Australia does not have to sacrifice social and community wellbeing for economic prosperity. Or vice versa.

Too often, political debates present a ‘winner-takes all’ trade-off between a better economy or a better society, between wealth creation and its equitable distribution. Australia’s public policy does not have to be locked into such binary choices.

A recent essay by Treasurer Jim Chalmers reminds us of the concept of ‘shared value’. He argues for a re-set to values-based capitalism in response to the serial crises of the Global Financial Crisis, the pandemic and now, energy and inflation shocks.

The Treasurer’s call is for a more progressive, inclusive approach to capitalism, without a choice between our economic and social objectives. Rather, priority goes to action that serves both goals. 

Why are binary choices between the economy and society so durable?

Partly, because of the adversarial nature of party politics. Perhaps because of the fracturing of debate into ever more divided and extreme outlooks. Or as economist, Ross Gittins, suggests, binary positions that shift from one extreme to another over time, are an easy way of communicating complex policies. They also serve as a short-cut substitute for necessary “hard thinking”. 

Not everyone agrees with the Treasurer’s enthusiasm for a new capitalism. Critics label his approach as highly interventionist and contrary to landmark financial and market liberalisation reforms of the Hawke-Keating era. Others minimise its contribution, arguing it is ultimately silent on genuine, far- reaching reforms to capitalism that result in sustained social dividends. They see the Treasurer’s efforts as a modest, not radical, set of ideas with a highly limited capacity for implementation. 

The Treasurer refutes these reactions with prescriptions for a reform agenda for modern times. He highlights: co-investment and greater economic co-operation; reform of institutions, e.g., the Reserve Bank and the Productivity Commission; and an overhaul of markets to be more informed and well-designed. He points to concrete current examples of policies and structures to serve as practical role models. 

Whether you agree with Jim Chalmers’ arguments or not, there are two good reasons to welcome the Treasurer’s more thoughtful long-form essay putting a different angle on issues shaping Australia’s future. 

Firstly, the fresh emphasis of its subject matter at the intersection of shared social and economic value. Secondly, the case it puts for collaborative problem-solving. 

Intersection of the social and economic worlds 

Jim Chalmers’ essay opens up the debate on capitalism. It questions the conventional wisdom of neo-liberalism, which has been the predominant, if not exclusive, driver of Australia’s public policy in recent decades. 

Not only is this orthodoxy uncontested, but its outcomes in terms of both business competitiveness and people’s wellbeing, are disappointing. This neo-liberal philosophy has effectively isolated economic decision-making from social concerns.

Now, the Treasurer has focused our attention on the intersection and interaction of social and economic aspirations. This allows us to explore the commonalities and interdependency of economic and social policy. Most importantly, we are invited to delve deeper into the dynamics of how creating shared economic and social value works in reality. 

The end result of this greater understanding is that decision makers potentially uncover more versatile policy options and more informed measures of success.

Earlier articles in this Latest Thinking website have contributed insights on shared value. They provide examples of the drivers and effects of aligning the commercial and social purposes of businesses. See Redefining Capitalism: More Than Money (March 2020) and Companies With Purpose: Jobs With Meaning (November 2019). These emphasise the importance of spanning boundaries.

Collaborative problem-solving 

The other important contribution of the Treasurer’s essay is its focus on collaborative problem-solving. 

This also involves spanning boundaries, particularly between government, business and community interests. A vital prerequisite is a combination of a common cause, shared intelligence and trusting and productive working relationships. 

Essential ingredients for identifying and implementing workable solutions to complex problems include the ability to embrace and make sense of diverse, even opposing, views and proficiency in critical and design thinking. Closeness to consumers and communities that policies are aimed to benefit is also essential. 

This does not happen by accident, but requires expert brokering of connections of both people and ideas, and skill at drawing out alternative plausible innovative solutions to problems that matter. 

One example of expertise in addressing challenging problems in an inclusive and rigorous way is the work of the Eidos Institute. See the October 2020 Latest Thinking article, Making the Contest of ideas ‘Shovel-Ready‘. Its key feature is the ability to foster uncommon connections, new ways of working and intelligent compromises. 

To conclude, it is worthwhile giving the concept of values-based capitalism a go. 

This concept has the potential to bridge previously separate ideas—profit and purpose, cooperation and competition, social and economic outcomes, urgent challenges and future opportunities— and to craft solutions to problems that to date have resisted easy answers. 

Better than stark binary choices and past orthodoxies, values-based capitalism offers a way to experiment with policies that simultaneously deal with historic vulnerabilities and advance both the living standards and the quality of life for all Australians.

REFERENCES: 

Jim Chalmers, Capitalism after the crises, The Monthly, February 2023.

Michelle Grattan, Jim Chalmers lays out agenda for pursuit of values-based capitalism, The Conversation, 27 January 2023.

Politics with Michelle Grattan, Treasurer Jim Chalmers answers critics of his values-based capitalism, The Conversation, 30 January 2023. 

Carol Johnston, Humanising capitalism: Jim Chalmers designs a new version of an old Labor project, The Conversation, 1 February 2023. 

Guy Rundle, Chalmers’ plan isn’t radical. Labor needs an alternative to the rule of capital, Crikey, 6 February 2023. 
Ross Gittins, A better economy comes from policy, not picking sides, Sydney Morning Herald, 6 February 2023