Click here to print page

Doing well by doing good


Wednesday, October 03, 2018

American economist Milton Friedman was awarded the 1976 Nobel Memorial Prize in Economics. He is invariably referred to as the 20th century's most prominent advocate of free market capitalism and the father of modern capitalism. In addition to his research and writings in economics he left behind many quotable quotes. One of the most enduring is this one: “There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase profits..”

In case the reader does not immediately get it, let me give a shortened version of Friedman's dictum. “Business has only one social responsibility and that is to make a profit.”

One is tempted to say Milton Friedman was a fool. But one cannot call the winner of the Nobel Prize in economics a fool without himself risking being called a fool. Let's just say, Milton Friedman was in this instance wrong; dangerously wrong.

The Mighty Sparrow, in observing the effects of unbridled, self-serving capitalism on Trinidad's poor, did a calypso song in which he voiced these lyrics: “It is sad and getting more hard, Lord, capitalism gone mad.”

The following line from the foreword to Stuart Hart's best-selling book, Capitalism at the Crossroads, echoes similar sentiments to Sparrow's and expresses the central theme carried throughout the book: “Companies can reap incredible growth while sowing tremendous improvement in people's lives.” There is growing realisation that business has a responsibility that goes beyond blithely buying, selling and making a profit. Business has a corporate social responsibility.

The emergence of an enlightened form of capitalism — embracing the tenets of corporate social responsibility — has had a positive effect on businesses generally, and Jamaican businesses in particular. This is evidenced by the plethora of corporate foundations that together give hundreds of millions of dollars to social causes and programmes.

On September 20, 2018 the Lasco Group of Companies — famous for its Police of the Year, Nurse of the Year and Teacher of the Year philanthropic initiatives — officially launched the Lasco Chin Foundation. Chairman of the foundation, Lascelles Chin, in his remarks, hit the proverbial nail on the head. This, in part is what he said: “In business life, it is important to recognise the ills of the society in which we operate and to always be working at being part, of the solution. Our vision is to change the way Jamaica views and treats its most vulnerable young people, so that they can be empowered and have access to a range of opportunities to succeed in life generally and business in particular.”

In keeping with the chairman's vision, the foundation, which is headed by Professor Rosalea Hamilton, will focus on four areas:

1) support for at-risk youth to help them succeed as business entrepreneurs;

2) support for at-risk youth to help them succeed in school;

3) support for high-quality programmes aimed at ensuring that at-risk youth have access to first-class service solutions; and

4) support for individuals and institutions through charitable assistance.

Large Jamaican companies cannot be accused of not giving back to poor communities and to causes that help disadvantaged people. Take away this assistance and irreparable damage would be done to the country's social safety net.

It is refreshing, nevertheless, to hear the outspoken president of the Private Sector Organisation of Jamaica (PSOJ) Howard Mitchell encouraging those who are able, to do more. In a speech to the Rotary Club of New Kingston on September 7, which was widely reported in the press, he called for a “new capitalism characterised by corporate social responsibility, participative democracy, and responsive leadership that believes in development that is broad-based and not top-down”.

Public sector entities, particularly those that are revenue generating, should also do their part. In the wake of the Petrojam scandal the prime minister and his Cabinet instructed the Ministry of Finance and the Public Service to draft a policy on corporate social responsibility to govern how donations and sponsorships by these agencies are handled. One can only hope this will not be another knee-jerk reaction by Government which, under the guise of curtailing corruption, results in bureaucracy that kills a worthwhile activity.

Investing in poor communities, which provide markets for goods and services, is one of the wisest decisions a business could make. It is doing well by doing good.