Many of the problems in the world remain unresolved because we continue to interpret capitalism too narrowly. In this narrow interpretation we create a one-dimensional human being to play the role of entrepreneur. We insulate him from other dimensions of life, such as, religious, emotional, political dimensions. He is dedicated to one mission in his business life ---- to maximize profit. He is supported by masses of one-dimensional human beings who back him up with their investment money to achieve the same mission. The game of free market works out beautifully with one-dimensional investors and entrepreneurs. We have remained so mesmerised by the success of the free market that we never dared to express any doubt about it. We worked extra hard to transform ourselves, as closely as possible, into the one-dimensional human beings as conceptualised in theory to allow smooth functioning of free market mechanism.
Economic theory postulates that you are contributing to the society and the world in the best possible manner if you just concentrate on squeezing out the maximum for yourself. When you get your maximum, everybody else will get their maximum.
As we devotedly follow this policy sometimes doubts appear in our mind whether we are doing the right thing. Things don't look too good around us. We quickly brush off our doubts by saying all these bad things happen because of "market failures"; well-functioning market cannot produce unpleasant results.
I think things are going wrong not because of "market failure". It is much deeper than that. Let us be brave and admit that it is because of "conceptualisation failure". More specifically, it is the failure to capture the essence of a human being in our theory. Everyday human beings are not one-dimensional entities, they are excitingly multi-dimensional and indeed very colourful. Their emotions, beliefs, priorities, behaviour patterns can be more aptly described by drawing analogy with the basic colours and millions of colours and shades they produce.
I like some of the thinking in Natural Capitalism as well.
It's liekt here's 2 sorts of money gift-money and lend-money. I have for several years had sponsorchildren, that's gift-money, I invest in a childs future... but when investing in a buisness future lend-money is a more appropiate way of doing it
This post was modified from its original form on 18 Nov, 8:35
Free Market Economy
Capitalism centers on the free market. It is claimed that the freer the market, the better is the result of capitalism in solving the questions of what, how, and for whom. It is also claimed that the individual search for personal gains brings collective optimal result.
I am in favor of strengthening the freedom of the market. At the same time, I am very unhappy about the conceptual restrictions imposed on the players in the market. This originates from the assumption that entrepreneurs are one-dimensional human beings, who are dedicated to one mission in their business lives--to maximize profit. This interpretation of capitalism insulates the entrepreneurs from all political, emotional, social, spiritual, environmental dimensions of their lives. This was done perhaps as a reasonable simplification, but it stripped away the very essentials of human life.
Human beings are a wonderful creation embodied with limitless human qualities and capabilities. Our theoretical constructs should make room for the blossoming of those qualities, not assume them away.
Many of the world's problems exist because of this restriction on the players of free-market. The world has not resolved the problem of crushing poverty that half of its population suffers. Healthcare remains out of the reach of the majority of the world population. The country with the richest and freest market fails to provide healthcare for one-fifth of its population.
We have remained so impressed by the success of the free-market that we never dared to express any doubt about our basic assumption. To make it worse, we worked extra hard to transform ourselves, as closely as possible, into the one-dimensional human beings as conceptualized in the theory, to allow smooth functioning of free market mechanism.
By defining "entrepreneur" in a broader way we can change the character of capitalism radically, and solve many of the unresolved social and economic problems within the scope of the free market. Let us suppose an entrepreneur, instead of having a single source of motivation (such as, maximizing profit), now has two sources of motivation, which are mutually exclusive, but equally compelling--(a) maximization of profit and (b) doing good to people and the world.
Each type of motivation will lead to a separate kind of business. Let us call the first type of business a profit-maximizing business, and the second type of business as social business.
Social business will be a new kind of business introduced in the market place with the objective of making a difference in the world. Investors in the social business could get back their investment, but will not take any dividend from the company. Profit would be ploughed back into the company to expand its outreach and improve the quality of its product or service. A social business will be a non-loss, non-dividend company.
Once social business is recognized in law, many existing companies will come forward to create social businesses in addition to their foundation activities. Many activists from the non-profit sector will also find this an attractive option. Unlike the non-profit sector where one needs to collect donations to keep activities going, a social business will be self-sustaining and create surplus for expansion since it is a non-loss enterprise. Social business will go into a new type of capital market of its own, to raise capital.
Young people all around the world, particularly in rich countries, will find the concept of social business very appealing since it will give them a challenge to make a difference by using their creative talent. Many young people today feel frustrated because they cannot see any worthy challenge, which excites them, within the present capitalist world. Socialism gave them a dream to fight for. Young people dream about creating a perfect world of their own.
Almost all social and economic problems of the world will be addressed through social businesses. The challenge is to innovate business models and apply them to produce desired social results cost-effectively and efficiently. Healthcare for the poor, financial services for the poor, information technology for the poor, education and training for the poor, marketing for the poor, renewable energy--these are all exciting areas for social businesses.
Social business is important because it addresses very vital concerns of mankind. It can change the lives of the bottom 60 percent of world population and help them to get out of poverty.
As far as I can see, the so called "capitalism" is that theory which took a part (the convenient for the ones who make great bussiness) of the liberal theory, and added the parts of "Conservatorism" (hope the word exists). The result is the monstruosity of Neo Liberalism, meaning: "If you have the right contacts, you'll grow rich; if not, you're out of the market, and end up with a hart stroke before 50."
I see it daily in this beloved, underdeveloped, corrupted, etc, etc, etc country of mine.
Tough luck for me and many millions of my country people... Who cares? No one, of course.
This post was modified from its original form on 18 Dec, 15:22
We're moving into new fields here, the social entrepenuership - where our economical actions are determined by more than one motive force. Where our actions in the "market" are determined by more than monetary expectations, where we dare to invest our hearts and act as human beings, but also risk our money to promote and sustain the kind of world we want to see
"...Yunus poured himself into the Grameen Bank the way Steve Jobs poured himself into his garage built computer. He had no other hobbies. He didn't take vacations. And since he launched the bank, he has spent three decades traveling around the world talking to thousands of journalists, economists, philanthropists, bankers, students- anyone who would listen - to advance the idea of microcredit. In short Yunus behaved like many sucessful business entreprenuers the distinction being that his goal was not to maximize his wealth but to minimize others' poverty." from the book: WORLDCHANGING user's guide for the 21st century.