The Capitalist System and Social Enterprise

The financial meltdown in the United States, the economies of Greece and Iceland in tatters and the threat to the economies of Asia all has brought the spotlight fiercely on the capitalist method of operation in an economy. In the eagerness to find answers and to lay blame, people often say, “see what a belief in capitalism has brought upon us?” I’m not sure capitalism or the private sector is necessarily to blame. It has characteristics and instruments that can be very effectively used in poverty alleviation/development.

Muhammad Yunus in his book ‘Banker to the Poor’ says:

“Somehow we have persuaded ourselves that [a] capitalist economy must be fuelled only by greed. This has become a self-fulfilling prophecy. Only the profit-maximizers get to play in the market place and try their luck. People who are not excited about profit-making stay away from it, condemn it and keep searching for alternatives.”

“The private sector… is open to everyone, even to those who are not interested in making a profit.”

“I profoundly believe… that greed is not the only fuel for free enterprise. Social goals can replace greed as a powerful motivational force.”

Enterprises can push for social goals and for financial sustainability. At Aravind, the system and the emotional energy of the organization is geared to serve those who cannot pay, but it is the 40% that pay that not only allows this to happen but also keeps Aravind on its toes. It is the paying patients who push Aravind to be at the forefront of high quality services, technological change and customer service.


2 thoughts on “The Capitalist System and Social Enterprise

  1. Kathie says:

    This is a hopeful post. Thank you.

  2. Ragunath says:

    After struggling for a long time swinging between gift-economy and capitalism, I found an analogy that helps me strike the balance: Healthy Eating.

    We need to eat to survive, and to do all that our heart yearns for beyond survival. But there is a limit to our consumption beyond which we need to stop. If we don’t, then the addition spoils the entire system beginning with indigestion. Our body hates accumulation and does its best to eliminate it if forced.

    At the same time, if we do not consume to our limit, we will be undernourished.

    The indicator for the limit is the satiation of hunger. If we are fully aware of and acknowledge the satisfaction that arises out of consuming to our limit, our system will not want more. One similarity with economic systems is here:

    I’ll let you figure out the other similarities. Some food for thought 🙂

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