Proventus’ engagement in research and analysis

September 22, 2008

Article about Glasshouse Forum published in the Swedish dailyDagens Nyheter on 22 September 2008. Translation from Swedish.

The liberal world order is currently faced with great challenges.  Today’s financial crisis indicates the need for a scrutiny of capitalism, says Daniel Sachs, CEO of Proventus. Business cannot exist in a vacuum but should rather participate actively in the development of society.

Research and analysis play a major role for Proventus, which is a privately owned company with investments in different lines of business.  Both Daniel Sachs and principal owner Robert Weil are deeply involved in questions concerning society and culture. For them it is a question of personal interest, as well as of the company’s need to take on board trends affecting society as a whole.

“We think that there is a need to understand more about, for example, globalisation and its various consequences. Far too many people are conditioned by ideological views, where they have already decided for or against. For us it is important to pursue a deeper analysis, without being swayed by preconceived ideas”, explains Daniel Sachs.

Within Proventus knowledge of this kind has already been gathered. In the company’s annual report there is an account of how we view globalisation, from a positive standpoint but with a critical gaze. Among the weaknesses we are being warned about are the financial imbalances in the world:

“There is a great deal of talk about financial bubbles. The most serious of these is the American consumer bubble, in which households in the USA for more than 20 years have kept the world economy going on borrowed money. This cannot continue in the long term, which we can now see”, stresses Daniel Sachs.

In the USA greater savings are needed, he points out. But an adjustment of this kind is not painless; it involves a lower structural level of consumption. This will have a long-term effect on the global economy, even when today’s recession and financial crisis are things of the past. The important thing will be to face the consequences, both economic and political:

“Studies show that current developments are regarded by an increasing number of people as a threat, implying dangers for democracy. The result of greater gaps may be that many people attempt to defend what they have and blame the problems on others. We risk a backlash for free trade and by extension also for open society, stresses Daniel Sachs.

There is also a major question mark over the development of China. Among western commentators there is a predominant view that rapid economic growth will push the country in a democratic direction. But Daniel Sachs is not convinced that the link between the market economy and democracy is so obvious.

“A new ‘authoritarian capitalism’ has arisen in China and Russia. We cannot take it for granted that these countries will develop in a western direction as regards their views on freedom and human rights. On the contrary, economic advances may mean that their political leaders continue on the path they have chosen, which does not lead towards democracy. The liberal world order has lost its power of attraction and has been placed under greater pressure.”

It is precisely this question which is of great current interest to Proventus, which has taken the initiative in establishing “Glasshouse Forum” – a network of researchers from Europe, the US, China and Russia – given the task of studying different aspects of capitalism. The Forum is about to publish its first reports, dealing with China, Russia and authoritarian capitalism.

“We wish to get away from today’s polarisation and consider that, instead, what is needed is a search for greater knowledge. We cannot leave the critical study of the development of capitalism to those people who oppose the market economy. It is an end in itself to throw stones in glass houses, emphasises Daniel Sachs.

Glasshouse Forum is now running four different projects, on themes such as the consumer society, short-termism, authoritarian capitalism and the future of the middle-class. Further projects are planned. All exciting topics, one might think. Daniel Sachs underlines the fact that the work is being pursued independently and that a number of foreign researchers are participating. For Proventus it is a question of a method of creating long-term success – for this we are dependent on working within a liberal society in which wealth is broadly distributed.

Translation of an article written by Johan Schück published in Dagens Nyheter, 22 September 2008

Proventus' engagement in Glasshouse Forum

Glasshouse Forum's website