Trend-watcher sees moral transformation of capitalism

My answer is it's very practical. Look at the parade of fallen corporate heroes who march across our TV screens. What was the reason for their downfall? A lack of self-mastery in their leadership. The quickest route to self-mastery is through personal, spiritual practice. This is what many leaders are learning.

Some people will say, well, it's good to help people feel better about their work, but business exists to make a profit and benefit shareholders.

That's the old-fashioned definition of capitalism; economist Milton Friedman wrote that the social responsibility of capitalism is to increase shareholder profit. But we've since faced the worst economic crisis since the Depression and begun to experience the consequences of a system that honored profits at all costs. The result of such a philosophy was trillions of dollars in shareholder value being lost.

You've subtitled your book "The Rise of Conscious Capitalism." Would you explain that?

We've now become conscious of the uncalculated social, economic, and environmental costs of that kind of "unconscious" capitalism. And many are beginning to practice a form of "conscious capitalism," which involves integrity and higher standards, and in which companies are responsible not just to shareholders, but also to employees, consumers, suppliers, and communities. Some call it "stakeholder capitalism."

Can such businesses remain competitive and keep shareholders happy?

Shareholders might have cause to quibble if companies were losing money; in fact, the opposite is true. Studies show that corporate finances flourish when social responsibility and stakeholder concerns are taken into account. A 2005 study of public firms on Fortune's list of the "100 Best Companies to Work for" examined how well they rewarded shareholders: Between 1998 and 2004, they returned 176 percent, compared to only 39 percent for the Standard & Poor's 500. Another study of 25 firms that excel in stakeholder relationships - by Towers Perrin - showed they returned 43 percent in total shareholder value compared with 19 percent by S&P 500.

There is a reason for these results: A business is a whole, and systems work better when all their organic parts are honored.

Who's in the best position to bring this moral transformation about?

A theme in "Megatrends 2010" is that we the people have the power as investors, employees, and consumers to heal capitalism. As a manager, for instance, you may not be the CEO, but you have moral power in your division and can introduce small initiatives. As an investor, you can move your IRA into a socially responsible mutual fund. As a consumer, you can recognize your power to change capitalism every day by every vote you take with your wallet or pocketbook.

As an entrepreneur, it's within your power to shape the values of a small business. Just yesterday I saw Starbucks' CEO on CNBC. His firm is famous for offering health benefits to all, including part-time, employees. They pointed out that Starbucks pays more on health insurance than it does for coffee.

This is a far cry from the idea in the 1987 film, "Wall Street," that the bedrock of capitalism is greed.

We need to graduate from the ridiculous notion that greed is some kind of elixir for capitalism - it's the downfall of capitalism. Self-interest, maybe, but self-interest run amok does not serve anyone. The core value of conscious capitalism is enlightened self-interest. As Jim Cramer on CNBC says, "Bulls make money, bears make money, pigs get slaughtered."

The major social trends identified by Patricia Aburdene in her book "Megatrends 2010" (Hampton Roads) are:

1. The Power of Spirituality
2. The Dawn of Conscious Capitalism
3. Leading from the Middle [Management]
4. Spirituality in Business
5. The Values-Driven Consumer
6. The Wave of Conscious Solutions
7. The Socially Responsible Investment Boom.

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