Could capitalism have a conscience?

On the face of it, the answer would appear to be no.

In an interview from 2004 describing his work,  P-CED founder Terry Hallman outlined what he saw as an essential flaw in that:

“The problem is that profit and money still tend to accumulate in the hands of comparatively few people. Money, symbolically representing wealth and ownership of material assets, is not an infinite resource. When it accumulates in enormous quantities in the hands of a few people, that means other people are going to be denied. If everyone in the world has enough to live a decent life and not in poverty, then there is no great problem with some people having far more than they need. But, that’s not the case, and there are no rules in the previous capitalist system to fix that. Profit and numbers have no conscience, and anything done in their name has been accepted as an unavoidable aspect of capitalism.”

In law, a corporation may have the status of a person. People may or may not have social consciences but it cannot be claimed that in being a person, a corporation has a conscience.

In the P-CED treatise which presents the core argument for an alternative paradigm, he points out that capitalism has become a matter of imagining money into existence as debt, which have no anchor to finite resources and that this endangers those least able to compete.

“Positing numbers as real entities, and basing economics on that unproved and unprovable hypothesis, risks disposing of real entities (human beings) in favor of imaginary entities (numbers.)  The only variable needed for that to happen is unscrupulous human beings.”

His proposition is to modify the output of capitalism such that humans benefit.

“Modifying the output of capitalism is the only method available to resolving the problem of capitalism where numbers trumped people – at the hands of people trained toward profit represented only by numbers and currencies rather than human beings.  Profit rules, people are expendable commodities represented by numbers.  The solution, and only solution, is to modify that output, measuring profit in terms of real human beings instead of numbers”

In his advocacy for a social business which is ‘all about others’,  Muhammad Yunus offers an example in the ‘bottom line’ of Grameen Danone, which is the number of children removed from malnutrition.

It was this cause, ending poverty and hunger which formed the introduction to the P-CED paper, a case for business serving people:

“At first glance, it might seem redundant to emphasize people as the central focus of economics. After all, isn’t the purpose of economics, as well as business, people? Aren’t people automatically the central focus of business and economic activities? Yes and no.

People certainly gain and benefit, but the rub is: which people? More than a billion children, women, and men on this planet suffer from hunger. It is a travesty that this is the case, a blight upon us all as a global social group. Perhaps an even greater travesty is that it does not have to be this way; the problems of human suffering on such a massive scale are not unsolvable. If a few businesses were conducted only slightly differently, much of the misery and suffering as we now know it could be eliminated. This is where the concept of a “people-centered” economics system comes in.”

It reasons that in law there’s nothing to prevent a business being set up with a primary objective, to serve the same function as a non-profit, free of the constraints of Program Related Investments which foundations are obliged to follow. Provided the shareholders and directors agree, there is nothing to prevent any business dedicating its profit to a social purpose.  The synopsis published online ends with this paragraph:

‘Clearly, profits can be used very effectively in ways other than traditional investment and profit outcomes. Moreover, this is not charity, it is business–good business. One P-CED firm could be expected to spin off dozens of new firms and businesses, all of which create new jobs and all of which operate under traditional free-enterprise practices. That is, if a spin-off business were to profit a million dollars a year, the owners can bank the money for themselves and their stockholders as is the normal practice. There is nothing wrong with individuals becoming wealthy. It is only when wealth begins to concentrate in the hands of a relative few at the expense of billions of others who are denied even a small share of finite wealth that trouble starts and physical, human suffering begins. It does not have to be this way. Massive greed and consequent massive human misery and suffering do not have to be accepted as a givens, unavoidable, intractable, irresolvable. Just changing the way business is done, if only by a few companies, can change the flow of wealth, ease and eliminate poverty, and leave us all with something better to worry about. Basic human needs such as food and shelter are fundamental human rights; there are more than enough resources available to go around–if we can just figure out how to share. It cannot be “Me first, mine first”; rather, “Me, too” is more the order of the day.’

it in in Russia where P-CED is first deployed to source an experimental development initiative which becomes known as the Tomsk Regional Initiative.

It was here that the deployment of laissez-faire capitalism had  led to the scandal which David Mclintick describes in his article ‘How Harvard Lost Russia’ in which he concludes:

“In running Harvard’s Russia Project, Andrei Shleifer and Jonathan Hay had an opportunity to preach the importance of integrity, transparency and fairness in shaping a business culture, and to work to enshrine those values in the country’s legal and financial infrastructure. Instead, their personal dealings sent a very different message.”

What was proposed instead was a bottom up approach  placing funds in the hands of those needing it most, the poorest with no access to conventional credit.  The lending  model was based on Grameen’s loan circle approach, with the bank being managed by Finca.

Economist Gordon Pearson makes the point that the current demand for ‘new models of capitalism’ and capitalism with a conscience won’t work.  It depends on personal good and resisting the temptation toward being greedy and  law is on the side of the owners of property. rather than equity and human rights.

Way back in 1957 John Speedan Lewis in his speech for the BBC had said  “the present state of affairs is a perversion of the proper working of capitalism” pointing out that:

“The dividends of some shareholders exceed their own highest hopes, hopes that may have been much too greedy, and the incomes of the more fortunate of the captains of industry are many times as great as would have caused the same persons to work just as hard and for just as many years if, instead of going into business, they had happened to become, say, lawyers or doctors. This is quite wrong.”

In the business plan Hallman produced for tackling poverty in the UK , we say:

“Enterprise for the primary objective of poverty relief, localized community economic development, and social support became the business model which guided P-CED’s efforts and development at a time in the US when terms such as ‘social enterprise’ and ‘social capitalism’ had not yet been coined.

“Traditional capitalism is an insufficient economic model allowing monetary outcomes as the bottom line with little regard to social needs. Bottom line must be taken one step further by at least some companies, past profit, to people. How profits are used is equally as important as creation of profits. Where profits can be brought to bear by willing individuals and companies to social benefit, so much the better. Moreover, this activity must be recognized and supported at government policy level as a badly needed, essential, and entirely legitimate enterprise activity.”

“Along the way, all employees of P-CED are to be paid at minimum a wage sufficient to guarantee a decent standard of living in accordance with the International Covenant of Economic, Social and Cultural Rights.

“The fundamental policy guide for P-CED is the International Bill of Human Rights.  IBHR is comprised of Universal Declaration of Human Rights; International Covenant of Civil and Politial Rights, and International Covenant of Economic, Social and Cultural Rights.  P-CED’s main focus falls within sphere the economic, social and cultural rights, ICESCR  “

In 2003, Hallman had fasted from a tent in Chapel Hill NC, for the US government to sign up to the ICESCR and as a consequence of this, an invitation to the UK led to the founding of P-CED UK.  During the fast, messages of progress were channelled to senator John Edwards, who would himself become a champion of the poor and open the Center on Poverty Work and Opportunity on campus at UNC”s Law Center in Chapel Hill.

In the 2006 paper describing a ‘Marshall Plan’ strategy for Ukraine, the following points are made:

‘This strategy places adequate funding for social benefit under control and management independent of government and the very obvious vicissitudes and conflicts inherent therein.

‘This is a long-term permanently sustainable program, the basis for “people-centered” economic development. Core focus is always on people and their needs, with neediest people having first priority – as contrasted with the eternal chase for financial profit and numbers where people, social benefit, and human well-being are often and routinely overlooked or ignored altogether. This is in keeping with the fundamental objectives of Marshall Plan: policy aimed at hunger, poverty, desperation and chaos. This is a bottom-up approach, starting with Ukraine’s poorest and most desperate citizens, rather than a “top-down” approach that might not ever benefit them. They cannot wait, particularly children. Impedance by anyone or any group of people constitutes precisely what the original Marshall Plan was dedicated to opposing. Those who suffer most, and those in greatest need, must be helped first — not secondarily, along the way or by the way.

From there, broad economic and social development can develop “upwards” concurrently with more conventional top-down approaches to economic development. Moreover, this program will not only meet initial, most critical and urgent objectives of childcare reform and poverty relief in Ukraine, it will also provide training for ever-growing numbers of specialists educated in social enterprise economic thinking with sufficient funding to put ever more well-designed projects into action as Ukrainian citizens invent them.’

Senator Edwards in his pitch on Two Americas claims that those who speak up for the disenfranchised, disabled and poor will be opposed by those who want to “kill the messenger”.

Edwards stumbled at a personal level, leaving his political career in tatters, though he seems to have been correct in that’s precisely what happened to Terry Hallman,  one of 50 million Americans without health insurance who was left without payment for his contribution to a subsequent development project.

John Mackey, advocate for Conscious Capitalism stumbled too, when using anonymity to run down a competitor’s share price.

2 thoughts on “Could capitalism have a conscience?

  1. mt says:

    This is a great post !
    A Social Business awakening is eminent and let us be a driving part of it.

    Thanks for changing the world !

  2. jeffmowatt says:

    On David Floyd’s recent blog on the ongoing failure of social investment to ‘trickle down’ to grassroots organisations via intermediaries, is a topic raising considerable concern.

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