Could this be the year for caring capitalism?

Columnist and chief leader writer

Thursday 3 January 2013

Before we kiss good-bye the season of goodwill, let's consider an extraordinary idea: that 2013 could turn out to be the year of "The Business of Kindness".

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Anne Johnstone

It's the title of a book by Olivia McIvor, published six years ago when the idea that companies should benchmark kindness towards staff and customers sounded like a wacky counter-culture. To those on the far left, this sort of compassionate capitalism was simply an oxymoron, while on the right the notion of an unfettered marketplace was immutable. So capitalism continued to be embodied by Alan Sugar's Apprentice with its sharp-elbowed, thrusting wannabes, happy to ride roughshod over everyone to get to the top. Meanwhile global corporations' assertions that they required freedom from regulation in order to operate still trumped democratic debate.

But 2012 witnessed a shift in the public mood. Libor-fixing, another mis-selling scandal and revelations about how major global companies dodge tax created a wave of public disgust. On a more local level, the continuing demise of small independent shops and pubs, leaving sterile high streets and hollowed-out communities, got people thinking about the sort of society they wanted. Politicians have picked up on this revulsion. Labour's Ed Miliband was first, with his clunky, misunderstood conference speech of October 2011 about producers and predators. It was always less about good and bad British companies than the debate going on inside the business community and the recognition that German capitalism, with more emphasis on social responsibility and long-term goals, made a lot more sense than the UK model, focused relentlessly on quarterly profits. This thinking is not new. Commentators like The Work Foundation's Will Hutton have always argued that firms that set out to achieve social and public benefits are most likely to make profits in the long term. The same philosophy inspired the business ethics of dissenting movements like the Quakers in the 19th century. Perhaps what has changed is not just revelations about self-serving corporate greed but the arrival of what has been called "Generation G": young people moulded in the age of social media, with its emphasis on collaborating and sharing, who value generosity over greed. In the world of compassionate capitalism, size matters. It's easier for a small company, like Green City Wholefoods or Cafedirect, to base its philosophy on the ethics of its founders. The problems come when they try to scale up. Certainly some big companies are heavily into marketing gimmicks known as "random acts of kindness", such as sending bunches of flowers to people who tweet about having a lousy day. That's not to be confused with kindness as a core value. Yet that too can survive in big companies, as witnessed by Ben & Jerry's (now part of Unilever), John Lewis and the Co-op. To shift capitalism towards kindness we need two things. First, we need governments to nudge companies towards sustainable and equitable capitalism. That means promoting long-term business models that generate value-added jobs, as in Germany where there is more collaboration between finance, innovators, technocratic industrialists and workers. It means supporting a ban on practices like high-frequency trading (using computer models to spot market patterns and trigger massive share transactions) that exacerbate market volatility and short-termism. And it means regulating the huge pubcos that are jacking up rents and imposing monopolies on pubs. Secondly, concerned individuals must put their money where their mouths are by supporting their local bookshops and boutiques, rather than using them as showrooms then buying cheaper online. And by patronising local cafes that put something back into the community rather than fickle global chains that hide profits offshore. So let's ditch that "twas ever thus" pessimism and wish each other a Kinder New Year.

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Could this be the year for caring capitalism?

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