Regarding the definition of “socialism” as advocating that the government have the main role in production/problem-solving, a few months back I had a self-described socialist tell me that they defined their philosophy as having nothing to do with government but instead with the ownership structure of companies themselves: companies governed either partly or wholly by workers instead of solely by the shareholders (ie those who provide the capital). To me this sounds closer to the stakeholder capitalism that you talk about. What makes me uncomfortable about the examples you have are that these are still magnanimous decisions by capitalists with exclusive decision-making power over the companies. I think more democratic companies with shared decision making would more easily take on “stakeholder friendly” stances. TLDR: if we define “capitalism” as companies ruled exclusively by those who provide the financial capital and not by other stakeholders such as workers, I’m very skeptical stakeholder capitalism will take a sustainable hold.
Ok, but it’s not capitalism that’s causing Burkina Faso, Haiti, and North Korea to remain poor. It’s mostly poor governance and bad geography. In the case of both Haiti and Burkina Faso, it’s extremely inhospitable geography for sustaining human societies. And North Korea suffers from a lack of capitalism due to a dictatorship, as you obviously know. So to blame capitalism for their woes, I find this odd.
> Businesses that are either owned 100% by or direct 100% of their profits to charities would have a competitive advantage over traditional companies that benefit shareholders. This is because charities are more popular than normal investors and there is no additional cost to being a charity as opposed to a normal investor. Thus, these businesses working for charities, which I call Guiding Companies, could offer goods and services at the same price and of the same quality as ordinary businesses. Consequently, the project of creating and making the public aware of these companies-working-for- charities is potentially very high-impact, because these companies could tap into the profits in the broader economy and generate billions of dollars for effective charities.
It would be great if this happened, though I hear he's having a hard time getting it off the ground, due to the difficulty of getting the ear of philanthropists.
I'd add "Grapes of Wrath" to the reading list for this topic, only it's not exactly a brief read. The novel was published in 1939, and is perhaps more relevant today than it was then.
"How do we incentivize companies to use their profits for good?" Change how everyone thinks about being human. We're still out for ourselves, but shifting our understanding to being one-humanity would be the answer to our ills. How to get proactive to get us into a new story? I'm writing about that.
The point of profit is the same as it has always been. To make rich people richer. For poor people the point of profit has always been to get sufficient medium of exchange (cash) to enable them to get the things that they could not make themselves, because it was easier than barter.
The modern concept of corporations have only been around since the late 1600 to early 1700's when they were created by the monarchies to raise capital to support their colonial adventurism and resource collection. Lots of money was made by the crown and their rich investors. Lots of people were killed and enslaved and lots of resources were moved from the colonies to Europe. It worked so well that shortly the idea of selling stocks to raise money to finance business factories became popular. Of course only the rich could afford to invest.
Up until around the mid sixties, most large corporations gave at least a wink and a nod to the concept that they had a social obligation to support their workers, and the surrounding community. With the rise of Neoliberalism this was abandoned for the concept that the only obligation a corporation had was to make money for their shareholders.
The idea that we could trust the corporations to make the world better and replace government services, is not something I would take seriously.
Great piece! It started making me think about all the fictional corporations that have promised to solve giant humankind problems but either have sinister intentions (insert Zorin Industries) or fail and cause immense destruction (insert InGen, Skynet, Umbrella Corp.)
Back in the real world...
Salesforce founder and CEO Marc Benioff has a similar vision for business as a driver to create positive change in the world. It's an optimistic vantage point and sounds nice when shareholders are happy and the numbers are good. But I feel like the past year has stretched that idealism of progressive CEOs and businesses.
Great thoughts! I think we're just scratching the surface on this concept. It would be fun to get a panel of CEOs around a table and just start by asking this question (and somehow distract their PR teams from hovering).
What stands out is that companies are still looking out for themselves. Google and Amazon are not paying tax percentages on the level of the average citizen and benefit from the exploitation of the same workers earning them their profits, so why should we congratulate them for doing right by their employees?
I would argue that Google paying 50% tax or more would serve the common good. What they do now does not. Big companies sit atop a very sturdy financial footing thanks to favorable rules and have more agency than the individual or even a large group does. They can afford to pay more tax, pay their workers well, run their business, and make money. But if the goal is always more, always growth then the leeway to be a force for good is slim. Forces for good go bankrupt. Forces for rabid consumerism thrive.
Thanks Elle for your thoughtful post. As always you raise good questions. I'm going to get the popcorn and see what others think. I deleted my initial response as I realized it added little to the discussion. Keep up the good work.
Appreciate you writing about this so thoughtfully, Elle.
I don't have an economics or business background, so I feel like anything I have to say on this topic is out of a place of mostly-ignorance. But here I am commenting anyway, so: judge me accordingly, folks...
One thing I've seen critics of capitalism pointing out is that changing motivations at the top doesn't necessarily change behaviour at the consumer end, and this is one of the problems. For example: if a company with unethical, environment-ravaging tendencies is offering a product that's appealing enough in itself - or is offering a product at a price that undercuts its ethical, morally applaudable competitor, is it going to still clean up, because most consumers still don't care enough? If that is still generally true, the companies that focus on profits define the system, and everyone else has to compensate (and now it's so easy to view ethics as dependent on profits - if you're making enough of the latter, you can afford to do the former)? So this becomes: the whole system is the problem, because it has a core vulnerability that allows bad actors to thrive?
(I may be muddling consumerism with capitalism and...all sorts of other -isms here, apologies.)
But Davis Smith's examples and his faith in course-corrections here give me hope. One thing that's a staple of modern scifi is the "Megacorp," the corporations that gather up enough power to overrride governments and act as laws unto themselves. Usually they're depicted in a "capitalism gone Super Evil" sort of way, but - like A.I. - what if the opposite were true? It's interesting to think, and ponder how.
This was a very interesting reading. I’m from Puerto Rico, and I truly don’t know much about politics - That’s the main reason I’m here 😅, to learn more.
Reading this makes me wonder why private companies would have to be “responsible” for the issues and problems of the government’s? Don’t paying taxes is their way on supporting the system? - I know there’s ways billionaire’s “escape” from paying a certain amount of taxes... But, is probably my ignorance, I don’t see how they should be responsible for things that the government should be working on. Like I said I don’t know anything about politics and that’s the main reason I am here 😅
I do like the idea of them (private companies) offering better benefits to their employees and building a better relationship with them. Like building their own “economic incentives” to build a more “balance” society... (if I understood that right?! 😅)
English is not my first language so please excuse myself if I misunderstood what you wrote. For me this is a complicated topic but I love the way you write and I became a paid subscriber because I want to learn more and open my mind to new possibilities.
I feel the world is changing so fast. It has always impressed me how some countries might look like the future is already here and how other places feels like “time has stopped” and not much have change so far... is very intriguing.
Regarding the definition of “socialism” as advocating that the government have the main role in production/problem-solving, a few months back I had a self-described socialist tell me that they defined their philosophy as having nothing to do with government but instead with the ownership structure of companies themselves: companies governed either partly or wholly by workers instead of solely by the shareholders (ie those who provide the capital). To me this sounds closer to the stakeholder capitalism that you talk about. What makes me uncomfortable about the examples you have are that these are still magnanimous decisions by capitalists with exclusive decision-making power over the companies. I think more democratic companies with shared decision making would more easily take on “stakeholder friendly” stances. TLDR: if we define “capitalism” as companies ruled exclusively by those who provide the financial capital and not by other stakeholders such as workers, I’m very skeptical stakeholder capitalism will take a sustainable hold.
Ok, but it’s not capitalism that’s causing Burkina Faso, Haiti, and North Korea to remain poor. It’s mostly poor governance and bad geography. In the case of both Haiti and Burkina Faso, it’s extremely inhospitable geography for sustaining human societies. And North Korea suffers from a lack of capitalism due to a dictatorship, as you obviously know. So to blame capitalism for their woes, I find this odd.
In effective altruism, someone once suggested that philanthropists could buy companies specifically to then divert the profits into effective charities (https://forum.effectivealtruism.org/posts/WMiGwDoqEyswaE6hN/making-trillions-for-effective-charities-through-the):
> Businesses that are either owned 100% by or direct 100% of their profits to charities would have a competitive advantage over traditional companies that benefit shareholders. This is because charities are more popular than normal investors and there is no additional cost to being a charity as opposed to a normal investor. Thus, these businesses working for charities, which I call Guiding Companies, could offer goods and services at the same price and of the same quality as ordinary businesses. Consequently, the project of creating and making the public aware of these companies-working-for- charities is potentially very high-impact, because these companies could tap into the profits in the broader economy and generate billions of dollars for effective charities.
It would be great if this happened, though I hear he's having a hard time getting it off the ground, due to the difficulty of getting the ear of philanthropists.
I'd add "Grapes of Wrath" to the reading list for this topic, only it's not exactly a brief read. The novel was published in 1939, and is perhaps more relevant today than it was then.
"How do we incentivize companies to use their profits for good?" Change how everyone thinks about being human. We're still out for ourselves, but shifting our understanding to being one-humanity would be the answer to our ills. How to get proactive to get us into a new story? I'm writing about that.
The point of profit is the same as it has always been. To make rich people richer. For poor people the point of profit has always been to get sufficient medium of exchange (cash) to enable them to get the things that they could not make themselves, because it was easier than barter.
The modern concept of corporations have only been around since the late 1600 to early 1700's when they were created by the monarchies to raise capital to support their colonial adventurism and resource collection. Lots of money was made by the crown and their rich investors. Lots of people were killed and enslaved and lots of resources were moved from the colonies to Europe. It worked so well that shortly the idea of selling stocks to raise money to finance business factories became popular. Of course only the rich could afford to invest.
Up until around the mid sixties, most large corporations gave at least a wink and a nod to the concept that they had a social obligation to support their workers, and the surrounding community. With the rise of Neoliberalism this was abandoned for the concept that the only obligation a corporation had was to make money for their shareholders.
The idea that we could trust the corporations to make the world better and replace government services, is not something I would take seriously.
Great piece! It started making me think about all the fictional corporations that have promised to solve giant humankind problems but either have sinister intentions (insert Zorin Industries) or fail and cause immense destruction (insert InGen, Skynet, Umbrella Corp.)
Back in the real world...
Salesforce founder and CEO Marc Benioff has a similar vision for business as a driver to create positive change in the world. It's an optimistic vantage point and sounds nice when shareholders are happy and the numbers are good. But I feel like the past year has stretched that idealism of progressive CEOs and businesses.
Great thoughts! I think we're just scratching the surface on this concept. It would be fun to get a panel of CEOs around a table and just start by asking this question (and somehow distract their PR teams from hovering).
What stands out is that companies are still looking out for themselves. Google and Amazon are not paying tax percentages on the level of the average citizen and benefit from the exploitation of the same workers earning them their profits, so why should we congratulate them for doing right by their employees?
I would argue that Google paying 50% tax or more would serve the common good. What they do now does not. Big companies sit atop a very sturdy financial footing thanks to favorable rules and have more agency than the individual or even a large group does. They can afford to pay more tax, pay their workers well, run their business, and make money. But if the goal is always more, always growth then the leeway to be a force for good is slim. Forces for good go bankrupt. Forces for rabid consumerism thrive.
Thanks Elle for your thoughtful post. As always you raise good questions. I'm going to get the popcorn and see what others think. I deleted my initial response as I realized it added little to the discussion. Keep up the good work.
Appreciate you writing about this so thoughtfully, Elle.
I don't have an economics or business background, so I feel like anything I have to say on this topic is out of a place of mostly-ignorance. But here I am commenting anyway, so: judge me accordingly, folks...
One thing I've seen critics of capitalism pointing out is that changing motivations at the top doesn't necessarily change behaviour at the consumer end, and this is one of the problems. For example: if a company with unethical, environment-ravaging tendencies is offering a product that's appealing enough in itself - or is offering a product at a price that undercuts its ethical, morally applaudable competitor, is it going to still clean up, because most consumers still don't care enough? If that is still generally true, the companies that focus on profits define the system, and everyone else has to compensate (and now it's so easy to view ethics as dependent on profits - if you're making enough of the latter, you can afford to do the former)? So this becomes: the whole system is the problem, because it has a core vulnerability that allows bad actors to thrive?
(I may be muddling consumerism with capitalism and...all sorts of other -isms here, apologies.)
But Davis Smith's examples and his faith in course-corrections here give me hope. One thing that's a staple of modern scifi is the "Megacorp," the corporations that gather up enough power to overrride governments and act as laws unto themselves. Usually they're depicted in a "capitalism gone Super Evil" sort of way, but - like A.I. - what if the opposite were true? It's interesting to think, and ponder how.
This was a very interesting reading. I’m from Puerto Rico, and I truly don’t know much about politics - That’s the main reason I’m here 😅, to learn more.
Reading this makes me wonder why private companies would have to be “responsible” for the issues and problems of the government’s? Don’t paying taxes is their way on supporting the system? - I know there’s ways billionaire’s “escape” from paying a certain amount of taxes... But, is probably my ignorance, I don’t see how they should be responsible for things that the government should be working on. Like I said I don’t know anything about politics and that’s the main reason I am here 😅
I do like the idea of them (private companies) offering better benefits to their employees and building a better relationship with them. Like building their own “economic incentives” to build a more “balance” society... (if I understood that right?! 😅)
English is not my first language so please excuse myself if I misunderstood what you wrote. For me this is a complicated topic but I love the way you write and I became a paid subscriber because I want to learn more and open my mind to new possibilities.
I feel the world is changing so fast. It has always impressed me how some countries might look like the future is already here and how other places feels like “time has stopped” and not much have change so far... is very intriguing.
Thank you Elle 🙏