Wednesday, December 9, 2015

Greed is not good! : What we want is shared value.

                The mantra for 20th century corporations was one powerful statement. “Greed is good!” Thus capitalism was born. Markets opened up in the western world, free trade was the norm and globalization was the goal. Governments encouraged industries and corporations. Often free land grants were provided and economic zones were set up to encourage and grow businesses. Governments in the 20th century realized that industrialization was a powerful tool to reinforce their nations GDP and growth. As corporations grew, more jobs were generated and people benefited from them. More jobs meant decrease in unemployment, decrease in unemployment meant more buying power, more buying power meant more consumers; more consumers meant more demands in market and further space for industries to grow and make profit.  This worked very well until the end of 20th century because it created some kind of benefit for everyone.
                Once 21st century began, science and technology boom took place and it benefited the industry in unprecedented ways. The invention of automation, control systems and computers took the necessity of human labor out of the job. Industries and corporations took “Greed is good” to a completely new level. Their motive to create jobs decreased, globalization resulted in change from nationalist to profit making mindset. Throw in few economic meltdowns and a couple of world wars. The entire world economy suffered and the companies only wanted to survive. How? The only way is to make profits. This soon became the standard. Firms adapted to this style of functioning. Over the course of 21st century, many corporations grew with the only motive of making profits and shareholders happy.
                This came with a price. Cost to society. Firms plundered natural resources, polluted environment and abused human labor. This started hurting the economy and government constructed laws that inhibited competition and imposed high corporate tax. When there was no competition in a market the industries perceived the market as inert and stopped investing in them.  This cycle has become our society’s problem. The firms think in terms of short-term profit and governments do not realize that supporting the weak alone results in economic slump. This vicious circle results in the law of diminishing returns. If this trend continues, what we will leave behind a world that is highly unsustainable for future generation. The law of diminishing returns will catch-up until the society has nothing to get in return.
                The only solution to this problem is, corporations and governments should think in terms of society as a whole and provide services and products that lead to sustainable growth that benefits everyone. Greed is not good. What we need is creation of shared value.

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