Following a brief examination of the main cause of the current economic downturn, namely the unequal distribution of wealth, the book individuates as a possible way to move forward out of the crisis that of pushing businesses to assume a more socially responsible conduct. But it is not up to the class of workers, disenfranchised by the process of globalization, to demand this more ethical conduct from businesses, it is up to another class: that of consumers. If they were to become more fully aware of their power to make a difference, with the adoption of various tools to help them exercise a more conscious consumption, they would be able to motivate companies in more ethical business practices, which would then lead to the substantiation of a Responsible Economy. A change of course in the conduct of businesses, as well as desirable for the redistribution of created wealth in the community, is entirely necessary due to the environmental and energetic unsustainability of the current neoliberal model, as based on an obsolete indicator such as GDP.
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CH. 1 – THE GROWTH TRAP AND THE UNSOLVED PROBLEM OF THE REDISTRIBUTION
1.1The growth trap
1.2The different ways of redistribution of the wealth
1.2.1Issues related to the continuous expansion of production activities
1.2.2Factors that make the third way of redistribution less effective
CH. 2 – THE CLASS OF WORKERS AND GLOBALIZATION
2.2.The class of workers
2.3.Globalization as a cause of the failure of the working class
CH. 3 – THE CLASS OF CONSUMERS AND THE CORPORATE SOCIAL RESPONSIBILITY
3.1.The class of consumers
3.2.Why consumers should take steps towards a better society
3.3.CSR (Corporate Social Responsibility)
CH. 4 – CONSUMERS ARE READY
4.1.Changes in consumers’ behaviour
4.1.1The loss of advertising effectiveness
4.1.2The decrease in purchasing power
4.1.3The advent of the Internet
4.2.The emergence of new patterns of consumption
4.3.The factors that hold back a more responsible behaviour by consumers
CH. 5 – THE TOOLS FOR THE "REVOLUTION OF CONSUMPTION”
SECTION ONE - Self-certification of Corporate Social Responsibility
5.2. Self-certification of CSR (Corporate Social Responsibility)
5.2.2The level of economic commitment
5.3. Examples of labels of CSR self-certification - special cases
5.4.The advantages of CSR self-certification
5.5.CSR self-certification and transparency
5.6.Self-certification made by the company or by a third-party certification body?
5.7.Effects on consumers and businesses
5.8.Effects on foreign companies and domestic exporters
5.9.Low-cost products in the new competitive ethics-oriented model
5.10. CSR self-certification and advertising
5.11. Assumption of responsibility by businesses and fear of a rise in prices
SECTION TWO – Transparency on the profits of manufacturers
5.12. Indication on the label of the level of profits in relation to the hours of work and the number of workers
SECTION THREE – Transparency on product prices
5.13. Knowability of the overall supply chain margin of products
SECTION FOUR - Step-by step CSR Self-certification
5.14. Modularity of the obligation of self-certification
SECTION FIVE – The tax instrument
5.15. Reduction in VAT rates
CH. 6 – CONSCIOUS CONSUMPTION
6.2.Consumption as a political act
6.3.Conscious consumption and its effects on businesses
CH. 7 – RELAUNCH AND REDEVELOPMENT OF CONSUMPTION
7.1."One-off" relaunch of consumption
7.2.Redevelopment of consumption
CH. 8 – UNSUSTAINABLE CONSUMERISM AND THE NEED TO STREAMLINE THE ECONOMY
8.2.Streamlining the economy
CH. 9 – A RESPONSIBLE ECONOMY
9.1. The new model of responsible economy
9.2. The benefits of a responsible economy
9.2.1A higher level of protection of workers, consumers, and the environment
9.2.2Greater stability of the economic system
9.2.3Enhanced sustainability of the economic system
9.2.4A more harmonious relationship among the various economies
9.3.The responsible economy and the "visible hand”
CH. 10 – CONCLUSIONS
FOR A RESPONSIBLE ECONOMY
How to get out of the growth trap and put theindividuals back at the heart of the economic system through a veritable revolution of consumption
Title | For a Responsible Economy Author | Davide Vasello
ISBN | 9788892691148
Via Roma, 73 - 73039 Tricase (LECCE) - Italy
This work is licensed under a Creative Commons
Attribution – Non-commercial - No Derivatives 4.0 International License.
To view a copy of this license, visit the website
To my family
“No, Donna Adelaide, vi sbagliate. La
guerra non è finita e non è finito niente.”
(No, Lady Adelaide, you’re wrong.
The war hasn’t ended, nothing has ended.)
(Eduardo De Filippo – Napoli milionaria (Side Street Story))
‘It is the market…’
You have certainly heard this phrase, probably uttered in a self-exculpatory tone by certain entrepreneurs or politicians to justify the policies aimed at reducing rights.
Sometimes, it is said in a defeatist tone by those people who, while suffering the consequences of this economic system, end up resigning themselves to the idea that there are no alternatives.
The message of this sentence is: we should take the market as it is without trying to change its rules, but adjusting to it, even if this means a reduced protection of workers, the environment, consumers.
I believe, however, that the market is not immutable. We can change and improve it because we are the market1.
Throughout this book, we are going to see how we can change the rules so that the market is no longer synonymous with avidity, which has gone so far as to trample on people’s life, but becomes synonymous with responsibility. To make this possible, it is necessary to encourage businesses to become more socially responsible, since their activities heavily affect the well-being of individuals as workers, consumers and users, as well as owners of the environment.
Businesses could be ‘friends’ of individuals and the environment if they no longer aimed to reap the maximum profit and if they added certain ethical rules to their work (Chapter 5 will explain the solutions in that regard).
The current international economic environment, however, is characterized by uncontrolled competition, based on quality and innovation on the one hand, but above all on cost reduction, for which the protection systems set up in the past are dismantled. In such a situation, countries tend to adopt policies in support of the competitiveness of domestic companies on world markets, thus renouncing higher standards of protection in favour of labour, the environment, and human health.
The fact that the economic system is based on competition is not necessarily bad since this may ensure efficiency and dynamism. The problem arises when competition is based only on cost and quality, while a third important factor is absent, which is ethics.
In the specific case, ethics refers to companies paying attention to adapt their work to the principles of honesty and fairness, while fully respecting the rights of workers, consumers, and the environment.
A company works in an ethical and responsible way when:
- pays its workers allowing them to have a decent life;
- respect the environment;
- produces good-quality goods and sells them at a fair price;
- pays a fair price to suppliers for raw materials, semi-finished products and parts.
Therefore, a company works in a socially responsible way when it does not aim at maximizing profits, but at a more equitable distribution of the wealth among the various actors involved in the production process. If competition were at the level of ethics and responsibility as well, individuals and their needs would be put back at the heart of the economic system.
However, we live in a profit-oriented economy, in which rules tend to favour businesses and, in particular, support their ambition to maximize profits. This is a flaw in the system. The goal of the highest profit does not go together with what should be the "natural" goal of the economy, which is to provide as many people as possible with an adequate standard of living, which is also compliant with theprotection of the environment and natural resources.
Economic activities should be a tool to be used by individuals to pursue their goals; however, what happens today is that individuals are the tools to meet the needs of the production world.
The capitalist system certainly led to the increase in the standard of living in the past decades (with questionable procedures); however, it is no longer able to ensure widespread prosperity (the underlying reasons are explained in paragraphs 1.1.-1.3. and in paragraph 9.3) and it is indeed evident that this system caused many failures in the current society: growing inequality and social disintegration, lower employment, temporary jobs, a more polluted environment, less healthy food, over-exploitation of energy resources and raw materials, environmental issues of global significance, etc.
So, how can we come out of this wild capitalism and achieve the goal of having an economic system oriented to ethics and responsibility?
A first solution would be to reform the rules of international trade in the direction of greater protection of individuals; as we know, these rules tend to favour the interests of businesses with the result that countries are forced to adapt their legislation (for example, flexibility of the labour market) in order to prevent other countries from compromising their competitiveness.
This solution, however, would require the support of many countries, which is very difficult to obtain since they want to defend their own interests and also because the position of large companies is very strong as they are interested in ensuring that the existing rules are not changed (unless in their favour).
A second solution, which I propose in this book, is toencourage companies to compete at a level of ethics and responsibility as well, and we are going to see how to achieve this by a ‘revolution of consumption.’
List of topics.
The following topics are going to be discussed:
-the unfair redistribution of the wealth causing the problems of our economy and our society and the solution to come out of this situation: encouraging businesses to a more responsible behaviour;
-the fact that the working class, which disintegrated due to globalization, cannot expect a more ethical behaviour from companies;
-the increasing importance of consumers who, as a class, may successfully contrast with the economic and financial élite, thus recovering the social achievements of the past;
-the reasons why consumers may be considered ready to follow this path of social progress;
-the instruments that may be available to carry out their revolution;
-conscious consumption and how it can be an innovative form of democratic participation;
-the need for a ‘one-off’ relaunch of consumption for its subsequent redevelopment;
-the environmental and energy unsustainability of the current economy and the need for its simplification;
-the characteristics of the new economic model outlined in this book, the Responsible Economy, and the goals it may achieve.
1Becchetti L. (2012)
There are still people claiming that the redistribution of the wealth is a minor problem and the most important things are the economic growth and the increase in the amount of goods and services produced.
In electoral campaigns, the main objective declared by both right- and left-wing parties is the growth of GDP and the national wealth. Many people state that the economic growth offers the opportunity to ensure well-being without the need to impose sacrifices to those who have greater wealth.
For many years, therefore, it was decided that the problem of a more equitable redistribution of the wealth did not need to be addressed, with the idea, which has now become an illusion, that the ‘cake’ of the wealth (the famous GDP) could be increased unlimitedly and no one would miss its slice.
It happened that many Governments decided to not adopt more stringent redistributive policies, by partially draining resources from the wealthy classes to meet the needs of the most disadvantaged social classes.
According to the liberal recipe, rulers left the wealth largely in the hands of those who had achieved it, in the belief that it would be constantly re-invested in new production activities and would give new employment opportunities to those who had lost their jobs, while implementing an indirect redistribution of the existing wealth (I will talk about this more in detail in the next paragraph).
The belief that they could perpetuate this mechanism of reinvestment of the profits obtained in new production activities, according to the logic of continuous growth, led to an economy that expanded excessively, an elephantine economy that is thirsty for any resource and needs that everything that is produced is also consumed.
This resulted in the consumerism in which we are immersed, which has become a form of redistribution of the wealth, even when it turns out to be the purchase of useless or harmful products.
Therefore, when consumption is high, a larger amount of money is spent and is redistributed within the society. On the contrary, when the level of consumption is reduced, some of the companies are forced to stop production and lay off workers, with the result that unemployment increases and the national wealth decreases.
It is for this reason that growth can be considered a trap, as it makes the level of employment depend on the level of consumption, so that consuming large amounts of products becomes necessary to us, a real social duty.
Obviously, it is not possible to redistribute the wealth mainly through consumerism: it is a perverted logic which we should abandon. An economic system should be able to ensure a more efficient redistribution, while allowing everyone to have a decent life, without this depending on the level of consumption or the rate of economic growth.
Therefore, we should aim at an economic system maintaining adequate levels of employment without the need to produce and consume large quantities of goods and services.
This is possible only through a greater redistribution of the wealth in favour of workers.
In recent decades, however, it happened that a growing share of the wealth created by companies was taken by them in the form of profits, while the related share for workers decreased.
According to the ‘Employment in Europe’ study of the European Commission (2007), labourincome in Italy declined from 69.7. of GDP in 1975 to 53.3. in 2000.
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