Now is probably as a good a time as any to introduce a new ‘ism’ to the world – as we start a brand new decade knowing we have yet to find a long-term solution to the catastrophe of the 2008 financial meltdown. But it is not just the global banking and financial system that is being scrutinised more closely than ever but the very basis on which we run society. The BP oil spill will get paid for by BP continuing to operate as a conventional, capitalistic entity but you don’t have to be a rampant communist to be thinking is this really how we want to run our world – as long as somebody pays the price all is well? Obviously the green, environmentalist and social responsibility pressure groups will be muttering ‘we told you so’ but they have not put together a complete, holistic, coherent and systemic alternative to move us from where we are now. Communism failed and even democratic socialism is facing its toughest test ever. So maybe we need to start looking for a totally coherent, evidence-based approach to resolving issues of economic regeneration, social policy-making and organisational management simultaneously. Welcome to the world of valuism.
While capitalism was supposed to create wealth rather than destroy it and socialism was meant to distribute that wealth equitably, at the moment neither side seems to be sticking very closely to their part of the bargain. The goal of valuism, therefore, is much the same as the combination of these two competing forces but without any of the inherent conflict that has always produced an uneasy relationship between the two. Valuism aims to create as much value as possible for the greatest benefit of as many people as possible. Under valuism capitalists still have to produce as much profit as they can but socialists will also see that the rewards produced are more evenly and equitably spread. The only difference is the key part played by the management of people – human capital. Valuism is founded on the simple tenet that value cannot be maximised unless everyone is motivated to do their best to produce as much value as they possibly can.
Of course these arguments are not new (e.g. from each according to their ability, to each according to their need) but the world was not ready for them. Take Nobel prize-winning economist Milton Friedman’s view that -
“there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”
From ‘Capitalism and Freedom’ (1963), but quoted in his seminal New York Times Magazine article, September 13, 1970
Friedman knew exactly what he was saying and equally knew the reaction it would unleash – some of us do take great pleasure in shaking up conventional thinking – and as an economist myself I find I have to agree with Friedman – up to a crucial point. Where we would part is the word ‘profits’ – I would insert the word ‘value’ instead. So what’s the difference?
Take Bill Gates (or maybe Steve Ballmer as well) as an example. Bill Gates is one of the richest men in the world and is often described as a philanthropist; as are many successful entrepreneurs and businesspeople who give their money to societal causes. In Bill Gates’ case one of these is looking for a cure for malaria. The only problem is that this view of Gates does not sit easily with Microsoft’s reputation as an abusive monopolist (for which it has been fined) and I doubt if anyone would view Ballmer as the epitome of the beneficent philanthropist. Hence we have a phenomenon I call the ‘Microsoft Paradox’ (see ‘The Value Motive – The ONLY alternative to the profit motive’) – are these people a force for good or evil? They cannot be both simultaneously – an ‘evil philanthropist’ would be a perfect oxymoron.
So what is the solution to this conundrum? It’s incredibly simple – for Gates and Ballmer to truly earn the love of their fellow citizens they should have subscribed to the goal of value – that is, the most efficient, effective and innovative version of Microsoft without abusing their market position (which fits with Friedman’s view) – then they would be true philanthropists who could happily spend their well-gotten gains on whatever cause they chose.
From an evidence-based perspective there is also a simple lesson here – the only evidence that society should be interested in is value – not profit – and they are not mutually exclusive. We will explore the implications and ramifications of valuism in much more depth as this series continues.