Abstract
The purpose of this essay is to suggest that one of the dominant modes of thought in our society is a profound mistrust and misunderstanding of the role of business. A dominant myth in society is that business occupies the moral low ground, separate from ethics or a moral point of view. This position is characterized as the “business sucks” story, and the essay shows how the enactment of this story underlies business thinking among managers and business theorists. The essay concludes with a suggestion to rethink and reinvent this story along more realistic and more empowering lines. Values based capitalism, or stakeholder capitalism, offers a better way to understand the complex role that business does and should play in modern society.
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Notes
The “business sucks” story is intended as a further elaboration of what Richard Rorty (1992) called the “America Sucks Sweepstakes” referring to Jonathan Yardley. However, one may refuse to participate in the America sucks sweepstakes and still believe in the business sucks story, as is the case with some modern pragmatists.
This section is a direct paraphrase of what John Wisdom considered to be the problem of philosophy (cf. Wisdom (1970: 1–2)). The link between Wisdom’s view of the role of philosophy and Rorty’s notion of “redescription” of self and community is larger than indicated here.
This is the dominant version behind the recent waves of rhetoric on business restructuring and re-engineering where thousands of employees are fired to make things better for “the business”, and ultimately, so the story goes, for society.
In today’s world we can see this version of the story behind the current mania of companies to buy back their own shares to pump up the stock price, and the existence of raiders who put good companies into play with no motive other than to profit from the stock.
This is precisely Gilbert’s beef in The Twilight of Corporate Strategy (1992), and his more recent Ethics Through Corporate Strategy (1996). Why not just assume that business is one more way that human beings create meaning, and that we are fully human while we are fully engaged in business? We have tried to make this clearer recently in Freeman et al. (2010).
It is also related in a complex way to these many recent proposals for the revision of the story of capitalism. With colleagues, Bidhan Parmar and Kirsten Martin, I explore this new story in a forthcoming book tentatively titled: Business: the New Story. A first version of the argument here can be found in Freeman (2017a).
I leave these principles as they were in the original. I would state them differently today as I do in Freeman (2017a) note 8 op. cit. and in Freeman et al (forthcoming).
I would put this principle in the context of interdependent stakeholders and the search to avoid making tradeoffs. See Freeman (2017b)
And, it is worth noting that values based capitalism has plenty of room for businesses that may suck. Not all values are warm and fuzzy, as Freud and others have taught us.
References
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Exhibit 1
Exhibit 1
Four Principles of Values Based Capitalism or Stakeholder Capitalism
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I.
The Principle of Stakeholder Cooperation.
Value is created because stakeholders can jointly satisfy their needs and desires.
[Capitalism works because entrepreneurs and managers put together and sustain deals with stakeholders, rather than become agents of the owners of capital.]
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II.
The Principle of Complexity
Human beings are complex creatures, capable of acting on multidimensional values, some of which are selfish, some of which are altruistic, and many of which are jointly created and shared with others.
[Capitalism works because of this complexity rather than in spite of it.]
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III.
The Principle of Continuous Creation
Cooperating with stakeholders and motivated by values, people continuously create new sources of value.
[Capitalism works because the creative force is primarily continuous rather than primarily destructive.]
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IV.
The Principle of Emergent Competition
In a relatively free and democratic society, people can create alternatives for stakeholders.
[Capitalism works because competition emerges out of the cooperation among stakeholders, rather than being based on some primal urge of competition.]
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Freeman, R.E. The “Business Sucks” Story. Humanist Manag J 3, 9–16 (2018). https://doi.org/10.1007/s41463-018-0037-y
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DOI: https://doi.org/10.1007/s41463-018-0037-y