The Problem With Economics
Trevor’s recent post discussed the quote “Businesses are economic creatures. They can talk all they want about all this social responsibility stuff, but they are likely to do something about it only if there’s an economic reason for them to do it” from Bill Joy. The post got my attention and here are my thoughts on it for what it is worth.
I found a larger article on the Fast Company’s magazine web site that contained more from what Bill Joy had said, along with some insights from some other folks on what responsibilities business has to the rest of the world. Although Bill Joy comments above may hold a ring of truth, there is much more to business then simply acting economically, at least I hope that there is.
Economics is basically about whether or not a given action results in a monetary profit to the person or organization taking the action. Economist E.F. Schuemacher points out the problem in determining which actions to take solely on an economic basis in his book Small is Beautiful - Economics as if People Mattered. Schuemacher wrote, “out of the large number of aspects which in real life have to be seen and judged together before a decision can be taken, economics supplies only one – whether a thing yields a money profit to those who undertake it or not”. I would hope that more aspects then the simple profitability of a decision are evaluated before action is taken.
I was fortunate a while back to have heard a talk by Cosmologist Brian Swimme in which he gave a brief overview of the history of the universe as we know it. He talked about how the universe came in to being in the “big bang”, how the earth came to be, how life evolved on the planet and how eventually a relatively short while ago human beings came into the picture. Towards the end of the talk, he asked something about if it was really possible that the real meaning for human beings to come into the universe was simply to optimize our ability to shop.
Bill Joy’s comments may stem from the current reality that too often our businesses do get caught up in the idea that the ultimate purpose of our existence is to provide the ultimate opportunity for people to shop and make a profit from that, but unless that reality is challenged it may not change. Later on in the FastCompany article, the quote from Tachi Kiuchi, the managing director of the Mitsubishi Electric Corporation, points out again why simply relying on economics for addressing social and environmental issues cannot work. “Ecological and social costs and benefits never appear on our balance sheets”. Kiuchi goes on to spell out a more holistic approach to running a business, “My philosophy is, we don’t run companies to earn profits. We earn profits to run companies. Our companies need meaning and purpose if they’re to fit into the world, or why should they live at all?”
That is a philosophy that rings true to what servant leadership is all about.
The question that should be guiding us and our businesses is: what is our purpose? The answer will determine whether we focus on that "social responsibility stuff", or that economic stuff.
I found a larger article on the Fast Company’s magazine web site that contained more from what Bill Joy had said, along with some insights from some other folks on what responsibilities business has to the rest of the world. Although Bill Joy comments above may hold a ring of truth, there is much more to business then simply acting economically, at least I hope that there is.
Economics is basically about whether or not a given action results in a monetary profit to the person or organization taking the action. Economist E.F. Schuemacher points out the problem in determining which actions to take solely on an economic basis in his book Small is Beautiful - Economics as if People Mattered. Schuemacher wrote, “out of the large number of aspects which in real life have to be seen and judged together before a decision can be taken, economics supplies only one – whether a thing yields a money profit to those who undertake it or not”. I would hope that more aspects then the simple profitability of a decision are evaluated before action is taken.
I was fortunate a while back to have heard a talk by Cosmologist Brian Swimme in which he gave a brief overview of the history of the universe as we know it. He talked about how the universe came in to being in the “big bang”, how the earth came to be, how life evolved on the planet and how eventually a relatively short while ago human beings came into the picture. Towards the end of the talk, he asked something about if it was really possible that the real meaning for human beings to come into the universe was simply to optimize our ability to shop.
Bill Joy’s comments may stem from the current reality that too often our businesses do get caught up in the idea that the ultimate purpose of our existence is to provide the ultimate opportunity for people to shop and make a profit from that, but unless that reality is challenged it may not change. Later on in the FastCompany article, the quote from Tachi Kiuchi, the managing director of the Mitsubishi Electric Corporation, points out again why simply relying on economics for addressing social and environmental issues cannot work. “Ecological and social costs and benefits never appear on our balance sheets”. Kiuchi goes on to spell out a more holistic approach to running a business, “My philosophy is, we don’t run companies to earn profits. We earn profits to run companies. Our companies need meaning and purpose if they’re to fit into the world, or why should they live at all?”
That is a philosophy that rings true to what servant leadership is all about.
The question that should be guiding us and our businesses is: what is our purpose? The answer will determine whether we focus on that "social responsibility stuff", or that economic stuff.
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