A kinder face for Capitalism?
Social enterprise has been growing for some time and presents a much kinder face of capitalism.” says Tom Cropper, writing of the Social Enterprise World Forum in New Zealand, where according to PM Jacinda Arden, “Capitalism has failed New Zealanders”
I was curious enough to click on the link which reveals that rather than an independent journalist as described, Tom is a senior manager for Deloitte.
At Deloitte they have a culture of purpose rather than profit, so one might imagine they’ve read the original argument from our 1996 paper.
“Just eight people own more wealth than the 3.5 million poorest people in the world,” said Peter Holbrook of Social Enterprise UK, in his address to the event.
“There’s no sign of that being tackled,” he explained. “We’re at a loss about how to achieve that. Is it any wonder that we are seeing social unrest?”
Let me describe how we have been tackling it:
It was 21 years ago in September 1996 that Bill Clinton was warned of the need to reform capitalism or face global uprising by those disenfranchised. Not simply a kinder face, but redefining how we could measure profit in terms of human wellbeing In 2004, as a social enterprise in the UK we argued the following in a business plan to tackle poverty:
“Dealing with poverty is nothing new. The question became ‘how does poverty still exist in a world with sufficient resources for a decent quality of life for everyone?’ The answer was that we have yet to develop any economic system capable redistributing finite resources in a way that everyone has at minimum enough for a decent life: food, decent housing, transportation, clothing, health care, and education. The problem has not been lack of resources, but adequate distribution of resources. Capitalism is the most powerful economic engine ever devised, yet it came up short with its classical, inherent profit-motive as being presumed to be the driving force. Under that presumption, all is good in the name of profit became the prevailing winds of international economies — thereby giving carte blanche to the notion that greed is good because it is what has driven capitalism. The 1996 paper merely took exception with the assumption that personal profit, greed, and the desire to amass as much money and property on a personal level as possible are inherent and therefore necessary aspects of any capitalist endeavour. While it is in fact very normal for that to be the case, it simply does not follow that it must be the case.
“Profits can be set aside in part to address social needs, and often have been by way of small percentages of annual profits set aside for charitable and philanthropic causes by corporations. This need not necessarily be a small percentage. In fact, there is no reason why an enterprise cannot exist for the primary purpose of generating profit for social needs — i.e., a P-CED, or social, enterprise. This was seen to be the potential solution toward correcting the traditional model of capitalism, even if only in small-scale enterprises on an experimental basis.”
In 2006, that we joined the Social Enterprise Coalition to learn that the focus of our efforts was beyond theirs.
In my introduction to the Social Enterprise Coalition I’d described our efforts in Ukraine and by the following February a ‘Marshall Plan’ for Ukraine was in government channels. We decided on radical transparency and published in a promient magazine. The ‘Marshall Plan’ had this to say about capitalism:
“An inherent assumption about capitalism is that profit is defined only in terms of monetary gain. This assumption is virtually unquestioned in most of the world. However, it is not a valid assumption. Business enterprise, capitalism, must be measured in terms of monetary profit. That rule is not arguable. A business enterprise must make monetary profit, or it will merely cease to exist. That is an absolute requirement. But it does not follow that this must necessarily be the final bottom line and the sole aim of the enterprise. How this profit is used is another question. It is commonly assumed that profit will enrich enterprise owners and investors, which in turn gives them incentive to participate financially in the enterprise to start with.
“That, however, is not the only possible outcome for use of profits. Profits can be directly applied to help resolve a broad range of social problems: poverty relief, improving childcare, seeding scientific research for nationwide economic advancement, improving communications infrastructure and accessibility, for examples — the target objectives of this particular project plan. The same financial discipline required of any conventional for-profit business can be applied to projects with the primary aim of improving socioeconomic conditions. Profitability provides money needed to be self-sustaining for the purpose of achieving social and economic objectives such as benefit of a nation’s poorest, neediest people. In which case, the enterprise is a social enterprise.”
The Economics for Ecology conferences in Sumy provided the opportunity to deliver further warnings. In 2009, the opening plenary were told:
“At this point, the simple fact is that regarding economic theory, no one knows what to do next. Possibly this has escaped immediate attention in Ukraine, but, economists in the US as of the end of 2008 openly confessed that they do not know what to do. So, we invented three trillion dollars, lent it to ourselves, and are trying to salvage a broken system so far by reestablishing the broken system with imaginary money.
“What is not guesswork is that the broken — again — capitalist system, be it traditional economics theories in the West or hybrid communism/capitalism in China, is sitting in a world where the existence of human beings is at grave risk, and it’s no longer alarmist to say so.
“The question at hand is what to do next, and how to do it. We all get to invent whatever new economics system that comes next, because we must.”
We returned in 2010 to repeat the warning made in 1996 about global uprisings
The Arab Spring and Occupy Wall Street were still more than a year away.
In 2013 the Long Term Capitalism initiative gave opportunity to describe this to McKinsey readers as ‘The New Bottom Line’
In 2014 that the financial elite met in London at a conference on Inclusive Capitalism. The City of London Mayor repeated our own warnings
“If too many people remain or become marginalised, they are less likely to be enfranchised, empowered and effective as workers and citizens, rendering them unable to make an economic contribution at best, and resulting in civil unrest at worst. Everything a firm does from the very top to the very bottom should demonstrate on a daily basis our desire to see a stronger, better evolution of capitalism. “
Who will challenge traditional thinking, if we only have people like us in our teams? “
With an open letter I responded that I would and had, referring to the points made in 2004. Among those speaking Was Bill Clinton, the President who’d been told back in 1996.
‘It is only when wealth begins to concentrate in the hands of a relative few at the expense of billions of others who are denied even a small share of finite wealth that trouble starts and physical, human suffering begins. It does not have to be this way. Massive greed and consequent massive human misery and suffering do not have to be accepted as a givens, unavoidable, intractable, irresolvable. Just changing the way business is done, if only by a few companies, can change the flow of wealth, ease and eliminate poverty, and leave us all with something better to worry about. Basic human needs such as food and shelter are fundamental human rights; there are more than enough resources available to go around — if we can just figure out how to share. It cannot be “Me first, mine first”; rather, “Me, too” is more the order of the day.’
