Capitalism for Good

What’s the endgame of capitalism as currently practiced? According to a Native American proverb:

“When the last tree has been cut down, the last fish caught, the last river poisoned, only then will we realize that one cannot eat money.”

It’s a message against profit-driven reckless consumption of resources. Capitalism, the foundation of our global system, is also indirectly implicated. Beyond just warning us of the consequences of unchecked greed, this saying advocates for sustainable management of the environment. 

However, if capitalism as a practice is not socially conscious and sustainable, much more than the environment will be at stake. You only need to look at increasing socioeconomic inequality worldwide as another rallying call for something to be done about capitalism. As businesspeople, stakeholders in society and active participants in the economy, that “something to be done” needs to start with us. By practicing sustainable wealth creation, we can make social capitalism a force for good.

What is Social Capitalism?

To understand social capitalism, let’s start with capitalism. The system is intended to temper the greed of human beings, and on that aspect, while too often flawed in practice, it has its foundation in reality. Unlike the theoretical allures of utopian systems like socialism and communism that go against human nature, capitalism may be honest and ugly, but it has been tried, tested and proven to work. In contrast, the influence of Soviet-led communism on economic practice has faded into irrelevance.

The worst excesses of the capitalist system indeed ought to be criticised as an example of how it has failed against unchecked greed. That should not be taken as a call to abandon a system that has created real quality-of-life gains for people all over the world. Yet it is clear that the status quo of capitalism can and should be changed for the better.

I would even argue that social capitalism is true capitalism. At its heart, the system is meant for wealth creation. This happens when money is made, in exchange for products and services you sell to others. How do you then make more money? You would need to sell to a wider group of people who can afford your goods – the long-term rational action for business folks would be to help push people out of poverty into the middle class. If the poor stay poor, they don’t have the money to buy what you’re selling, which is a lost profit opportunity. That is why it is true capitalism – not because of any appeal to idealism, but because social capitalism creates more opportunities to earn money. 

In some other countries, you can see crony capitalism at work instead. Instead of championing free, healthy markets, when governments ignore the poor and opt to cannibalise from existing markets, the result is a top-heavy, dysfunctional economy. The wealth would have been redirected to the elite classes, to the detriment of the entire country’s performance. 

Take Zimbabwe under Robert Mugabe for instance – under repressive policies, its people experienced a fall in living standards and the country lost US$38 billion in potential growth from 1980 to 2017, while Mugabe had assets rumoured to exceed US$1 billion. 

Conversely, in a country that believes in pro-business initiatives and social capitalism, its people can not only aspire to make money and achieve a better life, but also find the means to do so. At the same time, a social capitalist system ensures that disadvantaged people are taken care of, whether it’s in healthcare or education. Even in developed countries with some of the highest GDPs, these crucial public goods may be inaccessible by those in poverty. 

The key lies in striking a balance between business-friendly attitudes and lifting people up. When you ensure that people have their basic and educational needs met, you also allow business within the country to flourish. That’s why it’s called sustainable wealth creation – when the system allows people to improve themselves, it also boosts their purchasing power, directly contributing to the health and stability of the economy.

Rethinking Corporate Social Responsibility

In modern times, the health of the economy is tied to the health of the country. Governments can rise and fall on the back of the economy, which is comprised of SMEs and other businesses – that’s testament to the influence that we hold as participants in our business and national communities. 

It’s also why businesspeople can no longer afford to stay uninvolved in matters of societal and political reform. A nation’s development likewise must have business leaders as part of the discussion and part of the solution. In other words, corporations have a social responsibility to use their influence for good and steer the country forward.

Corporations should not see this as a mere appeal for an abstract greater good, since it’s also good for their bottom line from a rational perspective. If communities hold companies in good societal standing, then these companies get a boost to goodwill, winning over socially conscious consumers and improving their corporate image. Successful corporate branding is also good for share prices, and if market analysts and fund managers can smell the money potential from these companies, it’s a win-win situation for everyone and hence a cause worth consideration.

Coming to terms with this kind of corporate social responsibility also means that key business stakeholders have to address the reality of own greed. It’s an inescapable truth that has to be admitted – if they didn’t possess any greed, however little, they wouldn’t be in the position they are today. 

We’re all greedy for something, whether it be love, ambition, power, status or something else. It’s not a question of right or wrong, or good and bad, because it’s an innate aspect of human nature, it’s simply a part of us. However, we do need to temper and control it, because while greed itself is natural, excessive greed can and has proved detrimental, as seen in the 2008 global financial crisis.

Greed can be likened to a very powerful engine in a luxury sports car – if you don’t know how to drive it, you’re going to lose control and crash, killing yourself and/or other people. But if you can exert control over it, you can accelerate and slow down or brake at the right moments, mastering the engine’s power to its potential but without going overboard. 

In driving and in business, restraint gets you farther than lead-foot acceleration. What can you do with 100 million that you can’t do with 80? Similarly, if you look at social responsibility from that perspective, it’s only good business sense to give back to the community for greater long-term shared success, whether it’s enhancing employee welfare or contributing to social programmes that can build stronger communities.

We live in times of record inequality. According to the United Nations’ World Social Report 2020, more than 70% of the global population lives in countries where the wealth gap is steadily growing. More people than ever are at risk of falling into poverty or being unable to escape from it. It’s absurd that in some countries, you can find starving children and their families living rough on the streets, right outside multi-billionaires’ spacious and beautiful residences. More ridiculous still is that twin epidemics of starvation and obesity can happen at the same time in the same country. 

“Your silence gives consent.” –Plato, Greek philosopher

What will you do? What will we do? Maintaining this status quo is unthinkable – change must happen, and we must speak out for change. Surely there is a need to get some of the most powerful people in the world to sit down and talk about solutions for a paradigm shift in world economics. Yet the work needed to effect change does not start and end with them. 

I live a comfortable life with everything I want from travelling first class to enjoying hotel amenities. Recognising my own position of privilege, I am doing my part to help uplift local communities. As business leaders, we’re not being called upon to make some unthinkable sacrifice, merely asked to give back to society (and often not even that). 

At the same time, we have the ability to give because we have the means to. Sustainable wealth creation also entails getting rich and then helping others improve their financial health. That’s the value of social capitalism – when you become rich, you can make a real difference in your community. If you have the means to do so, raise yourself to prosperity, then help others get there, instead of shutting the door on them.

What’s Good for Business

Global inequality is happening (and worsening) under the capitalist system. As participants and beneficiaries of this system, businessmen have a key role to play in helping steer the ship towards the right course of sustainable wealth creation for future generations.

Business groups should get involved with problem-solving, and they should be allowed to participate without hindrance. Many businesses already contribute significantly, whether to charities or to local communities. The problem does not lie in big business refusing to do its part for society, because it already does give back.

Beyond the tax rebates, however, some of us seek real fulfilment and more strategic involvement in societal changes towards greater equity. If we can preside over a change towards more socially conscious business operations and development, then we can represent a new standard for other businesses to follow suit. From experience, I know many other businessmen with similar ideals and aspirations, who are just looking for enough space in the public conversation to get involved and share valuable insights.

Whether it’s helping to better the lives of the disadvantaged or improving gender and race relations in the workplace and in society, businesses can definitely contribute their fair share without hurting their bottom line. In fact, what’s good for business can also be good for the world.

For instance, if I’m running a recycling company to process used rubber waste, I’m not just doing it because I have a stake in saving our planet’s natural resources. I’m also creating an end product that is cheaper to manufacture with recycled rubber than with newly harvested rubber, which I can then sell to businesses at more competitive prices. That way I can make more money and save the planet at the same time.

We can also tap on the potential of public-private collaboration. Continuing with the example of rubber product recycling, one can work with national governments to divert their usable rubber waste to benefit both parties. The government gets to keep some trash away from their landfills and incinerators, while the recycling company has a steady source of material to process. This also works on a societal level – why not run programmes to get disenfranchised groups in developing countries to find and trade in used rubber for cash?

Even if these decisions incur a negligible amount of lost profit margins, the business is still making lots of money. With these socially conscious initiatives, however, you’re also allowing another group to make money as well. It could even serve as their lifeline that keeps them going, with the hope that they can improve themselves in the future. That’s just one example of many that can create wealth sustainability across the board.

Business Leadership at Work

The modern business world is a very dynamic one – many entrepreneurs and business leaders have risen from unassuming backgrounds, founding successful companies from small, passionate teams working in bedrooms and rental spaces. Under capitalism, they have seized opportunities to grow their wealth through ingenuity, ability and foresight. These are key attributes that can be harnessed for breakthroughs in solving socioeconomic issues, and business leaders should be given a seat at any round-table discussion dedicated to fighting inequality in our communities.

Family-run businesses and private enterprises are also uniquely placed to champion sustainable wealth creation. Unlike public companies, they are not answerable to shareholders and can take more decisive actions in line with social capitalism without worrying about the bottom line. Without the obligation to maximise profits to the greatest possible extent, they have more leeway to use that money in ways that can benefit the community. 

Regardless of the size and type of business you run, as long as you’re part of the capitalist system, you should aim for wealth creation, not just for yourself, your business or your shareholders, but for society. Part of wealth creation also means doing what you can to move people out of poverty into the middle class, in a sustainable, permanent manner. Breaking the poverty cycle in communities is a cause that resonates deeply with me, and my organisation is looking into different ways to achieve that.

As leaders, you have a voice. Use it to encourage, engage, educate and inspire, even if changes don’t happen in a day or a year. There’s nothing wrong with incremental steps – three steps forward and two steps back is still one step forward. What’s important is that you keep moving forward, realising and fixing mistakes along the way. 

Because we are capitalists in a capitalist system, our success is based on the vitality and structure of that system. If we don’t do our part to contribute and take care of the people living in that system, our livelihoods will also be at stake when the system grows dangerously unstable and imperils the communities we live with. Conversely, when we do our part to fight poverty and lift people up, society as a whole prospers with us leading the charge for progress.

“Companies that take a long-term view and consider a wide range of stakeholders — such as customers, employees, partners, the environment, and the communities in which we serve — have been shown to be more sustainable, innovative, and profitable.” – Zvika Krieger, Head of Technology Policy and Partnerships, Centre for the Fourth Industrial Revolution, World Economic Forum

1 Rethink Corporate Social Responsibility

CSR should be more than a one-and-done volunteering effort for disadvantaged communities or throwing money to charities. Have your CSR-focused people seek out opportunities to contribute to society in an impactful, permanent manner.

2 Look for the Win-Win

What’s good for business can be good for society. Direct involvement with governments and communities can yield shared success and sustainable wealth creation.

3 Be a Thought Leader

Whether it’s making your voice heard in the press or leading by example, do what you can to make your concern with the status quo known, and advocate for social capitalism that helps elevate all stakeholders.