The economy an organ of society? – The European Economic Model as an answer

Society consists of different spheres, each of it with its own logic and “culture”. During the last decades the economic structure started to dominate all other spheres until it almost completely disconnected from society. This might be seen as the root cause for our ongoing, long-lasting (economic) crisis. The economic structure has to change and adapt again. The European Economic Model might lead the way.  

European Integration at the brink of collapse

European Integration is a societal and social project. It has brought peace and prosperity to the citizens of Europe.

European Integration is not only and not mainly an economic project.  – That we have thought for almost three decades. But we have seen that social structures don’t follow automatically economic structures and so we have learned differently through the on-going long-lasting crisis.

When there are too few interfaces and feedback cycles between the economic structure and the rest of society, economic actors disconnect and both sides – the economic structure and the social/political structures – get into troubles. Mass unemployment, a massive concentration of wealth, political radicalisation, protectionism, an aloof financial sector and immense sovereign and private debts have been the consequences.

How can the economic and the social structures be better connected again?

One part of the answer lies in adapting the economic structure. For this we have got a specific European answer. The (central)-European Economic Model is among other things based on medium-size companies which are successful players on global markets. The success of these so-called “Hidden Champions” builds on different factors but one principle seems to be valid for most of them: They focus on the creation of value for customers. In doing so, a company automatically creates social value and is – in the sense of the late Peter Drucker – an “organ of society”.

This contrasts very much with companies seeing profit-maximization and hence the maximization of their own value as the main purpose of their doing. This thinking has become the leading management doctrine since the 1990s, starting in the US and then being spilled over to the rest of the world. It has contributed profoundly to disconnecting the economic structure from society and to bring the European integration, which has focused on economic integration, to the brink of collapse.

The European Economic Model

The European answer is to transform the economic structure in the way that a majority of companies takes the creation of customer value as their central purpose and acts accordingly. By doing so, companies bring together their social responsibilities with their core business activities, a main condition for the public not to see the corporate sector as an enemy. And a big chance to reconcile economical with social values and to re-connect the economic sphere and make it again an “organ of society”.

See also:

A Conference on Hidden Champions in CEE and Turkey on May 22, 2014 in Vienna

Customer Value – an European Approach for the world

Hidden Champions – Europe’s hidden contribution to the globalized world

Europe and Emerging Africa, part 3 – Europe’s Chance

 

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