Social Capitalism and
the Rise of a Global Equity Culture
by Patrick F. Mahoney
Founder & CEO, Energy Answers International
A REVIEW OF
World Inc.: When It Comes to Solutions — Both Local and Global — Businesses Are Now More Powerful Than Government
Reviewed May 29, 2007
In World Inc., the sixth published book by Bruce Piasecki, Ph.D., one finds a vivid description, with real, understandable examples from the more progressive of the many multinational corporations, of an important phenomenon which has been described as Social Capitalism, "the Global Equity Culture."
A point that he makes early — that "51 of the 100 largest economies in the world are corporations" — is surprising and properly sets the foundation for his contention that multinational corporations are best capable of improving global quality of life and solving large-scale social problems.
Dr. Piasecki suggests that benefiting society has become increasingly important to profitability — and he is writing this book not as a mere observer of a trend. He has been one of the key initiators and communicators of a new global corporate understanding that problems can be solved and avoided, that crises need not develop, and that negative impacts can be mitigated if corporations adopt a proactive approach to analyzing and understanding the social, economic, and environmental consequences of their business activities and actions. What progressive corporations are finding is that this understanding can even improve the bottom line to the point where corporate governance decisions have become profit enhancers.
The author teaches this to the eager leaders of new departments, created by multi-nationals, called directors of social research and corporate governance, environmental health and safety directors, and chief environmental officers of some of the world's largest corporations. His enthusiasm for the unexpected benefits accruing to a company as an unintended consequence of a positive corporate business action that helps to solve a social and/or environmental problem is genuine and contagious. His great respect for those companies that have recognized their power to induce positive change and have made socially responsible governance a factor, even a driver, of their decision-making process is an encouragement for others to emulate their actions.
In his semi-annual conferences, from which he draws a great deal of the material for this book, Bruce brings together business leaders committed to improving the environment. He stimulates and challenges each individual to recognize the potential they have to initiate profound positive change. He shares examples of outstanding achievements as well as slow steady progress, of corporations that demonstrate good corporate governance by accepting a broader responsibility and that, as a result, realize significant economic dividends.
In his unique benchmarking conferences, Dr. Piasecki has invited Tom Chappell (Founder & CEO of Tom's of Maine) and Bob Stillert (CEO of Green Mountain Coffee) to address the corporate governance leaders of DuPont, BP, Arcadis, Dayton Power & Light, Chevron, FMC, the US Air Force, etc. "For what purpose?" one might ask; for the same purpose that he wrote World Inc.: to illustrate the economic benefits of addressing social concerns and to inspire others to evolve in that direction.
Evolution at Its Best
Tom's of Maine and Green Mountain Coffee are vivid examples of individuals and companies that have sensed the evolution of human concerns and responsibility in strong economies, and have responded by providing some social responsibility satisfaction with their everyday products: soaps, toothpastes, cleaners, and coffee. They have told their supply chain management and responsible environmental concern stories well and softly, so that the consumer pays a premium in order to support their socially responsible activities. And the consumer feels good about it. They have provided an uncompromised high-quality product and taken good care of the environment — and their suppliers and support staff along the way. And the response has been: "I'll pay a bit more for that, and I'm supporting an effort that is making a positive difference in the world and soothes my conscience a bit as well."
In his previous books and conferences, Dr. Piasecki has always recognized the right of corporate management, and their obligation to shareholders, to maximize profits. However, he has steadfastly proposed and demonstrated that the short-term quarterly profit goal should not compromise the long-term growth of a company by sacrificing good corporate governance and publicly beneficial actions. In this book he cites numerous examples of the long-term corporate benefits derived from a proactive policy of social and environmental problem avoidance.
The overall theme of his books has been respect for efficient, effective problem solving — always taking the problem-solver role rather than the "sound the alarm" approach. World Inc. consistently advocates responsible capitalism as the best structure for solving the problems in our society. The author clearly makes the point, and cites examples, that "doing well" while "doing good" is a sound business principle. He promoted corporate social responsibility and sustainability long before they were a tab on every corporate website. Working with some of the most profitable companies in the world, he has seen first-hand that corporations can be effective vehicles for improving society; and a consequence of that effort can be a better image, better sales, better profits, and better morale. World Inc. effectively and clearly conveys that message and empowers the reader to visualize their role in promoting positive change.
One concern that the book raises that I believe could be a dangerous path to pursue is the need for an internationally accepted norm to establish how much social responsibility to reasonably demand from a multi-national (p. 7). At another point, the need for more government leadership and a complaint that corporations are not stepping up to the plate to encourage new government regulations on climate change was raised by Frank Loy, the Executive Director of the NGO Environmental Defense. He suggested that Dr. Piasecki end his book by asking Why? But this book has gone well beyond that and has recognized that the multinationals are probably best equipped to solve the more serious global problems in a rational and timely manner.
After acknowledging that there is a role for government, the ending is more true to the theme of the book: "It is as if the power of consumers in a global equity market can provide daily and weekly inputs for corporate change faster than governments can regulate the expected behaviors."
World Inc. does not question the profit motive, but recognizes that our generation has "greater confidence than our ancestors did in the relative fairness of global capitalism." It is an objective but hopeful book: "with the right kinds of social leaders, large multinational corporations can play the key role in solving the long list of challenges facing society in the twenty-first century, from climate change to avian flu to the rapid erosion of affordable water and land. Therein can be found our best grounds for hope in the near future."