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.
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.
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.
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H. E. Datuk (Dr) Vinod Sekhar
Chairman & CEO | Founder & Chairman
Petra Group | Green Rubber Group