Beyond Neoliberalism: The Dawn of a New Civilization

Neoliberal economics are one of the root causes of humanity’s spiritual crisis today. The good news is the infrastructure for a more just, inclusive, and regenerative economic system is already in place.

We are in a profound spiritual crisis because the core operating principles of our civilization are based on domination and exploitation of people and planet, not on love for each other and our shared planetary home. Global warming, environmental degradation, tribalism, and the uneven distribution of wealth threaten the very survival of civilization.

We can trace our current spiritual crisis to the Doctrine of Discovery, which originated in a series of papal bulls issued by the Vatican to the kings of Portugal and Spain in the 15th century. These bulls split the New World between Portugal and Spain and authorized their kings to conquer any non-Christian peoples in these territories and exploit them and their lands and resources.

The Doctrine of Discovery established that white, European, male, Christians were the superior humans. The Doctrine of Discovery became the moral and legal justification for European nations to seize foreign lands, vanquish their indigenous peoples and exploit them and their lands and resources for the benefit of the crown. The Doctrine of Discovery gave legitimacy to colonial empires and the practices of white supremacy, slavery and genocide. Two consequences of the Doctrine of Discovery are a global civilization and economic system that are based on domination and exploitation of people and planet, not on love for each other and our shared planetary home.

Corporations, the principal actors in our economic system, were the agents of empire during the Age of Discovery. Their design still bears the imprint of domination over people and planet. The original corporations were agents of empire such as the Dutch and British East India Companies. These original corporations were used to conquer foreign territories and exploit their peoples and resources for the crown. The basic design of the corporation has not changed in 500 years. Corporations still conquer markets and exploit them for their owners.

Under the doctrine of shareholder primacy, the traditional corporation, by law or custom, has one legitimate purpose – to maximize stockholder welfare. Under this doctrine, it is morally acceptable to externalize the negative costs of corporate behavior onto society and the environment. As a result, we have a global economic system dominated by multinational corporations that are unwittingly prone by design to anti-social, sociopathic and even criminal behavior.

Corporations are amoral actors acting in an amoral economic system nested within an amoral civilization. This amorality creates a hidden conflict between two incompatible moral systems. The moral compass for public corporations and those who run them is the requirement, by law or custom, to maximize profit for shareholders, often by externalizing the negative costs of corporate behavior onto society and the environment. The moral compass for individual citizens around the world, on the other hand, is each of our particular spiritual traditions’ equivalent of the golden rule – do unto others as you would have them do unto you. This conflict is hidden because the corporation’s moral compass of profit maximization operates behind closed doors in the board room. It’s the golden rule vs. the rule of gold.

There is growing acknowledgment, however, that capitalism as we know it is broken. Marc Benioff, the CEO and founder of Salesforce, recently declared in a New York Times editorial “…as a capitalist, I believe it’s time to say out loud what we all know to be true: Capitalism, as we know it, is dead.” Mr. Benioff was also one of 181 public company CEOs who recently signed a Business Roundtable letter advocating a move to stakeholder capitalism.

We can’t change capitalism, however, without changing the foundational beliefs of neoliberal economics, which were themselves the solution to a conflict in moral systems between the totalitarian and the liberal orders after World War II. This conflict resulted in the Cold War between the democratic West and the state-run, centrally planned economy of the Soviet Union.

In 1947, perceiving that “the values of civilization [were] in danger,” a group of thought leaders from the US and Europe, met in Mont Pelerin, Switzerland, to design an economic system to address the totalitarian threat. Their original vision contemplated a free global market regulated by the rule of law and the moral standards of the West. Their thinking became the basis of today’s global, free-market economic system, commonly known as neo-liberal economics.

Neoliberal economics may have helped the West win the Cold War, but as economist Kate Raworth, points out in her book, Doughnut Economics, they have led civilization to the brink of collapse. Ms. Raworth identifies the 11 underlying beliefs of neoliberal economics. Key among them, for example, are the beliefs that “the earth is inexhaustible, so take all you want” and “society, which is non-existent, so ignore it,” which are echoes of the Doctrine of Discovery.

Neoliberal economics are one of the root causes of the spiritual crisis facing humanity today. We’ve allowed business to substitute maximizing stockholder welfare for the golden rule. Little will change unless we decide to hold business accountable to the golden rule or an equivalent common moral standard. Today, the struggle is not between the totalitarian and liberal orders but between the rule of gold and the golden rule. Neoliberal economics, which were a response to the post WWII conflict between competing ideologies, have unwittingly become a cause of our current spiritual crisis.

The good news is that the much of the infrastructure for a more just, inclusive, sustainable, and regenerative economic system is already in place. There is a global movement to endow the corporation with a social and environmental conscience with new corporate forms such as the Benefit Corporation (USA), La Societá Benefit (Italy) and L’entreprise à Mission (France).

Two small changes to the corporate code endow the benefit corporation, for example, with a social and environmental conscience that transcends and includes the usual pecuniary one. The fiduciary duties of the directors extend to all of the corporation’s stakeholders, including society and the environment. The benefit corporation also has an additional public purpose of creating a material positive impact on society and the environment. Directors in benefit corporations must optimize profit for shareholders while optimizing their corporations’ positive impact on society and the environment.

These new corporate forms begin to address the conflict in moral systems by requiring corporations to operate more in alignment with the golden rule. These changes make the corporation more prone to altruistic, rather than sociopathic, behavior.

There are encouraging signs that this way of doing business is becoming the global standard. The shareholders of Danone, the French multinational consumer packaged goods producer, just elected to become an “entreprise à mission,” the French equivalent of a benefit corporation, with more than 99% of the shareholders voting in favor. The shareholders of Amalgamated Bank recently approved benefit governance. Lemonade, an innovative insurance broker backed by prominent venture capital funds, and Vital Farms, a purveyor of pasture-raised eggs and butter, recently went public as benefit corporations. These four companies (with Danone) join the two corporations with benefit governance already trading on the NYSE or NASDAQ, Laureate Education and Natura of Brazil (the owner of Avon Products and The Body Shop).

Globalization has made it clear that we are one human family sharing one fragile planetary home. What will it take for business to embrace this reality and awaken as a force for good? The benefit corporation, societá benefit, and l’entreprise à mission may be the start of that awakening.

In conclusion, to change our civilization, we need to base it on love for each other and love for our planetary home. To change the economic system, we need to love each other by providing everyone with a good standard of living and love our planet by living within the resource limitations of our biosphere. To align business with the new economic system, we need businesses to act as responsible global citizens that take better care of people and planet.

To align ourselves with this new ethos, we lawyers need to expand our profession from its narrow focus on the zealous representation of each individual client’s individual self-interests to include having a broader responsibility for the collective well-being of society. This might mean, for example, revising our codes of ethics by expanding a lawyer’s ethical duties to the client to include society and the environment, as benefit corporation statutes expanded the fiduciary duties of directors to include all of a corporation’s stakeholders. Too often, our duty to zealously represent our clients’ interests blinds us to the potential social and environmental consequences of our representation and allows us to shirk these larger ethical issues.

We lawyers are in the best position to question whether the underlying principles of our respective legal systems actually reflect the values of a civilization based on love for each other and our planet. Do our laws provide access for everyone to a good standard of living? Do our laws help us live with the resource limitations of our biosphere? Do our laws encourage businesses to act as responsible global citizens? If not, let our profession become an agent of change to re-design our laws, as we have done to create benefit entities, to create a civilization that works for everyone. As Dr. David Hawkins said, “love is the ultimate law of the universe.”

This article was originally published in The Conscious Lawyer, September 2020.