ImpactAlpha, June 8 – Entrepreneurship is up, stakeholders are in and the President of the United States is vowing to “change the paradigm.” The right-hand lead in Sunday’s New York Times proclaimed an historic power shift: “For the first time in a generation, workers are gaining the upper hand.”
Reimagining capitalism is suddenly at the top of the public, and many private, agendas. The COVID disruption and the racial reckoning illuminated long-standing contradictions in the market-based economic system known as capitalism.
“We are capitalists,” says Omidyar Network’s Chris Jurgens, on a special ImpactAlpha podcast. “We believe in the power of markets and entrepreneurial innovation to solve big problems. But we think the current manifestation of capitalism that we have, particularly in this country, is fundamentally broken.”
In partnership with Omidyar Network, ImpactAlpha is digging into the new ideas, rules and power dynamics of the next version. Since markets are shaped by power, politics and people, they can be – and are being – reshaped by movements, policies and investments.
“We think the game is really about flipping that script, and that what we need to do is design markets to serve the well-being of society,” Jurgens told me in our lively conversation, “and to stop designing our society around serving the well being of markets.”
Omidyar Network is well known as an early practitioner and supporter of impact investing (see, for example, our 2019 series, “Beyond Tradeoffs”). Part family office, part venture capital fund, part philanthropic nonprofit, Omidyar Network has since 2004 committed more than $1 billion in investments and grants to “prime the pump” and jumpstart markets in education, human rights and financial inclusion.
In the aftermath of the 2016 election, Pierre and Pam Omidyar and other leaders of the organization asked themselves whether Omidyar Network was getting at the root causes of inequality, fraying social cohesion, the failure of our systems to deal with racism, climate change and other structural problems “and decided it was time for us to make a change,” Jurgens says.
One change was the spinning out of six impact investing funds into separate organizations, including Luminate, focused on civic empowerment and digital rights; Flourish, which works on financial inclusion; Spero, which makes investments in health, wellness and food; and Imaginable Futures, which addresses what it calls the future of learning (see, “What if… the redesign of education put racial and social equity at its core?”).
Omidyar Network itself now works on two major themes: responsible technology, to tackle both online safety and the power of dominant tech platforms; and reimagining capitalism, to shape a new economy in which markets can serve the interests of society.
That makes Pierre Omidyar, who made his fortune as the founder of eBay, the rare tech billionaire eager to look at the structural flaws of both technology and capitalism. Jurgens, who joined Omidyar Network from the U.S. Agency for International Development, where he managed a portfolio around entrepreneurship and impact investing, is inviting other impact investors to step up to such structural challenges as well, including through a deeper engagement with public policy.
“On the idea side, we think this starts with values,” he says, including democratic governance, ecological sustainability and a commitment to dismantling white supremacy. To articulate what that new thing looks like, and even what it’s called, Omidyar is working with organizations like Groundwork Collaborative, Roosevelt Institute and Hewlett Foundation to create an alternative intellectual infrastructure to the one that for decades has sustained the “neoliberal consensus.” (Omidyar Network has helpfully disclosed funding for its Reimagining Capitalism partners.)
That re-examination includes notions of fiduciary duty, which are being expanded, particularly in Europe, to include material environmental, social and governance factors. A second area is taxes and other incentives to encourage investment in research and development, workers and long-term prosperity, rather than short-term financialization.
Even more fundamentally, Jurgens says, is the shift from “shareholder primacy” to a “stakeholder economy.” CEO members of the Business Roundtable in 2019 committed themselves to respecting workers, communities, suppliers and the environment, along with investors, but accountability for such pledges has proven elusive.
One term Impact investors have not typically wrestled with directly, says Jurgens: power. Current capitalism has concentrated market power, which gets translated into political power, which shapes the rules of the game. Jurgens said Omidyar Network is focused on building power among constituencies that have lost power or been locked out in the first place, notably workers, communities of color, and small businesses that are competing against monopoly power.
Worth a read is Omidyar Network’s “Vision for the Future of of Workers and Work,” which supports both union organizing and efforts that go beyond the traditional labor movement.
“We’re looking at new forms of worker organizing, and extending work and organizing to sectors where you can’t have unions, sectors like care and other parts of the economy that labor law has excluded. We’re looking at revenue models for worker organizing,” Jurgens says. “And we’re raising the narratives of the real challenges workers are facing in their everyday lives, particularly in times of COVID.” He recommended in particular the work of Brookings Institute’s Molly Kinder, who has examined the treatment of grocery and retail workers through the pandemic.
The pandemic disruption has created both promise and peril. The surge in entrepreneurship, especially in Black communities, reflects dissatisfaction with current job opportunities as much as the lowered costs of starting a new business.
Jurgens credits grassroots and racial justice organizations that for decades have led the fight for a more just and equitable and anti-racist economy.
“Any progress we see stands on their shoulders,” he says. One opportunity Omidyar Network sees is to build bridges across constituencies to knit together racial and economic justice organizations, climate justice organizations, the impact investing community and progressive business networks that are advancing stakeholder capitalism from different directions.
That kind of alignment and inclusion is essential to seize the opportunity now that the reimagination of capitalism is indeed on the agenda.
“We agree that things have moved faster, particularly in the last six months than even optimistic proponents of this economic worldview would have predicted,” Jurgens told me. He warned, “We have to be aware that this may be a short window of opportunity, and aware of the forces that will oppose this change.”
“Major change happens when you have both grassroots pressure, and some folks from the inside game, from the establishment, come across. What we’re hoping to see is this broad-based coalition that can really push for the change that’s so important right now.”
ImpactAlpha’s Capitalism Reimagined project is sponsored by Omidyar Network. See all of our coverage at Capitalism Reimagined.