New Capitalism and SDGs

By: 鈴木貫正

 The Sustainable Development Goals. There are 17 interlinked global goals on the purpose to end poverty, protect the planet, and ensure that by 2030 all people enjoy peace and prosperity. As a high school student, I have had a question, ‘where do those issues come from?’. Why there are inequality, environmental crisis and other social issues. Now, thanks to my strong interest in economics, I might find one possible answer for my own question, which is ‘Capitalism’. That is to say, the current system of Capitalism could have been one big cause of various social issues in modern world. And if we, our young generation, can understand this theory, it should leads to better world in near future as we ourselves will be entrepreneurs. 

 Then, what is the problem of Capitalism? In the current Capitalism, firms are often seen to be owned by shareholders. I would like to suggest we should not believe in this idea anymore. Since the biggest purpose of firms could be to give profit to shareholders, most firms should try to increase firms’ ROE (return on equity). This ROE is calculate by ‘Net Income / Shareholders’ equity’. The problem here is that some firms might try to decrease its own net income in order to increase ROE. For example, if firms cut employees’ salaries, that will increase ROE but leads to inequality as well. Also, the same idea could be applied to climate crisis. In the current Capitalism, firms tend to have set priorities on profits for shareholders rather than environmental issues. These examples hopefully show the reasons why I think current system of Capitalism could leads to some social issues. 

 So, what should we do? Am I saying here that we should switch from Capitalism into Communism? No. What I would like to suggest is that we should try ‘New Capitalism’. In this ‘New Capitalism’, to make it simple, firms should distribute their profits not only for shareholders, but for individuals, society and the earth itself. Though this idea of ‘New Capitalism’ might sounds just ideal and fantasy, some people including me have already made some movements. In fact, a prime minister of my country, Japan has promised a ‘New Capitalism’ and the idea has been discussed a lot recently. Thus, if we can find this ‘New Capitalism’ work well, this could solve many social issues including inequality and environmental issues, and might be one way to achieve SDGs.

 Lastly, SDGs was set for 2030, when most of our young generation should be working or making our own firms i.e. entrepreneurships. If we can take advantage of ‘New Capitalism’ in those new firms, this new system could be taken over by next generation. Yes, we ourselves do have to solve various social issues. Dear all young generation all over the world: ‘Let’s change the world’.

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