The other day a fellow professor came into my office, and threw a gauntlet down. Richard Sennett, one of my favorite authors, has written a new book entitled “The Culture of the New Capitalism.” My fellow professor, and one other, would like to read and discuss this book during our upcoming summer break. I am the token Capitalist on our campus, so I will obviously step up to the challenge. I am now reading, enjoying, and agreeing with much of what Sennett states, although there are several points he tries to make that I disagree with.
Sennett makes an interesting comment about his book “The Corrosion of Character.” During his research for that book he saw “the chance to see the cultural idea of the new capitalism at its most robust, the boom suggesting that this new man/woman would get rich by thinking short-term, developing his or her potential, and regretting nothing.” For this research he focused on middle-class individuals who were involved with high tech, financial, and media industries, which were at their peak at the time. What he found was that these individuals were not becoming freer, but felt they had been cast adrift. In my words it would be a lost of meaning. I think that his definition of the new capitalism is too narrow.
In my opinion the new capitalism is both similar and different than the old capitalism. I have been thinking about this after spending a week in Cincinnati at the ENACTUS conference with seven of my students.
The new capitalism is similar to the old in that it is based on the same principles of the past, it is an economic system based in private ownership of the means of production that responds to the invisible hand of the market. It is also a political system strongly correlated with Democracy. There is a strong emphasis on the freedom of choice. I can choose to purchase this product, or that service, and as I choose those particular items someone is also choosing to supply it to me. Each of the participants, buyer and seller are better off. They have pursued self-interest, according to Adam Smith, and each have had their needs met.
However, we all know that this pursuit of self-interest can lead to exploitation and manipulation of the system. As large-scale corporatism has emerged there seems to be a greater emphasis on the power that comes along with big business. Absolute power can do what those in the past have said it will do, unless there are checks and balances, it can corrupt absolutely. I don’t have to reiterate the exploitation of employees by Walmart, or the accounting fiasco of Enron.
However, there is, at least in my estimation, a new capitalism emerging. I saw this new capitalism expressed by students from all over the United States. Over two hundred schools participated in the ENACTUS National conference in Cincinnati last week, and everyone one of those schools and students were using business principles to create positive social change.
I know Milton Friedman would not approve. He would say that business is business, and social responsibility clouds the purpose of business. I disagree! The ubiquitous nature of business means it is the perfect mechanism for doing good in society. This can be done at several levels.
Many of the schools that presented their programs were using principles of Corporate Social Responsibility to do good. In other words, they were using a portion of financial resources and volunteers from partner organizations to do good in their communities. This is no different that what all large corporations do today. They spend a certain amount of their profits on education, community involvement, etc. It has become a required action in the new capitalism.
Other schools presented programs that used Social Business examples. They actually created small businesses, which would provide a service to the community, and then take the profit from the endeavor and put it back into the community to enhance th standard of living within the community. This could involve the using of bag-birds, plastic sacks from the super market, that end up getting caught on barbwire fences, to make hand bags and then selling those wares.
Other schools were creating social entrepreneurships. They were truly creating businesses that were producing large-scale social change. One example of this was a particular school that helped to establish a small business school in Honduras. This school will help local Hondurans learn how to start small businesses, run them, while improving their life style. As Bill Drayton once said, “the social entrepreneur is not concerned with giving someone a fish, or even teaching someone how to fish, they are concerned with revolutionizing the fishing industry.”
The students of the 500+ schools around the world that are a part of ENACTUS are creating a new capitalism. I saw this over the last week. I also saw how these students are impacting the large corporations that financially support ENACTUS. Corporations like Walmart, Hershey, BIC, Home Depot, Walgreens, AFLAC, and others were resident at the conference. Many of them provided the judges used within the competition. And several of the presidents and CEOs gave speeches at the awards ceremonies. In every case the speaker would say how refreshing it was to see what these students were accomplishing. I tend to think that each of these individuals like to attend ENACTUS conferences because it helps them remember what they wanted to do when they were younger, before that light was extinguished by the need to do the job and be successful.
The new capitalism does have a name. It is called conscious capitalism. It still believes in profit, but it also believes in using the profit to create positive social change. You know, I believe in this stuff. I am a free market guy all the way, but I also believe in the responsibility of those who have to help those who don’t have. This is what the new capitalism is all about. It is about using resources and capabilities in an efficient manner, but it is also about helping those who are less fortunate to gain the skills they need to be successful too.
And that is my thought for the day!