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The 6th Force
September 18, 2011 11:29 AM   Subscribe

Capitalism is an unparalleled vehicle for meeting human needs, improving efficiency, creating jobs, and building wealth. But a narrow conception of capitalism has prevented business from harnessing its full potential to meet society's broader challenges. The opportunities have been there all along but have been overlooked. Businesses acting as businesses, not as charitable donors, are the most powerful force for addressing the pressing issues we face. The moment for a new conception of capitalism is now; society's needs are large and growing, while customers, employees, and a new generation of young people are asking business to step up. The purpose of the corporation must be redefined as creating shared value, not just profit per se. This will drive the next wave of innovation and productivity growth in the global economy. It will also reshape capitalism and its relationship to society. Perhaps most important of all, learning how to create shared value is our best chance to legitimize business again. ~ Creating Shared Value by Michael Porter & Mark R. Kramer (PDF)

Interview video on Rethinking Capitalism and the snippet HBR version if you don't want to read the PDF

Porter at Davos leading a discussion among several top government officials and CEOs about "A Social Contract for the 21st Century" video

THE speed of management fads is so rapid these days that Michael Porter's idea of "shared value", which I wrote about only a few weeks ago, is already challenged by an even more socially-sensitive rival: "thick value". ~ Schumpeter at The Economist
posted by infini (27 comments total) 22 users marked this as a favorite

 
[Italicized top quote for clarity. ]
posted by restless_nomad at 11:42 AM on September 18, 2011


brought to you by waterhealth.com... privatizing tomorrow's water today*!

these people are scum. their job is to greenwash corporate resource grabs while throwing up a wall of bullshit.

*in partnership with Coca-Cola
posted by ennui.bz at 12:08 PM on September 18, 2011 [21 favorites]


Wow, thanks for that link, ennui.bz. Even if you agree with the stuff Porter and Kramer are saying, this is certainly an interesting perspective:

from link: “The purpose of this initiative is to cleanse the image of partnering private companies who, through using so much of the public water supply, effectively exploit the public system at the expense of the poor.”
posted by koeselitz at 12:16 PM on September 18, 2011


It's linked on a waterhealth page but the article is from the Harvard Business Review.
posted by biffa at 12:17 PM on September 18, 2011


Capitalism is an unparalleled vehicle for meeting human needs...

Capitalism is an unparalleled vehicle for meeting some humans' needs at the expense of others'.
posted by i_cola at 12:20 PM on September 18, 2011 [14 favorites]


I prefer A Darwinian Left: Politics, Evolution, and Cooperation by Peter Singer.

There are no specific suggestion made but he clarifies the general idea that we must alter the non-zero sum games that make up society so that ordinary people may cooperate, even against the powerful, but the powerful may not cooperate amongst themselves so easily.

I'm doubtful that the sorts of "top level" discussions mentioned here will address those underlying game theoretic imbalances. Transparency helps. Breaking up monopolies helps. etc.
posted by jeffburdges at 12:31 PM on September 18, 2011


You know, I think there was a German fellow who wrote a couple of pretty good essays and books on "Rethinking Capitalism." This was a while ago, but he was a really interesting guy- lived in London for a while, then Paris. Had a pretty good commentary on Adam Smith, too. What was his name again? Karl...Karl something...
posted by TheWhiteSkull at 12:33 PM on September 18, 2011 [12 favorites]


I could have left it at the HBR link where registration or purchase of the PDF would have been required. The waterhealth link is hosting the PDF, kindly ignore it. It is irrelevant unless one would prefer to continue the conversation about how HBR doesn't provide PDFs and complete articles.
posted by infini at 12:49 PM on September 18, 2011


I could have framed it better however by linking to the HBR article and then put the "complete PDF" link in brackets afterwards, in order to improve the FPP's presentation.
posted by infini at 12:51 PM on September 18, 2011 [1 favorite]


Capitalism is an unparalleled vehicle for meeting human needs, improving efficiency, creating jobs, and building wealth.

Based on that part, I thought it was going to be an Onion article.

I think the bottled water industry is one of many that can serve to refute that sentence.
posted by entropone at 1:15 PM on September 18, 2011 [2 favorites]


I mostly read for the environmental aspects and it was not too enlightening. Most of the examples are companies increasing efficiency in packaging or water usage, thereby saving money and resources. I think this is good, but it's not exactly a reinvention of capitalism. These companies would do this even if there were no environmental benefits, and touting their eco-friendliness is just a PR bonus for them. I don't see how this shows that companies can/will take the lead on environmental issues in cases where there's a negative impact on profitability.

The idea that all businesses can create a significant amount of "shared value" through innovations that also increase or maintain profitability seems pretty pie in the sky to me. Where's the example of the coal mining company that boosted profits while removing 10% less mountain tops? Or redefined their product to be something that's not coal?
posted by snofoam at 2:29 PM on September 18, 2011 [1 favorite]


The
waterhealth link is hosting the PDF,
kindly ignore it. It is irrelevant unless
one would prefer to continue the
conversation about how HBR doesn't
provide PDFs and complete articles.


Not sure I agree with you here. Can we have a discussion about how corporations are willing to underwrite ernest narratives they will never follow - but that will give them cover to further their nefarious business practices?

Please?

I mean, waterhealth is paying HBR to redistribute this - right? What do they gain out of it?
posted by Orb2069 at 3:02 PM on September 18, 2011 [2 favorites]


The Harvard Business Review is largely a promoter of elitist "business management theory"; that, and it looks cool when you're flying in business or first class thumbing through your copy, to impress your seatmates - or having a copy sitting on top in your briefcase as you open it in front of your peers in the boardroom.

How about HBR creating a theoretical construct that would argue for corporate interests limiting their contributions to political campaigns, or supporting legislative efforts to require 100% financing of public elections? How about that? How about HBR arguing for a completely level legislative playing field for GE, General Motors, Exxon, etc. - you know, something that would *really* give empathic movements like health care for all and true environmentalism a real toehold in our culture.

One thing about HBR: it wraps the most simplistic concepts, like "helping your fellow man" into convoluted theories of the firm that don't mean shit to the average human being. I will say this, the gloss and beautifully laid out design of the HBR really look nice, strategically placed in the waiting room, or casually on the vacant passenger seat of your new Porsche.
posted by Vibrissae at 3:04 PM on September 18, 2011 [5 favorites]


Orb, no; it is the other way round. Porter & Kramer wrote this and that company is redistributing it.

snofoam, you are not the only one who thought the idea needs further explaining (The Economist).

Vibrissae, Porter is the biggest name in business strategy and it is important that someone like him promotes the idea that companies cannot operate when they optimize short-term financial value, overlook the well-being of their customers, the depletion of natural resources, or the economic distress of the communities in which they produce and sell.

Marx criticised the capitalist system (using its own system, I might add), great. This doesn't mean any other critiques are useless; people in Western countries won't be switching to a Marxist system any time soon. Porter is a sane, influential voice here and his work is quite opposed to the mindset that leads to bubbles and what some European officials called 'locust capitalism'. If he has the ears of people who can create mutually beneficial, long-term programs, all the better even if his shared-value idea is only applicable in certain contexts, I say.

Extra link: Michael Kramer on shared value.
posted by ersatz at 3:16 PM on September 18, 2011


The Curse of Tina, Adam Curtis, The BBC—Adam Curtis Blog, Sep. 13th, 2011
The guiding idea at the heart of today's political system is freedom of choice. The belief that if you apply the ideals of the free market to all sorts of areas in society, people will be liberated from the dead hand of government. The wants and desires of individuals then become the primary motor of society.

But this has led to a very peculiar paradox. In politics today we have no choice at all. Quite simply There Is No Alternative.

That was fine when the system was working well. But since 2008 there has been a rolling economic crisis, and the system increasingly seems unable to rescue itself. You would expect that in response to such a crisis new, alternative ideas would emerge. But this hasn't happened.

Nobody - not just from the left, but from anywhere - has come forward and tried to grab the public imagination with a vision of a different way to organise and manage society.

It's a bit odd - and I thought I would tell a number of stories about why we find it impossible to imagine any alternative. Why we have become so possessed by the ideology of our age that we cannot think outside it.
posted by ob1quixote at 3:19 PM on September 18, 2011 [2 favorites]


ersatz, I really appreciate what you're saying, and I'm familiar with Porter. And yes, we do need saner voices like Porter talking/writing about these things, especially if they're pointed in the direction that you and I appear to generally agree on. However, we need *faster* action than Porter posits in that piece.

btw, check out the rather new idea of "for-benefit" corporate charters. What Porter is writing about has also been going on in Europe for some time, with some corporations including social benefits and returns in valuation spreadsheets.
posted by Vibrissae at 3:52 PM on September 18, 2011 [2 favorites]


Capitalism is an unparalleled vehicle for meeting human needs

-Porter and Kramer

I've seen the nations rise and fall
I've heard their stories, heard them all
but love's the only engine of survival

-Leonard Cohen
posted by flapjax at midnite at 4:06 PM on September 18, 2011 [2 favorites]




Vibrissae, I included that bit about Porter's credentials for the benefit of others, as the FPP didn't say anything about him; sorry if I gave the impression that I thought you weren't familiar with him. I agree with you that a quicker-paced change is needed and the European debt crisis (which involves 'debts' from 2008, governance and regulatory issues) will demand some answers quite soon. We might see stopgap measures instead. I just didn't want to see a good idea get overlooked in Mefi because it isn't a complete solution or get buried in scorn because of the excesses it seeks to avert.

The "for-benefit" charters that redefine fiduciary duty are an interesting idea; thanks for the link. It reminds me of the triple bottom line idea.
posted by ersatz at 5:14 PM on September 18, 2011 [1 favorite]


The private life of Karl Marx
posted by homunculus at 6:03 PM on September 18, 2011 [1 favorite]


Radical sociologist Professor David Harvey visits the RSA to explain how capitalism came to dominate the world and why it resulted in the current financial crisis.

Taking a long view of the current crisis, Professor Harvey exposes the follies of the international financial system, looking closely at the nature of capitalism, how it works and why sometimes it doesn’t.

Examining the cycles of boom and bust in the world’s housing and stock markets, and the vast flows of money that surge round the world daily, David Harvey shows that periodic episodes of meltdown are not only inevitable in the capitalist system but, in fact, are essential to its survival. Harvey argues that the essence of capitalism is its amorality and lawlessness and to talk of a regulated, ethical capitalism is to make a fundamental error.

Can crises of the current sort be contained within the constraints of capitalism? Or is it time to make the case for a social order that would allow us to live within a different type of system - one that really could be responsible, just, and humane?

posted by Pirate-Bartender-Zombie-Monkey at 6:36 PM on September 18, 2011 [6 favorites]


P-B-Z-M: Thanks for that - very interesting stuff. How far can you go with this kind of thing before you and Prof. Harvey are shouted down by sign-waving Tea Partiers and conventional business hacks who simply wont listen to anything with a label resembling Left or Social or Marx?
posted by sneebler at 9:22 PM on September 18, 2011


The corporation as it exists is essentially an amoral profit maximizer with a legal requirement to NOT consider the consequences of its actions (otherwise the directors can be sued for negligence). Further, externalized costs imposed on society are not reflected on the corporate balance sheet (ex: BP / Horizon getting away with their Gulf travesty more or less scott-free).

Now, opinions may differ as to whether this structure is reformable by adding the corporate-charter equivalent of a conscience or if the system is totally rotten. I'm not sure I have the answer. But I think its clear that the Friedmanite position that corporations should be simply maximizing profit and the sum total of many corporations maximizing profit will be to maximize utility is incredibly misguided and/or pure propaganda.

I think guys like Porter are kind of the canary in the coal mine; the corporate elite are basically running roughshod over governments, cultures, and their arrogance is going to create the mother of all backlashes. Porter is basically trying to save the system before it destroys itself via overreach.
posted by chadmalik at 11:52 PM on September 18, 2011


Modest proposal: Introduce a collective punishment factor to all taxes, inversely proportional to whichever 'well-being index' seems least unreasonable, and thus let those with the greatest economic power also have the biggest incentive to figure out who the bad players are and then not do business with them.
posted by Anything at 2:13 AM on September 19, 2011


I doubt I actually share many values with the people who run huge corporations, and I'm not fond of the idea of them employing their wealth and power to "share" theirs with me. That doesn't seem like a particularly fair and balanced equation.
posted by itstheclamsname at 5:05 AM on September 19, 2011


I would be very curious to hear what Adam Smith would think if he were alive today.
posted by ovvl at 6:23 PM on September 19, 2011


Capitalism is unequaled for efficacy when there's things to be done and the resources are endless. Such as building the first railroad across a newly conquered country, or starting resource industries.

But it apparently can't be dialed back when resources are seen to be limited and cooperation is required to maximize social well-being. Today's capitalists have no problems robbing workers and consumers for short-term gain; they are even willing to eat each other.

If the main signifier of our health as a nation is the Dow Jones index, it should be clear that we're on the wrong track.
posted by Artful Codger at 4:38 PM on September 20, 2011


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