With the world gripped by a deadly virus and an economic meltdown that could exceed the Great Depression in its severity, visionary thinkers like Jeremy Lent are envisioning changes to society not seen since World War II. Hopefully, we get to a society closer to what Lent calls “life affirming” rather than what we have today – “wealth affirming.”
Despite the fundamental changes that will take place as we emerge from the dual crises of today, I continue to believe there is one force powerful enough to spur change at the rate we need by balancing the realities of life as we know it: markets. Driven by good old-fashioned supply and demand, markets create opportunities every day in every part of the world.
While they are far from perfect, the reality is that markets are the mechanisms by which the ideas of innovators are brought to life and made available to consumers. It is through markets that we will find – and bring to scale – solutions to achieve a more responsible and prosperous society.
As Thomas Friedman wrote in Hot, Flat, and Crowded, “The only thing that can stimulate this much innovation in new technologies and the radical improvement of the existing ones is the free market. Only the market can generate and allocate enough capital fast enough and efficiently enough to get 10,000 inventors working in 10,000companies and 10,000 garages and 10,000 laboratories to drive transformational breakthroughs; only the market can then commercialize the best of them and improve on the existing ones at the scope, speed, and scale we need.”
Although he does not refer to it as such, what Friedman outlines is what can be called the “Virtuous Cycle ofMarkets.” When the actors in markets—the Enablers (policymakers), the Validators (NGOs), the Builders (entrepreneurs), and the Financiers (bankers and investors)—come together, they have the ability to create things of lasting value to society. When done right, innovative ideas start the virtuous cycle by meeting an opportunity to fulfill a human demand, which will incentivize bringing that idea to fruition.
Virtuous Cycle of Markets
Once brought to market, that idea will create value for society by fulfilling the human demand and create further opportunities for scaling it for mass consumption. Taken together, that process will create a circular model for more ideas and better innovation.
In my book – Transformative Markets – I outline 10 concrete steps for how the markets of today can be improved so that they are more oriented towards creating value and life across all society rather than simply wealth for a few.
Photo Credit: Network for Business