In recent weeks there have been multiple stories highlighting insightful young people in New Haven, Oakland and other cities around the country and world rallying in support of socialism as a result of economic inequalities. Many young people have become disillusioned by an economic climate that left them buried in debt and struggling to provide for themselves and their families. Faced with a dim outlook casting doubt on the benefits of capitalism, they are looking for a new path forward by embracing socialism, the perceived alternative option.
That dichotomous view is a false one, driving young people’s belief that socialism is the only alternative to our current system. I agree that we need a new path forward, but in finding that path we must maintain the positive forces of capitalism while answering its flaws. I am one of a growing number of people who have embraced Conscious Capitalism. This movement represents the best of capitalism with a recognition that we must not only look to the bottom line when building a future but must also look to a higher purpose for businesses.
Following the 2008 financial crisis, I found myself seeking a new way forward. The crisis laid bare the flaws of an economic outlook based solely on financial success. In seeking to rebuild the environmental services company for which I serve as CEO, I was determined to ensure we would emerge a stronger organization, and that we would do our part to prevent the communities we serve from being as susceptible to the forces that caused the crash. It was then that I discovered Conscious Capitalism, a movement that believes business must take stock of its impacts and stand in support of the social, environmental and financial well-being of all stakeholders.
Despite its flaws, I believe capitalism, when ethically implemented, is the economic system most capable of improving lives around the globe. Capitalism is a system that is based on creating things of value, and that value has driven the forward march of innovation and lifted millions of people out of poverty. Two hundred years ago, most of the world’s population lived in extreme poverty. Today, only 16 percent of people live this way.
To follow Conscious Capitalism, a business must examine its motivations and identify its higher purpose. This higher purpose is the value a company provides to benefit society; a reason for being that motivates stakeholders beyond dollars and cents while reinforcing financial sustainability across the organization and amid market shifts.
According to the book “Firms of Endearment: How World-Class Companies Profit from Passion and Purpose,” recent research covering a 15-year period showed that by following the principles of Conscious Capitalism, companies not only improved their cultures but outperformed their peers 14-1. This is no surprise, given the growing belief amongst young people that a profit-driven economic system is not working.
Deloitte’s 2018 Millennial Survey found in members of that generation, as well as members of Generation Z, the same distrust of the future and the business climate that has driven many young people to turn their backs on capitalism. This worldwide survey found that today’s young people believe business has a responsibility to improve society.
These young people are customers of our businesses. In the past three years, 85 percent of companies guided by a higher purpose showed positive growth, while 42 percent of non-purpose-led companies showed a decrease in revenue. This gap is likely to expand as more young people enter the job market. It is increasingly clear that embracing a higher purpose and making a positive impact is not just a vanity effort for business, it is a necessity.
Deloitte’s 2018 Millennial Survey also found that more than two-thirds of young people believe political leaders are not the answer to the world’s problems. They are far more likely to believe that business can bring positive change. The business has a responsibility to answer this call. Capitalism without a higher purpose is not the way forward, but neither is seeking security through socialism. We must ensure that the world continues to move forward, not toward higher profits, but toward a higher purpose. That is the promise of Conscious Capitalism.
Larry L. Bingaman,
President and Chief Executive Officer of the South Central Connecticut Regional Water Authority and the Founder and Chairman of the Connecticut Chapter of Conscious Capitalism.