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Conscious Capitalism Definition
Conscious capitalism can be defined as an evolving economic system which builds on the foundations of capitalism – voluntary exchange, entrepreneurship, competition, freedom of trade and the rule of law. Conscious businesses and individuals are those who choose to follow a business strategy that aims to support both people and the environment. It takes its root from the philosophy of corporate social responsibility, which calls for a “value-based” approach where values reflect both local and global social and environmental issues. It believes that companies are good because they create value, are ethical, are focused on voluntary exchange; they can improve our lives and are admirable because they lift people out of poverty and create prosperity.
A Little More on What is Conscious Capitalism
The conscious capitalism concept popularized as “trickle down” is that the wealthy will ultimately benefit everyone from economic policies. It further enlightens that, it will contribute to the reduction of corporate taxes by federal legislation and rulings by the Supreme Court through corporate legal rights and take them closer to the human beings. Although these steps were expected to help the nation as a whole, the results were disappointing. The result was that the income gap between the richest and the rest of society was widened. It has also caused an increase in domestic debt and significant public trust violations such as oil and securities fraud. As a result, people and corporate leaders rejected it and pursued a new capitalism model.
The founder and co-CEO of Whole Foods Market, John Mackey, is the world’s leading proponents of conscious capitalism. Founded in Austin, Texas in 1980, the Whole Food Market has embodied the values of conscious capitalism. The business was named as one of Fortune’s “100 Best Working Companies,” and ranked among the world’s best corporate reputations in The Wall Street Journal. A marketing professor in 2013 collaborated and focused on a proposed new and optimistic type of capitalism, at Bentley University, Waltham, Massachusetts. Their book, “Conscious Capitalism,” shows that business and capitalism should work for all parties that may influence or be influenced by a company’s actions, not solely to the benefit of shareholders or solely by the profitability of doing good.
Guiding Principles of Conscious Capitalism
Conscious Capitalism has four pillars that guide a socially responsible and ethical business:
- Higher purpose: each company has a purpose that goes beyond money-making. The organization can empower, motivate and energize its stakeholders by concentrating on its higher purpose.
- Stakeholder orientation: business life and its human roots are self-sufficient and a company needs to create value with and for its different players.
- Conscious leadership: conscious leaders understand and understand the higher goal and focus on value creation and harmonization of corporate stakeholders ‘ interests.
- Conscious culture: are the ideals, beliefs, procedures underlying a corporate culture that permeates a business’s environment and links stakeholders with each other and with the company’s mission, workers and processes.
Importance of Conscious Capitalism
Companies that subscribe to beliefs of the conscious capitalism can, in the long run and with more profitable impacts on the world as a whole, outperform other companies in multiple dimensions, including financial ones. Patagonia, for example, increased its company size and tripled its profitability. It happened despite a marketing campaign that told customers not to buy their clothing. Mackey argues that, although nothing is wrong with making money, it is absolutely necessary for the business to flourish; it is not an admirable aim for the company by itself. Business sales aggregated collectively are the world’s greatest value producer, according to the conscious capitalist revolution, and this value creation is the root of economic morality.