In debates about the future of the economy people focus on the following issues, what technologies will appear as crucial for the forth tech revolution, which professions will be replaced with artificial intelligence, what would result from the great demographic transformation. Naturally, they are very important topics. However, among them there must be a certain general reflection on the way of doing business too. And this context is provided by the economics of values. In the shortest version: if capitalism is meant to escape from a siege (in which it is), then non-economic values have to be taken into consideration in business, too. There is the conviction that it’s going to be harder and harder to run business according to the rule “each cost is bad – each income is good”.
Capitalism in the crisis
As Kramer and Porter wrote: “the capitalism is in a siege”. Business has got the lowest public trust ever. There is a widespread conviction that business functions at the expense of larger communities. Moreover, the concept of corporate social responsibility (CSR) proofed to be an insufficient one. Too often CSR was treated just as a modern form of marketing. In companies CSR has been located on the peripheries and in case of any financial problems, first cuts were made exactly in the CSR area.
It has to be emphasized that the market mechanism is necessary for business. Therefore, the economics of values doesn’t propose to eliminate them. Moreover, in this approach the market mechanism is recognized as a very valuable one, because obviously it’s a fuel for an entrepreneurship. The problem lies in the fact that capitalism took a rather caricature form: the quarterly one. What counts the most is a short-term result is counted. Managers are held accountable for short periods, and investors seek mostly for fast profits.
economics of values
Where is hope?
In people. From the change of consumers’ behavior They take care about non-price issues more and more often. The prosumer approach is being more popular because consumers want to be co-creators, too. More and more often choosing a brand is a kind of serious declaration. People identify with brands increasingly stronger than before. Therefore, they want to be sure that the ones who make their products and services play fair. And it’s very difficult to blur this picture with a marketing.
Today (and moreover – tomorrow) reliable factual biases are necessary for the good PR. People require proofs that a company make good and responsible choices. That a company doesn’t just follow the primitive cost benefit analysis. Naturally, such a transformation can’t be made in several years.
Each time, when I ask students – if you had a choice that you could buy an iPhone on today’s price and this device was assembled in current standards or you could choose the same quality iPhone with 20-30% higher price, but with a guarantee that it was assembled by people who were guaranteed the same salaries and social protection like in Europe. Would you be willing to pay this extra money? Positive answers are always in a minority.
Not only people but technology, too
In terms of real respect of non-economic values, the new technology – mostly, notorious blockhchain – is the great simplification in analyzing the process of crafting goods and services is the new technology. Although most economists discourage from using this mechanism for currency creation, the idea of distributed ledger (because in fact this is blockchain) makes it easier to follow the whole process of creation. It lets us build reputation systems, set subcontractors’ payments in a dynamic way or share intellectual property with a specific usage condition in an easier way.
And this is really good news. Faced with corporate propaganda, we would be powerless without such tools. It would be hard to tell “values for the show” from real social responsible entrepreneurs. As it was mentioned above, without tools, the subject of values would be blurred in the sea of business keywords, “picklocks”, like: innovation, uniqueness, striving for perfection – which the more often they are used, the less content they have.
Economics of values in offensive
There is a lot of discussions about values. However, most times there is even no agreement in what is a value, and what is an anti-value. Nevertheless, there is a huge space for action, too. And these actions could be both business profitable as well as non-robbery. The first transmission which is required, is to switch to a long term thinking. And it shouldn’t be understood just as a series of short terms. As a result, there is a chance to popularize such a way of doing, which is typical for many family companies. Because, family businesses really want to keep their enterprise in a good shape for the next generations. And it helps to overcome a desire for fast profits instead of being responsible and patient. And this is exactly the economics of values in action.