Capitalism is coming full circle — again.
In the mid-1800s, a guy by the name of Karl Marx coined the term “capitalism” as a negative and derogatory way of talking about people (“evil capitalists”) who were unconcerned with the human element of a country’s profitable and private ownership over trade and industry.
Then, in the mid-1900s, Adam Smith wrote a book called The Theory of Moral Sentiments, which essentially explained that without this essential human component, his other teachings would make no sense. This became the foundation for his later work, The Wealth of Nations, which sparked American economist, Milton Friedman, and several others to run with the “maximizing profit” notion of capitalism, untethered from the moral sentiments Marx and Smith had originally stressed as being so important.
We could call what happened next as the “rebellious teenager phase” of our economy.
And it hasn’t been until fairly recently (historically) that major industries have begun to realize, “Oh, we can only live on this floating rock called earth if it stays alive.”
Investment funds and industry leaders now prefer sustainable companies.
We have plenty of data at this point to show that socially conscious, market-driven phenomena influence other variables besides just shareholder value and quarterly returns.
Organic food is a great good example.
In decades past, the food industry couldn’t have cared less about providing organic food on a large scale. But when individual consumers found out about the dangers of pesticides, they used their wallets to find alternatives. The food industry was eventually forced to adapt, and as it turns out, it doesn’t cost any more to go organic. Organic farms actually have better yield, are more resilient, and need less water.
Today, organic food is a multi-billion dollar industry.
How do you begin to move in a sustainable direction?
It depends on what kind of industry you’re in:
- If you can, clean up your supply chain and use suppliers that have less abrasive trade or ecological footprints.
- Work with banks and financial institutions that don’t use your money as leverage to buy firearms, tobacco, and other “sin” stocks.
- Look at your exhaust, the vehicles you rent, buy, or deploy.
- Improve relations within your company, and invest in employee education, incentive programs, or profit sharing that benefits the whole group.
And only when you’re actively, truthfully living by these principles should you, the company, deserve to be communicating with a “sustainable” message.
The evolution into the next phase of capitalism is also motivated by a younger, and increasingly diverse, workforce.
In the next few years, 50% of the workforce will be Millennials.
More than other generations, Millennials care about whether the business they’ll be working for is socially conscious. When they work for a company that’s motivated by selfishness and greed, or a company that’s complicit in prejudice or exploitation, they are quick to call bullshit or find a new job.
Millennials are instead aligning themselves with companies who demonstrate their values, which is dramatically changing the way the companies operate. Those with poor value systems are struggling to keep a workforce, because Millennials won’t work for a company that stands for anything morally objectionable.
When we look back at the lifecycle of how capitalism has evolved, it’s interesting to see how we’ve gone through periods where we’ve lost sight of the human component of “work.” There have been these faulty beliefs that in order to be profitable, you have to “deal with the devil,” cut corners, and cheat your way to the top — and that’s just not true. What consumers want, and ultimately what your own employees and partners want, is to be part of an authentic, transparent company with strong values and a healthy business model.
As American author and organizational consultant, Simon Sinek, would say, you have to “start with Why.”
Because if your “Why” is big enough, the right consumers, partners, clients, and employees will gravitate toward what you’re doing.
And that’s good for business.
I spent two years traveling the world looking for companies doing the right thing in the making of my feature film Prosperity. We’re currently screening the film to the public. See it HERE and join the conversation!