The Macroeconomic Case for Diversity and Inclusion

Diversity and inclusion (D&I) are often discussed at the HQ level of the organisation, dealing with important issues such as gender, race, and sexual orientation, but there’s a much broader proposition for D&I when we zoom out for a macro view: looking at entire supply chains, local operations and international market opportunities, and the goals we set for our organisations as a whole.

For decades, businesses have participated in a flawed economic model that pursued growth at any cost. In 2017, Kate Raworth put forth the “Doughnut Model” in her book “Doughnut Economics: Seven ways to think like a 21st-century economist”, as an alternative to the traditional growth (GDP)-focused economic models that have dominated our learning and practice for decades.”Humanity faces some formidable challenges, and it is in no small part thanks to the blind spots and mistaken metaphors of outdated economic thinking that we have ended up here.” “For the twenty-first century a far bigger goal I needed: meeting the human rights of every person within the means of our life-giving planet”.

Raworth argues that the growth-models have led to many unfavourable outcomes, chief among them inequality. Inequality has whole-systems effects; Raworth quotes an IMF study saying “More unequal societies have slower and more fragile economic growth”. Further, Raworth refers to Wilkinson and Pickett and their 2009 book, The Spirit Level, saying: “It is national inequality, not national wealth, that most influences nations’ social welfare. More unequal countries, they found, tend to have more teenage pregnancy, mental illness, drug use, obesity, prisoners, school dropouts, and community breakdown, along with lower life expectancy, lower status for women, and lower levels of trust. ‘The effects of inequality are not confined to the poor’, they concluded; ‘inequality damages the social fabric of the whole society.’ More equal societies, be they rich or poor, turn out to be healthier and happier.”

When it comes to the environment, the case is much the same: “Higher levels of national inequality, it turns out, also tend to go hand in hand with increased ecological degradation. Why so? In part because social inequality fuels status competition and conspicuous consumption […] But also because inequality erodes social capital – built on community connections, trust and norms – that underpins the collective action needed to demand, enact and enforce environmental legislation.”

The macroeconomic case as laid out by Raworth is clear, and so is the conclusion that follows on its heels: we must adopt a systemic view to fully embrace the challenge for the future, as well as the opportunities that follow.

This view gives a very different perspective on diversity and inclusion, and how it factors into our businesses. If we follow this thread all the way, D&I goes from being an add-on strategy, as is still the case in many organisations, to being built into the very purpose of our business: working towards a more equitable world, a more sustainable distribution and use of resources, and better opportunities for the global population at large. The ramifications for global businesses are incredibly exciting, and changing our lens to a systemic view allows us to truly see this.

CecaraThe Macroeconomic Case for Diversity and Inclusion