Better Than Capitalism

I’m currently reading Henry David Thoreau’s Walden. It’s not the first time I’ve read it, but it will be the first time I’ve read it cover-to-cover. I’ve discovered and rediscovered lots of insight in it, but that’s no surprise in a book that’s still popular 150 years after it was published.

Early in the book, just a few pages in, Thoreau spends some time thinking about the necessities of life. At a basic level, he decides, the necessities of life are simply food, shelter, clothing, and fuel. Thinking about his own life, he adds to the list some basic hand tools, a lamp, paper and pens, and access to a few books.

Then he asks a question which in many ways is both the theme of the book and of this blog: once a man has obtained the necessities of life, “what does he want next?”

What do we want next?

Jon Acuff, in his book Quitter, asks the same question. He invites his readers to think about what “enough” means in the context of chasing success in a career. Then he explains:

“we often never reach enough when we chase it. On the other hand, you are guaranteed to get to enough when you define it. You only find enough when you tell enough where to be found.”

That’s a powerful thought. And it’s a central part of my message.

There’s a point where we have enough. Thoreau’s the first person I’m aware of who ever described the golden handcuffs; he says the “seemingly wealthy” who chase wealth for its own sake “have forged their own golden or silver fetters.”

I’m not here to tell you what’s enough for you. But I am here to convince you that there’s also a point where our businesses have enough. Enough for a business can be—and should be—that it supports the lives of its employees, rather than merely being supported by them. Enough for an employer can be—and should be—that he sees his employees becoming more: more capable, more dedicated, and more caring because of his leadership.

It’s easy to think that we’ve found the golden ticket, and its even easier to let our success carry us away.

Thoreau answered his own question. He said that after we’ve “obtained those things which are necessary to life, there is another alternative than to obtain the superfluities; and this is, to adventure on life now” by doing things that matter most.

And what matters most is each other. After all, “[w]hat do we live for; if it is not to make life less difficult to each other?”¹

 

Over the last few weeks I’ve struggled to describe the change I’m advocating for. I’ve called it “this idea” and “the change I’m advocating for.” Then I realized there’s a word for what I’ve been describing.

It’s altruism.

There are many competing visions of altruism. For some, it means giving to charities. For others it’s giving back to the community in non-monetary ways. Some want to measure it and others help us to see that measuring only tells part of the story.

In the Gospel of St. Luke, there’s a parable given by Jesus Christ about the steward of “a certain rich man.” Hearing that the steward had been neglecting his stewardship, the rich man called the steward to him and commanded him, “give an account of thy stewardship.”

The rest of the story is meaningful on many levels, but the idea of giving an account of our stewardship is meaningful here.

Many of us give sincere donations of our time and money to charities and other philanthropic institutions. And rightly so; there’s a great deal of poverty, ignorance, and unfairness in the world that these institutions do a lot to ameliorate.

But we also tend to get caught up in our daily lives. We divide the day into minutes and hours, dropping our time into neat little quadrants that allow us to be highly effective people but not always highly effective neighbors or friends or family. And so we tend to compartmentalize our caring because there simply aren’t enough hours in the day to care all the time.

It doesn’t have to be that way.

In the U.S., a person who has a 40-year long career will devote somewhere in the neighborhood of 80,000 hours to that career; about 8 hours a day, 5 days a week, 52 weeks a year, for 40 years.

What if, when we built the businesses that will consume those 80,000 hours, we learned to say, “This much is enough.” Enough to be comfortable. Enough to provide the best service. Enough to create quality. And enough to give us time to care whether others have enough.

So much of capitalism is powerful and good. But there is more power and more good to be found and to be shared. I believe that at the end of our lives we’ll be called before Jesus Christ to give an accounting of our stewardships, an accounting that will include how well we spent our time in the service of others. But whatever the ultimate outcome of this life, I have no doubt that having spent it trying to improve the lives of others will be accounted a stewardship well cared-for.

Mike Rowe hosted the reality TV show Dirty Jobs, which was probably my favorite TV show while I was in college and then law school. For those who aren’t aware, Mike spent eight seasons exploring the work—and by extension the lives—of people who do some of the most disgusting, thankless, and just plain dirty jobs in our society. If Mike had ever advertised for an understudy, I would have been first in line.

Since Dirty Jobs ended, Mike has been building the mikeroweWORKS Foundation. One of the main goals of the mrW Foundation is to “challenge the absurd belief that a four-year degree is the only path to success.”

In a nutshell, Mike’s doing everything he can to get people to approach work differently. For years and years we’ve been telling ourselves that the way to get a great job is to graduate high school then get a college degree and stay as far away from manual labor as possible. And from a certain point of view, that idea is true. (I certainly know the appeal of that idea, I grew up working on my dad’s landscaping crew). But first on Dirty Jobs and now through the mrW Foundation, Mike’s been trying to teach people that there’s real honor in doing those jobs we’ve been poo-pooing for so long and that learning to do manual labor might well be a better (and better-paying) job than we thought.

And it looks like it’s working. Mike has nearly 2.5 million Facebook followers as of this blog post, many of them talking about his efforts to change attitudes about work. And I’m sure that anyone who has received a mrW Foundation scholarship will tell you about the effect Mike’s efforts has had on their life.

Recognizing the honor of an employee’s honest work is an indispensable part of giving up profit as a primary business motivation. For years and years, we’ve been telling ourselves that the point of business is to make as much profit as possible for the owners and shareholders of the company. There’s a certain amount of truth to that idea as well.

But it’s not the only way, and it’s not the best way. Deepening our appreciation for the work done by the employees in our organizations forces us to reevaluate our attitudes toward them and toward how we’re compensating them. Once we see the honor of honest work, it’s much easier to look at business as a partnership where we’re helping our employees to advance as much as possible rather than merely as a system for maximizing profits.

The biggest point of my last post, which I think I probably didn’t communicate very well, is that we need to do more than just talk. That’s true of life generally, but it’s especially true when we’re talking about making radical changes like I propose.

Biz Stone, one of Twitter’s founders, wrote an article a few years ago about the opportunity entrepreneurs have to give back. In that article, Biz describes a concept he calls the compound interest of altruism. He talks about how he and his wife found many opportunities to give, even when they were not wealthy, and the satisfaction they found in doing so.

Like many people, I’m inspired by the lives of some of the world’s billionaires. I’m currently reading Warren Buffett’s biography, Snowball, with great interest (pardon the pun). Sir Richard Branson has a fascinating story, so do Jon Huntsman, Sr. and Bill Gates. Like Biz Stone, each of these people have talked publicly about the importance of giving. And each of them have signed on to The Giving Pledge, pledging to give away more than half their wealth to charitable causes before they die or in their wills.

I remember first reading about The Giving Pledge shortly after I started law school. I was excited to hear that there was talk among the world’s wealthiest about what to do with their money. I thought about it again and again, and the more I thought about it, the more I was impressed.

During my third year in law school I worked in a legal clinic where we helped people start non-profits and charitable organizations. As I worked there, I started to realize that there were pretty severe limits on what a non-profit organization could do if it wants to keep its tax exemption.

Which led me to my next questions – why form a non-profit in the first place? Why can’t a for-profit business do everything that a non-profit does, and then some?

About this same time, I picked up a book about Moses Maimonides, or Moshe ben Maimon, one of the greatest Jewish philosophers in history, who lived in the 1100s. He was, and is, a fascinating guy. One of Maimonides’ most famous teachings regards the eight levels of tzedakah, or charity. His top three levels caught my eye.

Number three was the principle of giving anonymously to a known recipient. As this was how I’d always been taught to give, this made sense to me.

Number two was the principle of giving anonymously to an unknown recipient through a trustworthy intermediary like a charity. This too was familiar to me, since I’ve given a 10% tithe and various other gifts to my church for a long time and my work brought me into daily contact with charities who depended on just this sort of giving.

But the kind of giving that Maimonides described as the greatest was a complete surprise to me. He explained that the greatest form of giving is one in which the giver knows (and is known by) the recipient and gives a present or a loan, enters into a partnership with him, or finds him work so that “his hand will be fortified so that he will not have to ask others [for alms].”¹

Maimonides’ explanation of charity struck me powerfully as the answer to my question. I realized that if he’s right, there’s really no reason why a for-profit business can’t achieve everything that a charity might achieve. More than that, if Maimonides was right, “business” and not “charity” was the way to really help people.

Many charities do amazing work. But charities depend on the willingness of people to donate some portion of their disposable income. Traditional businesses also do amazing work. But employees of those businesses are always dependent on the business for their livelihood.

What if instead we built a company that is focused on developing its employees to the point that they’re no longer dependent on the business? What if mankind truly was our business?

Then we’d really see the compounding interest of altruism.

There are, for the most part, two kinds of thinkers.

Whether it’s because they’re content to quarterback the game from their armchairs, or because fear of the unknown stops them, or simply because they never thought of doing more, some thinkers never really get past the thinking stage.

The other kind of thinker just gets to work.

Changing the way we do business isn’t going to happen if we don’t just get to work. There are always a hundred reasons why we’re not ready. And really, we’re never ready. We’re going to have to make some of it up along the way.

The most important thing is to be doing. Doing what we say and doing what we mean. We don’t need anyone else to do this for us and there’s really no secret to it. All we need is to start looking out for others as much—or more—as we look out for ourselves.

So let’s change the way we do business.

 

This blog grew out of a crazy idea I started having years ago that really solidified while I was in law school. I started wondering what would happen if a person got really  serious about giving up the profit of a successful business and instead spent that money on increasing salaries and driving down the cost of goods and services as much as possible.

The more I thought about it the more excited I got. Because there’s a lot of good you can do when you’re interested in other people.

I’ve always been an idealist. I remember the first time I read Les Miserables. I was captivated by the change that came over Valjean after Bishop Myriel gives him the silver.

But this idea only works if the person (or people) who make the decision to stop chasing profits do it willingly. It’s not a form of socialism, neither is it communism. Those political and economic theories are based on a fundamental ideal in which the government imposes restrictions—whether with a light touch or a heavy—on the freedom of individual citizens.

This idea depends on its participants freely making an effort to sacrifice some part of their capacity, their earning power, and ultimately their hearts, to making the lives of those around them better. It’s a radical change in attitudes that changes the lives of both those who make the change and those who benefit from it.

Dave Ramsey is a brilliant leader. He teaches millions of people how to get out of debt, often mountains of debt, using the most fundamental financial tools available. One of the most powerful elements of his radio show happens when his listeners call in to give a “debt-free scream.” I literally get chills every time I hear the passion in those callers’ voices. This part of his show is so powerful precisely because it convinces his listeners that the radical changes he preaches actually do work.

The changes I’m advocating for here are just as radical, and they demand every bit as much “gazelle intensity” as Dave works to inspire in his audience. No employer will rationally give up her annual profits in the name of paying the highest wages possible unless she is totally convinced of the intrinsic value of that decision. And no employee will recognize the true humility of that sacrifice unless he understands the commitment that leads his employer to give up what is rightfully hers to withhold.

In short, I’m out to change the world.

And that’s crazy.

Business, at its best, transcends capitalism.

Ask the average 25-year-old college student what “capitalism” means and you’re likely to get an earful about European socialist democracies, Marx, and the immorality of capitalism (delivered, no doubt, from behind an Apple Macbook with a Starbucks coffee close by). Ask the average 52-year-old and you’re much more likely to hear about Reagan, trickle-down economics, and so forth (you’re probably equally likely to find a Macbook and a Venti Mochafrothything close at hand).

There’s very little to be gained by engaging in that argument here. Instead I’ll define capitalism as it’s most commonly practiced in the United States today: an economic system loosely based on the principles laid out by Adam Smith in which capital (in the form of cash or hard assets) is used to build a business for the purpose of maximizing profits for the owner or shareholders of that business.

Over time we’ll explore the consequences of capitalism as it’s practiced today. But from the beginning, I want to be clear:

Business, at its best, transcends capitalism.

That transcendence happens when a business turns its focus from maximizing profits to maximizing its positive impact on lives of its employees and the public at large. Many great contemporary thinkers have approached this idea. From the “gift economy” to the current fascination with social entrepreneurship, many more have nibbled a the edges of this principle.

Others have understood it better. Henry Ford apparently recognized it when he created the “Five-Dollar Day” for his employees in 1914. Seth Godin advocates brilliantly for it when he encourages business leaders (and each of us) to develop “linchpins” in their organizations. (Just go read Seth’s Linchpin, it really is brilliant, and this blog won’t get any better while you’re away). Patrick Lencioni’s description of how to improve our organizations in The Three Signs of A Miserable Job is just as inspiring.

Using biblical language from the Book of Matthew, Joseph Smith once described this idea as well. No doubt because I’m a Mormon, I find his description particularly compelling. Joseph explained that business should be organized so that “every man may improve upon his talent, that every man may gain other talents . . . [e]very man seeking the interest of his neighbor, and doing all things with an eye single to the glory of God.”

A brief example illustrates. Basic capitalist thought teaches that an employer should pay his employees the very least he can convince his employees to take. The employer’s profit is thus equal to the difference between the cost of the employee’s time and what the employer can charge for that time. This makes sense; it maximizes the employers profits and it feels very much like the explanation of that basic demand/supply curve our favorite economics teacher told us all about.

The problem is, it’s wrong.

A much better result occurs when the employer instead approaches the question of wages by asking “what is the most I can pay my employees while still earning a reasonable profit.” In the end, the wages she pays may not be any different from those paid by the employer in my last example. But very often they will be. And more importantly than that, when this approach is made explicit, the employer gains the trust and loyalty of an employee.

The effects of this loyalty are far-reaching, but they’re only available to the extent a business is willing to set aside profit as its primary motive. So I say again:

Business, at its best, transcends capitalism.

P.S. Happy Ruckusmaker Day!

 

I’m a 30-something lawyer working for a fast-growing tech startup. I read a lot. For work and for church and for pleasure.

Lately, I’ve been reading a lot of business books. I used to think they were hokey. Some still are. But there are a few that have started to help me put words around ideas I’ve had since I walked into my first economics class as a freshman at Brigham Young University.

These ideas have been influenced by so much that I’ve read. Everything from Victor Hugo to J.R.R. Tolkien to Jeffrey R. Holland to Milton Friedman.

Over the next year, I hope to sketch out a vision that can change the way we live and do business. They’re not new ideas, they’re not even all my ideas. I’m just hoping that maybe I can put them together somewhere where you can look at them all together—take them down and work with them—and see what I see.

 

A few weeks ago, a person I admire told me “Go make your ruckus, sir.”

A few days later, a radio personality started talking about things I’ve been saying for years, and I was irritated that I’d been scooped.

Tonight, for the hundred-millionth time, I sat telling my wife about these ideas that I have that seem so crazy but that I can’t seem to let go. And she told me that I should start telling people about them.

So here I am.

Not here we are, because you’re not here yet. Maybe you’ll never be here. But I’m going to write the things I keep thinking about and then I’m going to tell everyone I know where to find them. And then maybe one of these days you will be here and I’ll say something that resonates with you the way it resonates with me and you’ll share it.

I hope that when you do, you’ll share this blog. Because ultimately, this blog (like all blogs worth reading) is about giving people a place to gather and communicate.

Because there’s a better way for us to live. There’s a better way for us to interact with each other, to think about each other, and to help each other.

Something better than capitalism.