The leader of the Indian independence movement Mahatma Gandhi once said that “capitalism as such is not evil; it is its wrong use that is evil. Capitalism in some form or another will always be needed”.
Mankind has moved first from seeking to survive, to seeking to thrive and now has hit the light at the end of the economic tunnel just to find dissatisfaction in material. All of history from the Black Death to the Industrial Revolution to our modern day has brought Man to the dawn of a new paradigm, philanthrocapitalism. This article explores the roots of this rising paradigm in the black death, the industrial revolution, the 20th century and what it means for businesses today.
Before the Beginning
For the past 1000 years, the focus of Man was to amass enough material to survive and prosper as per Maslow’s Hierarchy of Needs. To begin, we go back to the era prior to the conception of the West as we know it; this is the feudal era. Feudalism is characterised by its systemic enforcement of its social hierarchy and subjugation of its people, a stark contrast to our society today. This system was pervasive throughout the known world at the time, from the Barons of Europe to the Daimyos of Japan. Such a system proved nearly impossible to climb for peasants. To the commoner of the day, it was an institution installed by God himself, unshakable and immutable. It would certainly take an act of God to break the chains of feudalism, subsequently, it would change the face of Europe.
A force to be reckoned with, an angel of death beyond that which ravaged Egypt in biblical times! Your loved ones fell asleep and were dead by dawn! A catastrophic 60% of Europe had fallen to the hands of the Black Death. For that handful of Europeans that had survived the horror, they had been left with more resources and land than anyone could dream of before the pandemic.
This remnant of survivors having escaped hell for nearly a decade naturally sought to live a better life, “they held gluttonous banquets, wore extravagant clothing and gambled”. The Black Death paved the way for the Renaissance, a great stride forward in culture, art and worldviews of Europe! This event brought Man out of the state of merely just surviving to something more.
Scientific progress of the Renaissance brought about the invention of Guttenberg’s printing press, 400 years later the Spinning Jenny of Hargreaves would bear the same attitude to usher in the Industrial Revolution. A Bloody Success. The Industrial Revolution had finally come to Europe. As the printing press of Guttenberg had revolutionised the industry of book-making, so the Spinning Jenny and the Steam Engine launched production into overdrive.
The dreams of material abundance could now be realized! For the first time, Man was now thriving and not just surviving! With the help of new technology, the new paradigm of “The Bottom Line” came about with the focus being on producing as much as possible at the lowest cost.
Was it really the lowest cost? This overhaul of production introduced long hours with little pay and endless workplace accidents. Europe for the God of materialism sold it’s soul to sweatshop capitalism. This unprecedented increase in production gave rise to not only the middle class but also to the advent of industrialised warfare. Such advances in the chemical industry, metal works and transportation translated to combat. Fueled by the advances of technology, humanity was enabled to commit the industrial killings of Auschwitz and to kill more of his own in the 20th century than all the previous four centuries combined!
The Spirit of Capitalism had now shown its power. It had brought great production tied to death and worker mistreatment/ It brought the extravagance of the roaring 20’s that led to the Great Depression. The latter half of the 20th century, the West spent going through finding a way to create a sustainable economic system through Keynesian philosophy in the West and the Communist failure of a utopian economy in the East. Whether anyone could put a finger to it or not, the world was seeking deep down for a way to fix the gap between capitalism and a just economy.
The Rise of the Modern Paradigm
Taking cues from the psychologist Maslow, the very bottom of the Hierarchy of Needs is the basic ones such as food, shelter, water, air etc. As we climb up higher and higher, we eventually reach a point where there is a need for morality and self-actualisation. Those in society who have more than enough to live are turning towards the focus on the ethics of their consumption. As in the 18th century coming into the Industrial Revolution, so in the 21st we are moving into the Informational Revolution.
This time it’s the internet rather than factories that fuel this revolution which in turn brings about the new paradigm. One such case that is evidence is the rise of veganism. One Guardian news article talks about how the lifestyle of veganism is spread mainly by social media through the likes of Instagram and online videos of poor treatment of animals, A leading reason why people go vegan is for the moral grounds of fair treatment of animals made aware by social media.
Another example is the call to boycott GAP over its allegations of using child labour and cruel sweatshops in 2002. With the power of the internet, news agencies and social media are able to give bad press to businesses for poor ethical practice. What’s the point of all this? It’s the idea that compared to before, morality is playing a much larger role in consumer choice and business practices. The term utility in economics means satisfaction from the product. In the past, this was about how much you could get out of the product. In our day and age when money can afford it, the product bought also gives consumers the peace of conscience.
Evidence of this growth can be seen in the rise of fair trade, a movement which protects workers rights and sustainable business practice. According to Statista, the growth of Fair Trade revenue has gone up consistently from 832 Million Euros in 2004 to almost 8 Billion Euros in 2016! That’s a 947% increase! It’s indisputable that we are seeing a huge change in the attitudes of the populace towards their own buying choices. What does this mean for businesses today? It means that startups may have to use ethical practice as their unique selling point for customers in order to compete and grow. As larger businesses are gearing more towards using their business to benefit communities around them, so startups are jumping on the bandwagon.
In the watch industry, a company called Tick Tock Timber has been recently started in which their strategy is to plant 30 trees per watch sold through charity, another company called WeWood is doing the same but planting one tree per watch sold. As much as the public views charity as something that is virtuous, charity is undeniably starting to become part of the selling point of a business. The way the power of the internet is spreading awareness of injustice or unethical practice (whether against people or the environment) is irrefutable.
Though businesses may not be totally transparent, their mistakes are a lot more damaging than they were 200 years ago. Bad press can shake the corporate giants of the world if they are not prudent in their practices. It is the role of startups to lead the way in socially responsible business and to set the trends for the future generations. As we move forward in the Information Revolution, it will be more evident that the confidence of the populace in businesses depends not only on the quality of product but also the ethics of its production.