Tag Archive for: Responsible Capitalism

BlackRock joins in i-Activism

A week after Jana Partners LLC and California State Teachers Retirement System wrote to Apple demanding it take action over the addiction of children to smart phones, BlackRock has made a powerful intervention in the governance debate. I dubbed this i-Activism LAST WEEK as I think this stance by investors is genuinely new. Many serious people can see that either capitalism reforms itself, or it risks being overturned by a populist revolt.

The New York Times is reporting that Larry Fink, the founder and CEO of BlackRock, which has some $6 trillion under management, is writing to companies in which the firm has a major stake to warn them to ensure they are making “a positive contribution to society”. He says that as equities have reached record highs, so has “popular frustration” and society is demanding that companies “serve a social purpose”. 

In particular, BlackRock wants companies to publish a long term strategic plan, approved by the board.

Meanwhile, in the UK, there was an animated exchange at Prime Minister’s Questions today over the collapse of Carillion, which created more heat than light. It does not take a genius to observe that Carillion’s bankruptcy is a tailor-made issue for Mr Corbyn. Those who are looking for leadership from the current crop of political leaders are likely to be disappointed.

Unless a refreshing Macron-style figure emerges in the UK or the US, only business itself can really provide the leadership. As Jonathan Hill, a co-founder of Prosperity UK observes in the Financial Times today: “For reasons wider than Brexit, business needs to reconnect with the society which it serves. It needs to overcome the crisis of confidence it has suffered since the financial crisis and remake the case for why we need markets and a competitive private sector. Otherwise it will increasingly find itself at the mercy of populist politicians.”

Imagine how other people feel

One of the great achievements of the Enlightenment was a sense of other. Instead of thinking only of ourselves, or our tribe or locality, European societies began to think philosophically about other people and their rights and duties. Although religion was a motivator, this respect for others became a doctrine in its own right.

Here is hoping that, after the disputatiousness of 2017 and a further decline into a bizarre negativity in public and social discourse, we can renew our respect for other people, their feelings and their proper selves.

I was very struck earlier in the year by an impromptu speech US Defence Secretary Jim Mattis gave in Jordon. He told US soldiers, to “just hold the line”, because Americans “need to get back to respecting one another, and showing it.”

Adam Smith, book of the year
It is for this reason my book of the year is Adam Smith’s other great work, The Theory of Moral Sentiments. This was published in 1759, 17 years before his more famous Wealth of Nations. It is deceptively simple, arguing that sympathy for other people is the basis of all morality.

The historian Simon Schama has gone so far as to argue that it provided the intellectual underpinnings which made the Acts of Union between England, Scotland and Ireland work.

The reason The Theory of Moral Sentiment is my book of the year is twofold. First, by coincidence, the thoughtful Conservative MP and transport minister, Jesse Norman, is publishing a biography of Smith in 2018, which he says will put particular emphasis on Smith as a moral philosopher and not just as an economist. It is intended to sit alongside his recent biography of Edmund Burke (a friend of Smith).

Secondly, it is my firm belief that the great task of our time is to bring the country back together: to respect one another, to compromise and to calm the hysterical and obstructive public rhetoric we find on Brexit, but also numerous other issues. All this has been amplified by social media which, in my opinion, needs regulating. Nor do the continuing rumpuses in Parliament help.

Prosperity UK
In April this year, it was my privilege to help organise the Prosperity UK conference in Westminster, which brought 600 business people, bankers, politicians, academics and journalists from all sides of the debate to look beyond the Referendum to how we might make a success of Brexit.

I was easily the least distinguished person on the advisory board, which was co-chaired by Sir Paul Marshall and Lord Hill of Oareford, and included the Marquis of Salisbury, Lord Wolfson (CEO of Next), Sir John Peace (chairman of Burberry and Midlands Engine), Baroness Stroud (CEO of the Legatum Institute), Anthony Clake (a partner at Marshall Wace), Professor Sir Steve Smith, Vice-Chancellor of the University of Exeter and Professor Colin Riordan, Vice-Chancellor of Cardiff University.

I am glad to say it was a great success and, partly because the amazing goodwill and positivity in the room was sadly dissipated by the election, another conference on global trade is being planned in March, together with some more bespoke regional events. Alex Hickman, an entrepreneur, has been appointed Director and has been leading the effort. The website is HERE

A quote from The Theory of Moral Sentiments
I am sure I am not the only person to think we are never going to get anywhere as a country if we go on arguing with one another.

Adam Smith would agree. Here is a quote from The Theory of Moral Sentiments:

As we have no immediate experience of what other men feel, we can form no idea of the manner in which they are affected, but by conceiving what we ourselves should feel in the like situation. Though our brother is upon the rack, as long as we ourselves are at our ease, our senses will never inform us of what he suffers. They never did, and never can, carry us beyond our own person, and it is by the imagination only that we can form any conception of what are his sensations. Neither can that faculty help us to this any other way, than by representing to us what would be our own, if we were in his case. It is the impressions of our own senses only, not those of his, which our imaginations copy. By the imagination we place ourselves in his situation, we conceive ourselves enduring all the same torments, we enter as it were into his body, and become in some measure the same person with him, and thence form some idea of his sensations, and even feel something which, though weaker in degree, is not altogether unlike them. His agonies, when they are thus brought home to ourselves, when we have thus adopted and made them our own, begin at last to affect us, and we then tremble and shudder at the thought of what he feels.

In other words, lets cheer up, and show some fellow-feeling, to each other and to our friends and neighbours in Europe and across the world.

Happy Christmas.

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