Chaos is a complex system ruled by discernable patterns where the agency of minute initial changes creates hugely different outcomes. The chaos system, while appearing predictable early on, thus cannot be predicted in its future outcomes. Also, if there are conscious forces of agency that perpetuate the deterministic chaos that is Lebanon from the perspective of a governance system, they appear to cherish obscurity. Our socioeconomic fate thus is uncertain as well as obscure on any time horizon, despite overwhelming evidence of dysfunctional public agency that underlies the problems of our economy.
Secondly, even when discussing the survival strengths or the residual weaknesses of Lebanese public and private sectors, the full identity and extent of the chaos system tend to remain impervious to analysis. Perhaps this is because, by human reason, such an insidious, logic-defying system ought not to exist.
By contrast to the unpredictability of the public system, however, there are many reasons to marvel at the survival skills of our private sector economy – which have been demonstrated more convincingly with every passing month of our 20 months of open economic crisis. Proven survival skills create opportunities. Yet a precious few observers, one of them Executive Magazine with the support of partners and stakeholders, have dedicated themselves to highlighting those opportunities.
This Lebanese constellation – of public development barriers and private development wants – today warrants newly discussing the social enterprise fundamentals: the purpose of business units in their evolutionary habitats of profitable industries. Profit and purpose belong together if the economy is to function as an ecosystem, as the noted international central banker Mark Carney – whose sterling reputation in the global finance realm was built over his tenures at the Bank of Canada and the Bank of England – preaches in a very recent discourse on the relationships of economic value and moral values.
According to him, companies with an internal sense of purpose and high employee buy-in into their purposefulness perform better for society – and prove themselves in times of disruption. “To build a better tomorrow, we need companies imbued with purpose and motivated by profit,” Carney writes. And purpose, he emphasizes, is modeled and informed by an underlying set of values.
Ergo, developing a new game engine, in the form of a collaborative and rational private sector paradigm, seems to be the only answer that would allow for the Lebanese private sector economy to thrive at a not-impossibly-distant future time point. All the available evidence suggests furthermore that the construction of this economic growth framework has to start with rebuilding socially productive entities in the categories of industry and the firm – quasi the formation of stronger Lebanese business tribes and superior warriors that can compete in the global game world of economic Warcraft.
SNAFU
Perhaps the construction of a new economic paradigm for Lebanon then needs to commence from two opposing points: construction of a new constitution for the state – an ethical state – on top and building industries from the granular structures of their two core economic unis, the ethical family (and socially alert family business) and the ethical firm. Firms, by collective wisdom of today’s inclusively minded female and male economists, are the core of capitalism, their habitat is the marketplace, and their survival depends on corporate governance in alignment with ruling standards and goals, known as ESG (environmental, social and governance) goals.
The first issue, a stakeholder discussion for creation and encoding of new purpose in the DNA of five Lebanese industries, provided the thrust to the special report on the Economic Framework for the Creation of Sustainable Private Sector in Lebanon, which the Executive team worked on in partnership with the United States Agency for International Development (USAID) and in alignment with over 50, highly qualified, stakeholders from finance, advisory, strategy design and operation in the fields of manufacturing, food-processing & agro-industry, media & content creation, food & beverage concepts and hospitality, and technology and knowledge enterprises.
This project was kicked off in February. Its first stage entailed diligent selection of a steering committee (SC) and a foundational SC meeting wherein our consultative approach determined the five industries that the project would focus on. Roundtables convened on March 30 and 31, resulting in 10 hours of recorded insights that were transcribed into approximately 70,000 words of raw minutes, condensed, journalistically augmented, and contextualized with expert comments in the writing and production of a benchmark report that was printed and presented on June 9.
Will history absolve us?
We noted three outcomes to this exceptional report. The first outcome was an affirmation of the capacity for brainstorming and constructive dialog that participating stakeholders have and the assurance that these experts and practitioners are perfectly motivated to construct a better economy. A second result of the deliberations was that industries have as yet underused potential for coordination in the current crisis. As a third conclusion and implication of untapped potential, the roundtable discussions have hinted at vertical and horizontal opportunities of supply chain development and innovative pairings of industries for mutual benefits.
Painting a realistic picture of the constructive discussion of our over 50 roundtable participants requires noting their will to listen to each other and hear out opposing views, but also means acknowledging that long-standing economic weaknesses and risks in the private sector economy have been exacerbated by the crisis and that there will be no lasting solution without political change, even if the economic actors do their best to perform as if there was no public disruption.
The detriment of entrenched old problems is reflected also in other challenges to our collective sanity that are documented in this issue, namely the perennial combat against corruption and the quest for a restructuring of our banking industry that will enhance our future economy, not cripple it further.
While there are comets of a new banking reality flashing through our financial sky, the harbingers of better times are yet feeble prospects. They have resisted our journalistic hunger for a clearer picture as reports on the banking sector’s current health, or absence thereof, will have to be assessed on basis of accurate sector data – which are still not in our line of vision – as well as implementation of restructuring and forensic audits. But being confronted with a banking picture of many imperfections today only whets our appetite to bring you, in the third quarter of this year, a fuller and deeper understanding of where banking stands and what it can again become.
The one thing in the past few months that was as important for this magazine as our project on creation of sustainable private sector employment in Lebanese industries, and even more energy-consuming than the development of our five economic roundtables, was the challenge of elevating our inner purpose and making it stand up to the burden of this ongoing crisis. We – every last member of the Executive team – have worked, striven, revised, and worked more on developing our purpose in midst of the social, economic, and worst of all political crisis that has bounced all Lebanon from one moment of despair to the next.
In a journalistic nutshell, the anchoring of purpose in the enterprise and the needs to counteract the deterministic chaos in the state, were the on-agenda drivers of this April/May 2021 issue of Executive, which we present to you belatedly, and which will be drivers of our future.
It may or may not be true that, as about a dozen staff researchers at the World Bank have just suggested in the Spring 2021 Lebanon Economic Monitor, this country’s still ongoing economic crisis will go down in history as one of the most extensive and consuming episodes of recession that have been recorded in the past 150 years.
But taking this observation from its opposite implication, Lebanon’s economy may yet deliver new empirical evidence that there is that real existent transition zone, between the realms ruled by anarchic disorder and stagnant order. This is the realm that has been dubbed the edge of chaos. Described constructively and optimistically, it is the place of bounded stability where new solutions can be innovated and verified in a sphere of maximum complexity.
It is then not inconceivable that the painful quagmire of the historically exceptional Lebanese crisis can ignite the mixture of desperate needs and applied ingenuity that can unleash what Carney calls the “magic of capitalism”, meaning the solving of a burning social problem with a profitable business model, which can generate a self-sustaining and/or scalable process which by virtue of its creation unlocks new answers to basic and current economic problems. Thus, in the extreme economies at this edge of chaos, developments can be initiated that shape the future of systems, such as the global economy that is battling to find its path between stagnation and anarchy.
Post scriptum: the edge of chaos is an exciting state of mind; a cozy place for the fainthearted, it sure ain’t.
