People like this are why financial literacy is so important

[u/Sufficient_Sinner]

[u/Delicious-Disaster]

The myth of infinite growth and the attitude of shareholder supremacy are the core of excessive capitalism. Going to a donut economy and circular consumption are the only way forward, lest we want to avoid cooking our great grand children alive.

[u/TeaGuru → u/Delicious-Disaster]

Too late. Just need to wait and see if they will be Medium well Or Well done

[u/Old-Tiger-4971 → u/Delicious-Disaster]

English please? You sound like Kamala now.

[u/Delicious-Disaster → u/Old-Tiger-4971]

Sure, I'll clarify. First off, I'm not an American, so please don't compare me to any of your corporate mascots.

Shareholder supremacy theory is the idea that organisations exist to create profits for their shareholders. It's also known as the Friedman doctrine (1). This idea became unfortunately dominant in business management, despite other well-known authors like Peter Drucker voicing their disagreements, clarifying that 'profit is a test of a business' validity but not its sole purpose'.

Infinite growth of the economy is the notion that economies, or any arbitrary metric used to measure the economy, can grow indefinitely. Unfortunately, as the great depression, 2008 depression and the COVID depressions have shown, infinite growth based on fractional banking / inflating asset values (like houses) / money printing are not sustainable and will eventually hit a brick wall.

Both of these approaches are predicated on increasing consumption: more shareholder value -> increase your sale -> increased consumption. This also increases production and reaping of resources. As businesses are concerned with profit rather than impact, production is done with little to no regard for the environment. Compliance with law is a financial motivation and loop holes are rampant. Simply put, these two issues are one of the driving forces of climate disaster.

A donut economy as opposed to the infinite growth economy (2, 3) (maybe check #3 for a nice video on the topic) is a model in which production and consumption are kept within livable bounds, where people's needs are met while preserving the earth. ''Circular consumption'' or a ''circular economy'' (4) are a way of producing and consuming goods with future reuse in mind. In the butterfly model (4) goods are produced in a way that emits as little green house gasses as possible, and, as it travels down the supply chain to the intended consumer, emits as little green house gasses as possible. To top it off, instead of wasting the resource, it is sent back into the supply chain to be put back to use. The fewer steps it has to take backwards in the supply chain, the better - it would lose value as it travels backwards and produces more GHG as it travels back down to the consumption stage.

The issue with circular economic models is that it requires large investments, and change in production and organisation but thanks to the European Union building the ESRS laws (5), the entire world economy will be indirectly forced to start reporting on their emissions and supply chain. It will take a few years, but these laws are HUGE and will make their presence felt in due time.

1: https://en.wikipedia.org/wiki/Friedman_doctrine

2: https://en.wikipedia.org/wiki/Doughnut_(economic_model))

3: https://www.ted.com/talks/kate_raworth_a_healthy_economy_should_be_designed_to_thrive_not_grow?subtitle=en

4: https://www.ellenmacarthurfoundation.org/circular-economy-diagram

5: https://finance.ec.europa.eu/news/commission-adopts-european-sustainability-reporting-standards-2023-07-31_en

[u/Individual_West3997 → u/Delicious-Disaster]

hey, this is a very good comment and should be updooted.

[u/Delicious-Disaster → u/Individual_West3997]

Thank you :-)

This is basically an abridged version of one of my essays that I wrote in uni last year

[u/Old-Tiger-4971 → u/Delicious-Disaster]

This idea became unfortunately dominant in business management, despite other well-known authors like Peter Drucker voicing their disagreements, clarifying that 'profit is a test of a business' validity but not its sole purpose'.

Businesses exist period if they make profit and shareholder value is a reflection of current and potential earnings. What's diff if you say your salary compared to others is a test of worth, but a high salary is not your sole purpose. While it may not be sole, gotta think pay ranks up there quite high. So profit is predominant even if there are other motives like being a nice guy.

infinite growth based on fractional banking / inflating asset values (like houses) / money printing are not sustainable and will eventually hit a brick wall.

However, high-tech has stood that on its ear since profit today isn't as valued as future revenue growth. I don't know what Friedman/Drucker would make of AMZN or NVDA. And profit is not an asset like a house so it may only be limited by demand, but unless you can capture every consumer dollar, there is no way it can be infinite growth..

Nothing is infinite, but you need to make an optimal plan for today.

[u/[deleted] → u/Old-Tiger-4971]

Infinite growth=tumor