“Capitalism – Inclusive capitalism – Compassionate capitalism” whatever you call it, doesn’t matter

“Capitalism – Inclusive capitalism – Compassionate capitalism” whatever you call it, doesn’t matter

What is the purpose of life? I am sure many of us are still wondering and doing our best to find the real purpose of our existence. Can earning the money be the sole purpose? I am sure few may agree on this. However, I believe money is always a by-product in the process of finding and living the purpose of our lives. By this, I am not undermining the value of money or wealth, what I mean is that it is not the sole purpose of life. We are close to live our purpose when we enjoy every moment of our act and do the best happily.

This is very much applicable to job we do. However, while interacting with the people in any organization we could find people who are cursing either their boss or work profiles they are in. Many believe they are not paid what they deserve and put the fact that they are unable to do what they want because of reason x, y & z. Are they living to their full potential? Are they living their purpose? I think no.

Use case I have mentioned above is not uncommon. Now, question comes why such scenario exists. If employees in a company are not living to their fullest, can this company thrive?  We, as individual need healthy body and mind to work effectively. Similarly, a company or a brand needs its employees to be in the best states to perform to the best. However, with certain conviction I can say those companies are rare where all the employees are fully motivated and capable to deliver their best.

Is it a very complicated science to understand that to perform our best we need health body & mind along with high end motivation? Certainly not, then why so many companies fail to realize this fact. Here comes, capitalism and inclusive capitalism. Only purpose of a business to exist is to the earn profit for its shareholders – perfect capitalism. According to Milton Friedman that businesses exist to earn maximum possible profit to its shareholders.

Now, lets analyze this statement from today’s perspective. Assuming Mr. Friedman to be perfectly correct.

Firstly, if businesses decide to get more work done from their employees and pay them less thatn what they truly deserve, will those employees put their best in work? I am sure you agree, they will not. If businesses decide not to take care of employees working conditions, their health and other needs; will employees be fully motivated? No. Therefore, it makes perfect sense to keep working environment healthy, pay employees what they deserve, be concerned about their overall growth for businesses to thrive and earn maximum profit to shareholders.

Secondly, businesses, in one form or other, need natural resources to conduct business. Be it land, water, air or human capital. Businesses, in one form or other, affect environment; be it industrial waste or some other socio-economic variabl. Consumers do also live in same environment. If any business affecting environment badly and not doing anything to reduce the adverse impact, will an informed consumer be loyal to that business in long term? No. Studies have confirmed that consumers not only look for good quality products/services but also want companies to be sustainably produce such products/services. Consumers do observer how companies are contributing to the social and environmental causes. Directly or indirectly these issues affect loyalty of consumers towards businesses. Therefore, to some extent we can convincingly say that to maximize profit for shareholders in long term, businesses need to be employee friendly and conscious towards social-environmental development. They must work to address social-environmental issues our society is facing.  Businesses can’t operate in isolation.

Finally, if we assume a scenario, for a moment, where earth starts to be in business. Natural resources are no longer free. How many businesses will see impact on their balance sheet? Certainly, many. This modified balance sheet will put many businesses out of the business. In-fact if unmindful explotation of natural resources continues for long, those days will not be far when these natural resources will be traded at a cost and at that point businesses will not have time to correct the course of action. Therefore, businesses with purpose will have maximum chances to deliver maximum profit to their shareholders in long term and purely profit oriented business will have maximum chances to go out of business.

So, even if we take what Friedman says word to word correct, businesses need to be purpose oriented beyond profits & cashflows.  In other words, this is inclusive capitalism.  Some may say it as compassionate capitalism. Whatever you call it, it makes perfect business sense to work for the purpose. Profits and cashflows will anyway follow.

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