Thursday, June 12, 2008

Capitilism 2.0

A few days ago a colleague at The Naples Institute commented on the notion that the sole purpose of a business is to make money for its stockholders, who are then free to do what they like with it, including giving it to charity if they choose. That's not a new idea, of course; it is one of the tenets of Primitive Capitalism (my own term). Indeed, in a public corporation, stockholders have been known to sue management in order to compel them to maximize profits.

I don't think that choice will disappear anytime soon, and I don't think it necessarily should. I personally enjoy choice and variety in the world.

Here's the thing, though: that is becoming only one option of several in the modern economy. One thing I would really like to see happen with The Naples Institute is for us to establish ourselves as leaders in what many are calling Capitalism 2.0 - the more sophisticated view of businesses as potential instruments for positive social change as well as of profits.

Look at the "For-benefit corporation," such as Newman's Own, which is legally a for-profit company, but which gives 100% of those profits to charity. That's hundreds of millions of dollars so far. There is another for-benefit corporation, TMI, in Immokalee that I hope we get to tour at some point. Michael, Jane, and I are in the process of turning Naples Social into a for-benefit corporation. The model makes more sense to us, especially as we are not going to ask for donations to fund our operations.

Many profit-oriented companies are still agents of social responsibility. Starbucks and numerous other firms sell Fair-Trade Certified coffee. Whole Foods is very serious about its giving. And we already talked about Tithe and More (, the local real estate firm that gives 30% of its profits to charity.

Gene Landrum and I have just started a venture fund. 10% of our profits from that will go to charity. Also, the companies we create will give 10% to charity. Our first firm is already set up to do so.

The question came up at the last NI meeting, does Tithe and More benefit from its dedication to charity? Is this a marketing ploy? My answer is, (a) I'm certain it is useful to its marketing - I myself would prefer to give them my business than another realtor - but (b) it is not a ploy. I've met Bill Ventress, the broker/founder. He is a remarkable man who honestly, to his core intends to help others.

Capitalism 2.0 is all about companies doing more than just maximizing profits. It's about doing Good, with a capital G. It is also about Enlightened Self-Interest. Chew on this: overwhelmingly, the companies I am familiar with that are socially responsible are also much more competitive than their less generous competitors.

My argument for even the most Neolithic, primitive business person who wants to make money and nothing else: give. Behave ethically. It pays - in actual money.