Thriving beyond economic growth

Don’t underestimate the power of not for profit business, argues Donnie MacLurcan of the in this talk for Net Balance in Australia. He has a vision for a not-for-profit world by 2050, sees a shift from quantitative to qualitative growth, and has a pretty radical hypothesis about where business is going.

Loads of interesting thoughts here about collaboration, equality and simplicity, and business in a steady state economy.

I’m posting the video, but you can consider it an audio piece if you like, and listen to it while you cook your dinner.

17 comments

  1. Donnie has some very interesting thinking here that I think will move us in the right direction. One caveat: many, many non-profts – while not in hot pursuit of profit – are nevertheless hooked on growth. Growthmania is so deep in our DNA, growth in size, growth in membership, growth in donations, growth in programs are all goals and metrics of success for lots of these organizations. Would love to hear Donnie’s thoughts on that.

    Dave Gardner
    Director of the documentary
    GrowthBusters: Hooked on Growth

    1. Dave In the context of growth, typically scaling to maximise production, we advocate the shift from production centric to people-centered local economies of local food and energy production. The model, in which a ‘profit for purpose’ or community funding enterprise has a primary role, derives from work in Russia which began in 1999.

      1. Jeff, I don’t think that changes significantly the challenge of overcoming the deeply programmed idea that growth is success.

        1. In that case, will thinking deliver significant change? The business model Donnie describes at the beginning of his presentation is a challenge to Friedman’s interpretation of profit maximisng business. The challenge to shareholder primacy came in our 1996 paper which was published in synopsis free to use.

          “Not for profit” is an inappropriate term for the business with a social purpose, which distrbutes no dividend. In our work spanning the last 15 years, we’ve argued the case for this model repeatedly.

    2. Dave, I would agree that many not-for-profits are hooked on growth (albeit with more qualitative outcomes). However, the pressure to scale programs and membership often comes from private donors and government and the pressure for more donations can come from an operating model dependent on philanthropy.

      This is an ‘old-school’ model of ‘non-profit’ which, I believe, will fade out as not-for-profit enterprise emerges. When operating as enterprises, it’s my understanding that not-for-profits don’t have the same ‘growthmania’ and will often limit their scaling, out of choice, because their governance structures are linked to physical locations or specific interest groups.

      1. Donnie, I was relieved to hear you mention financial inequality and status envy as no-one seems to want to entertain anything to do with human nature. Personally, I broadly believe that fear for our own security causes the drive for power which creates financial inequality and then status envy. I would love to see this out in the open. Did you see The Royal Society have mentioned it in People and the Planet, albeit, with too much diplomacy – p103 6.5 The role of science and technology – Above a certain income level wealth seems to have little effect on individual well-being, though ‘natural impulses of aspiration and perception of worth relative to others’ continue to drive consumption.

  2. It is great to see Donnie Macluran expose some of the false ideas that we are inclined to be tempted into. But his main message seems to be that we will be forced into more sustainable NFP business and that due to less financial restrictions we can afford to successfully start, run, and enlarge them. I am not clear though, on how much our need for NFP business can reduce financial inequality and status envy (his fundamental cause of un-sustainability), and increase a reputation economy, to any more than damage limitation on the earth (not to be sneered at of course), and most importantly, whether he has missed the even deeper fear for our own security, which remains the driving force of trying to own, manipulate and dominate the earth and one another.

    1. I can offer an answer to you question with the example of a strategy plan, which defines the intended use of profit:

      “An inherent assumption about capitalism is that profit is defined only in terms of monetary gain. This assumption is virtually unquestioned in most of the world. However, it is not a valid assumption. Business enterprise, capitalism, must be measured in terms of monetary profit. That rule is not arguable. A business enterprise must make monetary profit, or it will merely cease to exist. That is an absolute requirement. But it does not follow that this must necessarily be the final bottom line and the sole aim of the enterprise. How this profit is used is another question. It is commonly assumed that profit will enrich enterprise owners and investors, which in turn gives them incentive to participate financially in the enterprise to start with.

      That, however, is not the only possible outcome for use of profits. Profits can be directly applied to help resolve a broad range of social problems: poverty relief, improving childcare, seeding scientific research for nationwide economic advancement, improving communications infrastructure and accessibility, for examples – the target objectives of this particular project plan. The same financial discipline required of any conventional for-profit business can be applied to projects with the primary aim of improving socioeconomic conditions. Profitability provides money needed to be self-sustaining for the purpose of achieving social and economic objectives such as benefit of a nation’s poorest, neediest people. In which case, the enterprise is a social enterprise. ”

      1. Jeff, thanks. However, the fallacies exposed and the concept itself presented no new issues for me. I was left wondering how significantly the business incentives will be realised by the communtiy. This was given next to no time (other than, as long as it meets the constitution requirements), but it was probably not his aim. Possibly, his book will give much more detail.

      2. Jeff, thank you for raising this important point.

        As you would have picked up in my talk, I’d argue that ‘not-for-profit’ (whilst perhaps more aptly titled ‘not-for-private-profit’) is actually the most appropriate of legal structures for ensuring the outcomes you describe above. Take listed for-profit companies in the U.S., for example, that wouldn’t, under law (as I understand it), be able to have a strategy plan that saw profits directly applied to help resolve a broad range of social problems (beyond philanthropy as part of their ‘corporate social responsibility’ actions). Hence, the emergence of legal structures like ‘B Corporations’ with their ability for dual social and financial missions (see: ).

        For mine, if we can shift the notion of private profit as sacred and focus more of our attention on how not-for-profit is and can be even more incentivised, there is greater hope for truly sustainable business. I believe there is enough pluralism within the not-for-profit model to keep the necessary macro-economic diversity within our modern economies.

        1. Hi Donnie, Since I posted above, I remember there was a conversation about this on Skoll Social Edge forum a few years ago:

          It was the paper that put foeward the concept of a business with a primary social purpose, that argued that there was nothing preventing a business doing this provided it had the consent of directors and shareholders and declared that purpose in the corporate charter. This afaik is what B corps did.

    2. Hi dichasium,

      Thanks for your comments. Less financial restrictions are just part of the equation when it comes to the reasons I believe not-for-profit will become the main business paradigm this century. Others include the more common alignment with open (source) innovation, the ability to access things at discount rates, the nature and intention of the not-for-profit workforce, the higher levels of innovation that can come from flattened worker hierarchies (and network approaches), and the commitment to built-in-maintenance (rather than built-in-obsolescence).

      On this last point, whilst I believe reducing financial inequities is fundamental to ensuring sustainability, I would argue that the products and services not-for-profits produce are often and increasingly more conscious of environmental impacts than happens under the corner-cutting practices often associated with the for-profit sphere.

      I will be addressing the issue you raise about our fears for our own security in the forthcoming book () – there is a lot to be said about how collaborative consumption and other forms of working together are reducing these collective fears. However, I agree that one of the biggest fears needing to be considered in these discussions is the fear that ‘in a world of ever-depleting finite resources there is not enough to go around’.

      1. Donnie, That reminds me of the last sentences of the paper on people-centered economics:

        ‘It is only when wealth begins to concentrate in the hands of a relative few at the expense of billions of others who are denied even a small share of finite wealth that trouble starts and physical, human suffering begins. It does not have to be this way. Massive greed and consequent massive human misery and suffering do not have to be accepted as a givens, unavoidable, intractable, irresolvable. Just changing the way business is done, if only by a few companies, can change the flow of wealth, ease and eliminate poverty, and leave us all with something better to worry about. Basic human needs such as food and shelter are fundamental human rights; there are more than enough resources available to go around–if we can just figure out how to share. It cannot be “Me first, mine first”; rather, “Me, too” is more the order of the day.’

        This is how it evolved from there:

      2. Donnie,thanks. I had not missed your other reasons. I would like to see more concrete examples and how they work into the community. Perhaps, I’m missing something and expecting more.
        We can work collaboratively when our own skins are at stake – necessity is the mother of invention. My hope is that the human values may be reinforced by our errors, in good time.
        I really want to see built in maintenance as a step in a process of improvement. I wish we could enforce it! The piece Jeff has given from the people-centred economics says that even a few companies can be significant, so I’m all for step one. However, it then says ‘if’ we can ‘just’ figure out how to share. That second step seems even more of an incredible task as this involves the aspect of human nature that I am really referring to. But, one step at a time and my best wishes are with you and all working on it. No reply necessary.

      3. Donnie, just a quickie – Sorry to bother you but I need to clarify a comment I made to you on 28 Nov. I did not mean we ‘only’ work collaboratively when we are at risk. Trying to be brief can cause misinterpretation. Hope you realised I was not being a misanthropist! Regards, D.

  3. I can speak only of our own work as practitioners. The influence on institutional childcare in Eastern Europe being perhaps our greatest impact. There are already many books and academic articles on the theory, but they aren’t standing beside us when we go head to hwed with organised crime.

    .

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