Does capitalism need a reboot? That question seems to be on the minds of many leading corporate leaders, economists, and social thinkers.
There’s no doubt that capitalism has played an important role in lifting people out of poverty, extending life expectancy, boosting industrial productivity, and improving the quality of life for hundreds of millions of people.
At the same time, there’s also no doubt that capitalism has resulted in uneven distribution of benefits and significant environmental costs. This is especially true of the form of capitalism practiced in the United States, which dates back to Milton Friedman’s mid-20th century advocacy of free markets and public corporations’ sole responsibility to increase shareholder profits. The COVID-19 pandemic has spotlighted and exacerbated these issues.
This increased consciousness about the limitations of the current model led the World Business Council for Sustainable Development (WBCSD) to state, “Even committed capitalists are beginning to argue that capitalism, in its current form, is unsustainable—socially, environmentally, and economically.”
Social Entrepreneurship as a Way Forward
So what’s the alternative to capitalism as it’s currently practiced? Joel Makower, chairman and co-founder of the GreenBiz Group, has said: “For years, there has been a steady stream of visions aimed at reforming, rethinking, reimagining, reinventing, redefining, and rebooting the operating system that drives capitalist economies.”
I argue that we can find the best model in a vision less often discussed: social entrepreneurship. Throughout the world, social enterprises are already quietly leading the way toward a practice of capitalism that addresses the deficiencies of the current model, while preserving the fundamental benefits that capitalism promises.
What social entrepreneurship offers is a balanced way to pursue profit and social and environmental impact, simultaneously. By defining success more broadly than just the numbers on a balance sheet, social enterprises—and, just as importantly, the impact investors that help fund them—have greater freedom to explore different business models, or to apply proven business models to different kinds of customers.
To register for the Miller Center panel on Reinventing Capitalism, Wednesday Jan. 26: www.timesofe.com/events.
Social Enterprises Apply Capitalism More Flexibly
This year, Miller Center for Social Entrepreneurship at Santa Clara University is celebrating our 25th year of accelerating social entrepreneurship, and in turn, helping to reinvent capitalism. Of the more than 1,300 social enterprises we have accompanied over that time, here are just three examples of organizations that are achieving both profits and impact in the world today.
Husk Power Systems, the leading rural energy services company operating in weak- and off-grid communities in Africa and Asia, provides clean, modern, affordable electricity to customers who lack access to a reliable electrical grid. Founded in 2008, Husk has an industry-leading 130-plus minigrids today and the capacity to add a dozen new sites each month, which serve customers in rural communities across India, Nigeria, and Tanzania.
“Husk has committed to building 5,000 minigrids by 2030 that will benefit millions of people and support half a million micro, small, and medium enterprises (MSMEs) that are the economic engine of rural Asia and Africa,” said Manoj Sinha, co-founder and CEO of Husk. “The communities where we work in South Asia and sub-Saharan Africa are the most vulnerable to climate shocks such as drought and flooding, so we are working to embed climate resilience into our business model. The next frontier for social ventures like Husk is to tap into incremental climate finance by capturing the adaptation and resilience value we are creating in those communities.”
Halfway across the world, MedHaul, a U.S.-based social enterprise founded in 2017 in Memphis, Tennessee, is building innovative healthcare transportation solutions for vulnerable communities that are often overlooked, including people who are elderly, have physical and mental disabilities, or live in poverty. A Certified B Corporation—a for-profit corporation certified for meeting high levels of governance, social, and environmental performance standards—MedHaul is committed to using its business as a source for good and making a difference in the communities it serves.
“I was inspired to found MedHaul by my grandmother, a Type 2 diabetic double leg amputee who had difficulty booking non-emergency transportation for medical appointments,” said Erica Plybeah, founder and CEO of MedHaul. “We believe that everyone deserves safe, reliable, and efficient transportation, regardless of special, or unique, need. By focusing on transportation as a social determinant of health, MedHaul has created a tech-enabled marketplace that bridges transportation providers and healthcare institutions, creating economic benefits for everyone involved: booked rides and lower vehicle vacancy rates for transportation companies, lower operational burdens for healthcare providers, and an affordable, no-hassle rider experience for patients.”
Operating from the guiding principle that hungry children can’t learn or grow, Food for Education has provided more than 6 million fresh, nutritious, locally-sourced meals to primary school students in Kenya, including more than 2 million meals to children and their families during the COVID-19 period. Through its Tap2Eat digital mobile platform, Food for Education uses cutting-edge fintech (financial services technology) to allow parents to pay $0.15 for their children’s subsidized lunches using mobile money. The impact for students is improved nutrition, school attendance, performance, and higher high-school transition rates.
“We use advanced technology, a smart supply chain, and innovative operations and logistics practices to design an economically sustainable way to deliver high-quality, nutritious meals to students,” said Food for Education founder and Executive Director Wawira Njiru, who was awarded the United Nations Person of the Year 2021 for her work and visionary leadership toward feeding the future. “By sourcing food directly from farmers, we are boosting the local economy. And through economies of scale, we are continuing to reduce our cost per meal as we feed more kids. I believe that a generation that is well-nourished and educated is the best path toward a prosperous future for the African continent.”
Moving the Needle
Attempting to reinvent capitalism represents a monumental undertaking. It’s a challenge that’s too large, and too existential, to be tackled by any one approach alone.
The corporate world can learn a lot by studying the successes of social enterprises across the globe and across economic sectors. And we can all help forge a path forward by driving resources and capital to social enterprises and the impact investors that support them.
Social enterprises are, by their nature, “businesses for good.” They present a unique model for harnessing the power of the marketplace to achieve what current capitalism struggles to do: reduce global poverty, promote widespread human flourishing, and protect the natural world that sustains us all.
Brigit Helms is Executive Director, Miller Center for Social Entrepreneurship
The Miller Center is a sponsor of Challenges Met, Opportunities Ahead. Register here: www.timesofe.com/events.
This story and others on Times of E are made possible by a sponsorship from the Ewing Marion Kauffman Foundation. The Ewing Marion Kauffman Foundation is a private, nonpartisan foundation that provides access to opportunities that help people achieve financial stability, upward mobility, and economic prosperity – regardless of race, gender, or geography. The Kansas City, Mo.-based foundation uses its grantmaking, research, programs, and initiatives to support the start and growth of new businesses, a more prepared workforce, and stronger communities. For more information, visit www.kauffman.org and connect with www.twitter.com/kauffmanfdn and www.facebook.com/kauffmanfdn.