Social Business Business as if people mattered The pursuit of economic growth has promoted materialism and overconsumption It is not sustainable But 25 billion people live below the poverty line ID: 339492
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Slide1
Michael J. Baker
Social Business:
Business
as if
people
matteredSlide2
The
pursuit
of ‘economic growth’ has promoted materialism and over-consumption
It
is not sustainable
But 2.5 billion people live below the poverty line
Michael J. Baker
2Slide3
‘Big Business’ and Capitalism are responsible and the
‘
villains of the piece’ I believe this misunderstands the role of both
Potentially they are the solution, not the causeMichael J. Baker
3Slide4
“Consumption is the sole end and purpose
of production” Adam Smith, 1776, the ‘Father’ of Economics
Michael J. Baker4Slide5
Michael J. Baker
5
Smith’s emphasis on task specialisation and exchange in ‘free markets’, facilitated by
competition and capitalism, was founded onthe concepts of mutual benefit and satisfactionSlide6
Michael J. Baker
6
Benefit, satisfaction, value etc. are all subjective states of mind particular to individuals’,
ie. a qualitative judgement or ‘measure’
Slide7
Michael J. Baker
7
Smith’s successors –
the nineteenth centuryneo-classical economists – abandoned qualitative measures as ‘unscientific’ in favour of quantitative (
objective) measures. [‘physics envy’] In doing so they removed the human elementfrom economic analysis and policy formulationSlide8
Michael J. Baker
8
Economic growth is measured in terms of the ‘Gross Domestic Product’ (GDP) which is the aggregated monetary value of all the goods
and services produced annually by a nationIt takes no account of the quality of life enjoyed
by individual citizens, ie. the aggregated valueof consumption; nor does it take ‘externalities’ into accountSlide9
Michael J. Baker
9
Vicious circle-Recession-unemployment-less
demand-more unemployment-deeper recession
Virtuous circle- increased consumption-economic growth-more jobs-more demand-more growth Concern over the sustainability of policies
promoting economic growth began to gather momentum in the 1960s Slide10
Michael J. Baker
10
International recognition of the need for concerted action was prompted by the Brundtland
Report (1987). Its Key Recommendations were:
Reviving growthChanging the quality of growthMeeting essential needs for jobs, food, energy, water and sanitation
Ensuring a sustainable level of populationConserving and enhancing the resource baseReorienting technology and managing risk, and
Merging environment and economics in decision makingSlide11
Michael J. Baker
11
Effectively, Brundtland took up Shumacher’s
challenge “Small is beautiful” with its theme “Economics as if people Mattered”
Simultaneously (1987), Lutz and Lux published Humanistic Economics challenging mainstream economics with its emphasis on quantification
to the neglect of qualitative factors that influence human consumption behaviour – the concept of the “dual-self” Slide12
Michael J. Baker
12
Put simply, the dual-self recognises that basic physiologicalneeds are moderated by social and psychological factors
identified in Maslow’s Hierarchy of Human Needs, viz:Higher Self Growth Needs Lower
Self Deficiency NeedsSelf-actualisation Ego-aggrandisementTruth seeking Self-interest seekingReasonable
Rational (economic)Principled behaviour Instrumental behaviourAltruism and love Selfishness
Objective SubjectiveTranspersonal Personal
(
individual)
‘Some Basic Characteristics of the Dual-self’
(
Lutz and Lux Table 1.1
,
page 17)Slide13
Michael J. Baker
13
In essence, the dual-self is motivated by
self-interest - survival depends on it - but is enlightened by the knowledge
that collaboration and co-operation will result in better outcomes than selfish self-interest that ignores the needs of others
The Golden RuleSlide14
Michael J. Baker
14
Adam Smith’s original conceptualisation ofcapitalism
and free trade was based on theassumption of collaborative exchange behaviour guided by moral principles and regulated by laws to control/punish those who ignored
or broke themSlide15
Michael J. Baker
15
By replacing the needs of individuals with the‘objective’ notion of demand, laissez-faire(Anglo-Saxon)
capitalism enabled Business topursue profit by any means within the Law
But, democratic governments failed, to a greater or lesser degree, to regulate themarket and prevent businesses from
adopting unethical practices and unprincipled behaviour Slide16
Michael J. Baker
16
There is growing evidence that younger people -’Millennials’- are more socially engaged and concerned with ethical and moral issues.
This is reflected in the changing curricula of major Business Schools and the PRME initiativeIt is also apparent in the growing emphasis given
to Corporate Social Responsibility in business strategy and practiceSlide17
Michael J. Baker
17
Governments establish and regulate the environment in which economic growth occurs but it is
Business that decides what will be produced and for whomSocial Businesses accept responsibility for the needs
of all their stakeholders and for the environment on which all depend