The Breakthrough Capitalism that isn’t

We need systemic change to deal with the social environment challenges which now face us.  This is the key message from the Breakthrough Capitalism Forum.  Forum in this context meaning an invitation driven conference or panel discussion.

It would resonate with P-CED founder Terry Hallman if he were still alive today.  In 1996 he recognised these challenges in a seminal paper proposing an alternative to traditional capitalism. It drew attention to more than a billion suffering hunger and the creation of money as debt, which increasingly allowed wealth to accumulate in the hands of a minority while those in greatest need found their lives at risk. It warned that failing to tackle poverty would lead to uprisings by those who were left with no other way to resp0nd.  It argued that “dismissing other people and consciously leaving them to die, was probably not the way to go”

When first signs of the economic crisis were seen 3 years later with an economic collapse in Russia, he was there researching the possibility of a poverty alleviation initiative. He sent his recommendations, a localised bottom -up strategy which included a community microfinance bank, to President Clinton, who’d been the primary recipient of the 1996 paper. This would become the Tomsk Regional Initiative, which lead to the creation of around 10,000 micro enterprises and was replicated by USAID in several other cities.

This marked the beginning of  a ‘new capitalism’ or as we call it, People-Centered Economic Development.

In 2004, P-CED established as a profit-for-purpose business in the UK calling on government for support in tackling poverty by deploying this new paradigm, saying:

“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.”    

In 2006, with our focus on children abandoned to state care in Ukraine, there was a developing interest from the academic world and an opportunity to discuss it openly on Skoll’s Social Edge foru, where this memorable conversation on Profit with a Purpose took place.

A month after that conversation our paper on Microeconomic Development and Social Enterprise was delivered to Ukraine’s government. It would be published online  the following  August and said:

“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 2009 there was an opportunity to deliver a paper to the International Economics for Ecology conference at Sumy and ours was presented at the opening plenary.  Entitled ‘Economics in Transition‘, it discussed the “Triple-Bottom Line” of financial, social benefit, and environmental benefits. It asked “how can we create an economy based  on people, to achieve financial profit, social benefit, and a safer, cleaner environment? What would such an economy look like?  How can it work?  What can be done in Ukraine to achieve it?

“Triple bottom line” is an expression which derives from the work of John Elkington, whereas, the alternative to capitalism was conceived in Hallman’s 1996 treatise.

Just weeks later, at the Said Business School in Oxford University, the Oxford Social Enterprise Forum (which again wasn’t  an open discussion)  met to ask if an “new kind of capitalism” was possible.  I referred it to Terry Hallman who then suggested that Oxford should expel itself for passing off someone else’s work as their own.

Heading the Skoll Centre at Said Business School is Pamela Hartigan, who is now leading Breakthrough Capitalism from a rostrum.

Hartigan it not alone in turning a blind eye and a deaf ear to original work.  The Guardian hub on sustainable business is doing a pretty good job in its own right.  They’ve been particularly resistant to my describing our activism, while editor Jo Confino bathes in the warm reflective glow of business with a “heart”.  A heart which doesn’t extend to abandoned and neglected children however, or indeed those who perish trying to help them.

As I pointed out in our social impact report last year, there is a visible influence in the concept of ‘Creating Shared Value’  which would surface later in 2011 .  It seemed to diverge however when Mark Kramer suggested, again in the Guardian, that corporations could profit from solving social problems. I put to him the case for ‘Profit for a Purpose’ where  we  do not aim to profit, but use profit for social ends.  It would get me censored and barred from commenting on the Guardian since.

Welcome to the new capitalism,  much the same as the old capitalism which dismisses other people and consciously leaves them to die, in pursuit of reputation .


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