The Higher Purpose of Capitalism Pt.1

Thank you for joining us for week 1 of the HR Book Club Blog. This month we’re reading “Conscious Capitalism” by John Mackey and Raj Sisodia.

Countries that have embraced free enterprise capitalism have prospered tenfold over those that have not, and the face of the world has improved substantially because of it. The authors give some quality of life improvement facts in Chapter 1 that are staggering:

  • In 200 years capitalism has taken the levels of extreme poverty down from 85% to 16%.
    • “Adjusting for affordability and quality improvements, the standard of living of ordinary Americans has increased 10,000% since 1800!”
    • Major strides in sanitation, medicine, and agricultural productivity have led to massive growth in worldwide human population, and life expectancy has more than doubled.
    • Malnourishment and hunger has been cut in half worldwide.
    • Literacy levels have spiked with 84% of adults now able to read in developed countries.
    • Minority groups have more rights within democratic governments, and overall life satisfaction levels correlate with this economic prosperity.

The authors feel that entrepreneurs in particular are the real heroes of the modern day, saying that they are “every bit as bold and daring as the heroes who fought dragons or overcame evil.” After all it is the entrepreneur who envisions the world in ways it could and should be, and who creates wealth through creativity and passion.

Capitalism has earned a bad wrap as greedy and exploitative, but at it’s core capitalism and for-profit business has the ability to create prosperity at a level previously unforeseen. The authors define conscious business as “business galvanized by higher purposes that serve and align the interests of all their major stakeholders; business with conscious leaders who exist in service to that 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.” They believe that taken together these things can create better communities and a better world through purpose, love, creativity, compassion, freedom, and prosperity.

The trouble is most businesses can be considered low-conscious; failing to recognize their impact on the environment and animal life as well as on the physical and mental health of team members and customers. Employee engagement levels haven’t improved in the last 20 years hovering around 30% and executives are paid 325+:1 the amount that low level employees make. The idea that business, like people, is purely self-interested and focused on profit maximization has allowed these practices to run unchecked under the guise of inevitability. All of this is made worse through government coercion that seeks to consolidate power and market-share for the benefit of officials.

The real purpose of business is a virtuous one: “to improve lives and to create value for stakeholders.” While money is one form of value, it is not the only one that should be considered. This quote really spoke to me:

“This is what we know to be true: business is good because it creates value, it is ethical because it is based on voluntary exchange, it is noble because it can elevate our existence, and it is heroic because it lifts people out of poverty and creates prosperity. Free-enterprise capitalism is one of the most powerful ideas we humans ever had. But we can aspire to even more. Let us not be afraid to climb higher”

It’s time that we fully embrace business as a powerful force for good; one that we must use responsibly. Once this power and responsibility is realized we will see a massive cultural shift in how people view their part in business and free-enterprise capitalism.

What are your thoughts?

  • Is capitalism virtuous in nature?
  • Why has business developed this greedy and exploitative image?
  • How can we leverage business for good across all stakeholders?

#capitalism #virtue #conscious

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