Serving society rather than growth Business in a wellbeing economy (by Lorenzo Fioramonti and Just

Updated: Jun 22, 2023

One day an African fisherman had an American visitor join him on his small fishing boat. As they gently cruised the Atlantic ocean surface, the American visitor watched him catching one fish after the other, and watched him as he put the smaller sizes back into the ocean. After the morning had subsided, they cruised back. The fisherman’s wife and other family members were waiting at the shore, ready to work the fish and take them to the market to sell. The American asked him: 'Why did you not stay longer out at sea? What are you going to do with the rest of the day?' The African said: 'Well, we sell the fish we need, and then we go home. So I get to play with my kids, after that I spend time with my wife and my friends.' They made a good living, the American thought, as they sat together that night for dinner. Yet, a thought kept buzzing in his head: why keep it small? It could get so much better with scale. So he said to the African, 'You know, I have a PhD in business management. I could help you become a more successful person.’ The fisherman listened as they American kept talking: ‘From now on, you should spend more time at sea and try catch as many fish as possible. When you have saved enough money, you can buy a bigger boat and catch even more fish. Soon you will be able to afford more boats, set up your own company, get investors, build your own production plant for canned fish and distribution network. With more time, you can move out of the village, to the capital, and set up to manage all your branches.' The African asked: 'And then?' To which the American responded: 'Well then you can buy whatever you want, live like a King in a mansion! You can even start to float your shares on the stock exchange eventually and make even more money.' 'And after that?' the African asked. The American answered: 'Well then you can go into early retirement, have more time with your family, and live on a paradise beach and relax all day.' To this the African responded with a smile: 'Isn't this what I am doing already?'

Most of us have heard this story in many of its versions before. But it illustrates a good point about what is important not only in our pursuit of development, but also in our understanding of what constitutes a good life.

What if growth was not the business imperative? Crazy, you say? What if, instead, we focused on wellbeing which is a direct result of good social relations and a healthy environment?

The world is already facing a number of threats due to our obsession with growth, from catastrophic climate change to inequality and resource depletion. Among others, the Sustainable Development Goals require a change of approach. Time has come to turn this economic imperative on its head and rethink what it means to be a successful business. Take for instance a company that provides goods and services to otherwise marginalised communities. Its positive effects are not just based on the profit it makes, but also on its ability to tackle social exclusion and reduce inequalities. Think of a repair shop: besides making money, it also helps reduce waste. What about a family-run grocery store: it supports local economic development by sourcing food from local farmers.

Because of their proximity to target communities and operating environments, small businesses produce a myriad of positive effects. They contribute to wealth distribution by hiring a local workforce. They are often run by families or close friends, which implies a better civic responsibility in their operations. It is unlikely that a small business owner will intentionally pollute a river or dump toxic waste nearby if his or her children will drink the water or play in those areas. In a wellbeing economy, communities create value through social relations, which build trust and make businesses even more successful.

Since most of these positive impacts are non-monetary, the growth economy ignores them altogether, just as it ignores all the non-monetary destructive impacts of large companies, from pollution to waste and inequalities in income and wealth. A small business owner does not get a tax rebate because of his positive impacts on society. Nor can he or she go to a bank and get a loan with a preferential interest rate because of the many ways in which it generates value for society. These privileges are reserved for big business, which blissfully hides all its negative effects.

In the growth economy, the pursuit of size and scale is seen as indispensible to achieve market dominance. No start-up will ever be considered by investors unless there is a clear plan for scale and expansion. This is why entrepreneurs are advised to slice their companies into shares, with a view to leveraging external investment in support of the growth of the company. Our governments support this dominance of the growth mantra, for instance by limiting the liability of large companies and bailing them out when they go bust.

Profit, for us commoners, equals all income minus 'all' costs. This is not how our growth economy sees it. Imagine a business that extracts natural resources (e.g. an oil company), or an industry that manufactures goods like cars, tables or computers. It’s obvious that there are social and environmental costs involved in all these processes. The extraction of oil pollutes the soil and the air. The manufacture of goods results in waste, wear and tear of the workers, perhaps contamination of some other incidental sources, like water. No company, however, is ever asked to account for the depletion of the resources it uses, let alone the negative social and environmental impacts of its actions (unless they cause major disasters, for which limited liability helps reduce their financial risks). Companies simply externalise them: that is, they make you and us pay for them. How? Through taxes needed to fix society and the environment, through a lower quality of life for all, which often requires additional expenditures (such as having to buy bottled water, or increased medical insurance for those of us in polluted cities), and through the ultimate menace of environmental and social collapse. The value of this constant ‘damage’ caused by large businesses exceeds 13% of all our incomes globally according to the UN: this is real money that must be spent on cleaning up the mess generated by corporate giants. This is more than what the world spends on education, healthcare, research and humanitarian aid. And it happens every single year.

Not only do our societies blissfully neglect the massive costs of conventional production processes, but they cheerfully subsidise them, as if such behaviour deserved additional reward. The International Monetary Fund estimates that subsidies for the fossil fuel industry amount to 8% of all government revenues worldwide. Large scale fishing companies, not our African fisherman, receive tens of billions of dollars to continue depleting our oceans, while industrial farmers and commercial agriculture cash in hundreds of billions of subsidies to produce food that is unhealthy, polluting and often wastes. This way, the convergence of unaccounted costs and undeserved subsidies produces a miracle: energy and food produced at great cost to society and the planet end up being cheaper than any locally produced sustainable alternatives.

But is this kind of business something we really want? Are we prepared to pay for the social and environmental breakdowns (at which point money will be useless, if our health, our topsoil, our air, and everything we need to sustain us, is no longer serving us). A recent survey in South Africa reports that the majority of customers believe that the 'one size fits all' approach of megastores and shopping malls no longer works. People want more personal, more customized products. What about us in Namibia? With more big business taking over, do we think that that will bring us all prosperity, or only a few?

In the wellbeing economy, successful business will not strive for growth and scale. It will rather aim for the 'right size', depending on the type and scope of its production. Businesses will grow organically until they reach an optimum equilibrium with the outside environment (customisation capacity and quality relationships with clients). As profit is not the only benchmark against which their success should be measured, the right size for each type of business should be dictated by the interconnectedness of various dimensions of wellbeing, including the direct interaction with customers and the balanced relationship with the outside environment. The economy will be circular, not linear, thus eliminating pollution and waste, and emulating the natural system (there is no such thing as 'waste' in nature). Business practices should incentivise durability, re-use and modular design, so that products can be easily fixed, reassembled and upgraded in multiple ways, contrasting the throwaway culture of the growth economy, which is causing enormous costs for society at large. A transition to wellbeing means building businesses that serve society from the bottom up, not the other way around.

[This work is adapted from Lorenzo Fioramonti's upcoming book entitled Wellbeing Economy: Success in a World Without Growth (Pan Macmillan) launching in May. This article has also been published here]

About our Guest Author

Lorenzo Fioramonti is professor of political economy at the University of Pretoria and director of the Centre for the study of Governance Innovation (GovInn). He is the author of 9 books, including the bestselling Gross Domestic Problem: The Politics Behind the World’s Most Powerful Number and How Numbers Rule the World: The Use and Abuse of Statistics in Global Politics.


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