Perversion of the Proper Workings of Capitalism

“The present state of affairs is really a perversion of the proper workings of capitalism. It is all wrong to have billionaires before you have ceased to have slums. Capitalism has done enormous good and suits human nature far too well to be given up as long as human nature remains the same. But the perversion has given us too unstable a society” said Spedan John Lewis, the founder of the John Lewis Partnership.

I like what Spedan said about the “proper workings of capitalism” because he was right. Capitalism, when operating optimally, delivers significant and very meaningful benefits.

Seth Godin, a business change evangelist tells a great joke that nails the paradox between business and society’s needs in the 21st century on the head. The joke goes like this:  “A woman visits her psychologist and says, ‘Doctor, doctor my husband thinks he is a chicken!’ The psychologist says, ‘That is terrible. Tell me, how long has he believed this?’ The woman says, ‘Three-months…’ The psychiatrist shouts, ‘THREE MONTHS! Why on earth didn’t you come to see me sooner?’ The woman replies, ‘Because we needed the eggs.’”

Here’s the catch. We all know about the perversions of the industrial system that Spedan referred to, side effects like: pollution; income inequality; soul-destroying jobs; companies behaving unethically; bosses being disrespectful to employees or customers and being paid outrageous bonuses while there are people living in slums – but for the large part we’ve done little to change capitalism because we have wanted the “eggs”. Like our grandparents and parents, we have accepted the industrialised mindset that has produced the organisations of our modern world. But at a personal cost – giving up control by working 9-to-5; conforming by not deviating from tasks set out in job descriptions; and, offering compliance by dressing and behaving as stipulated. In return, the industrial system has “rewarded” us with a lot of affordable shiny stuff. But as Godin concludes: “Just because you're winning a game doesn't make it a good game.” 

The current shareholder model of capitalism frequently fails to deliver sustainable and meaningful benefits to society and the world. In a paper for the Dallas Federal Reserve, economists calculated that “the total cost to the U.S. for the 2008 financial crisis was in the order of $6 trillion to $14 trillion.” Breaking that down into recognisable terms, the price tag for the financial crisis just in the US, rises to as much as $120,000 for every man, woman and child. Imagine the meaningful benefits that would have accrued to education, health and sciences if this money had been put to better use than bank bailouts.

The Great Recession is behind us but the aftershocks of this tidal wave of economic disruption are still pulsating through the global economy. The growing inequalities gap, Greek ruptures in the Eurozone, wars being fought with Islamic States, Syrian refugees flooding into Europe, burgeoning government debts and now the ruptures of Brexit are all symptoms of an economic system that benefits the few and is now worryingly in danger of ending in the type of societal disruption Spedan Lewis warned us of.

To turn this negative and disruptive tide around, the 21st century needs the growing might of ethically minded leaders on a quest to use business as a force for good by improving the world. It is here that the importance of being on a quest comes to the fore because quests by their very nature deliver meaningful benefits.

Leaders can gain sustainable competitive advantages by delivering meaningful benefits to the societies they serve, broader communities, and the world within their influence. Fortuitously a quiet revolution is surging, rapidly reaching tipping point. Do not miss this revolution because it is changing the future of how organisations work and will usher in a new era where a remodelled version of capitalism delivers more meaningful benefits to all stakeholders.

This article is adapted from Quest: Competitive Advantage and tha Art of Leadership in the 21st Century