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The case for capitalism

Jan 19 2014 10:26
*Ian Mann
Conscious Capitalism: Liberating the Heroic Spirit of Business, by John Mackey and Raj Sisodia

THIS truly remarkable book is one that will shift the way you run your business. If you are not a business owner or a business manager, it will shift the way you understand the role of business in the society.

Picture sitting among socially conscious and thoughtful people, and asserting that business is a force for good in the world. You also assert: “No human creation has had a greater positive impact on more people more rapidly than free-enterprise capitalism. It is unquestionably the greatest system for innovation and social cooperation that has ever existed.”

You will be fobbed of as a lackey of the evil and greedy, or discounted as appallingly ignorant.

Here are the facts: in little more than 200 years, business and capitalism have changed the world and relieved many of the greatest difficulties of daily life for the vast majority of people.

Two hundred years ago, 85% of the world’s population lived on less that $1 a day (in relative value.) Today that number is about 16% (still awful). The average income per capita, viewed globally, has increased 1 000%.

The percentage of undernourished people in the world has halved, and if this continues, we should see hunger as a thing of the past this century.
Countries have benefited enormously from capitalism, with South Korea topping the list. Their GDP growth has increased 260-fold since 1960. South Korea has moved from being one of the poorest countries in the world to one of the richest and most advanced.

Two hundred hundred years ago, almost everyone in the world was illiterate; today, 84% of adults can read.

The top quartile of economically free countries has a life satisfaction index of 7.5 out of 10, the bottom quartile scores 4.7.

The force behind these very significant improvements is free enterprise capitalism (free markets and free people) and business activity. Communism (dictatorship and governmental economic control) has proven to be inferior.

Compare the United States with Russia; West Germany with East Germany; South Korea with North Korea; and Taiwan, Hong Kong and Singapore with China.

Capitalism is held in low regard by some very thoughtful people because of the abuses in its name. This is not dissimilar to the disgrace experienced by religions through the deeds of their claimed adherents.

An example is “crony capitalism”.

The authors explain that “regulations and the size and scope of government have greatly expanded, creating the conditions for the spread of crony capitalism, restricting competition in favor of politically well-connected businesses. Crony capitalism is not capitalism at all, but is seen as such by many because it involves businesspeople.”

“Conscious Capitalism” is capitalism at its finest. The term requires explanation. The caterpillar lives to eat, and some eat so much that they grow 100 times their original size. Then through the metamorphosis process, it enters the cocoon and emerges as a butterfly, which is beautiful and is necessary, as it pollinates and promotes growth.  

Conscious Capitalism is the butterfly, both beautiful and growth promoting; the misuse of capitalism is the caterpillar devouring whatever is available only for itself.

“Our primary purpose in writing this book is to inspire the creation of more conscious businesses: businesses galvanized by higher purposes that serve and align the interests of all their major stakeholders; businesses with conscious leaders who exist in service to the company’s purpose, the people it touches, and the planet; and businesses with resilient, caring cultures that make working there a source of great joy and fulfillment.”

The authors sound like idealistic, barely repentant hippies, with lovely ideas and no idea of how the real world works - but this is hardly the case.

John Mackey is the founder and CEO of Whole Foods Markets, a chain selling wholesome, healthy food, produced in a sustainable fashion. The employees are a committed group of highly energised people who never leave the company once they join. Whole Foods and its people are much beloved in the communities in which they operate.

This is no “mom and pop” health food store. Their turnover is $11bn, larger than any supermarket chain in South Africa.

They are not a freak phenomenon – companies with the same ethic and worldview include The Container Store, Patagonia, Eaton, the Tata Group, Google, Panera Bread, Southwest Airlines, Bright Horizons, Starbucks, UPS, Costco, Wegmans, REI, Twitter, POSCO and many others.

Co-author Raj Sisodia is a professor of business who has written extensively on the topic of evolved capitalism and done significant research on why companies that have adopted this philosophy make more money.

In my column next week, I will describe how they operate businesses that people can genuinely be proud of and which make staff, suppliers and investors very happy.

Readability:   Light ---+- Serious
Insights:        High +---- Low
Practical:       High --+-- Low

 - Fin24

* Ian Mann of Gateways consults internationally on leadership and strategy. Views expressed are his own.

ian mann  |  capitalism  |  entrepreneurs


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