It’s Time To Put Freedom Back Into Free Enterprise

It’s Time To Put Freedom Back Into Free Enterprise

The freedom train has left the station, my friends. If you’re a business leader, you better track that train down, leap aboard and learn how to conduct the right type of freedom throughout your business ecosystem. If you don’t, your company and your career may soon hurtle off the rails.

We’ve arrived at a point where free enterprise is on nearly everyone’s minds. And, regardless of  our politics, there are two thoughts most of us share. The first is that we remain deeply attached to the principles of free enterprise and the ideal of free markets. We continue to view capitalism as the best system for enabling global progress and prosperity. The second thought is that capitalism isn’t quite working right; it’s broken. As more business and thought leaders recognize that capitalism needs a fix, I want to make sure that we’re on the right track. Why? Because there’s never before been more riding on getting freedom right in our capitalistic endeavors and markets.

With apologies to Janis Joplin, it turns out that freedom isn’t just another word for nothing left to lose. At a time when we have so much to lose, freedom is exactly what we, as business leaders, need to focus on.

Specifically, we need to understand how two distinct forms of freedom – “Freedom From” and “Freedom To” – interact and coexist with each other, as they govern our world and our companies. Equipped with this understanding, we should get started on the hard work of establishing the right balance and dynamic between Freedom From and Freedom To so that we can scale them in a way that prevents our institutions from careening into oblivion as our economies lurch more frequently from crisis to crisis.

Rethinking our Search for Capitalism 2.0

Ever since the financial crisis, we’ve been trying to re-boot, reset or reform our globally interdependent financial system. Lately, this drive to reboot has focused on capitalism itself. This is good news in that it demonstrates our commitment to capitalism. Despite capitalism’s imperfections, no one’s clamoring for socialism or a return to feudalism. The bad news is that there’s a growing sense that capitalism isn’t working. I agree, and want to inject some breaking news into this discussion: resets, reboots and reforms just aren’t going to cut it. If you’re resetting, reforming or rebooting, you like the system the way it is but you want to make it better, you want to tinker at the margins and improve it. But this is no time to tinker at the margins.

Einstein said to us that if you’re in a new era that’s discontinuous with the prior era, don’t reform, rethink. Have the courage to rethink, even to rethink fundamentals. We need to rethink capitalism from the ground up. Before we can go forward, we should take a couple of steps back – way back – to reexamine the fundamentals of our free enterprises. This work requires a profound effort, but judging by the ambition of some current “fix-capitalism” efforts, we have both the stomach and brains for this profound effort.

These endeavors are part of a huge movement already underway to create a better form of capitalism. This movement is evident in many places, including our language. Merriam-Webster Inc., America’s top dictionary publisher, selected “capitalism” as its word of the year in 2012 because it was the most searched for word on People clearly are seeking to understand capitalism, in many cases so that they can redefine, reinterpret and reconfigure it.

Similarly, phrases like “Capitalism 2.0” and admirable initiatives such as Inclusive Capitalism, which addresses the harmful effects of income inequality and focuses on ensuring that capitalism works for the greatest number, are being discussed with greater frequency. The leaders of the Henry Jackson initiative (which created the Inclusive Capitalism Task Force) understand that capitalism is continually evolving and want to ensure that it evolves in the right way in the coming years.

The driving forces behind this movement have come up with truly commendable modifications of capitalism. I have been especially struck by the leadership provided by the Conscious Capitalism movement that business executives like Whole Foods CEO John Mackey and Conscious Capitalism Inc. Co-Founder and Co-Chairman Raj Sisodia are nurturing.

The Conscious Capitalism credo embraces business as good, ethical, noble and heroic: “Free enterprise capitalism is the most powerful system for social cooperation and human progress ever conceived. It is one of the most compelling ideas we humans have ever had. But we can aspire to even more.” I’m fully on board with that reasoning. This type of rethinking is animated not only by an ethos of inclusiveness but also by the type of inspirational leadership businesses and people are hungry for today. I’m honored to be invited to participate later this week in Conscious Capitalism 2014 , a gathering with a title that unites two great leaders, Martin Luther King Jr. and Adam Smith, in an illuminating instructive way: “The Fierce Urgency of Now: Building Fully Human Organizations.”

Adam Smith, 21st Century CEO

The movement to improve capitalism is fierce, as it should be. What all of these efforts have in common is an underlying desire to make capitalism more human. What I find so essentially right about Conscious Capitalism is that consciousness is all about a certain way of thinking and feeling.  And the most effective capitalism fix requires rethinking in the deeply human way capitalism was originally conceived by Mr. Smith.

Mackey, Sisodia and their Conscious Capitalism partners are not alone in their quest for a more human business organization. Smith, free enterprise’s founding father and the author of “The Wealth of Nations,” espoused a “human organization” a long time ago. Smith saw business as personal and human because it was animated by a “moral sentiment.” In fact, Smith was an 18th Century moral philosopher, and he never used the word “capitalism.”

Instead, he talked about a system of natural liberties, and trade animated by moral consciousness. By doing so, Smith laid a moral foundation for capitalism. He understood that a company, as a system, would succeed based on its ability to scale and systematize liberty – the right kind of liberty. That means not just Freedom From tyranny, but the Freedom To innovate, to fail without fear of disproportionate consequences, to dissent in front of the boss, to collaborate with talented colleagues, to be yourself regardless of your religion or sexual orientation.

This is what a free enterprise is all about. And free enterprise is what capitalism, as it was originally intended, is all about. Yes, capitalism still is our best hope for a brighter future. But we should not move on to a new capitalism – i.e. 2.0 or 3.0 – until we pause and return to the roots of free enterprise to ask one question: Did we ever get capitalism 1.0 right?

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