By Mohamed Elwani
The concept of conscious capitalism reveals, albeit implicitly, that there are many errors, or as Naomi Klein calls them “disasters”, in the structure of the traditional capitalist system, as an economic practice and system.
Thus, this concept/theory (conscious capitalism) was an attempt not only to acknowledge these mistakes but to utilize and use them for the benefit of the capitalist system itself.
Here we have to say that the treatment offered by the theorists of conscious capitalism is capitalism to the core. They think in the same way, and follow the same methods, and it is not surprising that they differ slightly in their results and recommendations from Milton Friedman and his teachings.
What is Conscious Capitalism?
The concept was formulated by Whole Foods Co-Founder and Co-CEO John Mackey; Marketing Professor and Speaker Raj Sisodia; In their joint book Conscious Capitalism: Liberating the Heroic Spirit of Business.
Conscious capitalism refers to a socially responsible economic and political philosophy. The underlying premise here is that companies must act ethically while seeking profits, which means that they must think about serving all stakeholders involved, including their employees, humanity, and the environment, and not just stakeholders and investors.
The doctrine of this capitalism acknowledges that, while free-market capitalism is the most powerful system of social cooperation and human progress, through which people can aspire to achieve more, it does not, at the same time, diminish the pursuit of profit; But it only encourages the inclusion of all common interests in the company’s business plan.
Conscious capitalism’s doctrine includes competition, free trade, the rule of law, and voluntary exchange. But it is also built on the foundations of traditional capitalism; By adding items; Like trust, compassion, cooperation, and value-making into the formula.
Although profits do not take a secondary position in conscious capitalism, it does stress the imperative to do so in a way that integrates the interests of all the major stakeholders in the company.
And because the concept of conscious capitalism is a slippery concept, not identifiable systematically and rigorously, we see it mixed with other concepts. It, for example, shares many themes with the concept of impact investing, an investment style that seeks social benefits as well as returns.
This is even though the two concepts are not identical. Conscious capitalism refers to specific business practices that an individual company may adopt, such as sourcing sustainable materials or adopting fair business practices, while impact investing is an investment style that seeks companies with social, or environmental benefits, which may include “conscious capitalism” businesses. Corporate Social Responsibility (CSR) also shares many themes with the idea of conscious capitalism.
Many companies with strong CSR programs also follow the ideas of conscious capitalism. However, conscious capitalism differs from the traditional understanding of corporate social responsibility; By focusing on self-awareness within the company’s leadership; To understand how their business practices can influence other stakeholders.
Principles and Guidelines
This philosophy is based on four basic principles, which we summarize as follows:
-Higher Purpose: A business that adheres to the principles of Conscious Capitalism focuses on a goal beyond pure profits, and in doing so, it inspires and engages key stakeholders.
-Stakeholder Orientation: Companies have many stakeholders, including customers, employees, suppliers, and investors, and some companies focus on their shareholders to the exclusion of everything else. On the other hand, conscious action focuses on the entire business ecosystem; To create and improve value for all stakeholders.
-Conscious Leadership: Conscious leaders emphasize “we” rather than an “I” mentality to lead the work; By doing so, they are working to cultivate a culture of conscious capitalism in the project.
-Conscious Culture: Company culture is the total of the values and principles that make up the social and ethical fabric of the business. A conscious culture is the culture in which conscious capitalist policies permeate the organization; This enhances the spirit of trust and cooperation among all stakeholders.
This concept has not escaped criticism, even by proponents of the capitalist current itself; A range of critics believe that conscious capitalism can solve problems within the corporate structure, which they see as a mistake.
These critics also point out that adopting this model may not necessarily bode well for investors who often seek good returns.
Other critics argue that the responsibility should not necessarily lie solely with business, particularly the private sector; They see the responsibility to enable change through public policy and the collective efforts of leaders.