Wealth What do we mean by wealth?
by Peter Firth and Steve Tooze, foresight editors at The Future Laboratory.
For most of human history, the concept of wealth has been understood by its classical dictionary definition: ‘an abundance of valuable possessions or money.’
But today, new understandings of wealth are emerging in response to an almost unprecedented set of environmental, economic, political and cultural challenges facing our globalised society.
Over the next decade, research and analysis by The Future Laboratory strongly suggests that our common definition of wealth will be radically altered by the aspirations and behaviour of a new generation of progressive affluents seeking to re-engage with, rather than insulate themselves from, the turbulent world around them.
Length 33 minutes
Date Published 6th July
Podcast: Tomorrow's Wealth
Length 33 minutes
Date Published 6th July
We are entering a new phase in how we define wealth. It used to be associated with accumulation, profiteering and greed, but our fast-moving, networked and turbulent world is ushering in a new set of circumstances in which the affluent are finding bold and altruistic ambitions for their money.
In this item, Peter Firth, foresight editor at The Future Laboratory, is joined by four guests who will help us understand what wealth will mean in the 21st century. Rana Foroohar, author of Makers and Takers: The Rise of Finance and the Fall of American Business, explores the role of financialisation. Hugo Greenhalgh, wealth correspondent for the Financial Times, examines the new affluent individual. Leanne Wierzba, co-curator of the What is Luxury? exhibition at the Victoria and Albert Museum, introduces us to a new phase of luxury, and Alexandre Mars, founder of philanthropy network Epic Foundation, shows us what philanthropy will look like as we head towards 2020.
‘In the past, and in many parts of the world today, wealth is about ownership, status and the accumulation of assets,’ says Tom Savigar, partner at The Future Laboratory.
‘But that is changing fast. Tomorrow a potent new incarnation of wealth will emerge that focuses on proving its value to society at large through radical altruism, the exploration of new scientific, physical and cultural frontiers, and the collective conquest of the societal and environmental ills that threaten us all.’
Economic and political shock waves from the UK’s decision to leave the European Union are shaking global financial markets, reminding us once more that we are living through truly turbulent times marked by rising anxiety and a deep distrust of global elites.
Brexit itself is a perfect case study. More than 17m people left behind and marginalised by 30 years of neoliberal economics defied warnings of economic catastrophe from their Prime Minister and august bodies such as the OECD to register a massive protest vote against one of the global institutions they blame for their plight.
Other examples are easy to find. They include the rise of US Republican presidential candidate Donald Trump on the back of a wave of anti-immigrant and anti-establishment sentiment, and the increasing influence of far-right parties such as the Front National in France, Greece’s neo-Nazi Golden Dawn and the Freedom Party in the Netherlands amid persistent financial uncertainty.
Politicians across the globe are trusted less than insurance agents and advertising executives, according to GfK Verein. In the UK, a recent survey by Ipsos Mori shows that just 21% of Britons trust politicians to tell the truth, and only 37% believe that bankers won’t lie to them.
Much of this generalised cultural anxiety springs from a tangled web of crises enveloping our interconnected world. In China, slowing economic growth signifies that the global financial system is as fragile as it was before the 2008 financial crash.
Extreme weather events are becoming more frequent as global temperatures rise and yet agriculture, one of the largest contributors to climate change, will need to feed about 2bn more people by 2050.
With ISIS rampant across the Middle East, the fear lurks in many minds that states and businesses are powerless to protect us from terrorism. A recent poll by The New York Times and CBS found that 79% of Americans believe that a terrorist attack is somewhat likely or very likely in the next few months, signifying a rise in anxiety not seen since the 11 September 2001 attacks.
In the UK, holidaymakers are opting for destinations they believe are safer, with bookings to Greece, Portugal and Spain rising as demand falls for hotels and resorts in Tunisia and Egypt, according to The Guardian.
Amid this anxiety, trust of organisations, government bodies and brands is eroding fast among an increasingly frightened global population. In 2015, the Edelman Trust Barometer signalled a sharp decline in trust of brands for the first time since the financial crash, with nearly two-thirds of countries falling into the distruster category.
Perhaps, most worryingly of all for the wealthy, the survey discovered that the levels of trust among the poor towards the affluent have never been lower.
‘The elite globally have more trust in each other than ever before, but the mass populations in countries have less trust in the elites than ever before,’ says Rana Foroohar, author of Makers and Takers: The Rise of Finance and the Fall of American Business.
‘We have reached a tipping point. Those who are running global institutions, businesses and governments must bridge that trust gap or we will see unrest and protest arise to levels that will erode everyone’s wealth.’
Against a global backdrop of economic and political uncertainty and a rising general distrust of ruling elites, old attitudes and beliefs about wealth are dying fast.
Research and in-depth interviews with a series of global experts in wealth, its management and its future have led The Future Laboratory to conclude that three new types of wealthy individual will emerge – the Philanthropist 2.0, the New Frontierist and the Anti-citadel Affluent.
These networked, entrepreneurial and visionary affluents, who will find powerful, altruistic ambitions for their wealth, will become increasingly dominant in the decade ahead.
‘Today, there are clear indications of an early sea change in the way that affluent individuals think about their wealth,’ says The Future Laboratory’s Savigar.
‘It is no longer about money and the amassing of fortunes for hedonistic reasons. It is, from a very early stage in their lives, about affluent individuals using wealth to give meaning to their existence.
‘This is most pronounced now in advanced economies. But by the 2020s it will become a worldwide phenomenon that will spread to the wealthy in emerging economies too.’
Philanthropy and wealth have always been intertwined. Towering historical figures such as the multi-millionaire 19th-century US steel magnate Andrew Carnegie remain household names through their charitable works.
But whereas in the past, philanthropy was an activity that the affluent tended to indulge later in life with legacy in mind, it is now becoming an early career mission.
‘This is a new generation of wealthy for whom ambition is completely limitless,’ says Hugo Greenhalgh, wealth correspondent for The Financial Times.
‘Wealth is getting younger and fortunes are being made much quicker. Previous fortunes were made by the time people reached their 50s, 60s and 70s, at which point you would retire and fund a local opera.
‘When you’ve made your fortune by age 30, you have another lifetime ahead of you, and your thoughts inevitably turn far more quickly to how to use your money for the greater good.’
As a result, a new wave of the enlightened rich, rather than seeking to amass ever greater fortunes, believe their duty is to die poor, having given away all of their money.
Today’s world is full of high-profile business leaders who are publically pledging large proportions of their fortunes to those in need. US business magnate Warren Buffet famously complained that his secretary paid a higher tax rate than he does.
Bill and Melinda Gates have given away more than £21bn ($28bn, €25bn) via their charitable foundation. Hamdi Ulukaya, founder and CEO of yoghurt brand Chobani, launched the Tent Foundation, an organisation that delivers critical support to refugees and displaced people.
In 2013, Sir Richard Branson, along with Russian mining oligarch Vladimir Potanin, and technology entrepreneurs Azim Premji and Hasso Plattner publicly pledged at least half of their fortunes in the Giving Pledge.
The numbers of proto-Philanthropists 2.0 are rising fast, and 154 signatories from 16 countries have now taken the pledge. These public displays of generosity are powerful galvanisers for a new generation of Millennial rich who have long admired these high-profile personalities.
Among these young affluents, there is growing evidence of a rejection of institutionalised forms of philanthropy in favour of personally controlled giving. A combination of idealism and social media fluency makes Millennials passionate about causes, but not necessarily about non-profit-making organisations and charities, according to The Next Generation of Philanthropy article by Imagine Canada.
Traceability is a key area of concern for these philanthropists, who want to see and understand exactly how their money is creating change. This makes sense in the current age, when provenance, from food to fashion, is a widespread trend.
‘It was always clear to me that I had to become wealthy before I could make the world a safer place, not just for my family but for everybody,’ says former technology entrepreneur Alexandre Mars.
He created the Epic Foundation as an online philanthropy platform for global child safety causes that provides a range of tools that enable people to track how their money is benefitting specific projects.
For Mars, this is a crucial component for driving interest in giving. Using video and new media technologies, people can follow the progress of the schemes they pledge money to. Mars plans to integrate virtual reality into his offer, as studies have shown that immersive media can elicit a powerful emotional response from its users.
It is an approach to wealth that will gain momentum over the next 10 years, and will become increasingly radical. As The Financial Times’ Greenhalgh says: ‘We will see more and more young and wealthy people starting companies with social impact and purpose built into their framework.
‘For quite a few of them, the whole point of making money is so that they can give it all away again. That’s a fascinating and game-changing idea.’
For a growing number of future wealthy individuals, their life mission will be to use their money to explore the new frontiers of science, exploration, ideas and experience, both for the greater good and to enrich their own existence and sense of meaning.
Science and technology, once closed fields dominated by professional researchers and big corporations, has been democratised by the advent of the internet.
Now we live in an age of citizen science unrivalled since the heyday of the great Victorian amateur enthusiasts. Ordinary people can participate in live research projects via online platforms such as Zooniverse, which has been estimated to have saved researchers more than £1.1m ($1.5m, €1.3m) by crowdsourcing the work on scientific projects.
Another example is FoldIt, a platform that turns the discovery of new protein configurations into an online game played by more than 350,000 enthusiastic amateurs. Perhaps the greatest success story to emerge from this trend is the Galaxy Zoo project, which led to a complete indexing of galaxy types in an image catalogue, as well as the discovery of a new class of galaxies.
The development has not been lost on a generation of high-net-worth individuals (HNWIs) looking for new ways to define and deploy their wealth by expanding mankind’s collective database.
Multi-billionaire Elon Musk is a current role model for this approach to wealth and its modern uses. His projects include pushing the boundaries of man’s exploration of the universe with a manned mission to Mars – he wants to die there, just not on impact. They also include a new generation of mass-market electric cars, and the development of a revolutionary household battery to overcome the problems of intermittent generation inherent in renewable energy.
Similarly, wealthy Silicon Valley entrepreneurs are pouring their funds into developing genuine artificial intelligence (AI). They have donated more than £752m ($1bn, €905m) to create OpenAI, an organisation dedicated to the sustainable and responsible approach to the advancement of AI.
They believe in a model in which the organisation is free from financial obligations, is designed to have a better positive human impact and to evenly distribute artificial intelligence technology to everyone. The founding of OpenAI is a clear sign of early-adopting wealthy individuals coming together to think about a future threat to humanity.
Meanwhile, Russian media mogul Dmitry Itskov, academic Aubrey de Grey and Google’s engineering director Ray Kurzweil are all trying to solve the longest-standing eternal problem of all – how to cheat death.
There is a hunger among the affluent to be at the forefront of scientific thinking and debate, and this can be seen in the experiences that they are increasingly seeking out. Multi-millionaire founder of the Discovery Channel John Hendricks has opened a luxurious Colorado mountain resort with a retreat-meets-learning offer.
Branded as Curiosity Retreats, each holiday is built around a four-day schedule starring eight key speakers. Every series covers all four categories that Hendricks considers foundational: science, technology, civilisation and the human spirit. The presentations are interspersed with arts and music, for when visitors need a break from discussing string theory, nanotechnology, global conflict or the evolution of the internet.
Over the next decade, the wealthy will increasingly become the New Frontierists, donating billions to initiatives that further the cause of science, and revolutionising the way in which research and discovery takes place.
In the US, a huge shift will take place in the way that the sciences are funded as a result. Budget cuts from the US government are leaving a gap in research funding, one that is increasingly being plugged by independent wealth.
‘For better or worse, the practice of science in the 21st century will be shaped less by national priorities or by peer-review groups and more by the particular preferences of individuals with huge amounts of money,’ says Steven A. Edwards, policy analyst at the American Association for the Advancement of Science.
In a frightening yet fascinating 21st century, another breed of affluents is coming to terms with the understanding that wealth cannot be used as a comfort blanket to shield them completely from the financial, cultural and environmental ills that afflict us all.
‘There is a rising realisation among the wealthy that they cannot shelter in their citadels to escape from the turbulence of massive wealth inequality and environmental degradation,’ says Martin Raymond, co-founder of The Future Laboratory.
‘In the years ahead, they will need to demonstrate their worth to the general population by getting their hands dirty and finding solutions to some of the world’s problems. To fail to do so will risk distrust, and resentment of affluence may reach dangerous levels.’
This joined-up thinking about creating a more equal society out of a combined sense of social justice and a desire for future success, and even self-preservation, can be seen in the current strategies of Howard Schultz, chairman and CEO of Starbucks.
His brand is offering staff universal healthcare and funding for college education in a bid to boost their future social mobility and earning power. As Rana Foroohar says: ‘As a corporate leader who makes lattes, you need to think creatively about building a society that contains as many latte drinkers as possible.
‘Schultz has recognised the importance of building his future consumer base by helping his worker base to be healthier and better educated, and therefore to have the financial wherewithal in the years ahead to buy more of his products.
‘This is a way of thinking with which many more business leaders and affluent people will need to engage in the future.’
Rising numbers of wealthy women are expected to be in the vanguard of a more compassionate understanding of the meaning of wealth that will attempt to engage fully with a wider society.
And the evidence suggests that the gender gap in the global rich is starting to close. In 2015, French luxury group Kering, owner of brands including Gucci and Saint Laurent, doubled its number of female CEOs to six, out of its 22 total brands.
The number of female billionaires globally has increased almost sevenfold in the past 20 years, according to a report by UBS and PwC, and although the number of male billionaires still outnumbers women, the study found that the wealth of women has grown at a faster rate.
Beyond this, more rich women are now self-made, savvy entrepreneurs who are aware of world events. Crucially, these new affluents are collaborative, conscientious and highly proficient in multitasking, according to Faith Popcorn, founder of think tank BrainReserve.
‘Women are creating the environment in which all people will be working in the future. In terms of collaboration, they will be working in their own time, placing attention simultaneously on family, but also committing to an always-on schedule.’
As the number of wealthy women rises, they will continue to instigate new forms of collaborative and whole-brain thinking in the workplace and in wider society, our research indicates.
In the turbulent decade ahead, the world’s rich will step out of their citadels to become an important part of the solution to the colossal challenges that humanity faces.
A wide-ranging rejection of the dangerous belief that wealth can insulate them from all of the world’s troubles will be the first step in this big shift.
‘No one is immune to disaster or change. Although wealth is still used to buy security, this in itself is limited,’ says Leanne Wierzba, co-curator of the What is Luxury? exhibition at the Victoria and Albert Museum.
Danny Dorling, Halford Mackinder professor of human geography at Oxford University, agrees. ‘The very wealthy cannot protect their future great grandchildren and great-great grandchildren simply by leaving trust funds. Their offspring will do better in safer, more equitable and greener future environments and societies.’
By radically re-engaging with the problems and possibilities of a wider society, tomorrow’s affluents will chart a path towards a different understanding of wealth, one that enables them to use their money and assets to imbue their lives with a deeper sense of meaning and purpose.
At the same time, it will enable them to redefine wealth itself in the eyes of the population at large. ‘Distrust and resentment will be replaced by respect and acceptance as wealthy individuals forge a new pact with the societies of which they will become a crucial and valued part,’ says The Future Laboratory’s Savigar.
‘Using their money primarily to help create a better and fairer world will be a key part of their understanding about what it means to be affluent in tomorrow’s world.’
In the next chapter of Unlimited’s examination of the future of affluence, The Future Laboratory will present in-depth interviews with the pioneering Wealth Heroes who will reshape what it means to be rich in tomorrow’s world.