Social Market Economy

We Cannot Let The Populists Ruin Our Business

Firma bildet Flüchtlinge aus
A Somalian refugee in an industrial training program near Frankfurt. Photo: DPA

After years, even decades, of ordered and largely prosperous economic global development, it now seems as though the world has been thrown into “disorder.” But is the world really falling apart? I don’t think so.

Our society now faces developments that some view as a perfect storm. I, however, am more inclined to call them challenges that government and business can master together. In this respect, the following five issues are particularly relevant.

First, rapidly growing populism. This trend and, in its wake, nationalism and protectionism, narrows vision, promotes intolerance and hinders world trade and cooperation. These elements feed on some people’s perception that they are the losers in a changing world.

 

Openness, tolerance and free trade are fundamental beliefs that we should defend.

Companies can work against this by contributing to the success of the societies in which they operate. Siemens, for example, pays taxes and provides quality training and employment opportunities in the countries where it works. Our company is directly or indirectly responsible for 4.3 million jobs for diverse people in more than 100 countries worldwide. This “cooperation in diversity” not only works, it also makes us more creative, innovative and tolerant.

Our economy, from major corporations to small businesses, has profited from the world opening up in the past decades. Openness, tolerance and free trade are fundamental beliefs that we should defend. Responsible business people must not abandon the field to populists.

The second development is global migration. For a long time globalization was seen to be a one-way street for the world champion of exports, Germany. Today we know that this street allows traffic in both directions. At the moment, there are over 63 million people in flight worldwide – more than ever before. Many countries and their societies are not yet prepared to become immigration countries. But what can businesses do? We should welcome migrants who accept and respect our values. Lawmakers must create the right conditions for immigration and integration. That also means maintaining state control. Companies, on the other hand, should make considerably more work experience programs and training available to refugees, along with building other creative ways toward integration.

One example of how this is possible, is Siemens’ mentor program for refugees, who are working, or completing, a work experience program at Siemens. The mentor is the first contact person for new employees, providing support in daily work as well as getting settled, language classes, dealing with the authorities and even private matters.

The third major issue is climate change. The Paris climate agreement and announcements by the G7 to “decarbonize” the world by 2100 were big steps in the right direction. In the 83 years we have until 2100, we must push forward the conversion to a sustainable world economy in economically and ecologically meaningful terms.

At the same time, we can learn from the experiences of Germany’s ongoing transition to renewable energy. This transition will demand strength and foresight, but it also offers enormous opportunities. The German economy, in particular, has the right technology for more sustainability, thanks to its leading industrial position. But businesses can also take on a key role in other respects. They can fashion their own processes to be more CO2 efficient. Siemens, for example, is planning to cut its CO2 emissions in half by 2020 compared to 2014 and become a carbon-neutral company by 2030. Initial interim results show that it is doable – and that it has economic advantages.

Fourth, and this development is not to be underestimated, we have the disruptive power of the fourth industrial revolution. Industry 4.0, or the Internet of Things, will more drastically change the world than the three preceding industrial revolutions – steam, electricity, and automation. Its impact is enormous, when you think that industrial products account for 70 percent of world trade. For Germany, in concrete terms, almost 8 million production jobs are at stake.

 

That is also what our society is all about: Commitment to the common good.

But we can get ahead of this by educating and training our employees for digital work better than we have been doing – and by taking full advantage of our strengths. That means further strengthening the industrial base,  taking care of our customer base, and maintaining the symbiosis between small and mid-sized companies, major corporations and universities.

We must also become more adaptable and open to the changes of the digital age. Job profiles will change radically, certain activities will fade and vanish, but new positions will emerge in other areas. It is the task of companies, government, scientists, religious institutions and the media to examine both the opportunities and consequences of this. A society will only accept such a transition when the number of winners is significantly greater than the number of losers. Only then can Industry 4.0 become a success story.

Fifth, we are experiencing a development in the direction of short-term thinking and opportunism. Particularly in the financial markets, the mindset has focused on short-term stock performance. But this tendency is not just limited to the business world. Approval ratings and numbers of “likes” and “followers” all influence decision-makers today more than ever before. But politics and business cannot be seriously shaped by such factors.

Werner von Siemens once wrote: “I won’t sell the future for momentary profit.” We at Siemens seek to counter the single-minded striving for “momentary profit” with something we call “ownership culture.” Ownership is a core belief of our history reaching back now almost 170 years. “Always act as if it was your own company” is our guiding principle. Far more than 150,000 employees are shareholders in our company – that means almost one out of every two. Whoever has a share also has a responsibility and “cares.”

That is also what our society is all about: Commitment to the common good. It is to this end that we must further develop our social market economy in line with the needs of the future. The Social Market Economy 2.0 must be inclusive. It must promote global societal integration, an open attitude to the world, sustainable management, technological changes and focus on the long term. But above all, it must prevent a greater divide between winners and losers.

We are capable of managing this. I would like to cite a specific example from another field: The start-up scene. We all agree that we need a new Gründerzeit, that period of vigorous economic activity in 19th-century Germany known literally as the “Founders’ Period.” A Social Market Economy 2.0 must create the framework so that businesses with fresh ideas can be successful. Part of that is more flexible models for working hours and locations. The German government recently presented an initiative on this matter. Certainly part of that is also creating a standardized single digital market in Europe, which opens up the possibility for a startup to immediately scale its own business model to 500 million people. Another part of that will be imparting entrepreneurial competencies in schools and reinforcing the appreciation of social issues in the business world.

I am convinced that the Social Market Economy 2.0 will prevent our society from drifting apart. And it must form the basis by which social security and modern entrepreneurship can be reconciled. We should stand up for this idea, and support it with passion.

 

The author can be reached at gastautor@handelsblatt.com

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