We want to be good, but profit extraction is in our DNA.

The Conundrum of Conscious Capitalism & the Public CompanyEarlier this month, at the Kellogg Innovation Network's annual event, KINglobal, there were many speakers wrestling with the question (yes, still) of how businesses can be better citizens. For example, Marc Cutafani, the CEO of Anglo American Mining, discussed how the mining industry in Africa is banding together to work with local communities to bring healthcare and infrastructure to miners and their families. They are even thinking about how to structure mining towns to last beyond the mine's useful life.It wasn't just Marc. Many presenters were trying hard to find ways to make meaning, to do good and above all, to first do no harm. They collectively referenced every structure designed to measure outcomes other than shareholder value as a good, such as triple bottom line, B corp (or Benefit Corporation), Conscious Capitalism, or Sustainable Development Goals. They talked of their sponsorship or charitable projects. Yet, while these were all very laudable things, in the end, it still looked like good people stretching and straining to make something fit that never will.At the core of the problem is this: businesses are constructed as separate, standalone entities, isolated to their own ends, with the goals of benefitting the holders of their capital stock (and possibly their employees), usually at a cost to the commons (costs that are known as “externalities”). This means that profits accrue to the shareholders (disproportionately to those that are already wealthy), while the downstream costs, in the form of pollution, garbage, health impacts, ecosystem damage, industrial illness, resource depletion and more, accrue to citizens- to taxpayers through the government (disproportionately to those who are middle class or poorer), and to the unrepresented entities on the planet.Even the individuals who benefit (through employment or retirement accounts), must often choose between their own personal financial well-being (for example, having a 'good job' in places where they are scarce) and supporting corporate predation that may in fact be against their own self-interest, or that of their children or their communities (see: AgChem, Big Oil, or any big bank).I'm a business person, I've built companies, I get how to make profit, I understand why it can be a great fuel for creativity, I like making and having money: this isn't a screed against financial success. It's a commentary on overreaching greed.Through legislation, democracy has sought to put caps on the amount of unreimbursed costs to society that corporate interests can retain. Labor rules and environmental protections are some examples of this. Of course, this is a hassle for everyone involved. Individuals and businesses often complain about governmental oversight, the pain of bureaucracy, how they don't need governments to tell them how to do the right thing. But in reality, we do need oversight, because greed is in the DNA of our corporate institutions (and in many unenlightened individuals).Example: Let me tell you about the Tule (TOOL-EE) Elk, and a situation that will heretofore be called the Tule Elk problem. The Tule Elk are a big, meaty beast native to California. Before the Europeans arrived, there were an estimated 500,000 Tule Elk. Yet, in a single generation, hunters wiped them ALL out- they were thought to be extinct until a single breeding pair were discovered. This is the heart of why humans need governance: we can't trust each other not to be assholes. I might think that ungoverned I personally wouldn't hurt anyone or take more than my fair share. But it's a asynchronous problem: just a few people who don't hold those values and the system skews. Because of the idiots who killed almost all of the Tule elk, or the ones who poison the waters with factory run off, or hide the research on pesticides and cancers - because of the predators and the fact that some people are just greedy motherfuckers, we made laws. Yet, in the case of corporations, greed isn't a moral issue or a moral judgement, it is literally in the DNA of how their success is measured and rewarded - they cannot do anything other than extract as much profit as possible.Furthermore, investment managers are charged with getting the highest return for their investors. Institutional capital will flow to the most profitable place, with some exceptions. Capital markets are also accountable for this glitch in human history.In response to a range of oversights and regulations, because they are measured on profit extraction, companies resist: they hire paid lobbyists to sway lawmakers into going easy on them, or move operations overseas to attempt labor and environmental arbitrage, then sell the goods made overseas back to middle class consumers for very low prices, on credit. This globalism in the name of competitiveness and shareholder value took local jobs, polluted the planet, and created a situation where 'jobs' and 'low prices / more stuff' were falsely equated among many people with self-interest, instead of true self interest: steady good creative work, healthy and playful living- and basic human rights such as clean air, water and food.When you speak with individuals in business or politics, they seem to want good things to happen, they don't seem evil. Yet, the reward systems and structures of growth and profit at all costs, turn good people toward bad action. Or at least shortsighted action. Rules actually let people be better humans. In a lawless wild west society, it's every man for themselves and you get the Tule Elk problem. Shareholder value as a sole metric of business success is destructive to society, and to the planet we are here to care for.What can be done? How to safeguard the collective from the structural greed inherent in shareholder value without limits? Privately held companies with mindful investors and backers can behave as they wish (at the risk of being less profitable than others in their industry). Public companies who want to do well while being good can push for tariffs on rule breaking imports to make competition more fair. Countries that have created regulatory arbitrage opportunities can take it upon themselves to make sure their people and their environment are treated at least as well if not better than 1st world workers, and close the gap. Or maybe we need an altogether new model of measuring the success of and legally organizing the creative genius that business can set loose.----*Note: I wrote this article BEFORE Amazon bought Whole Foods, with the Whole Foods outgoing CEO saying they "valued their employees at the expense of their customers"- employee and community welfare is a core tenet of Conscious Capitalism. Growth and profit at all costs!*