Changing the Narrative
What future business has to look like to be creative and truly productive.
What story do you tell yourself about business? How do you explain the motivations and intentions of different agents in such a sophisticated market? Is it profit and the reckless pursuit of self-interest that drives them? That at least, is the chorus that the academic community has been singing for almost two hundred years. But why? Who came up with this idea?
Many with the needed background will refer to Adam Smith’s “The Wealth of Nations” in which the Scottish philosopher wrote down what was to become the foundation of the biggest and most sophisticated social system the world has seen. In short, he proclaims that the one who rationally follows only his personal self-interest in a free enterprise market automatically serves the community to his highest potential. This idea is indeed well argued for and it can certainly predict market behaviors to a certain extend in some sectors.
But it is not universal, yet widely implemented as if it was!
I argue that in the first decades of capitalism the field of economic theory somehow boiled down to this single premise, out of many ways to explain the markets. Maybe this happened, because it simply is the best fit. But maybe, and that’s what I believe, it happened because it’s much easier to build a whole field of pseudo-“mathematical” science on a simple, rational statement instead of a vast set of philosophical assumptions. Like the basic axioms of mathematics (e.g. there is 0, there is 1, …) the basic axiom of a myriad of market theories is the rational agent. A farfetched assumption about the core motivation of people that has proved to be wrong through psychology and philosophy alike. Yet it is the core of a science for which we award Nobel prices every year.
Economists don’t like to hear it, but what they are dealing with in their nice, formula-filled whitepapers and dissertation are not rational agents but humans with a wide range of emotions influencing every single decision. Thus economics should not think of itself as a natural science (where you can construct a formula and proof it mathematically), but rather a human or social science like philosophy, theology or sociology. In fact, it is combination of them all.
Economics took from us our human core of philosophy, emotion and compassion in order to fit us into a formula.
What did this simplification lead to? It led to the merely profit based understanding of business that is so widespread today. A destructive, primarily negative point of view towards corporations and markets. We consider work as a dread, businesses as the danger to the environment, corporations as reckless exploitation machines. These negative images are the stories we know about capitalism. Not that it lifted more people out of poverty than ever before. Not that it enabled inventions like electricity, the automobile or the cellphone. We consider these to be given “by nature”, but it was business that made them accessible.
What then, you ask, is the free enterprise capitalism really, if not the form we have seen the past 200 years? In its core, capitalism, unlike mercantilism is based on the assumption that we can grow the economic pie out of the limited resources we have, by creating new, valuable products, ideas or processes, so that everyone can have a bigger piece. It is not, by any means, a zero sum game. Furthermore, business used to rely on voluntary exchange. No one if forced to buy things from a certain vendor, and no one is forced to sell anything.
I think the key to understand the difference between destructive (past) and creative (future) capitalism is the narrative we tell ourselves about it. It is, in different forms, the answer we give to the question: Why? Why do you build your own company? Why do you want to sell a product? Why would you want to give up your free time for such a project?
As we have seen above, the traditional capitalist can only have one answer to this: Profit. Profit is the ultimate purpose of business if you listen to the consensus of economic theories today. And while profit obviously is necessary for a business to prosper in the long term, it does not have to be nor should it be its singular purpose. As an entrepreneur of the conscious capitalism movement you don’t ask: “How can I reap profits?”, instead you ask: “How can I create value for others?”. Naturally, if your idea is good and your intentions pure, the profits will follow.
Doing something good for others and “business” in one sentence. That sounds suspicious already, doesn’t it? That right there is your deep mistrust in capitalism enacted. By no means am I trying to talk you out of this somewhat needed mistrust, for I know that in the world we live in right now, one needs to be wary of crony capitalists trying to reap undeserved profits on the cost of others. And you need to be wary of people presenting a formula that tells you that the rational way is always the best. So please keep your critical point of view.
For many, though, the horrible consequences of wrong, destructive capitalism are so overwhelming and depressing that they are not able to see a positive future anymore. But it is this limited mindset that restricts our abilities to transcend into a world of creative capitalism.
What I mean is the mindset that strictly separates business from normal life. A mindset that sees business as something what we have to do in order to live. Terms like “work-life-balance”, incorporate this contrast we see everywhere. There is something inherently good, called life and society. And there is something bad, called work and business. The widespread implementation of such a mindset is clearly the result of the decades if not centuries of disappointment we felt from harmful capitalism combined with economists “justifying” these matters in cold, rational formulas.
They took the human part out of business and thus alienated it from its very core participant: us.
If and only if we are able to abandon this narrative, will we be able to transition into this new, wholesome and sustainable form of capitalism. This comes along with a change in our understanding of people and their intentions so deep, that it might just be the most fundamental change we have seen in a long time. And that although we technically keep all our institutions, systems and practices in place. We really just change the narrative.
The new narrative is about people. People interacting and engaging in a voluntary system of win-win cooperation. The new narrative is about serving. Serving the needs of others with valuable products and ideas. The new narrative is about trust. Trust in the honesty and purity of other peoples intentions.
The new narrative is, if anything, about us. Us enacting our graving for acceptance, importance and community not despite the business we do, but through it.
When it comes to business, I sometimes like to forget everything I was told about it and just think of it like that: Business is the most natural thing for us to do, because it is about getting things done. What else are we here for if not to improve the situation of everyone on this planet?
Yet business became a victim of the narrative and over time, the story we told ourselves became more important than the subject it covers. This is a tragedy, but more than that it is an opportunity, for the narrative, by definition, can be rewritten. Let us change it to the better.