By Kitty Liang, Associate at Big Idea Ventures
Capitalism hasn’t been critically evaluated and improved since the start of the Industrial Revolution; it’s now seeped deep into our culture and is an established pillar of modern society. We understand that capitalism is an essential force that powers the global economy, but there have been many examples of that power being misused and even causing harm to society. Discovering Youtube’s recommendation algorithm radicalizing Brazil and spreading hate speech and misinformation is just one example of the serious consequences of businesses pushing to profit without fully considering their stakeholders and effects on society. It’s easy to blame business leaders and politicians for trying to sustain economic growth while many social and environmental situations have worsened over the decades; but, is there a way to achieve both economic success and use capitalism to create a positive influence on society? At the very least, why haven’t we found a way to conduct business without harming other parties or perpetuating inequities? In order to change capitalism from a negative force into a positive one both in peoples’ minds and in society, we will need systems change and better education surrounding the meaning and value of businesses. The ideas propelling Benefit Corporations and economic circularity are incredibly promising for pushing businesses to become more thoughtful and purposeful organizations that strive for Conscious Capitalism instead of just traditional capitalism.
The creation of Benefit Corporations and B Lab’s B Corp Certification are fantastic guides for the future of businesses. Benefit Corporations help bridge the gap between nonprofits and for-profits; it’s generally believed that non-profit work is meaningful while for-profit work is economically sustainable. By combining the two traditionally very different types of companies, businesses are encouraged to achieve both purpose-driven and profitable outcomes. Reaching both types of outcomes challenges companies to be more creative and thoughtful with their work, and in turn will create stronger, more stable companies that society wants and needs. If Benefit Corporations become the norm, we may have fewer but better businesses because those who work to improve and engage with their stakeholders positively will have long-term support and loyalty while companies that exist to the detriment of society and their stakeholders will eventually become obsolete. If companies continue to operate within the same systems and goals as they did when the world looked very different, they will be left behind by the new generations who care about all the underlying things outside of profitability that make a good business. The creation of Benefit Corporations as a tool and entity is already starting to create a new group of businesses but it is not yet prevalent everywhere. Both policymakers and business leaders can work together to figure out realistic ways for current companies to transition into businesses that will last into the future by upholding core values and being held accountable for their actions.
Businesses themselves can strive for Conscious Capitalism by creating systems change in their own operations that will ripple out to affect their larger industry by moving away from the linear economic model towards the circular economic model. Traditional values of capitalism have been prevalent since the start of the Industrial Revolution, and those values are supported by the linear model of extracting abundant resources while not considering the waste or the larger impact; however, we are currently in the midst of a Fourth Industrial Revolution caused by disruptive technologies such as the Internet of Things, advanced robotics, and artificial intelligence. In order to survive and flourish through this time of immense change, companies will need to find better ways of doing business by utilizing economic, natural, and social resources in new, restorative ways. Now that new technologies are being introduced to the supply side with natural resources and ecological systems in decline, and shifts are occurring on the demand side towards greater transparency and new patterns of consumer behavior, traditional capitalism will not last. Circularity emphasizes the importance of the overall health of systems and stakeholders so that the economic aspect of business does not dominate the social and environmental aspects; this model will help companies strategize for the long-term and create economic opportunities while also achieving environmental and societal benefits. Trying to have it all sounds like a daunting task, but modern businesses need to be challenged and shocked in order to improve because what we desperately need is a shift to a more thoughtful and relevant form of capitalism that is sustainable in the long-run.
The challenge of finding and delivering a new kind of capitalism, such as Conscious Capitalism fueled by purposeful businesses, is an inevitable challenge because the Fourth Industrial Revolution will force companies to re-examine why they exist and innovate for the rapidly changing environment. By putting limits and standards onto companies, we can push businesses to be more creative and create healthier systems for themselves and their industry; resources are limited while innovation is not. As global stakeholders, individuals need to be even more actively involved in and educated about the actions and impact of businesses so that individuals can encourage businesses to change in the direction that the world needs. If people and communities are empowered to speak up about what they want to see in businesses and leaders, then the power will no longer be in the hands of the few sitting in the clouds and results will come faster. The businesses that exist and succeed into the next century will be the ones that we, as stakeholders, allow.