Capitalism Even My Mother Could Love

At age 32, when I announced on a phone call to my mother that I was starting a business, the line seemed to go dead. My mother, whom I love deeply, is not someone you would call business-friendly. As a retired California social worker and occasional head of her local Democratic Party, she distrusts big business.

She isn’t alone.

Business in America, according to the book I’m about to review, has an approval rating of around 19 percent, two points above Congress.

My father, on the other hand, a retired CPA and mall developer, admires business. When I was still in high school I remember him telling me, “Profit is one of the most beautiful words in the English language.” He regularly complained about anti-business prejudice in the media and academia. As I was setting off to graduate school in sociology, he told me to enjoy myself, “but don’t believe everything your professors tell you.”

My parents divorced when I was six.

My mother had hoped I would become a doctor or teacher, as was customary on her side of the family. My father had already abandoned hope that his journalist/consultant/analyst son would ever become an entrepreneur, and so was delightfully surprised when I made the same phone call to him. He called me his “late-blooming son.”

As a product of both my parents, I set out in business somewhat conflicted. Serving customers felt natural and good, but to survive in business, would I have to be ruthless? With degrees in biology and sociology, my education was devoid of business courses of any kind. Did I miss out on learning how to be hard-nosed?

'Give capitalism a chance'

In the early months of Levenger, working out of our townhouse in Boston, Lori and I had plenty of days with no sales, and one day I shall always remember, with just one sizable return—that is, a negative-sales day.

Was it too late to become a doctor, I wondered?

Yet in our fledgling business I did feel I had finally found my calling. (I discovered this with the help of another book called Minding the Store by Stanley Marcus, who taught me that being a merchant could be a noble thing.)

After a dicey first two years of taking no salaries, success came dramatically to our company. During those early years of success, I would hear business executives speak at charity events about the importance of “giving back” to their communities. I chafed at this. It implied that business was taking and that we business people, like criminals, had a debt to repay.

Yet I watched our own business employ people, help them grow in their careers, make our suppliers happy, keep our accountants busy, and give our customers something that, judging by the many heartfelt letters we received, they had been yearning for.

How could this be a bad thing?

One day a promising young customer service rep at Levenger who was about to graduate from college came to see me. She told me she was quitting Levenger to work for a nonprofit, because she wanted to do good in the world. I said I was sorry to lose her but understood that people must follow their hearts. I suggested that it was also possible to do good in the world while working for a company. I even gave her some examples. But she wasn’t buying it.

As we parted, I said with a smile that I hoped she would “give capitalism a chance.” She laughed, as did I, but she left the company anyway.

From profits to purpose

If the new book Conscious Capitalism: Liberating the Heroic Spirit of Business succeeds in changing the world the way the authors hope, my remark about “giving capitalism a chance” will no longer be a joke. Because future young people graduating from college will just assume capitalism can do good in the world. They won’t think they have to join a nonprofit to follow their hearts.

They will understand that a “for-profit” company can just as easily be described as a “for-purpose” company, and that profits are one way, and sometimes the best way, to sustain noble work.

At present, though, that future seems far off. 

That’s why John Mackey, the co-CEO of Whole Foods Market, and Raj Sisodia, a professor of marketing at Bentley University, wrote this new testament of business. They named it after the movement they helped found, Conscious Capitalism.

Its credo begins with this sentence:

We believe that business is good because it creates value, it is ethical because it is based on voluntary exchange, it is noble because it can elevate our existence, and it is heroic because it lifts people out of poverty and creates prosperity.

Part of the problem, explain the authors, is an image problem.  Corporate malfeasance, real and fictional, gets lots of play in the news and movies, while the goodness of business does not.

But most of the problem is more invidious.

The noble purpose of business has been hijacked. And this hijacking is not the work of cynical professors and journalists, but of business people themselves who willingly share the myopic belief that business is, first, foremost and finally, about profits.

The economist Milton Friedman, in his widely cited 1970s essay on social responsibility, claimed that profit was the only social responsibility businesses had. Too many people have interpreted his advice too narrowly, to everyone’s detriment. Mackey and Sisodia convincingly demonstrate that it simply isn’t true. Businesses that focus first on purpose, and then expand their view widely to benefit all stakeholders—rather than just narrowly serving shareholders—are better businesses, and better by all financial measures.

Unfortunately, write the authors, capitalism “developed in a stunted way, missing the more human half of its identity.”

The 70% solution

One of the most serious consequences of this dwarfed manifestation of business is that the average engagement of workers in the United States hovers around 30 percent. Some 7 out of 10 workers just aren’t that into their jobs. Think of the opportunities for everyone if those ratios were reversed.

It is the job of business leaders to help engage that lost 70 percent, and to help employees realize that in their hands—and hearts—lies the basis for the positive transformation of societies and communities.

The authors of Conscious Capitalism ask us to imagine a business “built on love and care rather than stress and fear,” a business where staff members are able to “craft a purposeful life while earning a living,” and where employees can experience “the joy of service, of enriching the lives of others.”

Even if you aren’t a doctor or a teacher.

Conscious Capitalism: from good to great

It’s a different way of thinking about business. Instead of viewing situations as tradeoffs (high wages leads to lower profits), the authors advise that we think in terms of mutual wins: living wages lead to happier staff members, which creates happier customers, which generates higher sales, which results in satisfied shareholders.

Conscious Capitalism is a good book. It’s well-researched, well-written and has already received favorable reviews in major publications. But what is exciting is its potential to become a great book—the kind that triggers a fundamental and pervasive change in attitudes.

Could Conscious Capitalism do for business what Silent Spring did for the environment?

The widespread view of capitalism as some sort of necessary evil is a kind of DDT to human potential. Breaking into an enlightened conception of capitalism could liberate human potential, leading to new levels of innovation and personal fulfillment.

But as powerful as Conscious Capitalism can be, it is not an elixir for business success. The most enlightened capitalists must also go through the hard work of developing an effective corporate strategy—that long and difficult process of examining options and selecting the very few to pursue. Then comes execution, a topic that rightfully has filled volumes of business books and launched the careers of untold numbers of business consultants.

Just as essential, in order for Conscious Capitalism to be sustained, it must be embraced by the current generation of young people starting businesses today. Only if they take it up—which they will do in their own ways—does the movement have a chance to change the world.

There are promising signs.

Tearing down the Ivy Curtain

More colleges are focusing not only on entrepreneurism, but on social entrepreneurism. Students will do their own mashups to create businesses that feel like nonprofits, and nonprofits that are run like businesses.

I’m hopeful that students will tear down the Ivy Curtain that for my generation separated the so-called impractical liberal arts from majors like business and accounting. I’m hopeful that we’ll see more business students with their heads in the clouds, and art-history majors who like accounting.

My own sons, college classes of 2010 and 2013, are reading Conscious Capitalism, so we can discuss it as a family. Already they’ve let me know it seems rather obvious to them.

And maybe that’s our best hope—that young people setting off in business today will just assume capitalism can do good in the world. “Like, duh, Dad.”

I hope so. And I hope when they call my mother to tell them about their businesses, the conversation will be anything but silent.

Now to you, dear reader: Does Conscious Capitalism make sense to you? I’d love to hear. Just click on the Comments link below with your submission. (If you’re reading this as an email, click here and you’ll connect to Comments.)

Comments

[Jeff Poulin]

What a refreshing post and a topic too seldom broached! Whether a trading post on a colonial frontier or a global conglomerate, capitalism means the VOLUNTARY exchange of values. Those values represent ability and honest effort on both sides of the trade. There is profit as a reward and validation for the seller and satisfaction for the buyer that they can produce values to be exchanged for their needs and wants. It is moral and benefits all parties.

When the voluntary aspect is broken, whether by government fiat or other coercion, the morality is lessened and corrupted.

The system is even self-correcting. A business that overvalues its product will be replaced by one that restores the balance.

Thanks for an excellent topic.

PS: As a long-time Levenger customer, I can say your mother was wrong.

[Jean Speake]

I have not yet read this book, but it is on my reading list! While there are probably some business owners with no motive besides personal gain, I think most of us see it as much more than that. As owners of a "small" commercial refrigeration & HVAC company, my husband and I have been proud that through the recent economic downturn, we did not lay off any employees and have even added a full-time position. Five families, not including our own, have food and shelter because of the work we are able to provide. By doing the best possible work for our clients, which keeps their businesses running and profitable, they provide their employees with gainful work.
How is this anything but contributing to "the greater good"?

[Claire Phillips]

Conscious Capitalism is the way I've always thought businesses should be run. The most successful businesses I've dealt with are the ones that make this their practice. You can tell just by the level of customer service you experience. Living in a small town, I am acutely aware of the difference. As much as possible, my spending habits reflect my support of those businesses who practice this philsophy, whether or not they are aware of that fact. It is a shame that many large corporations do not consider this a viable business practice.
Furthermore, I believe Conscious Capitalism should be taught on a consumer level as well. Too often consumers only consider the lowest cost alternative, without realizing the consequences that a different choice could make - not only in their lives but in their shopping choices as well.

[JC Stadler]

Speaking as a business consultant, with over 40 years of experience, it pleases me greatly that a fresh assessment of capitalism is being presented and advanced. In my opinion, businesses can only succeed, in the long run, by producing value for their customers. Today crony capitalism, i.e., large corporations profiting from political relationships, has cast a dark pall over capitalism generally.

There are many examples of outstandingly successful companies that have succeeded even facing political adversity--e.g, Apple, Microsoft. As a customer, I see Levenger as a very good example as well.

[Steve Leveen]

Dear Friends,

What insightful and well-written comments. Jeff, I love your line about a business that "over-values its products" corrected by another business.... Jean, your broader view that employees are really families...Claire, your good suggestion that Conscious Capitalism should be practiced at the consumer level, too, with more customers being more conscious of their choices...and JC, I heartily agree that Crony Capitalism isn't capitalism at all.

Let's each keep the dialog going in our circles of influence friends, and thanks again for speaking out.

Steve

[David G. stone]

Dear Steve,
God Bless You, God Bless Conscious Capitalism, and God Bless America!!
The Best Always,
David Stone

[Bernard Glassman]

Dear Steve:

You quoted the authors as writing the following:

"We believe that business is good because it creates value, it is ethical because it is based on voluntary exchange, it is noble because it can elevate our existence, and it is heroic because it lifts people out of poverty and creates prosperity."

That sentiment would be much more plausible if it were to read:

"We believe that business is good when it creates value, it is ethical when it is based on voluntary exchange, it is noble when it can elevate our existence, and it is heroic when it lifts people out of poverty and creates prosperity."

As a co-founder of a hybrid (LLC/501(c)(3)) social-purpose enterprise, I'm all too aware of the nearly meaningless distinction between the for-profit and not-for-profit, not to mention the mind-bending, back-breaking contortions one must go through to keep one at arm's length from the other. Either can do good; either can exploit. Neither should be condemned uncritically, nor should either be praised without highly conscious examination. There are non-profit CEOs earning unconscionable salaries, driving (or being driven in) organization-owned cars, living in houses owned not by them but by the organization, and dispensing the legal minimum to causes that may or may not be socially worthy. There are tax-paying businesses that do everything the credo says that businesses do.

Any real tax reform will end this lunatic distinction and find another way to not penalize those who help make society fairer, healthier, less-violent and better educated, whether or not the principals and funders choose to be rewarded fairly for their risk. But it will not happen through blanket praise for "business." Nor will "Well, duh, Dad" be the final word on whether the latest generation truly gets it. We need to be looking for results.

If I don't buy the Kindle edition, I promise to pick up a copy next time I buy groceries. (Whole Foods is displaying it prominently right at the check-out counter.) And as I read it, I will try to see whether the lack of critical thought that is evident in the quote is equally evident in the body of the text. I hope it won't be, because your paraphrase of its argument is one that I very much hope it articulates and builds on. In the meantime, perhaps the authors will rethink their credo. Or perhaps another commenter will explain why the one you quoted is not an oversimplification on their part, and my modest revision is not the more useful version.

Thank you for your example,

Bernard Glassman

[Paul K Weerkamp]

"lean in": another book to consider

[Steve Leveen]

Dear Bernard,

What a beautifully written and reasoned post. I must say that the credo that we both quoted is only the first paragraph and the complete version is found in the book. I look forward to your further thoughts when you examine the book. All best wishes, Steve

[Joan]

I embrace your positive perspectives. However, here’s a problem – leadership (wearing a mask) boasts that it embraces ethics, caring, trust, and a host of all that’s good – while they demonstrate behavior contrary to their propaganda. Schizophrenic. Greed, egotism, thievery, connections and blind spots prevail. That’s human nature – globally. Oh, and a tricky legal system with loopholes.

[Don Kenner]

It is worth pointing out (again and again) that those businesses who abuse the public trust, and who look for profits outside of the free market, are almost always those who have connections to government. Corporate malfeasance that festers and grows is impossible without government assistance. But companies like Apple, Whole Food, Levenger, etc. make our lives better, NOT by "caring for us" or giving us free stuff, but by making products that enhance our lives (as well as contributing to the economy - no small thing). I think it is great to give (I share your disgust with the term "give back") but the idea that the profit from your creation is somehow mine because I "need it" is an evil idea. Greed, egotism (narcissism, actually), and thievery are the natural states of government, NOT businesses. Left alone by the thugs in Washington, the market will take care of those businesses who abuse the public trust. Check out some of the top non-profits and how LITTLE they give of each dollar raised to those they support (and the salaries of their employees). Hollywood/academia creates the fantasy of us being mugged/murdered by business. In the real world these things are almost completely the domain of government, ours included.