2010 has proven to be a year of significance for global capitalism.
First, in the EU and the United States, the model of generous public sector benefits has lost its appeal. Excessive debt leading to collapse of credit availability and EU financial rescues of Greece and Ireland and perhaps later of Portugal and Spain, French efforts to reign in retirement benefits, an austerity budget in the UK, and Tea Party election victories in the United States, all point the way to a very different future for the procurement of many public and quasi-public goods. Private markets will be needed more and more to provide for the quality of our lives. Global capitalism must therefore step up to the challenge of responsible growth.
Secondly, China has arrived as a global power for the first time in history. Its efficient production of consumer and other export products, its global purchases of natural resources and its accumulation of financial power now make China a force to be reckoned with in global markets.
Thirdly, excessive debt and liquidity in the global economy destabilized currencies to force adjustments in valuation of goods and services. These uncertainties sustained the move to quality assets that began with the collapse of credit markets in late 2008. Capitalism proved, once again, that it needs a balanced blend of liquidity - cash, debt and equity - to be sustainable and responsible. When the financial balance tips too far in any given direction, the system under-performs, just as with any living organism under ecological stress.
Lastly, tensions among basic values - what some call civilizations - continued, with continuing Western wars against Muslim fundamentalism, the end of peace negotiations between Israel and the Palestinians and growing concern over the role of a conceptually independent China that does not honor “universal values.” The challenge here for global business is finding sustainable peace to support economic growth across the world.
In 2010, the Caux Round Table, as you know from our commentaries and initiatives, responded to these challenges by seeking constructive approaches for business, government and NGOs. We offered our principles as wise guidance for better valuation of enterprises, more sustainable roles for governments and more mutual engagement across cultures and religions with the moral community of all humanity.
We hope this past year was fruitful for you and your endeavors and that 2011 will bring you increased prosperity and happiness.