What makes capitalism tick?

Think:Act Magazine Purpose
What makes capitalism tick?

August 13, 2018

The human desire to create will make the world a better place

Stakeholder theory pioneer R. Edward Freeman has dedicated his life to helping organizations create a culture that brings out the best in everyone. Here he answers three questions concerning purpose.

  • You once said that "if you just focus on financiers, you miss what makes capitalism tick." What is it then, in your opinion, that makes capitalism tick?
    Almost all entrepreneurs want to create something bigger than themselves. Capitalism works because we can cooperate together to create value for each other – none of us can do it alone. It is our human desire to create that is the spirit of capitalism. It is not greed and lust for money, as many believe. Of course there are some for whom making money is the only purpose, and doing whatever you can get away with. But these bad apples are dwarfed by the thousands of businesses and businesspeople who are trying to do the right thing, create some good with their businesses.

R. Edward Freeman, Author of Strategic Management: A Stakeholder Approach, is a professor at the University of Virginia.
R. Edward Freeman, Author of Strategic Management: A Stakeholder Approach, is a professor at the University of Virginia.

  • Should business, or companies, be seeking to change the world?
    Yes, that’s what capitalism and business is about. Think of all the vocabularies that we have invented to solve our problems so that most of the world has access to all of our knowledge via the internet. We have had to solve problems like the physics of semiconductors and countless others. Business hasn’t done all of it, but it has had a major role. Now we are seeing companies from Unilever to Whole Foods to thousands of "social entrepreneurs" around the world explicitly trying to act on purpose to create value for their stakeholders. The possibilities are virtually unlimited.
  • What do you think business can become in the future?
    It’s really very simple: We need to enact a new story of business. We need to elevate our thinking about purpose, values, ethics, stakeholders and cooperating with our stakeholders to create value all within a framework of a free, competitive and democratic society. If we can do this, we can make business an institution of hope. We can create a nation of entrepreneurs and we can focus on those people who have lost hope and been shut out of participating in business. We can be the generation that makes business better. We must be.

Further reading
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The purpose principle


What does purpose mean to you and your business? Our Think:Act magazine on purpose addresses changing values in the business world.

Published July 2018. Available in
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