49th St. Gallen Symposium "Capital for Purpose": 8–10 May 2019


Bonded to capital

Three years ago, I embarked on a journey to some of the most remote, cut off, and underserved areas of Pakistan. I grew up in Islamabad, the country’s capital, in many ways was shielded from the forces that the rest of the country was subjected to. After 16 hours of travelling, I arrived in a remote, dusty village. It was deep in the night, and there was no electricity. I was taken to visit a family under the light of mobile phone torches.

There is little that could have prepared me for what I saw next. In a small mud-house, moving and muttering under a heavy blanket was a group of four children. Even in the dark, their physical and mental condition was clear. Their faces were covered in soot, from the 16 hours of work that they had done in brick kilns throughout the day. For this back-breaking amount of work, they had received $0.15, most of it used to repay old debts. Their food consumption for the entire day totaled 3 glasses of tea, without sugar, because it was too hard to afford.

There is no child in the world who deserves a present so bleak, and a future even darker. These children had been failed by our institutions—for their refusal to intervene, by their previous generations—for passing on the debts they had accumulated, and by society at large—for turning its eyes away. These children were bonded, but more importantly, they were bonded to the capital that kept them afloat, barely keeping their chins above the water.

Capital that gives birth to new capital:

In the same leg of travelling I discovered a company providing affordable housing to those who could not afford to live in the cities. In doing so, this company made a hard decision; to forego the easy profits that building housing in the cities brought.

But it was not the company’s decision to serve the bottom of the pyramid that was a source of hope. It was the way in which it chose to engage with its customers.

There is no child in the world who deserves a present so bleak, and a future even darker.

All around the company’s housing schemes, the center of every decision was the ambition of building a coherent, functioning, tolerant community that could accommodate diversity. Houses, public spaces, and even parks were designed with this consideration in mind.

Ultimately, this meant that more dollars were spent on factors that do not merit consideration elsewhere. But it also meant that over the course of fifteen years the company gifted an underserved population what no other company before it had: the ability to live in dignity. Each housing society under the company’s management became a flourishing, thriving community, ultimately driving higher profit margins for them.

The kind of lives we have reason to value:

The brick kilns and the housing company are stark comparisons. In one instance, financial capital chained human capital, and in the other, it accentuated it. In the kilns, a lack of any intervention allowed the kiln owners to deepen their control, whereas in the housing company, a board of patient investors allowed the company to take risks and value social and communal capital in addition to financial capital.

In one instance, financial capital chained human capital, and in the other, it accentuated it.

Many years ago, Amartya Sen defined freedom as the ability of people to live the kind of lives that they have reason to value. Getting to that kind of freedom necessitates that we do two things.

First, we are intentional in how we generate positive externalities. In the past, the generation of positive externalities, such as the protection of the environment, or the generation of goodwill has been largely circumstantial. Instead, it should be actively pursued as an end-goal for financial investment. Doing so would require the displacement of financial return as the most important indicator of organizations and institutions’ success.

Second, that we let go of our over-reliance and in some cases, subservience to market forces. We now know that a free hand generates deeply negative repercussions, whether it is in allowing hegemonic corporations to take root, or in giving room to powerful actors—such as the brick kiln owners—to use capital as a way of chaining and restricting human capital for their own narrow gains.

We are intentional in how we generate positive externalities.

Both of these are easier said than done, and require a large amount of courage from those who have spent the past century accumulating financial capital and using it as a barometer for success. It will also require an unfailing amount of patience, and faith that focusing on other forms of capital—human, social, environmental—will ultimately lead to better financial gains in the longer term.