Poblador’s new capitalism
In this modern age, there are capitalists doing very well for themselves by being very good to others. This is the point of the new book, “Strategy in the New Age of Capitalism: Collaborative and Inclusive Approaches to Value Creation” (University of the Philippines Press, 2022), by Niceto S. Poblador.
“Strategy in the New Age” does not dispute the importance of profit maximization as a prime motivator of business firms. In line with Social Darwinism, business firms that are highly profitable do have the greatest chances of survival.
But professor Poblador goes further, by arguing that adopting new strategies of generosity, aligned with the economic interests of non-owner stakeholders, can enhance a business firm’s profits even more. These strategies can aim:
a. to create economic value for its customers through product and service development, to better serve their needs, offering generous prices and providing adequate customer care;
b. to create economic value for its workers by offering comfortable wages and other performance-based financial benefits, creating an organizational culture conducive to information sharing and collaboration, devoting ample resources to improve productivity through skills development and investment in new production technologies;
c. to create economic value for business partners by engaging suppliers and distributors in mutually beneficial collaborative relationships; and
d. to create economic value for the rest of society by developing the untapped productive potentials of people at the bottom of the social pyramid. The book has a separate chapter for each type of stakeholder.
The strategies might involve re-organizing the business firm appropriately. They might call for expansion or reduction of the scope (horizontally or vertically) of the firm. They might emphasize management of organizational knowledge. What the successful business firm needs is a framework for capturing the economic values created by the enterprise for its various stakeholders.
The book has many real-life examples, such as Uber’s digital platform business model, which exploits the interactions of the firm with the drivers and the users of transportation services.
It cites the COVID-19 response packages of Ayala Corp. (AC) in behalf of the tenants of their shopping malls. AC also developed wage subsidies, bonuses, leave conversions, and loan repayment deferments for the workforce of partner-employers.
In response to the pandemic, San Miguel Corp. (SMC) provided a guaranteed market for corn farmers and carabao milk cooperatives. SMC also partnered with the Department of Agriculture to open Kadiwa stores at Petron stations where farmers could sell their produce to consumers.
The book cites Jollibee’s Farmer Entrepreneurship Program, that has trained thousands of farmers for supplying agricultural produce, not only for Jollibee Foods Corp., but also for other business buyers, all over the country.
It discusses how Solar Philippines serves under-energized markets, uplifts communities, and cleans up the environment, and how Accenture Philippines manages recruitment and personnel development costs and creates a pool of employable workers.
Nick Poblador is a grizzled teacher of economics. I was privileged to be one of his earliest students in UP, circa 1960, when he already had a master’s degree from the University of Chicago, where he was a student of the famous Milton Friedman (his doctorate from the University of Pennsylvania came later).
My one caution to readers of Nick Poblador’s book is the possible wrong impression that Friedman would have rejected its thesis about the economic returns to generosity. Having gone to the University of Chicago myself, and also having been Friedman’s student, circa 1965, I know he was a very kind teacher who did not put self-interest first; I like best his “Capitalism and Freedom,” and “Free to Choose.”
“Strategy in the New Age” was launched at Social Weather Stations last week—Nick Poblador is an SWS Fellow—where it is for sale at the launching price of P480 while copies last, c/o malou.tabor@sws.org.ph. I recommend it highly to economics teachers in particular, as proof that the science is not so dismal after all.