Every Wednesday, Transformational Leadership Blog features a series of articles on social entrepreneurship and/or personal development. This is the 2nd article in a new series on Corporate Social Responsibility.
Capitalism is built upon the prospect and idea of products and profits. More often than not, it is not the producers who rake in the profits. Rather, it is the middlemen who facilitate the movement of goods that take the biggest cut in this system. To maximize gains and profits, the producers and manufacturers seek to cut production costs to the maximum level. This results to low wages, poor waste management, bad treatment of environment and in some extreme cases, even substituting substandard ingredients in the production process.
Globalization is one of the manifestations of capitalism. Companies have expanded to other countries in search for new markets. As a result, multinational companies and their products have become household names even in the poorest countries of the world. This global movement of products and services became possible because of the ever increasing search for profits and fortunes!
A number of complaints have been lodged against capitalism, or at least against its top missionaries—the multinational corporations.
Maltreatment of the environment. Toxic waste. Oil spills. Pollution of the water table. Drying up of rivers and lakes. Deforestation. Acidic land. And the wanton destruction of wildlife habitat. At one time or another, Ford Motors, Pepsi Cola and Coca Cola have been involved in one of these issues. So was British Petroleum. Sure thing, accidents do happen. But what are companies doing to ensure the sustainability of development and caring for the environment.
Extremely low wages. In developing and under-developed countries, skilled workers in blue collar jobs tend to receive very low wages. Some of them survive on a measly $5 a day. That may be enough for a single person in the Third World such as the Philippines. But for a family of six, that is barely enough! In the name of profit maximization and cutting costs, the laborers have to endure the biggest cut from their paychecks.
Political and Economic Oppression. Some capitalists have been known to use unethical business practices just to get ahead of the competition. They bribed political leaders such as Indonesia’s Suharto, the Philippines’ Marcos and Zimbabwe’s Mugabe. By doing so, they seek to gain advantage and outperform the competition. What they don’t know, or perhaps they don’t care to know is that bribery begets more corruption and political and economic oppression.
Because of these issues and more, Joseph Stiglitz’s Globalization and Its Discontents and that of of other writers and analysts have decried the injustices brought about by excessive capitalism. It’s a dog-eat-dog world and something must be done to change the system.
But how can compassionate capitalism be implemented? Isn’t that an oxymoron? Can compassion be tied up with competitive capitalism?
Compassionate capitalism is highly possible through corporate social responsibility and social entrepreneurship.
Compassionate capitalism through corporate social responsibility.
Let’s get it straight. Corporate social responsibility is not a magic salve that would ease the conscience of those who practice unethical business practices. If you are polluting rivers, the water table and other environmental resources heavily, no amount of reforestation efforts and cleanup will ever change the minds of people regarding your business practices.
Corporate social responsibility should really be included in the overall strategy and perhaps the vision and mission of the organization. When a leader displays commitment to the company’s employees, to the stakeholders and to the environment, CSR is a logical step forward.
This then, calls for a careful examination of business practices and how to become more ethical and still maximize profits and impact. More often than not, maximizing profits become secondary to the long-term impact of the company. After all, the earth has finite resources and it just might become the goose that lays the golden eggs if it becomes abused.
Compassionate capitalism through social entrepreneurship.
Corporate social responsibility is the response of companies to their people and to the needs of the planet. Social entrepreneurship is an entirely different thing. It may come in the form of a non-profit organization that seeks to address real-world needs of people. Or it may be a profit-oriented company that seeks to deliver goods and services that are beneficial to various peoples and to the planet, too!
Yes, it still is capitalism. But it is compassionate capitalism at work!
To get more ideas about compassionate capitalism, I recommend that you read the following books: