FLOW Vision News April 2008

Dear FLOW Members,

Human beings evolved the cognitive and moral capacities needed to make
the judgments needed to survive in small tribes of 150 or so.  Given
the limitations of our cognitive and moral judgments, it is truly
extraordinary how we have extended our lifetimes several times over
and created a world in which the death of an infant has become rare
rather than typical.  But our path to the luxury of children who
typically live, rather than die, and who typically grow to an old age
has not been an easy one, nor will it be easy to continue to improve
human life around the world.

One of the primary challenges we face in creating a world of
widespread peace and abundance, is overcoming the hatred many people
feel towards the free enterprise system, or "capitalism," as the free
enterprise system is referred to by its critics and enemies. If we are
to dramatically reduce global poverty and war we need to re-vision and
re-brand capitalism.  In order to do so, those of us who seek to
create a new identity for capitalism need to identify those elements
of capitalism that are intrinsically virtuous while also admitting
those elements of capitalist practice which are, in fact, vicious,
much as the critics believe.  We also need to create and support ever
more virtuous manifestations of capitalism while also fighting the
deep-set bigotries against capitalism that prevail in so many
quarters.

John Mackey's preferred expression to represent the ever more virtuous
manifestations of capitalism is "Conscious Capitalism."  His two
criteria for the practice of Conscious Capitalism are:

• That it be based on a deeper purpose than profit maximization.
• That it understands the interdependent relationships between all stakeholders in the enterprise, including shareholders, employees, suppliers, customers, communities, and the environment, and addresses the interests of each and the relationships between the stakeholders to optimize the enterprise system for the highest good for all.

I won't add to his discussion of the stakeholder model at present, but
with respect to deeper purpose, John makes the sensible point that the
creation and management of enterprises ought to be regarded as a
profession, with ethical standards and lofty aspirations, so that we
understand the nobility of enterprising much as we understand the
nobility of law, or medicine, or education.  This is not to deny that
sometimes businesspersons, or lawyers, or doctors, or educators are
sleazy or unworthy individuals.  Some are, some always have been, and
some always will be.  But those who limit "capitalism" to a mechanical
notion of "profit maximization" are unfairly denying the nobility of
the nature, effects, and intentions of many in the business world.
Worse yet, by claiming that "capitalism" is somehow intended to be no
more than "profit maximization," they thereby encourage and support
those who are either mindless or vicious in the business world.

Moral purpose is an essential feature of human nature.  In the tribal
environment, it was crucial to survival that each member of the tribe
supports the norms of the tribe, which were often manifested in a
moral and cosmic order integral to the beliefs and identity of the
tribe.  Beyond loyalty to the customs and the gods worshiped by
individuals in the tribe, tribal leaders needed to exemplify support
for and commitment to the customs and the gods.  Contrariwise, tribes
disciplined those who failed to adequately support the cultural
integrity of the tribe by means of social disapproval as well as
harsher sanctions, ultimately including banishment or death. The code:
"Good people support the moral purposes of the tribe" has been bred
into us through its utility to tribal survival over millions of years.
 It isn't smart to ignore Mother Nature.

Indeed, despite the extraordinary diversity of recorded human history,
until the 19th century the centrality of moral purpose to human life
was self-evident.  There were many villains and criminals, but
typically even they claimed some higher purpose for their crimes.
Only in late 19th century Europe do we find a widespread decline in
belief in moral purpose among certain intellectuals, even a dogmatic
belief that the most advanced scientific thinking - sometimes regarded
as Marx, Darwin, and Freud - had shown that moral belief was a
delusion.  The evolutionary psychologists have shown (as did Darwin)
that the hunger for moral purpose is as real as is the hunger for
food.  And just as our evolutionarily optimized appetite for food
leads us to eat fats and sugars that are not good for us today, our
appetites for moral purpose have sometimes led us into dangerous moral
diets.

Just when the timeless belief in moral purpose was fading among some
intellectuals, there were violent conflicts between workers' unions,
on the one hand, and business leaders, on the other.  These conflicts
were exploited by intellectuals starved for meaning who believed that
they could create a better world through violent revolutions leading
to an idyllic Marxist communism.  By the 1920s the Marxists had taken
the moral high ground at many universities around the world.  While
there continued to be many noble business leaders who continued to
create and manage companies based on a deeper purpose, by the early
20th century almost no intellectuals were willing to defend them.
Anti-capitalist moral righteousness intimidated all but a very few
defenders of free enterprise into silence.  By the late 1930s, the few
remaining defenders had been effectively marginalized.

Rather than defend the moral purposefulness of free enterprise, as
classical political economy had done, neo-classical economics withdrew
into mathematical formalism and developed the notion that corporations
"maximized profits," an amoral but mathematically convenient notion
that was completely alien to the classical political economy of Adam
Smith and J.S. Mill.  And thus during a period in which we most needed
a moral theory and practice of capitalism, moral perspectives on free
enterprise almost completely vanished from the realm of ideas.  The
universities, widely believed to be temples of learning for the sake
of human advancement, often advanced Marxism, the most lethal moral
ideal the world had yet seen.  Our appetite for moral purpose had led
us grievously astray.

Ironically it was during this period in which defenders of capitalism
based on moral purpose were most needed that our business schools were
founded, almost all of which taught that profit maximization was the
goal of businesses, and which attempted to provide "scientific"
methods for maximizing profits.  This is not to disparage the
excellent technical analyses which have been developed through schools
of business that have, in fact, been very useful.  But it was not
necessary to neglect the moral dimension of business, and it is a
tragedy that it was so neglected.  Thus it came to pass that those
temples of learning were simultaneously advocating destructive
anti-capitalist ideas as well as destructive capitalist ideas based on
the notion that corporations are no more than machines for maximizing
profits.

In response to the generations who have been taught the mistaken
notion of "capitalism as amoral profit maximizer," we have seen an
increase in interest in making business more moral.  Unfortunately, in
the form of Corporate Social Responsibility (CSR) the primary
perspective has been that of the anti-capitalists:  Business is often
perceived as intrinsically guilty, and CSR campaigners sometimes
regard themselves as self-appointed moral police force out to force
business to be moral according to their beliefs.  Again, this is not
to disparage all CSR campaigners, who have often won important
campaigns that have, in fact, made moral improvements in the
functioning of capitalism.  But just as amoral "profit maximization"
was not an ideal, so to the notion that business is ipso facto guilty
is also not an ideal.  It is not true, and the notion of business as
"guilty until proven innocent" will never mobilize a generation to
utilize capitalism to transform the world for the better.

The moral purpose of capitalism has been largely asleep for a hundred
years.  It is time for capitalism to wake up, and become conscious,
more conscious than it has ever been before.  Many of the great
entrepreneurs and inventors of the past - Thomas Edison, Henry Ford,
Alexander Graham Bell, George Westinghouse, Samuel Insull, etc. - were
morally purposeful business leaders.  Unfortunately the intellectuals
were united against them and not enough of their colleagues came out
in their defense, and no one foresaw how close we came to losing the
free enterprise system altogether until it was almost too late.
Moreover the earlier generation of morally purposeful business leaders
were not as sophisticated in their moral entrepreneurship, in their
moral leadership, as they needed to be (for instance, although Ford
really did care about democratizing transportation, and did so, he was
also a bigot).

Thus it is important that the new Conscious Capitalists be more
sophisticated, mature, aware moral entrepreneurs, and use their
enterprises and their abilities to create and lead enterprises in ever
deeper and more morally inspiring ways.  The fact is that free
enterprise is the most powerful tool for human betterment the human
race has ever known.  We need to pick it up and use it consciously.
We need moral purpose and we need the nimble, scaleable, innovative,
versatile power of free enterprise.  We need organizations in which to
work, in which to invest, with which to trade, and from which to
purchase goods and services that are truly deserving of our highest
moral aspirations.

It is natural and good for human beings to want moral purpose, and for
young people to respect, admire, and seek to emulate those individuals
with integrity who exemplify moral purpose.  As business leaders,
business schools, economists, and others who believe in the positive
power of free enterprise increasingly commit to a Conscious Capitalist
model in which the moral purpose of business is central to the life of
every so called "for-profit" corporation, we will see capitalism
increasingly respected as the powerful force for positive change which
it has the power to be.

A parable on the power of purpose:  As a delegate at the U.N.
Commission on the Status of Women, I attended a panel on innovative
ways of financing women's causes.  At one point when the panel was
discussing ways of obtaining funding from corporations, a delegate
from Brazil raised her hand to say that she would never take money
from a corporation because all corporate money was morally tainted.

At that moment I paused to consider the fact that she, and all others
there, clearly respected the U.N.  But what would we think of a
for-profit corporation which had a "Human Rights Advisory Board" that
included many of the worst human rights abusers on earth, that had
"Peacekeeping Forces" that went to developing world countries and
raped the women, and which was involved in a billion dollar oil
corruption scandal involving the leader's son and one of the worst
dictators on earth?  Strictly based on the facts of the case, such a
for-profit corporation would be regarded as a corporate criminal far
more evil than Halliburton or Blackwater.  And yet alongside these and
other grisly facts about the U.N., the U.N. exemplifies some of the
highest aspirations of the human race, as exemplified in the U.N.
Declaration of Human Rights and other U.N. documents.  And to a
remarkable extent aspiration trumps behavior when it comes to public
perception.  Our evolutionary code apparently inclines us to swoon
before moral aspiration much as it causes us to crave sugar and fat.

Hardheaded economists and businessmen may snigger when John and others
talk of "moral purpose" and "Conscious Capitalism."  For those who
would snigger at the real world impact of moral purpose on public
moral regard and reputation, I would have them explain why the U.N. is
regarded around the world as a more positive global moral force than,
say, Johnson & Johnson or EBay.

The fact is that the U.N. is not and never will be capable of making
the U.N. Declaration of Human Rights a reality.  But business is
bringing those goals closer to reality every day.  Conscious
Capitalists need to commit to goals as lofty as those of the U.N.
Declaration of Human Rights - and higher.  A global league of
Conscious Capitalists, with the stated intention of bringing peace and
prosperity to all, and manifesting their intentions with integrity,
could make extraordinary progress towards those goals.

And as millions of our brightest and most ambitious young people pour
into ever more morally committed corporate entities, and as we create
a more conscious operating system for capitalism, we will thereby
create a healthier world with happier people, a world of
morally-inspired enterprises in which profitability is ever more
closely aligned with contribution to the good, the true, and the
beautiful.

Peace,



Michael Strong
 CEO & Chief Visionary Officer
 FLOW, Inc.

P.S.:  For a fabulous account of how our evolutionary mind is confused
by contemporary economies, see Michael Shermer's new book, "The Mind
of the Market."

P.P.S. Don't miss John and the FLOW team at 2008 FreedomFest, July 10
– 12 in Las Vegas.