“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”Adam Smith, The Wealth of Nations
“How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.”Adam Smith, The Theory of Moral Sentiments
Ayn Rand and Atlas Shrugged. Gordon Gekko and his infamous “greed is good” line from Wall Street: Money Never Sleeps. Profit over people. Efficiency above labour. These are the images, personas and principles that fuel our perceptions of capitalism and how we build businesses today. What if we got it all wrong? What if we’ve been building businesses on a flawed model that wasn’t the one intended in the first place?
Most people are familiar with The Wealth of Nations, which sets the framework for what today’s capitalist system has evolved into. It includes infamous passages about the invisible hand that guides the free market economy, the butcher and the baker’s self-interest and the efficiency of the division of labour. Smith’s five-volume work is about efficiency, pragmatism and the way that we as human beings interact with consumption and production.
Adam Smith, the Father of Modern Capitalism, was an economist, but at his core, he was actually a moral philosopher. Before he even set out to write The Wealth of Nations, he wrote another book––one that I believe is of far greater importance: The Theory of Moral Sentiments. The entire premise of this book is about empathy, compassion and how we treat one another as human beings.
It’s hard to imagine that the same person wrote such different books. But what if they were supposed to be read together? In that same sense, what if we were supposed to build our economic system by respecting both works––there is a place for pragmatism and profit, but the way that we treat the people around us matters just as much, if not more.
We are facing a crisis of epic proportions: inequality is on the rise as economies grow, our natural resources are quickly becoming depleted, sea levels are rising and are putting our major cities at risk of flooding, weather patterns are changing and are creating dire circumstances for agriculture-reliant communities, and our waste, especially plastics, are piling up with no efficient means for removal.
These are the problems that have been passed down to our generation, and they are the problems that we need to solve. The capitalist model is the core driver of many of these issues, but I caution people to villainize business. The fact is, the reason the capitalist system exists the way it does today is because of our own consumption habits, our desires, our greed and our wanting of a more comfortable world for ourselves and the people we love. Some of these things cannot change, but the question I pose is: how can we use business as a tool to solve these problems? How can we create businesses that reduce our consumption, our environmental impact and help to create a better world?
In the same way that a person needs to read both sides of Adam Smith to see the full picture of who this person was, we need to look at business holistically as well to understand what business can be. Business is one of the greatest tools we have to drive change, we just need to be wary of the changes that it creates.
I don’t have the answers today, but I have some ideas. This blog is a place where I am starting these conversations. I’ll be writing about capitalism, impact investing, entrepreneurship, climate change, design, moral philosophy and how all of these things fit together. Feel free to join in.
Can our butchers and bakers be benevolent in their actions? I believe so.