Adam Smith, the Scottish economist and philosopher who is largely dubbed as the “The Father of Economics'' and ''The Father of Capitalism,'' is perhaps most famous for his book in 1776 ‘The Wealth of Nations.’
But speaking at a discussion, entitled “Leading a 21st century corporation,” at the World Economic Forum (WEF) in Davos, Switzerland, Keven Sneader, global managing partner at major consultancy McKinsey said that Smith’s published work from 1759 — ‘Theory of Moral Sentiments’ — actually provides a key framework that’s needed today in corporate business.
“Clearly there’s an urgency and this is a new paradigm,” he said in response to the large scale inequality across the globe.
“You all know Adam smith and the ‘Wealth of the Nations’ work, which has underpinned how we approach things but that it was actually the lessons he delivered in 1759 when he was professor of philosophy [that we should look at].
“He was very clear that responsibility of business person was to give back to the community and enrich everyone around them. We’ve lost our way a bit in forgetting that and we are where we are today.”
This month, British charity Oxfam released a report claiming that global economic inequality is “out of control.”
The ‘Time to Care’ report says that the wealthiest 1% of the world’s population have more than twice the wealth of the rest of the 6.9 billion on earth. In 2019 the world’s 2,153 billionaires had more wealth than 4.6 billion people, 60% of world’s population.
“Today’s extreme wealth is also founded on sexism,” the report notes. “Our economic system was built by rich and powerful men, who continue to make the rules and reap the lion’s share of the benefit.” Oxfam puts the monetary value of unpaid care work, carried out by women aged 15 and over at some $10.8tn (£8.3tn) a year.”
Adding to the statistical puzzle when it comes to inequality, Sneader pointed out that if you look at data from 1993 to 2005, 10 million households in “the so-called developed world” saw incomes decline but in 2005 to 2014, 500 million households saw income declined.
“That all took place [amid] strong economic growth.,” he pointed out.
“The reality is that tech is coming in, which we all embrace and it can be incredible for the good... or not. But it has created a nervousness for jobs. Trust in business also wasn’t what it used to be. We have to do something differently.”