Capitalism solves social issues when partnered with a sense of purpose

One of the first things that struck me about social entrepreneurship is its embrace of capitalist ideals to address social problems. As pointed out by earlier blog entries by my colleagues, the importance in focus to a core mission is what distinguishes these ventures. This ability to bench-mark success based on how closely the company is serving the mission rather than profits alone is what makes social ventures able to solve the problems of society.

I found the article by Hugh Whalan, “How Misinformed Ideas about Profit are Holding Back the World's Poor", particularly helpful when determining what issues prevent the utilization of capitalism for addressing social needs. He illustrates three points that are crucial to understanding why capitalism is important in addressing social problems. The first point is that misconceptions about making money from countries with poorer citizens is unethical. He points out that in fact starting new ventures creates competition, which "brings prices down and creates choice"(Whalan). His second point is that there are other companies already involved in these markets such as Coca-Cola. Whalan argues if Coca-Cola can sustain profits in these markets selling a non-essential good, why can't companies that provide products they need succeed too? The third point which I agree with is that, while there are uses for charity funds, charity alone does not provide a sustainable solution for addressing the needs of the world's poor. 

To create ventures that are both sustainable businesses and address social problems there must be an avenue to create them. B-Corporations represent a means of developing these organizations, that are not only captive to the return on Investment for their investors. This organization structure provides an opportunity to commit to a company mission of social good that is as Bob mentioned in his blog entry having a “clear vision to bring opportunity” to all stakeholders.

Supplementing the theme of this week, venture development and growth, these principles of the free market provide an avenue for social entrepreneurs to success in delivering new products and creating successful companies in the developing world. Capitalism can solve issues, such as delivering cleaner natural fuel stoves to families in India, by creating a supply chain from the producers of these new products to the people that need them. To create ventures that are scalable and sustainable, the methodology is simple; be focused in the mission of the company, benchmark success based on stakeholders served, and identify ways to reduce overall costs.