Why Do Businesses Exist?
Not everybody was as relaxed. Markets are dependent on rules and laws, but those laws and rules are also reliant on honesty and trust. If the truth is hidden or this trust is lost, no one will want to play the game because it is too unpredictable. When this happens, the markets will be empty and prices will plunge as common people look for new locations to stash their cash, such as their homes or beneath their beds. We will all be poorer and capitalism's great virtue—that it offers a method for society's savings to be converted into the creation of wealth will have been undermined. Either that, or we will have to depend more and more on the government, which has never been particularly good at creating wealth.
Trust is a delicate thing as well. Similar to a pane of glass, once broken, it can never be the same. Recently, it has appeared to many that corporate CEOs are no longer managing their businesses for the benefit of the customers, or even of their shareholders and staff, but rather for their own financial gain and personal goals. Only 18% of Americans, according to a Gallup poll conducted at the beginning of 2002, believed that corporations did a good job of protecting their shareholders, while 90% said that the people in charge of the companies could not be relied upon to protect the interests of their employees. In fact, 43 percent of respondents thought senior executives solely cared about themselves. Another survey found that 95% of Britons agreed with such statement.
Why did everything go wrong? It is tempting to point the finger at those in power. According to Keynes, capitalism is the astonishing conviction that even the most evil people will act in the best interests of all. Keynes inflated his claims. Few corporate leaders, happily, are guilty of intentional deception or immorality. Instead, they may be accused of personal greed, inadequate inspection of the company's activities, insensitivity to public opinion, or other offenses. At worst, all they were doing was playing by their own interpretation of the game's rules. These regulations, more specifically, the new goal posts, are to blame for the distortion of capitalism.
Business has always been a driving force behind advancement, whether it be through new product development, promoting the adoption of technology, reducing costs through increased productivity, or enhancing services and raising quality to make the finer things in life more accessible and affordable to an increasing number of people. This process is motivated by rivalry and fueled by the need to give those who risk their money and careers adequate returns, but it is in and of itself a worthy cause. We ought to produce more of it. Like philanthropic organizations, we ought to evaluate our progress in terms of how it affects both the outcomes for others and ourselves. While charities require funding just as much as corporations do, they tend to focus more on marketing their goods and services.
However, servicing both the wealthy and the needy might earn you money as well. There is a sizable untapped market among the billions of underprivileged people in the developing world, as C.K. Prahalad has noted. To reach this market, businesses like Unilever and Citigroup are starting to make technological adjustments. Due to rethinking refrigeration technology, Unilever can now distribute ice creams for just two cents each, while Citigroup, which has also done so, can also offer financial services to those in India who only have $25 to invest. Although they are successful in both situations, the desire to take care of these neglected consumers served as the motivation. Progress frequently results in profit.
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