Capitalism 3.0
Claus Otto Scharmer, who is the creator of Theory U, started some research on how to transform capitalism in order to bring our system to the next level. He takes the article from Johnson discussed in my previous blog as a starting point. Johnson is dealing with one of two main factors which are blocking a real transformation: Power - the close ties between Wall Street and Federal Institutions. Scharmer deals with the other: Paradigm - how our thinking based on conventional economic thought is preventing us from asking some tough questions that could help us to identify the root issues of the economic crisis, how it is connected to the need for global transformation and how we can shape it in a more intentional way. His ideas can be found in his paper "Seven Acupuncture Points for Shifting Capitalism" which explores the underlying system of thought that has led to the current crisis and proposes ideas for a green, inclusive and intentional ecosystem economy.
In the first part of the paper Scharmer points out the evolutionary stages of capitalism based on the notion of capitalism 1.0, 2.0 and 3.0 that Peter Barnes suggested in his book "Capitalism 3.0" from 2006 and the works of the British historian Arnold Toybee. Scharmer comes up with the following:
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Stages of Economic Evolution |
Challenge |
Response: Primary coordination mechanism |
Dominant Sector/Player |
New Primary Source of Power |
|
17th-18th Centuries: Pre Capitalist. Mercantilistic/state-driven |
Stability |
Regulation / hierarchy |
State/government |
Sticks |
|
18th-19th Centuries: Capitalism 1.0. Capital/Shareholder-driven |
Growth |
Market / competition |
State/government; Capital/business |
Carrots |
|
19th-20th Centuries: Capitalism 2.0. Stakeholder interest-driven |
Externalities |
Negotiation / dialogue |
State/government; Capital/business; Civil Society/NGO |
Norms |
|
21st Century: Capitalism 3.0. Shared ecosystem-awareness-driven |
Global Externalities |
Collective action arising from shared awareness and common will |
State/government; Capital/business; Civil Society/NGO; Cross-sector communities of creation |
Actions that arise from presencing the emerging whole |
This is the guideline what we should aim at, transform the current forms of Capitalism into Capitalism 3.0. Then Scharmer points out "Seven Acupuncture Points" which for him are practical leverage points that could shift the system from 2.0 to 3.0. The term emphasizes that the transformation requires a set of interrelated system interventions, no. 6 being related to Leadership: To reinvent leadership learning in order to facilitate "learning from the future as it emerges" rather than replicating the knowledge of the past. (please refer to Theory U for explanation of the wording). One essence form him is to move from the ideological either- or debate to a pragmatic both- and integration as part of an upgrade to 3.0.
These ideas are some of the most appealing I have heard about for some time and it nicely fits in my current mood of looking at things from an evolutionary stages standpoint and builds on my previous entries. In the context of Spiral Dynamics Scharmer shows a way how to move up the spiral.
Posted at
09:47PM Nov 01, 2009
by Volker Seubert in Personal |
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Forms of Oligarchy
After I looked into Spiral Dynamics I am very sensitive now to any of those evolutionary patterns. I just recently found some in a very interesting article from Simon Johnson, a professor at MIT’s Sloan School of Management about the economic crisis, it's causes and how to solve it.
He argues that the U.S. economic recovery will fail unless the "financial oligarchy", responsible for the crisis in the first place is broken. The government, captured by the finance industry is according to Johnson, running out of time needed to prevent a true depression. A highly advanced country like the US also has the most advanced oligarchy and with this statement Johnson describes three stades of political systems, a primitive one in which power is transmitted through violence, e.g. military coups; a less primitive system that is found in emerging markets where power is transmitted via money, e.g. bribes and finally a system in which the
“...financial industry gained political power by amassing a kind of cultural capital—a belief system. Once, perhaps, what was good for General Motors was good for the country. Over the past decade, the attitude took hold that what was good for Wall Street was good for the country. The banking-and-securities industry has become one of the top contributors to political campaigns, but at the peak of its influence, it did not have to buy favors the way, for example, the tobacco companies or military contractors might have to. Instead, it benefited from the fact that Washington insiders already believed that large financial institutions and free-flowing capital markets were crucial to America’s position in the world.”
Although this is the most developed form of oligarchy it is located pretty low on the Spiral. I see patterns of the achievist theme (ORANGE) in which everything is strongly focussed around prosperity and material well-being. Using Johnson's words we are dealing with "a society that celebrates the idea of making money". On the other hand I see elements of Purposeful-Authoritarian/Truth (BLUE). It looks like we need to move up the Spiral as this focus is not good enough for our well being in the future. And although Johnson's overall position seems radical including the solution he suggests at the end of the article I believe it deserves serious consideration...
Posted at
01:19PM Oct 25, 2009
by Volker Seubert in Personal |
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France and Strike
In an editorial note the “Frankfurter Allgemeine Zeitung” on Saturday wrote about Unions and strike in France. There is something about the international reputation of France related to strong Unions and employees fond of going on strike. Let's hold some facts against it: in measured days of strike France is amidst the average countries in Europe. Also the Unions in fact are not as strong as it may look like. Only 8% of employees are organized in Unions which is one of the lowest rates worldwide. The perception we get is formed by a higher percentage of employees in public services compared to the general industry being part of Unions who regularly manage to focus strikes on key parts of daily life as transportation or schools.
Additionally the mood of the population does seem to change. Unions try to mobilize people and fail. Actually President Sarkozy puts reforms in place without encountering too much resistance. People may have understood that in times of international competition change is necessary. Nevertheless there is pressure in the system with energy prices going up and only “la rentree”, the school start after the holidays in September which traditionally is the time for protests will show what the situation is like.
Posted at
07:58PM Jun 23, 2008
by Volker Seubert in Europe & Beyond |
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Arabic Capitalism
Interestingly the German weekly news magazine “Der Spiegel” ran a title story on Dubai beginning of February. Looks like the topic is hot. It was emphasizing the superlatives aspect of Dubai, the Emirates being the country in the world with the most mentions in the Guinness Book of records. But far more interesting it was looking at Dubai as an Arabic/Islamic model for the future, an element against Islamic conservatism, poverty, civil war and terrorism in other parts of the middle east and north Africa. Located between East and West, with a population of 1,5 Billion in a radius of 3 hours flight, being close to the growing markets of India/Pakistan, China not being far, as well as the European Union on the other side, Dubai has developed into a major very liberal trading place, somehow reviving the ancient silk road.
The Sheiks of the Emirates are positioning themselves and their country as the spearhead of a new Arabic/Islamic openness and tolerance. During a conference of Arabian states Dubai's Emir and Emirate's Prime Minister Sheik Mohammed Ibn Rashid Al Maktoum threw the following words to his fellow senior government leaders: “Change yourselves otherwise you will get changed.” He is not interested if someone is Sunnit or Shiit, those who are good to their neighbors and work hard are welcome. During his latest visit to the Emirates President Bush gave his blessing, stating that the Emirates are a model of an Islamic state tolerant against people of all religions. Dubai Marketing is advertising with slogans like: “Imagine a world in which no one is a stranger!” 150 nations live together in peace, there are 50 nations amongst the Palm investors.
So the summary really is that the Sheiks are learning very quickly from the West and getting a lot of acceptance. They are very well positioned in the global competition to attract investors as well as consumers and tourists from all cultures. The Egyptian author Jussuf Ibrahim is quoted at the end of the articel, that for decades (Muslim) people travelled to Saudi-Arabia, Irak and Iran importing into their countries the ideas of islamic fundamentalism and bringing black shawls for their wives. Today they go to the Gulf, bring Jeans for their wives and ideas how to make business. "Long live Arabic capitalism!"
Posted at
07:11PM Feb 26, 2008
by Volker Seubert in Europe & Beyond |
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What Petrodollars can do!
We had a meeting in Dubai last week in one of our global top growth regions, the middle east. First impression was like coming to the US or even more precisely to Las Vegas. Huge roads, big cars, tall hotels that in terms of standard are amongst the best of the world as the Burj al Arab. Already before I heard that the city is a huge construction site with all crane capacities concentrated there – and it is. For an impression of the state the city is actually in watch this short video, a drive on Sheikh Zayed Road. The Burj al Dubai is supposed to become the world's tallest skyscraper. On February 5 it actually reached the height of 604.9m (1,985ft). Although the final height was to be kept secret it leaked out that the plan is to go up to 818m (2,684ft).
There are a lot of other development projects (click this link for an overview) currently in progress, planned or finished, like Ski Dubai a skiing hall in the desert, Dubai's Disney World “ Dubailand” and most interestingly all the artificial islands in the sea, the Palm Islands, The World, The Universe. Not to mention all the huge shopping malls that already exist like Souk Madinat Jumeirah or the Mall of the Emirates.
Although one will find Arabic elements in the architecture most buildings still feel pretty artificial. The most impressive building and an architectural success for me is the Burj al Arab built to resemble the sail of a dhow, a type of Arabian vessel. People living in Dubai for years complained that the city lost much of it's Arabic character.
On January 24 the Herald Tribune reported about the project of “Lyon Dubai City”, the idea of Buti Saeed al-Ghandi the head of Emivest to build a little Lyon after he was overwhelmed visiting the city. The project planner was cited having said that this would not be Disneyland or Las Vegas, they want to make people feel that they are in Lyon without copying the architecture of the city itself!
But it is not Dubai alone seeking to invest the oil billions to develop a self sustaining economy. The big neighbor of the United Arab Emirates on the Arabian peninsula, the Kingdom of Saudi Arabia the world's leading oil exporting country has even more incredible plans. King Abdullah, the 83-year-old Saudi monarch, himself is pushing a plan to establish six "economic cities" to be completed by the year 2020 in different regions of the country to promote development and diversification. The cities will be King Abdullah Economic City on the western coast, near the city of Rabigh; the Knowledge Economic City, near Medina; and the Prince Abdulaziz bin Mousaed Economic City, in the north.
Referring to another article of the Herald Tribune from January 20 the cities are supposed to create one million new jobs and be home to as many as five million people. They will together have three times the population of Dubai, and an economic output equal to Singapore's. Other plans include building four refineries, two petrochemical plants and a modern graduate-level university with an endowment of $10 billion. The focus will mainly be on four main sectors: petrochemicals, aluminum, steel and fertilizers. One big industry project is already in progress and ready to start production of plastics end of this year: the refining and petrochemical plant of Rabigh that will as one of the world's largest petrochemical plants begin to put Saudi Arabia within the top three chemical producers in the world within a few years. It is a joint venture of the state-run oil company Saudi Aramco and Sumitomo Chemical of Japan.
All this investment would not have been possible without the surge in energy prices which have quadrupled since 2002 and reached $100 a barrel in New York in January. But clearly the oil exporting nations do not invest all their increasing fortunes in their own countries. The McKinsey Quarterly in January analyzes “The new role of oil wealth in the world economy”. Added liquidity from these countries has significantly lowered interest rates and increased real-estate values in developed countries. McKinsey concludes that petrodollars are creating inflationary pressures in markets for illiquid investments, such as real estate, art, and companies and states that if the pressures move beyond those markets, the potential asset price bubbles could burst. The question is how the world economy long term would react to higher oil prices that it has so far accommodated without a notable rise in inflation or an economic slowdown?
Last but not least I have to mention that I really enjoyed the Arabian food, one of my favorites being Hummus!
Posted at
05:03PM Feb 10, 2008
by Volker Seubert in Europe & Beyond |
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Freakonomics
Just finished reading Freakonomics a book from economics professor Steven D. Levitt (read profile of him by Dubner) and journalist Stephen J. Dubner. It educates readers how to question things in daily life we might easily accept as reality, mainstream opinions that media and so called “experts” are propagating. We have apparently a tendency to associate truth with what fits best to our personal comfort and interest. The famous economist John Kenneth Galbraith coined the term “conventional wisdom” for this type of truth which must not necessarily be untrue.
One main element of Levitt's questions is to go look for the incentive people have for their behaviors or actions. Then data and regression analysis is his way of demonstrating reality.
He comes up with really odd questions, e.g. “Why do drug dealers still stay with their moms?” Because they are earning only $3.30 an hour - less than the minimum wage. Only the leader of the gang did fairly well, making around $100,000 a year (tax free). Or “Where did all the criminals go?”, referring to the sudden and precipitous crime drop in the US in the 1990s. According to his analysis those criminals were not even born as he relates the crime reduction to legalization of abortion (which was very controversially discussed in the US).
I am going to let you read this book to learn more about the background on these topics. What I really enjoyed was the creative approach how to use the thinking you learn while studying economics in day to day settings to cross check facts with reality. It definitely encourages lateral thinking which I am convinced is the base of creativity. You find a little bit more insight into the contents of the book in this New York Times article. There is also the Freakonomics Blog or the Freakonomics webpage. And I recently discovered that Pavel read the book at the same time as I did but was quicker with his blog!
Posted at
08:16AM Nov 15, 2007
by Volker Seubert in Personal |
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Hamburg
I owe this entry about my home city Hamburg to my blog... I love this picture which shows the Alster, the large city lake. If you look to the opposite direction you will see the river Elbe where the Hamburg port is located. It is the second largest port in Europe behind Rotterdam in the Netherlands and ranking amongst the top 10 container ports worldwide (2005: No.8). Cargo turnover increased by nearly 50% from 2000 to 2005! It takes ships 6 hours to get down the Elbe westwards to the North Sea (110 km or 68 miles). 80 km or 50 miles North East of Hamburg is the Baltic sea. So to some extent Hamburg is located in between two seas.
It is a vibrant, very open and international city. With 1.7 mio inhabitants (more than 4 mio in the metropolitan area) it is the second largest city in Germany after Berlin and Germany's leading international trading place. There are only a few cities in the world in which you find more consulates than in Hamburg where you have nearly 100 of them. Some major Japanese companies chose to establish their European logistic centers here like Panasonic, Olympus and Sharp. With 360 companies from Greater China the Chinese represent the biggest business community.
But Hamburg is also a major IT centre in Germany. From AOL and Adobe, via the content management software expert CoreMedia and Gentleware known for software modelling tools like Poseidon for UML to Google who just announced that in Google World Hamburg will be the first city to be viewed in real 3D, many top IT companies are located here. And... as readers of this blog know, Sun Microsystem's StarOffice/OpenOffice Team.
Around 20000 students in sciences and engineering graduate each year from several universities, a university research institute for computer science, the Hamburg Business Development Cooperation and the Hamburg Chamber of Commerce fuel the development of the IT sector.
The other side of the city which makes it a really nice place to live is the varied cultural life ranging for example from several musicals like Lion King, Dirty Dancing and others to it's night life in the former seaman's amusement neighbourhood “St. Pauli” with the world renown “Reeperbahn” also referred to as the “Kiez” (party and redlight district is probably the closest translation) which nowadays by the way also offers pretty much of a cultural variety. In simple words: just a great, nice city to visit, to live in or just to party in!
Posted at
11:33PM Mar 04, 2007
by Volker Seubert in Personal |
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Economy and Open Source Software
A study has been prepared for the European Commission on the “Economic impact of open source software on innovation and the competitiveness of the Information and Communications Technologies (ICT) sector in the EU.”
It turns out that shared software (open source or as referred to in the study: FLOSS – Free/Libre/Open Source Software) has a huge positive impact on the whole economy in many different ways. Starting from generating programming and communication skills for the participating developers to an amount of EUR 12 billion in monetary value that comes from the existing code base which is doubling in size every 18-24 months! Using open source software potentially saves the industry over 36% in R&D investment that can result in increased profits or be spent in other areas of innovation.
Coming back to the EU's Lisbon goals of making Europe the most competitive knowledge economy by 2010 open source software can contribute to provide a skills development environment valued by employers and retaining a greater share of value add locally (the study shows that the EU is significantly loosing talent in science and engineering to the US). This environment combined with the comparatively higher share of open source developers in Europe could encourage the creation of new software businesses which is limited here compared to the US due to restricted venture capital and risk tolerance.
Concrete statement: “Increased use of open source software may provide a way for Europe to compensate for a low GDP share of ICT investment relative to the US. A growth and innovation simulation model shows that increasing the open source software share of software investment from 20% to 40% would lead to a 0.1% increase in annual EU GDP growth excluding benefits within the ICT industry itself – i.e. over Euro 10 billion annually.”
And just a modest note on Sun: the study made proof that we are the No. 1 contributor (by far) to the open source community. Not sure how many times open office is mentioned in the study but you'll read it very frequently going through...
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Posted at
07:34AM Jan 19, 2007
by Volker Seubert in Sun |
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EU Economy
The decision of the German government mentioned earlier to restrict the entry for workers from Bulgaria and Romania, new EU members from tomorrow on, is no surprise. It has to deal with a highly EU enlargement averse population. Polls published these days show that only 39% are positive towards the enlargement. People fear that low cost competition is going to threaten their jobs. But with this type of protection the problem will only be postponed.
Sometimes it is difficult to convince people although the benefits of the EU and it's enlargements should be obvious. As stated in the article: New members give lift to EU economy, the EU is still behind the US and 5 East Asian economies and likely to fail it's own goal to become the most competitive region in the world by 2010. The new members in eastern Europe provide possibilities for further growth and development of the whole EU economy. As also stated earlier in my blogs those new countries are fostering competition which is a good thing as “good old Europe” is forced to renew itself. By boosting welfare and economies in new member's countries all other economies will participate and prosper over time. Every country will find it's niche and specializations and trade with the others. The less regulated and free this whole multi country economy is the higher the benefits for all (going back to the economic theory of competitive advantage).
As an example how successful new member countries can be: the Czech Republic already overtook Portugal in gross national product per person since joining the EU beginning of 2004. Why not let the whole EU economy get some traction through these relatively young, highly dynamic economies? Instead of taking measures of protection we need to confront ourselves with the phenomenon of competition which would bring us to the next level. The earlier the better. For 2007 I wish politicians, unions and all people in western EU countries to discover that challenge and take it up!
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Posted at
12:29PM Dec 31, 2006
by Volker Seubert in Europe & Beyond |
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Innovation Matters
I want to point to some interesting blogs and discussions around innovation at Sun. First there is Greg's blog (Greg Papadopoulos Sun's Chief Technology Officer). In his most recent entry he claims that the world will only need five computers. Greg points out that in the future there will be five hyperscale, pan-global broadband computing services giants and Sun's bet is to be one of their major suppliers. On our way to get ready for that being innovative is of significant importance. The huge computing power those companies will demand cannot easily be generated by filling some more racks. Some complex issues need to be resolved, e.g. in terms of space, power supply, cooling and more. He refers to Project Blackbox Sun's latest innovation: computing power in a shipping container. Greg closes with: Engineering for scale matters. Really matters. Read some of the discussion around this hypothesis in Computerworld IT Blogwatch .
Secondly there is the Innovation Blog. Watch the video posted in Driving Innovation! Host Hal Stern (VP of Global Systems Engineering), our CEO Jonathan Schwartz and Greg discuss why innovation matters. I want to go into one aspect they touch on mentioned by Greg before. It is the theory on market segmentation in customers who are over-served by Moore's law and customers who are under-served by Moore's law. Under-served are those who need to grow as their customers demand more computing capacity while the bandwidth of DSL lines is constantly increasing and those who experience hypergrowth as a result of increasing demand for services (e.g. salesForcecom). Greg's prediction is that this latter market segment will grow significantly over the next coming years. And again there is a need of innovation and engineering for scale.
Evidence on growth through bandwidth: in Germany today it is possible in nearly every bigger city to get DSL lines as fast as 16mbits. Who will fill those pipes and with what? Videostreaming, IP telephony, television are possibilities for existing and new companies to grow. YouTube would probably not have been successful if the bandwidth would not have increased.
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Posted at
07:40AM Dec 21, 2006
by Volker Seubert in Sun |
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Web Economics
I just thought about the economic impact of the web evolution, trying to remember what I have learned years ago during study times. Also if this was not a lot it is still fun to have some thoughts about it!
It is evident that Market transparency is drastically improving with the web evolution. Being one of the elements of perfect competition which economists generally use for their theoretical models, it significantly contributes to enforce a free market economy. As a result the price will more strictly follow supply and demand.
Let's think about what consequences Recruitment 2.0 could have for companies. Differentiation between “ companies to work for” and “companies not to work for” due to their reputation in the market will grow with increasing transparency through web information. Consequently the demand to work for companies that have a good reputation increases to the extent that employers in that category have an overflow of talent to choose from.
Could this mean that for them the price of labor would drop? We already know companies today who have a compensation philosophy targeting lower market rates because they constantly have a huge talent pipeline based on their image as an employer. Would that gap get bigger? From an economic perspective the price (salary) should fall until the over supply will again exactly match the demand. Can this really be applied to human labor and corporate compensation schemes? Maybe the next generation will accord a higher priority to a fun working environment and is ready to compromise on their salaries?
On the other hand companies with a bad image would have to pay high premiums to attract people. Would that mean that employees who want to maximize their income need to go work for less attractive employers to get higher salaries?
I have no fears for Sun. Our motto is “sharing”, being open, having open standards, open software, we have an open culture inside and are even encouraged to take it outside by blogging (as you see this web page is a blogging page explicitly for Sun employees!). Our CEO Jonathan Schwartz promotes openness daily. I really enjoy working for Sun Microsystems!
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Posted at
03:41PM Nov 10, 2006
by Volker Seubert in Human Resources |
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