Feb 23 2009

Ambassadors of Capitalism

Categories: Corporate Culture | Management Skills | Entrepreneurialism | Economics

Posted by Dean Zatkowsky at 9:44 AM
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By Dean Zatkowsky, co-author of Two Billion Dollars in Nickels

Many people see our current economic crisis as an indictment of capitalism itself, but I think this is just as misguided as the idea that  "government is the problem, not the solution." That we have incompetently managed our government and our economy proves only that we have been careless and irresponsible in our stewardship of two great and noble ideas.  Capitalism and democracy remain worthy goals, and we must aspire to be worthy of them.

I've heard conservative pundits accuse academia of turning young people against capitalism, but I don't believe it.  As an old marketing guy, I'm convinced that brands are formed by experience, not sloganeering.  I agree that many young people are turned against capitalism, but not by their professors. Young people are turned against capitalism by their first experiences in the workplace.

Incompetent supervisors and mendacious business owners do more harm to capitalism than Karl Marx ever did. They create an adversarial relationship with people who could be their partners, and make things harder for every other employer, as Paul Orfalea noted in his essay about the difference between "open hand" and "iron fist" capitalists.  I think capitalism thrives when people entering the workforce are encouraged toward entrepreneurship. And the best encouragement is a taste of ownership.

I'm a staunch supporter of generous profit sharing because I think every business owner's primary social responsibility is to mentor coworkers and teach them how business works. Profit sharing is not so much a share-the-wealth program as a share-the-knowledge-and-responsibility program. The wondrous thing about profit sharing, as we learned at Kinko's, is that the owner gets a slightly smaller slice of a MUCH bigger pie when all coworkers' interests are aligned. As the economy struggles, you're going to need partners, not adversaries.

Many years ago, I addressed a class of business school seniors who accused Kinko's of gouging customers because we charged so much to send faxes. The students had considered the cost of the fax machine, the cost of the paper, and the cost of long distance telephone calls, but that was all. Seniors in business school had not considered the cost of rent, the cost of personnel, the cost of electricity, advertising, taxes, health care, etc. Where will they learn these things?

Profit sharing requires one to open the books so coworkers can see where profit comes from, and where profits are lost. So this is not a good choice for venal, dishonest owners; but it is a way for respectable business people to fight against the perversion of our beloved capitalism, and to produce future generations of honest, generous business owners. The workplace is the best environment for business education, and if we believe that capitalism is worth saving, we must give our coworkers tangible evidence of its benefits.

Dean Zatkowsky, managing partner of Dizzy One Ventures, LLC, is co-author of The Entrepreneurial Investor: The Art, Science and Business of Value Investing, and Two Billion Dollars in Nickels: Reflections on the Entrepreneurial Life.

 

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