The past week brought more news about the Madoff scandal as Peter Madoff, younger brother of Bernard Madoff, was sentenced to 10 years in prison for his role in the Ponzi scheme. Although he received a much shorter sentence than his brother’s 150 years, many believe he played a larger role than he’s willing to admit. And as the judge who sentenced him noted, the damage done by the Madoffs was huge. They not only ruined many individuals who are still suffering from the fraud but also helped erode the public’s trust in the financial system.
Maybe it’s time we took a good hard look at that system. The Madoff scandal was just one example of its susceptibility to greed and corruption. As the Great Recession has shown and the Occupy movement has further spotlighted, the deep flaws in our current economic practices have led to increasing inequalities and damaged our planet.
But how do we fix these flaws? Whether or not you’re a fan of the capitalist system, it’s likely here to stay. So the challenge is not to replace it, but to transform it.
The desire to change the system has spawned a buzzword: the new economy. These days, as reported in Dollars & Sense, that means “an economy whose very purpose is not to grow profit … but sustain people and the planet.”
This may sound idealistic and unachievable, and many challenges remain to making such a fundamental shift. But other powerful movements have prevailed despite major obstacles — and the pressing issues driving the need for a change aren’t going away.
Some recent trends show evidence of the new economy’s vitality:
- Slow Money: The Slow Money movement aims to move the economy from a system of “extraction and consumption” to one that values “preservation and restoration.”
- Co-ops: Co-ops, while not new, have been expanding and taking on new forms to address today’s issues. The Evergreen Cooperatives of Cleveland are creating green jobs to help revitalize hard-hit neighborhoods, using a model that other cities are emulating. In California, the San Francisco Energy Cooperative lets anyone invest in clean energy for as little as $10 and have equal voting power in the co-op.
- B Corporations: B-Corps or Benefit Corporations turn the idea of traditional corporations on its head. While they are for profit, profit is not their overriding goal. What’s key is that B Corporations can’t be sued by shareholders for putting just as much weight on social and environmental concerns. A number of companies are joining this trend, as B-Corp legislation is passed in more states. A perfect example of creating a new and better kind of capitalism!
- The sharing economy: The popularity of the “sharing economy” marks a shift from having to own something to getting the services that the thing provides. Whether it’s for money or not, people are sharing cars, workspaces, tools, and many other resources. Crowdfunding lets people share their dollars to help start all kinds of projects, including product creation. The sharing economy can help keep money circulating locally and revitalize communities, and it’s key to moving from an economy based on rampant consumption.
- Impact investing: Here’s where it gets interesting for the average person. Sure, you can donate your dollars to help crowdfund all kinds of deserving projects. But what if you could make a return on those dollars? More opportunities are opening up to do just that — like Mosaic, a Certified B Corporation, with its new online marketplace that lets people invest in community solar projects. And something else to watch next year as it goes into effect is the JOBS Act, a crowdfunding bill that lets average citizens invest in startup companies.
These new ways to share our resources and do well while doing good are providing real opportunities to transform our economy.
And the appeal is widespread, as seen in the growing internet presence of downsizing and the new economy. Organizations are forming to support the trend, such as the New Economics Foundation, the New Economics Institute, the New Economy Working Group, and the American Sustainable Business Council. Even Richard Branson is getting in on the action. His new B Team promises to campaign for reforms that would make capitalism more environmentally and socially responsible.
With even major capitalists looking for a “Plan B” for the system, plus a growing grassroots movement, we can expect some real changes — and maybe even a move away from Madoff-like scandals. Fasten your seatbelts, and get ready for the ride to the new economy!