It’s been 8 years now since we launched our business to tackle poverty and made the assertion that Capitalism is an Insufficient Economic Model.
In the Guardian some weeks ago, John Elkington offered his impressions of Creating Shared Value and in response Mark Kramer reasoned that corporations could profit from solving social problems.
I’d asked him if rather than an opportunity to profit in financial terms, we might see this another way. quoting the argument we’d made for placing Ukraine’s institutionalised children in family homes. My suggestion was soon deleted and I was blocked from further comment on The Guardian:
“Enterprise is any organizational activity aimed at a specific output or outcome. Once the output or outcome – the primary objective – is clear, an organization operating to fulfill the objective is by definition an enterprise. Business is the most prominent example of enterprise. A business plan, or organizational map, provides a reference regarding how an organizational scheme will operate to produce a specific outcome: provision of products or services in a way to create profit. Profit in turn is measured numerically in terms of monetary gains, the “bottom line.”
This is the function of classic capitalism, which has proven to be the most powerful economic engine ever devised.
An inherent assumption about capitalism is that profit is defined only in terms of monetary gain. This assumption is virtually unquestioned in most of the world. However, it is not a valid assumption. Business enterprise, capitalism, must be measured in terms of monetary profit. That rule is not arguable. A business enterprise must make monetary profit, or it will merely cease to exist. That is an absolute requirement. But it does not follow that this must necessarily be the final bottom line and the sole aim of the enterprise. How this profit is used is another question. It is commonly assumed that profit will enrich enterprise owners and investors, which in turn gives them incentive to participate financially in the enterprise to start with.
That, however, is not the only possible outcome for use of profits. Profits can be directly applied to help resolve a broad range of social problems: poverty relief, improving childcare, seeding scientific research for nationwide economic advancement, improving communications infrastructure and accessibility, for examples – the target objectives of this particular project plan. The same financial discipline required of any conventional for-profit business can be applied to projects with the primary aim of improving socioeconomic conditions. Profitability provides money needed to be self-sustaining for the purpose of achieving social and economic objectives such as benefit of a nation’s poorest, neediest people. In which case, the enterprise is a social enterprise.
In this case, for the project now being proposed, it is constructed precisely along these lines. Childcare reform as outlined above will pay for itself in reduced costs to the state. It will need investment for about five years in order to cover the cost of running two programs in parallel: the existing, extremely problematic state childcare scheme, and the new program needed to replace it for the purpose of giving children a decent life. The old program will be phased out as the new program is phased in. After this phase transition is complete, the state will from that time forward pay out less money for state childcare. Children will have a better life, and will be more likely to become healthy, productive assets to the nation rather than liabilities with diminished human development, diminished education, and the message that they are not important – the basis for serious trouble. There is no need whatsoever to give these children less than a good quality of life as they grow and mature. The only problem is reorganization of existing resources.”
Was he afraid to answer, or could this have something to do with where we began in Russia, behind Harvard’s Russia Project?
My response to John Elkington had also been removed and I was placed on moderation status, unable to comment when Lucy Mangan offered her review of what she found “almost unbearable to watch” in Kate Blewett’s recent documentary on Ukraine’s Forgotten Children.
If she’d Google’d ‘Ukraine’s disabled children” or “Ukraine’s abandoned children” it might well have delivered something of a surprise – perhaps leading to the story of an American who’d given his life to this same cause.
What kind of research to journalists do? One wonders.
In June last year, responding to the suggestion by the editors of the Guardian’s social enterprise hub, that I might submit an article for publication, I’d prepared ‘Changing Capitalism for People and Planet’ which had described the impact made since 2006 in Ukraine. The final paragraph, suggested by the colleague who’d be dead within a few weeks
“Hallman concludes that social business and social enterprise must be done by working backwards, from the problem: identify the worst social conditions in any given location, then analyze why the problem(s) exist. This method will always reveal all factors and barriers. Only then can the problem be understood, and then possibly fixed. But, he notes, barriers are often found in various organizations who are supposed to be trying to fix the problem, but have vested interests in direct conflict with achieving actual solutions.”
I’d copied it to Jo Confino, editor of the Guardian’s Sustainable Business hub. I’d asked Jo in the past to help me in efforts to get paid by another GMG newspaper, which is 3 years in arrears for payment of our support services.
He’d been unable to help, suggesting perhaps that if you can’t influence your own organisation to take responsibility for paying its suppliers, there can be little hope of impacting the ethics of other businesses.
Yet Jo does his best, with Iain Cheshire and John Elkington changing capitalism from the relative safety of conferences and newspaper articles. Intending perhaps to disprove that ‘you can’t build a reputation on what you are going to do” I suspect few would argue that you can’t build a reputation on what someone else has done, when in control of a media silo.
Out there on the front line however going toe to toe with mafia, we’d been calling for the breaking down of the silo approach. For example with this missive to the US Senate about the matter of R.I.C.O activities within Ukraine’s childcare system:
“Thank you for your time and attention to this. I and others will look forward to hearing from you. I hope we continue to realize ever more fully that outside the box and inside the box have only a box in the way. We outside the box know quite a bit of what’s going on, many times in exquisite detail, perhaps in ways that those inside the box can’t quite as easily access if at all. We are grossly underfunded in favor of missiles, bombs, and ordnance, which is about 100% backwards. Now, with even the US Pentagon stating that they’ve learned their lesson in Iraq and realize (so says top US general in Iraq ten days or so ago) that winning hearts and minds is the best option, I and others shall continue to think positive and look for aid budgets and funding spigots to be opened much more for people and NGOs in silos, foxholes and trenches, insisting on better than ordnance, and who understand things and how to fix them. We can do that. We can even do it cost-effectively and with far better efficiency than the ordnance route. Welcome to our brave new world. Except it’s not so new: learn to love and respect each other first, especially the weakest, most defenseless, most voiceless among us, then figure out the rest. There aren’t other more important things to do first. This message has been around for at least two thousand years. How difficult is it for us to understand?”
Yet the Guardian ploughs on regardless, with John Elkington now talking Breakthrough Capitalism to promote 50 of the books about changing capitalism. Instructing us how to ‘be the change’, from the comfort an armchair. I may well be a threat to their authority
Tough luck for Ukraine’s Forgotten Children who take second place to all these egos. It was perhaps said best in the Sunday Times:
‘The Ukrainian maxim: “I saw nothing, my home is on the other side of the village” has no place in the modern world. If by our deliberate blindness, children are allowed to suffer such depravities then, by our inaction, we are all guilty.‘