In recent years, in part due to the global economic downturn, a fundamental shift in perspective in the global investment and corporate community has raised a new awareness of the role of corporations and investors in the wellbeing of the global community.
As a result a new re-evaluation has emerged with regards to the fundamental guidelines of capitalism and especially the relationships between the social and profit drivers in an organisation. This new approach to social development has manifested in a large number of socially responsible businesses and social-purpose enterprises that balance scale with quality, financial sustainability with social impact and community requirements with rapid growth (Goldman Sachs Foundation, 2003).
In essence on a global scale capitalism is evolving and a number of new initiatives have been proposed as the new model for capitalism including the New Age Capitalism as presented in the Harvard Business Review, Virgin Unite’s Capitalism 24902 or Social Capitalism as presented by Forbes. All these new forms of capitalism have the common denominator where the focus is removed from the individual pursuing his/her own benefit at any cost to a new system where the needs of the greater community is brought into balance against the rights of the individual.
What I recently discover through our business and social ventures in the low-income areas of South Africa, in particular in Soshanguve where we base our operations, is that a similar social-orientated capitalistic view is already in place in these areas. This observation was further substantiated recently when I took part in Leaders Quest, a non-profit initiative that brings executives from the first-world to the third-world to improve their understanding of the challenges faced and to enable the exchange of ideas and knowledge. As one of the representatives of entrepreneurs in South Africa I spent an afternoon discussing these conditions with a big part of the executive team of the European Aeronautical, Defence and Space agency (the company that owns Airbus amongst others). The main feedback they provided is that these communities in South Africa were miles ahead with the implementation of the exact same capitalistic principles that combines social and business they are currently striving to implement in the first world. The most common paradigms of this low-income approach in my humble experience is firstly the fact that small business owners in these communities are aware that the community in which they operate is their biggest stakeholder and they go out of their way to accommodate the will and needs of their community and secondly that these small businessmen recognise that their success is directly as a result of the support from the community and they therefore are willing to allow the community to benefit directly from their success.
This approach has been proven on a micro-level and to some extend in larger corporations, especially in the agricultural industry with the Fair-trade coffee and Mauritian sugar industries as prime examples. With the world desperately looking for a new approach for the corporate environment to prevent a repeat of the effects of capitalism gone wrong such as the economic recession these humble micro economies might hold the answer.
I therefore think it is possible that the community based form of capitalism practiced in low-income areas of South Africa might hold the key to achieving the marriage between profit and social that the first-world is looking for. Our own attempt to learn from this approach resulted in an initiative that provides educational support to local learners free of charge every morning while operating as a profitable business during the afternoon and evenings. I believe this combination of solid business principles with commitment and cooperation with the community and increased ownership and buy-in from our staff members provides a great case study of what can be achieved when these different principles are combined.
Should we as South Africans then not take a moment to reconsider our frantic push towards a Western model that the West itself is busy abandoning and look towards our own African way of doing things and have the West follow us for a change?
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