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.
Yes, I agree. If companies are governed/owned by the workers themselves (a "cooperative"), that to me would be a prime example of stakeholder capitalism rather than shareholder capitalism.
Right now, many of the companies we might think of as examples of stakeholder capitalism are still "magnanimous decisions by capitalists"—even Patagonia would not be structured the way it is if it weren't for Yvon Chouinard's benevolence. This is why I think we need some kind of government regulation to regulate it. But I'm still thinking through what that might look like in practice!
People who more than I do have told me that a good place to start (in America, anyway) is to actually remove some of the governmental barriers that get in the way of coops forming and getting financing.
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.
Well it's not capitalism that's causing those countries to remain poor. But not having access to capitalism (because of their poor governance, geography, etc) is why they haven't had access to the same prosperity other countries have had access to!
Yes, I think it was more just your word choice/phrasing making it sound that way vs your meaning.
And since I know you appreciate book recs, another one I found fascinating related to the topics of access and prosperity was “Africa: A Biography of the Continent,” by John Reader. Despite being on the older side, it really goes into the intersection of geography and society for the world’s most colonized continent.
> 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.
This is very interesting! Thank you so much for sharing all of this!!! I do think businesses could funnel profits into important causes (and Patagonia is a good example of this!) Worth exploring more for sure!
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.
I don’t know how to change how everyone thinks about being human 😊 But I do think we could shift societal incentives to be more for the community. I think it could stand to be approached from the societal side as well as from the personal side, so I very much appreciate you thinking about this from the personal side!!!!
My Substack deals with getting everyone in an altruistic frame of mind. "I’d like to popularize a new creation story. If we’re sinners needing redemption, we behave one way. As beings privileged to able to think and feel and create and love, we behave another way. And, lo and behold, Science, our god du jour, supports a creation story that has us in a grateful, celebratory state of mind. To close off this how-to-change-the-world tutorial, here is Brian Thomas Swimme, the new story’s luminous storyteller: https://youtu.be/dHm2jDGD3xA."
It's interesting. I was recently thinking about this in terms of children. Children often don't think about how their behavior affects others around them (makes sense when it comes to "survival of the fittest") and they have to be taught how to be aware of those around them. I imagine we are still being taught this as adults!
We all are evolving, along with the whole cosmos, where what I'm dealing with isn't about being taught but involves realizing. Being inspired also cover it.
The myth of scarcity affects them too and paying a CEO hundreds of millions less, redirecting that toward support local communities, does not hurt them.
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.
I don't think we should "trust" corporations to make the world better. But I think we could "regulate" them to. (Just like we have used regulation for that in the past. As you say, we had a period up until the 1980s that capitalism worked much better than it does today, and that was very much because of a regulation change that occurred then.)
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).
Businesses can be used for good or evil just like companies 🤣 But I do appreciate when they try to use them for good (like Salesforce). I don't want to rely on the idealism of CEOs, but maybe we don't have to. And that's definitely what I plan to explore!
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.
You are so right. The tax equation definitely needs to enter the conversation. I still don't understand what role corporate taxes should play (should they be low so that we encourage entrepreneurship? high so that the behemoths pay more taxes?) but I'm leaning toward starting with how we tax people more than the companies. But I'll be curious to see what you think of my next essay on that.
(And I'll keep studying the corporate tax thing in the meantime...)
I’m not sure how multi-state business tax returns are handled. I’m thinking it’s a bit like a traveling performer who pays taxes in the states where they perform. So if a business grows, the revenue generated by the business as a taxed entity helps state government do what is in its duty to do.
States give tax breaks to business to incentivize them setting up shop in a state. We say they’ll create jobs, make a place competitive, or any such points of progress. In NJ, we did that with Honeywell. They took the breaks for a few years then closed the location. The business has no stake in the people who they’ve hired or the government they support with tax dollars.
We can always have tax brackets so that new business owners can get a good start. It’s just that I’m not sure what regulation and taxation we’ve tried that has actually hurt the proliferation of business.
Hmmm yeah, I'm not really sure either. It makes sense that a company would pay taxes into the place where it is based (or where it does business), but I haven't done enough research to see how that works out (or doesn't) in practice. Worth further investigation for sure. (Especially as I know that in the movie industry, the tax breaks states have given to movies haven't resulted in earnings for those states and thus haven't been worth it!)
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.
Good job Mike. Decentralization is the truly elegant process/force that is the antithesis of Megacorp's and they are incapable of renting the state's powers for abusive cronyism. It is not only interesting to think about, but important. Thanks Elle once again for creating a space that is 'Ellegant.' (couldn't help myself)
You have a great point there, Mike. Consumers have great power to promote change (or to keep the status quo).
As a thought experiment, imagine two competing startups that have recently been founded. Both sell comparable products at the same price, with equal revenue. However, company A maximizes profits and uses them to improve the products and services (the Amazon model). In contrast, company B spends a good portion of its profits on welfare plans and employee benefits. In a very short time, company A will have much better products and a stronger financial position than B, and consumers will have two different products available, one better than the other. At an equal price, company B will probably go bankrupt. So even when good intentions exist, you take a massive risk by following the company's B model.
In some way, “conscious capitalism” is a collective construction in which not only companies have to play their part but also consumers. I also consider that non-profit organizations have a role in that construction by raising awareness. In the end, I don't think consumers don't care; sometimes they don't know.
EDIT
A question came to my mind after writing the above comment. I wonder: isn't it in the consumers' best interest that a company maximizes profits to have better/cheaper products faster?
Well you're just playing right into my essay two weeks from now.....
Yes, to Mike's point, consumers play a role by "voting with their dollars" so to speak. The problem is that leads to market failure. Because they vote for the cheapest and most convenient thing (your company A, Amazon model) which puts market pressure on suppliers to get labor and goods more cheaply. The company may grow to an enormous scale, but at the expense of almost everyone in that chain except Jeff Bezos.
I don't think the alternative (company B) that chooses to do better by their employees, but might generate less profits as a result, will go bankrupt. It just might have more expensive products, and thus a smaller market, but everyone in the chain benefits from this model, not just the founder. You might call this the Patagonia model. It exists alongside Amazon, even if it isn't as big. And maybe that can eventually be the norm?
I know you already have a long reading list, but a few other references that may be worth including in this conversation. First, it's worth reading Matt Yglesias' defense of Wal-mart. I don't find it entirely convincing (there's a lot that it leaves out), but it does put make the argument that yes, large, highly efficient companies are good: https://www.slowboring.com/p/small-business-is-not-the-answer
Conversely, Tom Slee points out, in No One Makes You Shop At Wal-Mart, that there can be a public action problem. For an individual person shopping at Wal-Mart may be an improvement, but if everyone switches, it can create public problems: http://tomslee.net/chapter-one-a-world-of-choice
Relevant to the original post, Lynn Stout has a short book, _The Myth Of Shareholder Value_ argues that the conventional sense that public companies have a duty to focus on shareholder value is incorrect in terms of both law and business strategy. There is a summary here: https://scholarship.law.cornell.edu/cgi/viewcontent.cgi?article=2311&context=facpub
Finally, it's been a while since I read it (and there may be newer books that are better), but I remember liking _Natural Capitalism. This article, by the authors, summarizes the main themes: https://hbr.org/2007/07/a-road-map-for-natural-capitalism
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.
Yes, I think you're right. Maybe these things should all be handled by the government. And maybe they could be if the government regulates these businesses to be better! But whether they are handled by the government or not, I think businesses could stand to do better by their employees and customers and stakeholders! And maybe better economic incentives would help!? But that's a lot of maybes 🤣
And I'm so with you in the angst at how some countries seem to be so much farther along than others. That seems to me like the biggest thing we need to solve for worldwide!
“But whether they are handled by the government or not, I think businesses could stand to do better by their employees and customers and stakeholders!” - I agree with you Elle.
Thanks for creating this thoughtful cyberspace, I’m really enjoying reading everyone in this thread!
Oh I'm so glad, I've been a little stressed trying to make sure this stays a thoughtful space (the internet can be challenging!) but I'm so glad it's turning out that way. Everyone has been so great so far, and I so appreciate your thoughts!
Of course, I think you are doing a great job. Especially because this is a very unique space with the sci-fi & Utopia possibilities. I can feel your authenticity and your curiosity and that is what makes it special 😉
Like I said, I’m here to learn more. Sure, I can read the books you share with us and do my own research online about this topics. There’s a lot of information online (good and not so good). But the reason I love reading you is because you bring your perspective (in a respectful unique way) and honestly it is also more easy and convenient for me to learn about this topics inside your community, hahaha.
So, don’t get stressed out (I know is more easy said than done 😂😅) the people that are here to learn and expand their perspective - genuinely - would not leave or give you a hard time 😉. Meaning we can all have different opinions but this cyberspace is very nurturing, I don’t feel any hate so far 😂 I’m sure some people would try but that’s another topic...
That really means so much to me!!!! Thank you so much for the encouragement Paloma!!!!
I'm here to learn more too, and I definitely don't have all the answers. But it's fun to research everything and think it all through, and have a community to come say "here what do you think??!!" (Even if it's scary sometimes!)
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.
Yes, I agree. If companies are governed/owned by the workers themselves (a "cooperative"), that to me would be a prime example of stakeholder capitalism rather than shareholder capitalism.
Right now, many of the companies we might think of as examples of stakeholder capitalism are still "magnanimous decisions by capitalists"—even Patagonia would not be structured the way it is if it weren't for Yvon Chouinard's benevolence. This is why I think we need some kind of government regulation to regulate it. But I'm still thinking through what that might look like in practice!
People who more than I do have told me that a good place to start (in America, anyway) is to actually remove some of the governmental barriers that get in the way of coops forming and getting financing.
That's probably true. Our current model definitely prefers the "aggressively grow and sell" model which is the exact opposite of what a coop is doing!
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.
Well it's not capitalism that's causing those countries to remain poor. But not having access to capitalism (because of their poor governance, geography, etc) is why they haven't had access to the same prosperity other countries have had access to!
Yes, I think it was more just your word choice/phrasing making it sound that way vs your meaning.
And since I know you appreciate book recs, another one I found fascinating related to the topics of access and prosperity was “Africa: A Biography of the Continent,” by John Reader. Despite being on the older side, it really goes into the intersection of geography and society for the world’s most colonized continent.
Thank you for bringing that to my attention. Unfortunately I think it's the Davis quote that maybe sounds that way? So I can't edit it!
And thank you so much for the book rec. That truly sounds fascinating!
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.
This is very interesting! Thank you so much for sharing all of this!!! I do think businesses could funnel profits into important causes (and Patagonia is a good example of this!) Worth exploring more for sure!
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.
Oh amazing, thanks for the rec! (Though my list is exceptionally long right now....)
"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.
I don’t know how to change how everyone thinks about being human 😊 But I do think we could shift societal incentives to be more for the community. I think it could stand to be approached from the societal side as well as from the personal side, so I very much appreciate you thinking about this from the personal side!!!!
My Substack deals with getting everyone in an altruistic frame of mind. "I’d like to popularize a new creation story. If we’re sinners needing redemption, we behave one way. As beings privileged to able to think and feel and create and love, we behave another way. And, lo and behold, Science, our god du jour, supports a creation story that has us in a grateful, celebratory state of mind. To close off this how-to-change-the-world tutorial, here is Brian Thomas Swimme, the new story’s luminous storyteller: https://youtu.be/dHm2jDGD3xA."
It's interesting. I was recently thinking about this in terms of children. Children often don't think about how their behavior affects others around them (makes sense when it comes to "survival of the fittest") and they have to be taught how to be aware of those around them. I imagine we are still being taught this as adults!
We all are evolving, along with the whole cosmos, where what I'm dealing with isn't about being taught but involves realizing. Being inspired also cover it.
The myth of scarcity affects them too and paying a CEO hundreds of millions less, redirecting that toward support local communities, does not hurt them.
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.
I don't think we should "trust" corporations to make the world better. But I think we could "regulate" them to. (Just like we have used regulation for that in the past. As you say, we had a period up until the 1980s that capitalism worked much better than it does today, and that was very much because of a regulation change that occurred then.)
We can change what the point of profit is.
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).
Businesses can be used for good or evil just like companies 🤣 But I do appreciate when they try to use them for good (like Salesforce). I don't want to rely on the idealism of CEOs, but maybe we don't have to. And that's definitely what I plan to explore!
Hehe! Their PR teams and lawyers will be sitting on their laps. No way we’re getting real answers.
Better to talk to them in secret (and on background 🤣)
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.
You are so right. The tax equation definitely needs to enter the conversation. I still don't understand what role corporate taxes should play (should they be low so that we encourage entrepreneurship? high so that the behemoths pay more taxes?) but I'm leaning toward starting with how we tax people more than the companies. But I'll be curious to see what you think of my next essay on that.
(And I'll keep studying the corporate tax thing in the meantime...)
I’m not sure how multi-state business tax returns are handled. I’m thinking it’s a bit like a traveling performer who pays taxes in the states where they perform. So if a business grows, the revenue generated by the business as a taxed entity helps state government do what is in its duty to do.
States give tax breaks to business to incentivize them setting up shop in a state. We say they’ll create jobs, make a place competitive, or any such points of progress. In NJ, we did that with Honeywell. They took the breaks for a few years then closed the location. The business has no stake in the people who they’ve hired or the government they support with tax dollars.
We can always have tax brackets so that new business owners can get a good start. It’s just that I’m not sure what regulation and taxation we’ve tried that has actually hurt the proliferation of business.
Hmmm yeah, I'm not really sure either. It makes sense that a company would pay taxes into the place where it is based (or where it does business), but I haven't done enough research to see how that works out (or doesn't) in practice. Worth further investigation for sure. (Especially as I know that in the movie industry, the tax breaks states have given to movies haven't resulted in earnings for those states and thus haven't been worth it!)
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.
Good job Mike. Decentralization is the truly elegant process/force that is the antithesis of Megacorp's and they are incapable of renting the state's powers for abusive cronyism. It is not only interesting to think about, but important. Thanks Elle once again for creating a space that is 'Ellegant.' (couldn't help myself)
You have a great point there, Mike. Consumers have great power to promote change (or to keep the status quo).
As a thought experiment, imagine two competing startups that have recently been founded. Both sell comparable products at the same price, with equal revenue. However, company A maximizes profits and uses them to improve the products and services (the Amazon model). In contrast, company B spends a good portion of its profits on welfare plans and employee benefits. In a very short time, company A will have much better products and a stronger financial position than B, and consumers will have two different products available, one better than the other. At an equal price, company B will probably go bankrupt. So even when good intentions exist, you take a massive risk by following the company's B model.
In some way, “conscious capitalism” is a collective construction in which not only companies have to play their part but also consumers. I also consider that non-profit organizations have a role in that construction by raising awareness. In the end, I don't think consumers don't care; sometimes they don't know.
EDIT
A question came to my mind after writing the above comment. I wonder: isn't it in the consumers' best interest that a company maximizes profits to have better/cheaper products faster?
Well you're just playing right into my essay two weeks from now.....
Yes, to Mike's point, consumers play a role by "voting with their dollars" so to speak. The problem is that leads to market failure. Because they vote for the cheapest and most convenient thing (your company A, Amazon model) which puts market pressure on suppliers to get labor and goods more cheaply. The company may grow to an enormous scale, but at the expense of almost everyone in that chain except Jeff Bezos.
I don't think the alternative (company B) that chooses to do better by their employees, but might generate less profits as a result, will go bankrupt. It just might have more expensive products, and thus a smaller market, but everyone in the chain benefits from this model, not just the founder. You might call this the Patagonia model. It exists alongside Amazon, even if it isn't as big. And maybe that can eventually be the norm?
I know you already have a long reading list, but a few other references that may be worth including in this conversation. First, it's worth reading Matt Yglesias' defense of Wal-mart. I don't find it entirely convincing (there's a lot that it leaves out), but it does put make the argument that yes, large, highly efficient companies are good: https://www.slowboring.com/p/small-business-is-not-the-answer
Conversely, Tom Slee points out, in No One Makes You Shop At Wal-Mart, that there can be a public action problem. For an individual person shopping at Wal-Mart may be an improvement, but if everyone switches, it can create public problems: http://tomslee.net/chapter-one-a-world-of-choice
Relevant to the original post, Lynn Stout has a short book, _The Myth Of Shareholder Value_ argues that the conventional sense that public companies have a duty to focus on shareholder value is incorrect in terms of both law and business strategy. There is a summary here: https://scholarship.law.cornell.edu/cgi/viewcontent.cgi?article=2311&context=facpub
Finally, it's been a while since I read it (and there may be newer books that are better), but I remember liking _Natural Capitalism. This article, by the authors, summarizes the main themes: https://hbr.org/2007/07/a-road-map-for-natural-capitalism
This is so so amazing. Thank you so much for all of this!!!!! More reading to do.....
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 🙏
Yes, I think you're right. Maybe these things should all be handled by the government. And maybe they could be if the government regulates these businesses to be better! But whether they are handled by the government or not, I think businesses could stand to do better by their employees and customers and stakeholders! And maybe better economic incentives would help!? But that's a lot of maybes 🤣
And I'm so with you in the angst at how some countries seem to be so much farther along than others. That seems to me like the biggest thing we need to solve for worldwide!
“But whether they are handled by the government or not, I think businesses could stand to do better by their employees and customers and stakeholders!” - I agree with you Elle.
Thanks for creating this thoughtful cyberspace, I’m really enjoying reading everyone in this thread!
Oh I'm so glad, I've been a little stressed trying to make sure this stays a thoughtful space (the internet can be challenging!) but I'm so glad it's turning out that way. Everyone has been so great so far, and I so appreciate your thoughts!
Of course, I think you are doing a great job. Especially because this is a very unique space with the sci-fi & Utopia possibilities. I can feel your authenticity and your curiosity and that is what makes it special 😉
Like I said, I’m here to learn more. Sure, I can read the books you share with us and do my own research online about this topics. There’s a lot of information online (good and not so good). But the reason I love reading you is because you bring your perspective (in a respectful unique way) and honestly it is also more easy and convenient for me to learn about this topics inside your community, hahaha.
So, don’t get stressed out (I know is more easy said than done 😂😅) the people that are here to learn and expand their perspective - genuinely - would not leave or give you a hard time 😉. Meaning we can all have different opinions but this cyberspace is very nurturing, I don’t feel any hate so far 😂 I’m sure some people would try but that’s another topic...
That really means so much to me!!!! Thank you so much for the encouragement Paloma!!!!
I'm here to learn more too, and I definitely don't have all the answers. But it's fun to research everything and think it all through, and have a community to come say "here what do you think??!!" (Even if it's scary sometimes!)
Thanks for being here!