CAPITALISM AT ITS BEST
Socially Responsible Practices Move Into The Mainstream
by MarJorie Kelly

"An image as an environmentally responsible company is becoming an essential part of a competitive strategy." -- Business Week, June 18, 1990

To my mind, the item was front-page news of the fundamental sort, worthy of a weighty editorial, but The New York Times had tucked it away in the business section, and if my read-through hadn't been more leisurely than usual that morning I would have missed it entirely. (Only the very idle or the very bored read pieces titled "Electricity Price Plan Is Backed.') Yet here was news of a New York state court ruling that utilities could set electricity prices based on power saved, rather than on power used. Instead of coupling profits to rising sales, the new rate system couples profits to reduced demand. In a strategy known as "demand side management," utilities subsidize efficiency improvements for customers, and recover the expense through electric charges. As a brief filed on behalf of the National Audubon Society stated, "We cannot expect power companies to take conservation seriously unless there is something in it for them."

I read the piece several times through, fascinated, for here was tangible evidence of a truth I have long believed: that the profit motive is not inherently wicked, but is rather a powerful engine that can be harnessed for virtually any purpose-including a socially responsible one.

In recent months, there has been a good deal of evidence of this truth -- the most prominent being the speed with which business is gaining environmental awareness. I'm thinking, for example, of the recent special section on the environment in Business Week -- a publication that serves as an unfailing barometer of mainstream business sentiment. In the magazine trade, special sections are known as pure advertising vehicles, covering safe and non-controversial subjects. And for Business Week, the mantle of non-controversy apparently extended to topics like "The Global Commons," zero toxic emissions, sustainable development, deforestation, CFC elimination, energy conservation, and alternative fuels. Everybody and their v.p. wanted into this section -- which ran a surprising 107 pages -- and featured CEOs of Monsanto and PG&E alongside the chairman of the Earth Island Institute. On the issue of business and the environment, the magazine concluded, "an abrupt about-face has begun."

I'll say.

And it's not the only about-face on social issues I've seen lately. South African divestment began as an issue of little concern to anyone beyond college age, but it ended up as front-page news in The Wall Street Journal, when the smattering of companies leaving South Africa became a stampede. Green products that once showed up only in hearth food stores are today the hottest concept -- predicted to be in the '90s what "lite" products were in the '80s.

It seems to be occurring with greater frequency and speed today, that ideas which begin on the periphery move into the mainstream. Companies that once looked like mavericks, with their socially responsible practices, turn out to have been the harbingers of things to come.

Hernan Miller was virtually alone when it instituted worker participation and teams in the 1950s, but today Fortune calls self-managed teams "the productivity breakthrough of the 1990s." Even the conservative National Association of Manufacturers has endorsed employee involvement in decision-making, calling it "a revolution that will transform the way work is organized."

When I read the business press for signs of change, it's unmistakable to me that something new is stirring. The evidence is overwhelming: A more socially responsible way of doing business is taking shape.

But not everyone sees it that way. In his new book, Making Peace With the Planet, Barry Commoner flatly declares that capitalism can create nothing but environmental degradation. Profits, he writes, are inherently in conflict with the environment. In downtown Minneapolis I picked up a free copy of New Unionist, which tells me that "corporations can succeed in the competitive capitalist market only by exploiting the Earth." Even Management Review recently headlined an article, "Is Business Ethics Really an Oxymoron?" If I had a dime for every time I had been asked that question, I could retire today a wealthy woman.

The notion of capitalism as evil is firmly rooted in our collective mind-set, yet it is an image increasingly at odds with reality. We haven't updated our image of business since the days of the robber barons, and it's time we did so.

We may cling to the notion that nice guys finish last and the ruthless get ahead, but today the reverse seems to be true. When Frank Lorenzo played hardball with the unions, he ended up driving Greyhound into Chapter 11. In the 1990s, you don't have to be a saint or a genius to figure out that it doesn't pay to alienate workers and turn them into enemies.

And you don't have to be a prophet to see that social responsibility is more and more a requirement of good business. If the about-face on the environment weren't evidence enough, if the rise of worker participation weren't evidence enough, there is the wave of legislation washing over us in this post-Reagan era. In the last few months alone, we've seen bills passed or close to passing that update the Civil Rights Act, mandate new clean air requirements, expand the employment rights of the disabled, and contemplate everything from better food labeling to bans on cigarette machines.

The paragons of business today are companies like IBM with its no-layoff policy, Johnson & Johnson with its effective handling of the Tylenol incident, Herman Miller with its employee involvement. They're the ones who show up on Fortune's list of the Ten Most Admired Companies -- where environmental and social responsibility is one of the key criteria.

A new paradigm clearly is emerging, and it is time we recognize it. The old view of business as a jungle, where only the vicious survive, is giving way to a new view of business as a community affair, where only the responsible get ahead.

That's not to say business is wholly transformed and now 100 percent pure. But it does mean that our picture of what constitutes good business has matured. There's a new way of looking at capitalism: not as preying upon society, but as serving society. It's an image, you might say, of capitalism at its best.

This article is excerpted from Business Ethics, 1107 Hazeltine Blvd., Suite 530, Chaska, MN 55318. Sample copies are available for $5. Marjorie Kelly is Editor and Publisher of Business Ethics.

Copyright © 1996. The Light Party.