#37: A Second Enlightenment and SCI

The coming US elections highlight the primary concern of the US Founders about democracy. Adams, Hamilton, Franklin, Jefferson, Madison and others were concerned that vested interests could mislead the public into supporting actions that harm individuals and society. System Change Investing (SCI) uses the capital markets to drive essential systemic changes. This post summarizes how SCI addresses the Founders’ democracy concern and supports the most important goal in the US Constitution – “promote the general Welfare”.

Weakness of Democracy

The US Founders understood that democracy is the only sustainable form of government. It is based on innate individual rights to equality and self-government. The alternative (i.e. some people ruling others without their consent) violates the laws of nature, and therefore cannot survive over the longer-term.

However, Hamilton and Adams in particular were concerned that citizens could be manipulated into acting against their best interests. Average citizens usually do not have enough time to study complex issues and make the best decisions for themselves, their families and society. Vested interests often provide dishonest, inaccurate information that misleads and divides citizens into debating fractions. When the people are divided, they are conquered.

In his Farewell Address, George Washington called political parties the worst enemy of elected government. He warned us that vested interests would use them to divide citizens and take their wealth and power to rule themselves. This has occurred to varying degrees throughout US history. However, as US elections approach, public deception and division appear to be at the highest level since the Civil War.

The Enlightenment

The US was born in the Age of Enlightenment and Reason. Several US Founders were leading Enlightenment thinkers. The Enlightenment honored science, reason and innate human rights. It opposed the blind faith, dogma and oppression of the preceding Middle and Dark Ages.

Democracy, the rule of law, justice and fairness were established to varying degrees in the US, UK, France and many other free countries. This enabled prosperous and stable economies and societies to exist for many years. But democracy, the rule of law and human rights are at growing risk in an increasingly unstable world.

A New Dark Age

In the US, many citizens have been misled into believing harmful, factually incorrect ideas, such as climate change is not real, the 2020 election was stolen, and environmental and social protections harm the economy and society. People often blindly believe their party’s dogma. This absence of rational, enlightened thinking, honored by our Founders, appears to have put the US and some other countries into a New Dark Age.

Many factors drove this, including concentration of wealth, degraded education and deceptive media. Deregulation beginning in the 1980s has concentrated nearly all economic and stock market growth at the top of society. Nearly flat inflation-adjusted wages over the past 40 years have increased the financial stress of many citizens.

Education reform since the 1980s has strongly suppressed critical thinking and made citizens more vulnerable to deception and division. Dishonest media since removal of the Fairness Doctrine in 1987 has enabled vested interests to essentially lie about climate change and many other issues. These and other factors produced the divided, disempowered society that the US Founders feared and warned us about.

People who grew up in the US and other democracies often took our freedom and protected rights for granted. We frequently felt sorry for people in Russia, China and other countries who were not free to criticize their governments or express themselves in other ways. The economic and military power of the US and its allies held totalitarianism in check and created a fairly stable global society that enabled trade and business to thrive.

However, political chaos in the US puts global stability at the greatest risk since World War II. US citizens are supporting candidates who called their opponents criminals and threatened to put them in jail. These candidates also threatened to silence speech that criticizes them.

The US has not faced a crisis like this since the Alien and Sedition Acts were passed in the 1790s. These laws forbade government criticism and put government critics in jail, actions that are common in totalitarian countries today. These anti-freedom, anti-democracy candidates insulted our traditional democratic allies and sought to align with the totalitarian regimes that the US traditionally held in check.

The democracy and freedom we’ve taken for granted since World War II are at growing risk. This poses severe threats to business, the economy and citizens’ quality of life.

A Second Enlightenment

Protecting freedom and democracy requires a Second Enlightenment. Like the US Founders, we must rehonor science, logic, fact-based thinking, and innate human rights. This requires effectively addressing the factors that created the New Dark Age (e.g. dishonest media, concentration of wealth, education reform that suppressed critical thinking).

For over 100 years, business has been able to profit by harming the environment and society. But degrading that which enables business existence is not sustainable. It inevitably will end. Given rapidly growing problems, including severe threats to freedom and democracy, it is highly likely that current systems and societies already are in the process of transition.

Only the corporate and financial sectors have the power and resources needed to drive essential systemic changes. These include requiring honest media, ending unfair concentration of wealth, reforming education in ways that teach people to critically evaluate ideas, protecting democracy, free speech and other rights, and enacting laws that make responsible corporate behavior the profit-maximizing strategy. SCI is a powerful lever for driving these changes.

System Change Investing

SCI rates companies on system change performance and shifts investments to system change leaders. Companies are rated on their efforts to drive the systemic changes discussed in this post, plus many others.

The approach helps investors by shifting investments to better-managed, lower-risk companies. SCI shifts the focus to system change and root causes, and thereby provides the highest possible sustainability benefits. This enables asset managers to attract new investment and position themselves as global responsible investing leaders. Based on current ESG, the approach is easy to implement. It has the potential to engage nearly the entire capital markets in system change.

In summary, SCI is one of the most powerful levers available to humanity for driving a Second Enlightenment, protecting democracy, and promoting the well-being of current and future generations.

For more information about SCI, visit our website SystemChangeInvesting.com or contact us at info@SystemChangeInvesting.com