Writing Forward the Future

Why is Bernard Madoff so reviled? It seems like a pretty easy question to answer. Whilst, giving every appearance of respectability as a former Chairman of the NASDAQ stock exchange, he ran a 'Ponzi' scheme during the nineteen nineties and the noughties. This scheme allowed his investment company to pay out apparently exceptional returns to investors. It did this by using the money from the newest investors to pay out generous returns to more longstanding investors, instead of paying out the 'real' returns from their investment. In all some $18 billion dollars of investor money is missing, but in broad terms the early half of his investors are still net 'winners', it is the newest half of his investors who are very much the losers. Perhaps what makes Madoff so disliked, is the way he encouraged many charitable organizations including hospitals and Stephen Spielberg’s Wunderkinder Foundation into his scheme, only to impoverish them. Tricking money out of the sick and from disadvantaged children has never been a good way of making friends.

Yes, it’s easy to see why the whole world loathes Bernard Madoff, and the newspapers have enjoyed the spectacle of the trappings of his lavish lifestyle being auctioned off to the highest bidder while he languishes in jail. Except that, if you think about ecological wealth rather than financial wealth, you realize that, like Madoff, we have all been (and still are!) complicit in a giant Ponzi scheme for decades!

Madoff’s scam worked by paying out an unsustainable return on investment to his early investors by exploiting and destroying the financial capital of the later investors. The industrialized consumer societies throughout the world operate by paying out an unsustainable return, in terms of material standard of living, to the current population of consumers. In doing so, it eats into and degrades the natural capital of the planet, thereby ensuring that the available quality of life returns for future generations will be reduced. The economists will probably grumble that this ignores the possibility of technological innovations improving future ecological efficiency or restoring the productive capacity of ecosystems. With nearly 3 billion new guests forecast to join the planet party over the next 40 years, this seems an optimistic view. We would bet that in the early days of Madoff’s scheme he was also convinced that some investment wizardry and a few lucky breaks would even things out and put his company back on an honest footing.

Like it or not, we are all part of an Ecological Ponzi Scheme. The difference is that Madoff’s longstanding investors were blissfully ignorant that they were prospering at the expense of others who didn’t deserve to lose their money. For the politicians, voters and consumers who are so keen to get back to a 'business as usual' scenario of economic growth, there is no such excuse. We may prosper in the short term, but only at the expense of those to come, unless we can redirect consumer lifestyles, business strategies, and economic policies towards the pursuit of more sustainable development.

Meeting this challenge is a theme that recurs throughout the pages of Sustainability Marketing and is a key motivation behind our efforts to make a sustainability perspective part of a new mainstream for marketing. We need more realistic consumer and investor expectations that don’t pressure companies into trying to deliver exceptional but short-term and unsustainable performance. We also need to connect the rights of consumers and their opportunities for consumption to the responsibility they bear in determining the consumption opportunities and quality of life of future consumers. Everybody wants to prosper but prosperity feels less sweet when you know it comes at someone else’s expense.

Photo by U.S. Department of Justice. Reproduced under creative commons licence