Rethinking our business model
I usually get the attention of my ECON 101 students when I tell them that Tina Turner was really talking about the American business model when she belted out her pop hit, “What’s love got to do with it?” The traditional supply-and-demand model of the market system, if it worked the way it was supposed to, ultimately brought the rational players of the market into the promised land of efficient production and satisfied consumers.
The fundamental mantra of free markets was what American economists would lecture governments and people all across the world about, and berated those who did not follow the model with fancy pull-me-downs, such as India following the “Hindu rate of growth.” These economists missed seeing the lines to the soup kitchens as they scuttled between luxury resorts. They did not see the pain of unemployment and underemployment — the kind of angst reflected in blue-collar workers today who voted loud and clear this past election and is reflected in attempts to raise the minimum wage, bring universal health care or preserve the environment. Something about the market model was not working well. Are there options?
In Minnesota there are models that present potential.
The Metro IBA is a network of small local independent businesses. While attending their meetings and interacting with members, I get a clear message that these businesses operate beyond the financial bottom line. They seem to be integrating the “common good” into their business model. In November 2016, after the election, when there was considerable fear and anxiety about the future, the president of Metro IBA, Molly Glasgow, who is a young entrepreneur (Point Acupressure) had a call to members to be extra welcoming to customers. On her business website you can see this message in multiple languages. We can often find members advocating for community issues beyond pure business issues.
It is not surprising that Minnesota passed legislation to create the Social Benefit Corporation. Companies can integrate the common good as part of their core business identity and measure both financial and community success. Over the weekend a new social benefit corporation was born, Element Boxing, SBC. Dalton and Lacee Outlaw, two young entrepreneurs symbolize this new business model in a very unique way. Their business platform at its core is an inner-city boxing gym with rich cultural connectedness. However it is also an incubator for small fitness start-ups such as Push and a young man I recently met who is building a new life after serving time in prison. Also integrated into this business model is the common good as they work to build youth and help them find their purpose. “We put people and community before profits” is a tagline on their new website. elementgym.org/story
I think we are on the verge of something good in Minnesota.
Bruce Corrie, PhD, blogs at chai.news and is a professor of economics at Concordia University - Saint Paul.