Business fights Purpose
The story begins in 1996, with the Committee to Re-elect the President and a position paper proposing a new way of doing business. It began with these words:
“At first glance, it might seem redundant to emphasize people as the central focus of economics. After all, isn’t the purpose of economics, as well as business, people? Aren’t people automatically the central focus of business and economic activities? Yes and no. “
In 2004, we’d introduced our people-centered model of business to the UK with a business plan to tackle poverty:
“The opportunity for poverty relief was identified not only as a moral imperative, but also as an increasingly pressing strategic imperative. People left to suffer and languish in poverty get one message very clearly: they are not important and do not matter. They are in effect told that they are disposable, expendable. Being left to suffer and die is, for the victim, little different than being done away with by more direct means. Poverty, especially where its harsher forms exist, puts people in self-defence mode, at which point the boundaries of civilization are crossed and we are back to the law of the jungle: kill or be killed. While the vast majority of people in poverty suffer quietly and with little protest, it is not safe to assume that everyone will react the same way. When in defence of family and friends, it is completely predictable that it should be only a matter of time until uprisings become sufficient to imperil an entire nation or region of the world. People with nothing have nothing to lose. Poverty was therefore deemed not only a moral catastrophe but also a time bomb waiting to explode. Poverty reduction and relief became the overriding principle and fundamental social objective in the emerging P-CED model.”
“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.”
“Traditional capitalism is an insufficient economic model allowing monetary outcomes as the bottom line with little regard to social needs. Bottom line must be taken one step further by at least some companies, past profit, to people. How profits are used is equally as important as creation of profits. Where profits can be brought to bear by willing individuals and companies to social benefit, so much the better. Moreover, this activity must be recognized and supported at government policy level as a badly needed, essential, and entirely legitimate enterprise activity.”
“The P-CED model is not a charity sort of operation. It is business. What we choose to do with profits is entirely up to us, and we choose before anything else happens to set most of our profits aside to assist poor people. In fact, our corporate charter requires us by law — UK law, where rule of law is very well established — to use our profits only for social benefit. We cannot do anything else with it.”
In 2006, he spoke out about corruption within a childcare system were disabled children had become a cash cow. Many had died through neglect.
It was 2008, I recall, the year of the economic crisis that I read an appeal from HRH Prince Charles, writing for the International Business Leaders Forum of the need for new models of engagement to tackle poverty. So I introduced our concept of profit-for-purpose. They were far from welcoming.
2008 was an eventful year. I joined the network on Business fights Poverty, where I was told that I may not discuss corruption. I was blocked and never allowed to rejoin.
The argument that we made about using profit to resolve a broad range of social problems may have been unwelcome, but not at Davos 2008, where Bill Gates , describing Creative Capitalism, argued that “corporations should sacrifice profits to the public welfare”
In February, our appeal to USAID had spelt out the extent of corruption in Ukraine and our primary focus on childcare reform to place children in loving family homes. The ‘endorsement’ of Bill Gates was pointed out to them.
USAID and the Senate Committee on Foreign Relations were introduced to our ‘Marshall Plan’ strategy for applying social purpose business on a national scale.
“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.”
In October I joined the BITC network to share it there and later on their Mayday network where I had the opportunity to describe our ‘journey’.
In December, I introduced it to the EU Citizens Consultation.
In 2009 we took the opportunity to deliver the first of our presentations to the Economics for Ecology conference at Sumy.
“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.”
Within days the Oxford Social Enterprise Forum met to discuss a ‘New Form of Capitalism’
The organisation known today as Social Enterprise UK told us that it was beyond their focus.
When Richard Branson told Davos 2009 delegates that “business should focus more on solving social problems”, at a rountable on creating more effective social programs in Ukraine, I shared with Virgin Unite.
I shared with B Corporations, proposing collaboration.
Later that year, both the UN General Assembly and the Vatican were talking about people-centered economics In Caritas in Veritate, Pope Benedict wrote:
“Striving to meet the deepest moral needs of the person also has important and beneficial repercussions at the level of economics. The economy needs ethics in order to function correctly — not any ethics whatsoever, but an ethics which is people-centred.”
“This is not merely a matter of a “third sector”, but of a broad new composite reality embracing the private and public spheres, one which does not exclude profit, but instead considers it a means for achieving human and social ends. Whether such companies distribute dividends or not, whether their juridical structure corresponds to one or other of the established forms, becomes secondary in relation to their willingness to view profit as a means of achieving the goal of a more humane market and society. “
In 2010 I introduced it to Grameen Creative Labs and Erste Bank for the Social Business ideas competition.
In 2012 with the help of MEP Sir Graham Watson, it was introduced to EU commissioner Michel Barnier. Barnier suggested future collaboration.
The arrival of Creating Shared Value in 2011 inverted the argument for applying profit for purpose. Instead it argued that corporations could create more profit by solving social problems. My contribution was censored.
The message about civil unrest and the need to reform capitalism was gaining traction. Dominic Barton of Mckinsey was telling it to HBR in 2011.
“Business leaders today face a choice: We can reform capitalism, or we can let capitalism be reformed for us, through political measures and the pressures of an angry public.”
I shared with McKinsey in Long Term Capitalism , first in 2012 then again in 2013.
Re-imagining capitalism for people and planet
Re-imagining capitalism: The new ‘bottom line’
It was followed by Paul Polman of Unilever, saying:
“When people talk about new forms of capitalism, this is what I have in mind: companies that show, in all transparency, that they are contributing to society, now and for many generations to come. Not taking from it.
It is nothing less than a new business model. One that focuses on the long term. One that sees business as part of society, not separate from it. One where companies seek to address the big social and environmental issues that threaten social stability. One where the needs of citizens and communities carry the same weight as the demands of shareholders.”
In 2013, Stephen Howard of BITC was now telling us that capitalism must be a force for good.
In 2014 I shared with The Blueprint for Better Business in the Great Business Debate.
They read back the argument from our ‘Marshall Plan’
“A business needs to make a profit otherwise it cannot survive — but making a profit is not the purpose of business. There needs to be a connection between the purpose of the business, the benefit to society and to all the other stakeholders: employees want a job, customers want the right goods or services at the right price, suppliers want to be treated properly, investors want a return… purpose is the glue that brings it all together and creates long term sustainable performance”
