Re-thinking the purpose of the corporation
500 years on. I’m not alone in seeing a relationship between Martin Luther’s challenge to corruption in the Catholic Church and today’s corporate excesses. When I wrote about it in January, I shared what others were saying.
One of these was The Aspen Institute who ask “what would it take to rebuild the narrative on the purpose of the corporation?”.
“What we need to do is shift mindsets about what is possible in business — the fundamental business purpose.”
I can relate what it’s taken so far, which includes an economic crisis, violent uprisings in Ukraine and Syria and the deaths of many people including that of our founder .
Back in 1996, our founder Terry Hallman questioned the purpose of business. Isn’t the purpose of business to benefit people rather than maximising shareholder value? He described a business model for social benefit which distrbutes no dividend using profit to address social problems.
An invitation to serve Clinton on the Committee to-relect the President gave him an opportunity to “pitch to the top” as he put it. He concluded:
“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.’
From 2004 his work in Ukraine would draw attention to the growing crisis of corruption and inequality that could only result in violence. In 2007, his ‘Marshall Plan’ strategy came at a time when other models of business for benefit were being put on the table. Benefit corporations and Conscious Capitalism were among them.
Interestingly one of the first oganisation to pick up on the concept of people-centered business and use of profit to create social benefit had been the Vatican. With Caritas in Veritate , Pope Benedict wrote of the need for serving the common good:
“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. “
His death in 2011 was to the best of my knowledge from natural causes and local ectivists commended his commitment to those he risked his life to speak up about. They shared part of his appeal to USAID who would subsequently brush this issue aside and partner with The British Council and Ukraine’s oligarchs in a ‘social enterprise’ development project .
“The author of breakthru report “Death camps for children” Terry Hallman suddenly died of grave disease on Aug 18 2011. On his death bed he was speaking only of his mission — rescuing of these unlucky kids. His dream was to get them new homes filled with care and love. His quest would be continued as he wished.”
In his notes about the ‘Marshall Plan’ Terry Hallman described how we decided on radical transparency, publishing the plan online when a competing plan was suggested by a leading oligarch. As it turned out, McKinsey & Co were his assistants.
“As the 60th anniversary of the Marshall Plan came around in June 2007, noise was emerging within Ukraine of a certain political boss preparing a Marshall Plan for Ukraine. This person was a reputed mob boss — exactly the sort of entity that the original Marshall Plan meant to oppose. It seemed most likely that whatever he came up with would be self-serving, hijacking the label ‘Marshall Plan’ and turning the whole notion on its head.”
“Supported by the current Lithuanian leadership and praised by the vast majority of Ukrainian policymakers, the plan envisions an additional, massive wave of economic support to Kyiv valued up to $50 billion, doled out over a period of ten years.”
In 2011 an article on HBR from McKinsey’s Dominic Barton led to the Long Term Capitalism challenge where a prizewinning article described the potential of the for-benefit enterprise.
I tuned into this paragraph “What’s crucial now is to put all of the pieces together like a puzzle. That’s the approach of pilots like the North Carolina Fourth Sector Cluster Initiative (NCFSCI), launched in 2010. The NCFSCI is a collaboration of business, community, government, academic, and economic development leaders convened to accelerate the growth of the fourth sector across North Carolina.”
Chapel Hill in North Carolina was where P-CED began in 1996, when founder Terry Hallman distributed his treatise on campus as UNC. Perhaps his ideas have been spreading like Martin Luther’s?
NCFSCI are a Linkedin group who won’t accept someone like me as a member.
I shared the story of how our for benefit enterprise evolved in my own article for Long Term Capitalism as The New Bottom Line. It was just as popular but won no prize. It described what the ‘Marshall Plan’ argued — a long term, permenantly sustainable program:
‘This is a long-term permanently sustainable program, the basis for “people-centered” economic development. Core focus is always on people and their needs, with neediest people having first priority — as contrasted with the eternal chase for financial profit and numbers where people, social benefit, and human well-being are often and routinely overlooked or ignored altogether. This is in keeping with the fundamental objectives of Marshall Plan: policy aimed at hunger, poverty, desperation and chaos. This is a bottom-up approach, starting with Ukraine’s poorest and most desperate citizens, rather than a “top-down” approach that might not ever benefit them. They cannot wait, particularly children. Impedance by anyone or any group of people constitutes precisely what the original Marshall Plan was dedicated to opposing. Those who suffer most, and those in greatest need, must be helped first — not secondarily, along the way or by the way. ‘
We all know truth is the first casualty of war and the second in this case may not have been the passengers of MH17, but they were casualties whose bodies landed in the grounds of the orphanage at Torez, the focus of Terry Hallman’s ‘Death Camps , For Children’ article. On the Ukrainian side around 18.000 lives have since been lost.
“I want to know why that boy died,” said one of the orphans, 14-year-old Ruslan. He and the other children read the news on line to find out the true reason behind the deaths of the Malaysian Boeing’s passengers and crew. Why did almost 300 children and adults fall six miles through space, their clothes ripped away by the blast and the rush of air, until they landed on roofs, in yards, on streets and in fields?
Violence began in February 2014, where Maidan activist s appealied for EU support, including a ‘Marshall Plan’ strategy/. They weren’t going to get it. I forwarded to MEPs in the South West.
Of all men to speak against violence at the time, Tony Blair would not be one of my choices, but there he was at Davos, chairing a panel on social programs in Ukraine, asking whether capitalism could delivere both financial and social returns. Tony Blair , who made social enterprise government policy was reading back the ‘Marshall Plan’ argument.