This is another post along the post-growth vein, please read We’ve had Enough Growth for some background on this.
Subject for this evening: business models.
We’re used to two major business models in the West today: corporations and private companies.
Corporations are legally obliged to maximise profit margins for shareholders above all other concerns. Shareholders being people who have invested money into the corporation and understandably want a good return on their cash, while in most cases, not working for the company and rather swanning around building up an impressive investments portfolio.
Private companies are owned by one or more partners and the profit goes straight to them. Their main motive is also to turn a profit, but they’re not legally bound to maximise it at any cost, so they might decide to pay their cleaners slightly more and make slightly less, for example.
Those are the two major ones, but several others feasible models (notably co-operatives, not-for-profits and social enterprises) are here and there in the economic landscape.
In terms of the post-growth concept, profit automatically leads to economic growth. That’s why every business person is chasing it like the end of a rainbow. But, in a situation where we – shock – don’t actually want to grow the economy – bear with me – then it follows that we don’t want profit. Not as such, any way.
But if that means we cannot have business, then that’s quite a stumbling block. The truth is, business is an extraordinarily effective way of organising human effort. Even though (at 20) I’ve never had a paid job more stimulating than waitressing, I still enjoy the aspect of working with other people towards a common goal. As much as I love the concept of volunteering, business just gets things done on a scale that wouldn’t happen if people were just doing something as a leisurely project.
So, can we have business without profit?
I think so, actually. The reason being, profit is only really needed to grow the economy – of course vital in our current situation, but counterproductive in a post-growth situation. Think about it. A business definitely needs to make money, because it needs to cover its costs, including paying all staff a decent wage, and it will probably need to reinvest money back into itself from time to time for one-off improvements. As long as the partners pay themselves a good wage, I don’t see that extra profit is actually necessary to keep the business going.
I’m probably missing something, so if you know about this stuff then please feel free to comment. But this is how it looks from a common-sense standpoint.
Diversity in an ecosystem makes the whole system more resilient. Similarly, I think diversity in the economy makes a more resilient economy. If we had loads and loads of small not-for-profit companies, community-interest companies, social enterprises and co-operatives, rather than a few corporate giants, I think this would deliver much more social value. We’d have a rich web of economic enterprises working to meet real social needs, while providing secure employment.
I’ll be posting again soon with more post-growth ideas!