In 1973, a significant oil crisis in the Middle East set off a chain of events that have shaped the world we live in today. This crisis drastically altered modern capitalism and led to the war, poverty, and division that we see around us.
Professor Randall Hansen, an expert on migration and war, and economist Professor Colin Mayer have delved deep into the roots of these issues and have proposed solutions to rectify the course we are on.
The oil crisis of 1973 sparked a quadrupling of oil prices within a year, resulting in a significant economic downturn in the West. This crisis paved the way for the era of neoliberalism, where unregulated free markets gained prominence. The rise of leaders like Margaret Thatcher and Ronald Reagan, who supported neoliberal policies, further exacerbated the situation by decimating working-class wages and increasing inequality.
The decline in working-class jobs was not caused by mass migration, as many believe, but rather by the economic policies of Western governments. Cheap migrant labor was a consequence of the destruction of working-class jobs, not the cause.
The effects of the 1973 oil crisis rippled through history, leading to terrorism, revolution, and war. The rise of political Islam, the Soviet invasion of Afghanistan, and the subsequent events that culminated in the September 11 attacks can all be traced back to the oil crisis.
To combat the multiple crises stemming from unfettered capitalism, Professor Mayer proposes a reimagining of the purpose of corporations. He advocates for a form of “caring capitalism” where companies are held accountable for the true costs of their activities, including fair wages, environmental responsibility, and community impact.
This shift towards a more ethical business model is not a revolutionary idea but a necessary evolution of capitalism to ensure long-term prosperity and societal well-being. By implementing a “duty of care” for companies and shareholders, we can create a more sustainable and equitable economic system.
Scotland has taken steps towards this more responsible form of capitalism through the Scottish Business Purpose Commission, which aims to address issues like climate change, inequality, and fair work practices. While the road to reform may seem daunting, it is imperative that we take action to prevent further economic crises and social upheaval.
Ultimately, the current capitalist model, focused solely on maximizing profits for shareholders, is not sustainable and has led to economic stagnation and inequality. By reimagining capitalism to prioritize social and environmental well-being, we can create a more prosperous and equitable future for all.
