Daily Archives: April 18, 2006

Democracy and finance

The discussion about the democratic management within corporations is not enough to attain our final goal: it’s also important to re-examine banks and other financial institutions as this sector determines which kinds of projects to be developed.

In fact the financial sector is the least democratically-controlled one among other economic actors. You deposit your money, for instance US$10,000, at a bank and your sole concern is the interest rate, in other words the growth rate of your asset provided that the chance for your bank’s insolvency is none. You’re happy when you get a higher return and it doesn’t matter you whether this growth comes from McDonalds’ or from an organic farm, from Nike’s impoverished workers in Southeast Asia or from modest craftsmen in Italy, from a destroyer of rain forest in Brazil or from a reforestation NGO in the Philippines(I’m not sure whether reforestation is regarded in today’s economy as a profitable project or not, but just to give you an example).

This structure makes ecologically or socially devastating projects thrive while social enterprises find it quite difficult to be sufficiently financed. Usually you can make more money by ignoring human rights and environment because the consideration on these aspects brings you no direct economic benefit at all(although corporations run the risk of boycott and/or other sanctions if they go too far in this respect) and it’s quite natural that CEOs are rather interested in saving cost than in improving their employees’ life standard and/or the environment. But I don’t see any logical consistency in those who claim the company they work for is not paying them enough and that the interest rate for their deposit is too low.

We need to make it possible for ourselves to check how our money is used should we want to have an economy which is friendly both to humans and to the ecology. The civil control on money is indispensable if we are to direct our monetary resource for socially and/or environmentally responsible projects. Or are we happy to make more money while impoverishing others or our own ecosystem?