Have you seen or read Bill Gates’ article on creative capitalism in last week’s issue of Time Magazine? I first read about his idea in Wall Street Journal month or so back after he introduced the concept at the World Economic Forum in Davos, Switzerland. When I first read about his idea I thought it may complete sense and quite frankly I still do however it was very interesting to read the arguments against his approach.
One of the main philosophical issues that comes to the table is what is the purpose of a company or business particularly those that are publicly traded. Milton Friedman, the esteemed economist of the 20th century, believed that it is simply to serve the interests of the shareholder, i.e. increase the stock price. I actually cannot argue with this purpose at the most elementary level. However our world is far from elementary.
I will not attempt to define the purpose of a business at this time because it is a question that deserves serious contemplation. I will only state that it obviously needs to be profitable to sustain itself. How profitable, is the bigger question.
Given some level of profitability the next question, one more to my liking, becomes is there a moral responsibility toward society for these companies? I say yes! While we are on the subject, is there a moral responsibility to treat employees fairly with respect to compensation between the hourly workers and salaried executives? Again I say yes.
Mr. Gates believes there is an under-tapped market in serving the poor both home and abroad and that companies can increase their bottom line by allocating resources to this market. Contrarians state that if the company can make money choosing this path then why should they receive accolades or outside financial incentives. I would argue that there might be more value to shareholders dedicating all resources to markets other than the poor. Therefore, there needs to be some incentive to choose the more moral path, as sad as that may be.
There also seems to be some debate about the naming of creative capitalism. Does it really matter? I say no! It is just semantics and a waste of time. Move on to heart of the subject.
Following this approach will make the world a better place and will most likely not affect shareholder value substantially and who knows maybe such an approach will increase a company’s profitability by stumbling upon innovative technologies or other markets through research and development. You will never know if you don’t try.
Lastly, what good does it do to increase shareholder value if people are going to starve and die as a result of our greed? Is that the type of society we want live in? I for one am willing to take a slightly smaller gain in my retirement portfolio if I know companies are trying to make the world a more socially equitable global community let alone meet the basic nutritional and medical needs of the people who by no fault of their own cannot.
Shareholder and companies who choose to embrace creative capitalism by any name will live a life of no regrets and leave a legacy of moral virtue for generations to come.
Live Your Life With No Regrets!
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