Take Back the Economy: An Ethical Guide for Transforming Our Communities

Chapter 3. Take Back Business: Distributing Surplus

49 whaT iS BuSinESS? Businesses are organizations in which goods and services are produced and exchanged. They are where entrepreneurs and workers transform resources, technology, and labor into something new. The mainstream message is that business is the font of economic growth from which wealth and well-being flow. Despitethisrhetoric,mostbusinessisnotprimarilyorganizedaround producing for the greater good. To use a familiar phrase, “Business is about problem-solving at a profit.” It is the desire for profits that fuels dedication—even obsession—especially on the part of business owners. Although for some, business is a source of great individual reward, for others it is a site of hardship and oppression—a place where exploitation is rife. For yet others, business is just a place to work and earn a living, an environment that claims the best hours of their waking day. So what actually goes on in a business enterprise ? One way to look at it is to follow the process whereby old wealth is transformed into new. For the moment, let’s focus on firms where something—a good or a service—is produced and then sold rather than ones that buy and sell already existing commodities. Businesses use stored-up wealth, usually referred to as finance, to purchase material inputs such as raw materials, land, buildings and machinery, and labor inputs. During the production process labor adds 3. Take Back Business Distributing Surplus k The social responsibility of business is to increase profits. Milton Friedman, New York Times 50 TaKE BaCK BUSINESS to the existing wealth of inputs to produce something whose expanded value is reflected in its sale price. Depending on the ownership and governance structure of a firm, this new wealth is shared with producers and nonproducers both within the enterprise and beyond. Over the last two hundred years, one form of business enterprise, the capitalist firm, has been lauded as the best way of organizing wealth transformation and achieving the most efficient production. The plant and equipment in a capitalist business are privately owned, employees are paid wages to work for set periods, commodities are produced and sold in markets, and profits are privately accumulated by the business owner or shareholders. The argument goes that private profits provide the appropriate incentive for entrepreneurs to take risks, compete with others, and put in the effort to achieve better outcomes. And private reward has flow-on benefits for many in the form of cheaper goods. A major flaw in this argument is that by problem-solving at a profit we have overstepped a sustainable level of resource use. The depletion of our environment has exponentially risen. The new wealth produced by capitalist business has gobbled up minerals, nonrenewable energy, soil fertility, and plant and animal species at a voracious rate. These uncosted “gifts” of nature have been transformed into private profits while ecologies and atmospheres have been degraded to such an extent that livelihoods are threatened. Only now are we realizing just how heavily two hundred years of industrialization has affected planetary health. On top of this fundamental problem, the new wealth created by capitalist business has not raised living standards equitably across the board. It’s true that in some places individual and societal consumption levels have risen quickly and many people are now leading lives that were unimaginable even a generation or two ago. But both within and between countries, the distribution of new wealth has produced greater inequalities than ever before. In 2000, 1 percent of world’s population owned 40 percent of global wealth and 10 percent of the population owned 85 percent of the wealth, while 50 percent of the world’s population owned barely 1 percent.1 It is this type of inequity that has propelled Occupy Wall Street movements in cities across the globe and given rise to the rallying cry “We are the 99 percent” (as opposed to the 1 percent of top income earners with whom wealth is concentrated). 51 TaKE BaCK BUSINESS It seems that business is a major contributor to the problems we and our planet face. But can it also be a critical vehicle for change? Could business direct new wealth toward planetary well-being? In many enterprises (though ones not often recognized as “business ,” such as households, farms, cooperatives, and community and state organizations), new goods and services are produced and allocated and wealth is held or shared in different ways. Ethical concerns about...