Time is up for short-term thinking in capitalism

Time is up for short-term thinking in capitalism

By Al Gore and David Blood

Published: November 26 2009 20:53 | Last updated: November 26 2009 20:53

Why do investors and business leaders continue to focus on the short-term and ignore the fact that businesses that think long-term end up more competitive and profitable? Behavioural economists believe they have the answer: our brains are hard-wired to think short-term because evolution has rewarded serial short-term successes such as avoiding predators and other dangers that faced our ancestors. Their survival ensured our existence – but predisposed us to the same kind of short-term thinking. As a result, even though our world is very different from theirs, long-term decision-making remains the exception, not the rule.

The global financial crisis had its origins in short-term, unsustainable strategies and actions. Before the crisis and since, we (and others) have called for a more long-term and responsible form of capitalism – what we call “sustainable capitalism”. Yet despite our collective best efforts, one year on, the capital markets seem to be reverting to business as usual.

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