02 Sep 2021

The future of capitalism in a finite world

How the global focus on sustainability is forcing a rethink of how capitalism can be used to solve global challenges.

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More and more we are challenged to look beyond the old orthodoxy when it comes to investing. As sustainability becomes central to our approach, we have asked questions about the future of capitalism, long-term thinking and patient capital and the very purpose of business.

We are delighted to once again have as our guest James Anderson, joint fund manager at Scottish Mortgage Investment Trust and partner at Baillie Gifford, together with Max Richardson of Investec Wealth & Investment UK.

In this webinar as part of our Coronavirus impact analysis, James and Max discuss how the focus on sustainability has forced society to look at the historic contribution of capitalism and capital allocation in arriving at this point and how it can be used to rise to these challenges.

They also talk about the continued evolution of the Internet and what innovations like blockchain might mean for the future of investing.

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  • What is sustainability and is it enough?

    04:30 Max and James interrogate the concept of sustainability. James worries that sustainability, at the stage the world is at, is not enough. “The illusion that we can make companies just be good enough, just be sustainable, is not going to get us here [where we want to be],” he says, “We have to back companies that are not just having a real impact, but have the ability to drive transformatory improvement, to drive a transition.”

  • What does the future of capitalism look like?

    08:13 How can capitalism and free markets sustain economic growth in a finite world? James laments that neither academia nor investors have done a good job addressing the deep questions of capitalism’s future. They discuss the need for rapid adaptation, and of understanding how economies work, how innovation happens, how exponential growth and decay happen.

  • Moore’s Law and its application across technologies

    20:14 This is the idea that computing power doubles every two years, while the costs come down. James and Max apply the principle across industries, to the internet and even healthcare. “What's really amazing at the moment, is that Moore's Law is interacting with sectors and other technologies,” says James.

  • Good governance is not about metrics

    23:27 Max highlights how the emphasis on environmental, social, and governance (ESG) metrics can sometimes divert attention away from the real goal of creating enduring companies and helping society to advance. James cites the example of Tesla, which has shifted an entire industry in a different direction, than what the metrics tell us.

  • The problem of inequality

    26:40 Against the backdrop of rising social unrest in many developing markets, Max and James talk about the shortcomings of measures like GDP and the true success factors for societies.

  • Sequencing the genome of Sars-Cov-2 and what this means for the revolution in healthcare

    30:44 The success of Moderna and Illumina in sequencing the virus’s genome was a key determinant in the speed with which a vaccine could be developed. Max and James discuss how this can drive rapid changes in healthcare. “I think the extent to the revolution involved in all this is being underestimated,” says James.

  • The next societal crisis – how personal data can be used to shape behaviours

    36:53 It’s a concern that companies and governments are increasingly able to use personal data to shape behaviour. Flowing from this is the worry about how data and technology will deepen problems like inequality. “I probably worry most about inequality, because I think if you combine extreme technological progress with extreme division, inequality gets greater and greater,” says James.

  • Blockchain, decentralisation and the next phase of the internet’s evolution

    42:43 How will blockchain technology impact the financial services industry, and the allocation of capital, to a more sustainable, or perhaps, a more unstable future in general? James argues that it will be a few years before we get a feel for how blockchain will affect our societies: “I think the most important thing I can do is to say to people to spend lots of time and mental energy thinking about it; it's not about trying to come up with answers to impose on people for the next 20 years.”

James Anderson
James Anderson, joint fund manager Scottish Mortgage and partner at Baillie Gifford

I think we will see 2020 as the beginning of the end of carbon.

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