What is the Role of Government in Conscious Capitalism?
Conscious Capitalism is more than just a movement; it’s a philosophy that’s spurred an entire collective of business leaders to create a better world.
While the movement and subsequent book and nonprofit were co-founded by Professor Rajendra Sisdodia and John Mackey, CEO of Whole Foods, the idea of Conscious Capitalism has been one that hadn’t been widely embraced until recent years.
Capitalism has not been trending upwards in younger demographics. It’s easy to associate capitalism with greed and mistrust, among other things. A common stereotype around capitalist business leaders is that they disregard the way their company affects society or the world around them, they’re focused on profit over everything else. There’s historically been little incentive for capitalist leaders to think of anything but profit.
The goal of Conscious Capitalism, however, is to change the narrative and ethos of the traditional viewpoints and practices of capitalism.
Conscious Capitalism is a philosophy that bridges the gap between businesses and the world. The philosophy says when business leaders run their companies in ethical and socially responsible ways, businesses will have a positive impact on the world. This can happen by adhering to the four tenets of Conscious Capitalism: Higher Purpose, Stakeholder Orientation, Conscious Leadership, and Conscious Culture.
The goal is to strike a balance between the needs of every stakeholder involved in a business which includes customers, employees, investors, vendors, and the environment. Too often, the needs of investors and customers outweigh the needs of the company culture or sustainability. This results in an uneven balance of priorities and favors profit over people and planet instead of profit in service to people and planet. Conscious Capitalism flips that dynamic.
Simply put, Conscious Capitalism is about believing that your business serves a higher purpose than just making a profit. And yet, companies that practice Conscious Capitalism perform 10 times better than those that don’t.
Over the years, more and more businesses have swapped traditional capitalist practices with a Conscious Capitalism mindset, signaling that private business is ready for a massive change. But, to really make an impact on the world, should the government hold business accountable to more sustainable, conscious businesses?
Government involvement in business has long been a divisive topic of discussion. Those that are for government involvement believe there should be more accountability for businesses and corporations. Those against it believe that government and business should remain two separate entities and that the powers of the market and philanthropy can save the credibility of capitalism.
Imagine, in 1955 when Rosa Parks refused to give her seat up that instead of the Supreme Court ruling its unlawfulness, a private bus company decided to integrate its busses. Sure, it would have been a noble, defiant act of the private bus company, but it would not prevent other bus companies from allowing segregation. Government needed to step in to create a more equitable system for everyone.
The government has already been playing a role in capitalism, thanks to its federal departments like the USDA, EPA, and FDA. These federal entities were put into place to regulate industries that affect the society and the world, like agriculture, oil companies, and pharmaceutical companies. The USDA, for example, regulates the farming industry to ensure that agriculture businesses that provide food products are prioritizing food safety over profits.
While regulation is a way to reduce any negative impact private business can make, it’s not the only mechanism of government that can be beneficial to a more consciously-led business. Businesses alone cannot be responsible to solve the world’s biggest challenges; conscious businesses AND a government — at all levels — need to work together for necessary systemic changes.
For example, a state could pass a law requiring that minimum wage be $15 an hour. This would enforce companies to pay their employees a livable wage, at a minimum. An increase in pay would have a direct impact on the lives and wellbeing of a company’s employees, resulting in an increase in company culture, retainment, recruitment, and overall success.
The Container Store, a pioneer in employee-first company culture, is famously known for being one of the best places to work. This is largely due to the fact that the founder and former CEO, Kip Tindell, made sure that in-store associates were paid a salary of at least $50,000. His belief was that employees who were treated well and paid well would be more inclined to stay with the company and do their best work, resulting in a stronger overall company.
While companies can certainly put these types of policies into place, the government has the power to continue they’re sustainability and hold them accountable.