Today an old post from Mark Sumner @ The Daily Kos came across my virtual desk, decrying the ways of Wal-Mart. Here’s what caught my attention:
But this isn’t just a Walmart story, it’s an American story. Not so long ago, American corporations accepted the idea that they had obligations to their stockholders, but also to their workers and the communities where they did business. They understood that profit was a tool, a fuel that powered the corporation to achieve its goals. But now profit is the goal. It’s been fetishized beyond all reason. Many people will even tell you that there’s a law requiring companies to generate as much profit as possible. There is no such law. There never was. And the only thing more insane than believing that such a harmful law might exist, is that many seem to think it’s a good idea.
I think we sometimes forget that capitalism is simply the economic system we happen to use (I shan’t say we chose it) as we came of age; it’s a reaction to mercantilism, which as a side effect tended to favor the status quo, thus freezing folks in their initial economic classes; not that movement was impossible, but it was difficult and, more importantly, the reason for freezing out new competitors rarely made sense to the losers. Capitalism has at least a veneer of meritocracy to it, even though we now recognize that governmental favoritism, monopolistic behaviors, and other behaviors can impede that meritocratic impulse which we find so attractive about capitalism.
In the early days, the only international companies were the trading companies such as the Dutch East India Company; the overwhelming majority of companies were strictly local companies. This resulted in the owners and the management having to live with the results of their decisions. If you made a decision to treat your employees poorly, you heard about it: at church, at your office, and, if you were not a monopoly, at the clerk’s counter, as the customers decided to take their business elsewhere. Communities did not exist to further the fortunes of companies, but to further the fortunes of the citizens, and they realized that betterment of the community resulted in the betterment of the citizens.
As railroads, telegraphs, and other earlier accoutrements of modern Western civilization began to appear, corporations began to lose this accountability factor; as the owners and management became disconnected from the community hosting the company, the era of the robber barons came into being.
These practices included exerting control over national resources, accruing high levels of government influence, paying extremely low wages, squashing competition by acquiring competitors in order to create monopolies and eventually raise prices, and schemes to sell stock at inflated prices[2] to unsuspecting investors in a manner which would eventually destroy the company for which the stock was issued and impoverish investors.[
(source: Wikipedia)
So, in a way, today’s world is little different from 300 years ago, it’s simply that advancing technology has enabled those incapable of caring for others to … not care. Perhaps the titular example is the Bhopal Disaster involving a leak of poisonous gas at a Union Carbide plant in Bhopal, India. Union Carbide’s headquarters was half a world away. Would this have happened if the CEO of Union Carbide had lived in town with the plant? Of course not. But one must also consider the conscious lying of tobacco company executives as a strong contender for the title. (On the other hand, one must empathize with them while considering their alternatives.)
But a capitalist is not necessarily a robber baron. Conscious capitalism is a website and a term for practicing a responsible form of capitalism:
Conscious Capitalism comes to life as it is applied to business. Conscious Capitalism has four pillars guiding and underlying a business that practices Conscious Capitalism.
Higher Purpose: Recognizing that every business has a purpose that includes, but is more than, making money. By focusing on its Higher Purpose, a business inspires, engages and energizes its stakeholders.
Stakeholder Orientation: Recognizing that the interdependent nature of life and the human foundations of business, a business needs to create value with and for its various stakeholders (customers, employees, vendors, investors, communities, etc.). Like the life forms in an ecosystem, healthy stakeholders lead to a healthy business system.
Conscious Leadership: Human social organizations are created and guided by leaders – people who see a path and inspire others to travel along the path. Conscious Leaders understand and embrace the Higher Purpose of business and focus on creating value for and harmonizing the interests of the business stakeholders. They recognize the integral role of culture and purposefully cultivate Conscious Culture.
Conscious Culture: This is the ethos – the values, principles, practices – underlying the social fabric of a business, which permeates the atmosphere of a business and connects the stakeholders to each other and to the purpose, people and processes that comprise the company.
The Higher Purpose section particularly applies here, because I have to think that running a business has to include more than just counting up your profits at the end of the year. If this is all you’re trying to do, then why exist? You only go through life once (apologies to reincarnationists), and merely attempting to accumulate enough capital to attract a mate (or, worse, build a McMansion) is really a betrayal of life itself; here we are with this marvelous ability to think the oddest thoughts, to achieve, and all you want to do is make money?
But, annoyed rant aside, Conscious Capitalism is an attempt to provide that community pressure on those who must take the responsibility to prevent something from going wrong, whether it be disposal of fracking water causing earthquakes, just any pollution problem. And, by doing so, it may also be considered an attempt to save capitalism from drowning in its own effluvia. After all, capitalists must remember that capitalism was brought into existence for the betterment of the citizenry; the profit motive, rather than being primary, is for personal motivation, and as a way to measure how well companies do in competition with each other. If the practices, side effects, and results of capitalism do not result in the net betterment of the citizenry, then the time may come to discard capitalism.
And I say that as an investor myself.
