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A social media expert with global experience with many of the world's biggest brands -including Nike, Toyota and Motorola-Simon Mainwaring offers a visionary new practice in which brands leverage social media to earn consumer goodwill, loyalty and profit, while creating a third pillar of sustainable social change through conscious contributions from customer purchases. These innovative private sector partnerships answer perhaps the most pressing issue facing business and thought leaders today: how to practice ...
A social media expert with global experience with many of the world's biggest brands -including Nike, Toyota and Motorola-Simon Mainwaring offers a visionary new practice in which brands leverage social media to earn consumer goodwill, loyalty and profit, while creating a third pillar of sustainable social change through conscious contributions from customer purchases. These innovative private sector partnerships answer perhaps the most pressing issue facing business and thought leaders today: how to practice capitalism in a way that satisfies the need for both profit and a healthy, sustainable planet. Mainwaring provides case studies from companies such as P&G, Walmart, Starbucks, Pepsi, Coca-Cola, Toyota, Nike, Whole Foods, Patagonia, and Nestlé as well as a bold plan for how corporations need to rethink their strategies.
A prolific blogger and social media consultant uses his online expertise to provide a framework for how businesses, consumers and social media can combine to make a better world.
Mainwaring is adamant that business as usual cannot be sustained in this era of corporate greed and a warming planet. The author's vision for a "We First" society, named after the social media consultancy company he founded, would have businesses take greater steps toward sustainability and social responsibility. In an age of growing interconnectivity, consumers, he writes, are vocal about wanting their purchases to promote social good. Corporations, whether altruistically or otherwise, have caught on and geared their brands to promote these values in order to maintain their consumer base. As a result, the private sector has begun to shift away from self-focused policies to those that include volunteerism, donations and sustainable manufacturing, building community and profits. But when contrasting the $20 billion in corporate donations to the trillions made in profits, plainly a great deal more can and needs to be done. The author offers clearly written and well-informed solutions, and end-of-chapter synopses and an appended reference guide flesh out his vision.
A must-read for those who want to understand and engage the power and potential of social media to promote a healthier, more equitable world.
TRANSFORMING THE ENGINE OF CAPITALISM
OCTOBER 24, 1929
On this day, Black Thursday, the Dow Jones Industrial Average dropped nearly 13 percent, leading to a week of investor frenzy. Orders to sell overwhelmed the market. By the following week, on October 29, Black Tuesday, another precipitous drop extended the decline to nearly 23 percent, and by mid-November, the Dow had lost nearly 40 percent of its September value. These market losses led to nearly ten years of unmitigated economic hardship for hundreds of millions of people not only in the United States, but also around the world, who lost their life savings, their jobs, and their homes....
OCTOBER 6, 2008
During what has become known as Black Week, the Dow Jones Industrial Average closed lower every day, wreaking market havoc. By the end of the week, the Dow had lost 18 percent, and the S & P 500 index more than 20 percent. By early November, the S & P was down 45 percent from its 2007 high. These market losses led to what some economists predict will be years of unmitigated economic hardship for hundreds of millions of people in the U.S. and around the world, many of whom will lose their life savings, their jobs, their homes and sometimes their families....
The parallels between the Great Depression of the 1930s and the Great Recession of the late 2000s are uncanny. It almost seems as if history is repeating itself.
How the two events started and spread throughout the world are so aligned it leaves little doubt that we have failed to learn the lessons of economic history. One of the most perceptive economists of the late twentieth century, John Kenneth Galbraith, called this human tendency to neglect economic history "the pathological weakness of the financial memory."
The Great Recession represents a major failure of capitalism, and we are still experiencing it. We are all familiar with the statistics and the stories about the millions of the people (including you, perhaps) who have found themselves unemployed, lost their homes, fallen into poverty, or who are worried about when and how the world's economy will reset itself. We know that this period is not an ordinary blip in history. It has rained economic ruin and social disruption on hundreds of millions of people, not only in the United States, but also around the globe. Almost no developed nation has been spared the calamities of the financial meltdown, and the loss of their prosperity has dramatically impacted the developing world through the resulting loss of funding from government and philanthropic sources.
In the book This Time Is Different, economists Carmen Reinhart and Kenneth Rogoff characterize the Great Recession as a profound game changer. Mincing no words, they write,
The global financial crisis of the late 2000s, whether measured by the depth, breadth, and (potential) duration of the accompanying recession or by its profound effect on asset markets, stands as the most serious global financial crisis since the Great Depression. The crisis has been a transformative moment in global economic history whose ultimate resolution will likely reshape politics and economics for at least a generation.
At least a generation? This prediction is ominous. It goes against the grain of what we have been taught to believe—that free market capitalism is the best economic system the world has ever known, one that steadily delivers widespread and enduring prosperity and wealth. This incongruity should inspire us all to ask a fundamental question: Can we afford to continue living with a system that creates so much economic chaos rather than fulfilling the promises we expect of it?
DOES CAPITALISM NEED REPAIR?
We First is about a new way of looking at capitalism. It seeks to initiate a greater degree of honesty and frankness into our thinking about free market capitalism as the engine that propels our society. Without becoming defensive or accusatory, this book proposes that we need to take a serious look at the results that the past practice of capitalism has brought us—and more important, where it is leading us in the future.
This book is not about doing away with capitalism. It is about recognizing the advantages of capitalism as a generator of progress and prosperity, but at the same time acknowledging the mounting criticisms—if left unchecked, a capitalist system will run off its own rails. Many noted economists, thought leaders, and social visionaries around the world are all recognizing that capitalism has become dysfunctional. It has lost its way as an effective, self-regulating, and sustainable economic system. It has devolved into the single-minded pursuit of profit and wealth for a small elite at the expense of the overall society.
What the Great Depression, the Great Recession, and all the decades in between should have taught us is that free market capitalism is in need of repair. It embeds a wide range of systemic problems that are slowly choking our societies and preventing our economic institutions from achieving what the human race ultimately needs—a steady march of upward prosperity and progress for everyone on the planet.
The noted economist Milton Friedman led a movement during the second half of the twentieth century that proclaimed that corporations have no social responsibility to society. As the leading voice on President Ronald Reagan's Economic Advisory Board, he championed supply-side economics and the view that the only role of corporations was to make profits for their shareholders, regardless of any consequences their actions might cause to society or the environment, so long as they complied with existing regulations. Friedman's philosophy has now guided three decades of government policy, leading to a massive deregulation of industries and the growth of powerful corporations.
Reasonable people disagree on whether this approach has succeeded in producing the economic benefits it claims. But more important, and not up for debate, is that deregulation has led directly to the increasing impoverishment of the American middle class and the erosion of the belief that the American Dream is still possible. Barring government intervention and voluntary restraint, free market capitalism has become effectively uncontrollable.
Admittedly, the freedom of unregulated capitalism can be at times its greatest strength. The potential rewards of capitalism inspire people to start companies, innovate, and create new businesses that both enrich themselves and advance the world. The United States in particular prides itself on being the leading-edge nation that attracts the best and brightest minds to reap capitalism's benefits—a strong investment community, an educated workforce, and a vast market of consumers. But at the same time, the unregulated market and the growth of corporations have altered the character of our society and transformed capitalism for the worse.
What are the systemic flaws of capitalism that prevent it from fulfilling its greater promises?
Capitalism allows a small class of people to amass most of the wealth and use it to dominate the investment markets, corporations, and the overall business environment.
It is prone to inflationary periods and bubbles that eventually collapse, wiping out investments.
It is prone to allowing, in the name of profit, the worst of human nature, namely greed and selfishness, to run rampant and manipulate the system, especially when government regulations are absent.
It is subject to unstable behavior on the part of investors, whose impulsive actions can seriously impact global markets.
Its single-minded pursuit of profit above all other factors takes a huge toll on average workers and their families, who are cast aside when wealthy investors and corporations are willing to sacrifice social progress for purely personal gains.
It encourages corporations and businesses to think only about short- term profits at the expense of the environment.
These systemic flaws are increasingly negating the advantages of capitalism, preventing us from steadily expanding prosperity and building a better and more stable world. If we are to be honest and responsible citizens who accept the stewardship of our nations and this planet, how can we not recognize that this engine is in need of a serious overhaul?
REPEATING THE SAME MISTAKES
It is critical that we begin to take stock of our situation and make changes immediately, as the financial crash of 2008 and its ongoing aftermath have cast capitalism's flaws into stark relief. The power brokers on Wall Street and within many corporations are already reverting to their pre- recession thinking and behaviors. Many of the systems and architects that wrought the financial melt-down are reemerging—as if nothing happened.
Enormous CEO salaries and bonuses are back on track, and corporate success is still tied to short-term market gains. Wall Street analysts, powerful hedge funds, and wealthy investors are again dictating that profits are the only results that matter. The old guard of Wall Street investors have returned to their old tricks, but this time they have become "high-frequency traders" who buy and sell securities up to one thousand times per second using smartly programmed computers. As a result, Wall Street's biggest banks, including Goldman Sachs Group Inc., JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., and Morgan Stanley enjoyed their most profitable two years in investment banking and trading between 2009 and 2010.
Meanwhile, corporations are hitting all-time record profits in 2010, according to the U.S. Department of Commerce. One reason for this is that companies are refusing to hire back workers to jump-start the sluggish economy. In the middle of 2010, Moody's Investor Services reported that U.S. corporations were sitting on $1 trillion in cash, due partly to their lower expenses and partly to increased profits from the nascent recovery. But even with that cash, few of them were starting to hire. Numerous reports indicated that many of these companies were instead using the savings from their lower payrolls to invest in laborsaving technologies to further reduce their workforce, while other companies began buying back their stock to increase its value for shareholders. Some economists euphemistically called this strategy a "jobless recovery," while Robert Reich, former Secretary of Labor under President Bill Clinton, referred to the trend as an outright "decoupling of profits from jobs."
The result of the recession and the continuing effects of unemployment are creating a dire situation in the United States—the virtual disappearance of the middle class. In her insightful book Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream, Arianna Huffington argues that capitalism has decimated the buying power of the average American family to such a degree that it has destroyed our once sacred notion of the "American Dream," turning the United States into the equivalent of a Third World nation. In the book, she presents a dire perspective of the middle-class situation.
The warning lights on our national dashboard are flashing red: Our industrial base is vanishing, taking with it the kind of jobs that have formed the backbone of our economy for more than a century; our education system is in shambles, making it harder for tomorrow's workforce to acquire the information and training it needs to land good twenty-first century jobs; our infrastructure—our roads, our bridges, our sewage and water and transportation and electrical systems—is crumbling. And America's middle class, the driver of so much of our creative and economic success—the foundation of our democracy—is rapidly disappearing, taking with it a key component of the American Dream: the promise that, with hard work and discipline, our children will have the chance to do better than we did, just as we had the chance to do better than the generation before us.... So long as our middle class is thriving, it would be impossible for America to become a Third World nation. But the facts show a different trajectory. It's no longer an exaggeration to say that middle-class Americans are an endangered species.
These are some of the facts that confirm the crisis of the middle class.
DISPARITY OF INCOME
The gap between the rich and the middle class is widening sharply. Between 1979 and the present, the top 1 percent of income earners has seen their incomes nearly triple, up by 281 percent, while the bottom quintile has seen their incomes rise only 16 percent. The middle 20 percent is up just 25 percent.
DISPARITY OF WEALTH OWNERSHIP
A small class of wealthy people owns nearly all the resources in the United States. Between 1983 and 2004, of all the new financial wealth created by the American economy, the top 20 percent of the population captured 94 percent of it, while the bottom 80 percent received only 6 percent. Furthermore, the top 10 percent of Americans owns 80 to 90 percent of all stocks, bonds, trust funds, and business equity, and more than 75 percent of non-home (commercial) real estate. The concentration is even greater further up the wealth scale: the top 1 percent of wealthy individuals owns 38.3 percent of all privately held stock, 60.6 percent of financial securities, and 62.4 percent of business equity.
The rise in poverty in the United States has hit record levels. In 2010, more than 44 million Americans lived below the official government-set poverty line—that's one in seven people—the highest rate since 1994. As of May 2010, 40.2 million Americans were living on food stamps, and this figure rose to 43.6 million by January 2011, representing more than 14 percent of the U.S. population. Among them, 6 million report they have no other income, so roughly one in every fifty Americans lives in a household surviving entirely on a food-stamp card.
DESCENT INTO DEBT
Debt is rising. In a 2009 survey, 61 percent of Americans say they "always or usually" live paycheck to paycheck, up from 43 percent in 2007. Over 1.4 million Americans filed for personal bankruptcy in 2009, a 32 percent increase over the previous year. In 2010, banks estimated they would foreclose on 1 million homes.
THESE ARE NOT ENCOURAGING STATISTICS, and the plight of the middle class is fast becoming grim. They portend an economic environment that is not conducive to the type of healthy economy that can support long-term corporate growth and success. It is not logical that corporations would want to support a version of capitalism that weakens people rather than turning them into strong, prosperous, and loyal customers. It is difficult to rationalize this behavior unless we concede that capitalism is taking us down the wrong path.
The biggest problem with runaway inequality ... is that it undermines the unity of purpose necessary for any firm, or any nation, to thrive. People don't work hard, take risks and make sacrifices if they think the rewards will all flow to others.
—Steve Pearlstein, Washington Post
CAPITALISM'S MISSED OPPORTUNITIES
Meanwhile, not only has capitalism failed the richest nations on Earth, but it is failing vast stretches of the developing world as well. The United States has a long history of being among the most generous countries on the planet in regard to sharing its national wealth to help other nations in need—in 2009, for example, the United States was providing assistance to 150 countries with an Official Development Assistance budget of about $30 billion. The size of our foreign aid is testimony to the fact that, since the end of World War II, the foundations of capitalism have failed to integrate what we formerly called the Third World nations (and which we now call the "developing nations") into a prosperous global economy.
Certainly, we cannot blame capitalism for all the problems of the less- developed world. History shows that in many of these nations, it is their own internal conflicts and political corruption that has stymied their progress. But it is simply incorrect to think that capitalist enterprises have done all they could in the second half of the twentieth century, given that so much of the developing world has failed to achieve steady progress toward prosperity.
As a result of decades of missed opportunities to integrate prosperity in the developing nations, the world is now faced with humanitarian problems on an unfathomable scale in the twenty-first century. Consider some of the challenges the underdeveloped nations of the world must endeavor to solve.
1.4 billion people on the planet live on less than $1.25 per day, while another 2.56 billion people live on less than $2.00/day.
1 billion children live in poverty worldwide, roughly 1 out of every 2 children.
8.1 million children died in 2009 before they reached the age of 5, half of them in Africa, most succumbing to illnesses that could have been easily prevented by access to inexpensive drugs and care.
Excerpted from We First by Simon Mainwaring. Copyright © 2011 Simon Mainwaring. Excerpted by permission of Palgrave Macmillan.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
1 Transforming the engine of capitalism 7
2 Redefining self-interest from me first to we first 23
3 The future of profit is purpose 43
4 Creating sustainable capitalism in five ways 61
5 Instilling we first values into capitalism 77
6 Why the world needs a responsible private sector 91
7 How brands build their business and a better world 115
8 How consumers build responsible brands and a better world 149
9 How contributory consumption creates sustainable social change 183
10 The global brand initiative, the future of the private sector 211
Reference Guide 234
Simon definitely knows his economics. It's great to know that someone is out there trying to educate us as consumers about the power of our purchasing. Even leaders in the free market can make a difference by having a profit with a purpose, and not profit for profit's sake.Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.
Posted December 18, 2011
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