by Jason Stewart (@HaveYouHeard_SA) Capitalism has always gone hand-in-hand with democracy — free markets for the free world. However, it’s been corrupted to advantage some and disadvantage others, rigged so that the rich keep getting richer and the poor keep getting poorer. This is what we call “capitalism without conscience”.
A capitalistic system is meant to create an environment that allows those who work hard and/or smart to prosper, with the outputs (usually wealth creation) being directly linked to the inputs (investment, being time or money or other resources). It therefore allows for private ownership, profit retention and capital accumulation, and requires open, competitive markets.
Capitalism without conscience is responsible for today’s greed, corruption, institutionalised bias, the negative impact of compound interest (for those who suffer with debt) and inequality in wealth, income and opportunity. Even worse, it’s eroded the optimism that the world felt moving into the new millennium and, after the global financial crash of 2008, most — if not all — faith in capitalism has disappeared like sushi on a buffet.
And, when it comes to culture and human behaviour, capitalism without conscience has sparked the growing populism, nationalistic and segregated racial rhetoric that has spread across Europe and the US, and is raising its head here in our young democracy in South Africa.
There is positive change happening, however. It can’t be called a backlash or a groundswell, but there’s some intent to stop capitalism without conscience in its tracks. In August 2019, the Business Roundtable, a powerful group of 181 top CEOs of American-based companies, redefined the purpose of a corporation: the old definition, of making profit for its stakeholders, was changed to improving society as a whole by valuing customers, protecting the environment, and hiring diverse groups and compensating them fairly.
But until this shift becomes the predominant and institutionalised way of being, we — globally and in SA — will have an economy where people are more pressured and under financial strain. The rich have less to spend, the middle class have less to save, and the poor have closer to nothing more than ever.
People will put up with most things but, once their living standards start to feel pressured or drop, they become angry. Hence the nationalistic revolts around the world.
They’ll also start placing increased importance on security, protection and opportunity. Many will look for escapism that fills them with hope; already Hollywood, Bollywood and the like are feeding us movies jam packed with heroes who fight the corrupt evil forces of power and win. The desperate may look for escapism that includes the traditional vices of alcohol, drugs, sex (porn). Others will seek out more tangible escape: emigration.
How will the market, businesses and brands be affected?
The grey market of stolen or fake goods will explode. Hope will become a commodity of value. Religion and other forms of communal belonging will continue to grow, especially as the more desperate and scared people become. The sharing and rental economy will grow, especially as the packaging of its services is so sexy and aspirational. Frugality will become cool and consumers will become econo-wise. A plethora of products, services and ‘spend thrift’ gurus will show consumers how to make smarter financial choices.
Consumers are going to interrogate price and, with increased use of technology, will demand more transparency in how products are costed. They will also start turning over every cent twice, asking if they can get more status, or more convenience, or more nutrition or more flavour per rand spent. Brands need to do more to stand out and show distinction of value, providing higher return on investment for the brand delivery.
Niche, smaller brands will fall away as these brand owners struggle to compete and make the profit needed to survive. Mass brands will offer the most-economical prices and provide the trust and guarantee needed for purchase safety (knowing the product will do what it says).
The range and nature of what people buy and use as status symbols will continue to change and narrow. Going cheap on certain types of products will become accepted. More importance will be focused on the status essentials that are closer linked to the likes of beauty, power, success.
Opportunity is always prevalent. Airbnb would never have become the world’s ‘largest hotel chain’, had it not been for 2008 creating an environment in which people would look to earn additional income and others would be willing to stay in cheaper rooms. Business, brands and entrepreneurs will need to continually rethink the consumer’s needs and wants.
Jason Stewart is co-founder of HaveYouHeard (@HaveYouHeard_SA), a full-service agency. Zeitgeist of Now, his new column on MarkLives, is inspired by the agency’s proprietary tool developed to understand the invisible but powerful forces that influence people, products, culture and societies. If we appreciate these, he argues, we become more-effective marketers.
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