Capitalism has always been a subject of criticism. German philosopher Karl Marx is its most vocal critic, rallying against capitalism’s promotion of commodification, inequality and exploitation of the labor force.1 According to Marx, capitalism will eventually be toppled in a revolution of the working class.
More than a century after Marx’s death, however, capitalism is still in force. It has created tremendous negative impact on the environment, resulting in climate change, the extinction of species, the loss of millions of hectares of old growth forest cover as well as in an increasing gap between the rich and poor, the continuing spike in poverty, among others.2 Forbes Magazine predicts that the increasing demand of capitalism on the environment will eventually “starve humanity by 2050.”3
John Mackey and Raj Sisodia, proponents of the movement called conscious capitalism, argue that capitalism in itself is simply the “co-existence of free markets and free people, or economic and political freedom.” They espouse a way of thinking about capitalism and business for doing good, for its innate potential to make a positive impact.”4
At the core of the conscious capitalism movement is the need to help “business leaders appreciate the morality at the heart of business.”5 This means having a clear sense of the company’s purpose and not just of profits and the bottomline, sticking to ethics and values and caring for the welfare of customers and employees.
There are four main principles of conscious capitalism6:
1. Higher purpose
A conscious business focuses not on profits but on its reason for being. This purpose gives the business its social value. For example, Mackey, who owns Whole Foods Market, Inc., drives the company’s vision of environmental stewardship and healthy eating. In this sense, the company inspires its customers and employees to care for the environment and work towards a healthy lifestyle.
2. Stakeholder orientation
A conscious business has a macro perspective. It does not only care for its business but for the whole ecosystem and the entire stakeholders. It ensures for example that food products are sourced through sustainable means, the highest standards are put in place in terms of food handling and other related processes, it ensures affordability of its products and so on.
3. Conscious leadership
A conscious business has a conscious leadership. The leader supports the purpose of the company, the employees, customers, partners, etc. He or she ensures the cultivation of the organization’s values and ethics and cultivates a culture of doing good.
4. Conscious culture
A conscious business has a conscious culture. Its operations, processes, decisions, among others, are governed by its values and principles. It fosters care and trust within the organization, its customers and all other stakeholders.
Entrepreneur notes that the important thing to remember about conscious capitalism is that it is not just about doing the ‘right’ thing but equally significant, that it is profitable.7
Barkley executives Jeff King and Jeff Fromm emphasize that conscious capitalism will be “one of the defining mechanisms of profit in the future.8
They cited statistics from Nielsen that showed that 43 percent of global consumers will spend more for a product or service that is for a cause. At the same time, they have also found data that show conscious businesses to have generated 1025 percent returns over the past 10 years.9
In a 2013 Cone Communications-Echo study, it was found that “doing good has become good business, not only because of changing consumer values but also because good companies are attracting top talent.”10
With all of these arguments for conscious capitalism, is your business ready to make the shift? Let us know your thoughts.
