Category: charity

Social Business – Possibly a New Way for Capitalism

After my last blog on TOMS shoes and their social business concept, I had several discussions about this idea of a ‘social business’. While I don’t want this blog to get a general educational twist, there was so much confusion about this that I’d like to use this blog for a short insight.

What is important, first, is that social business like we talk about with the shoe manufacturer TOMS has nothing to do with IBM’s ‘social’ business. IBM is all about making their electronics social, in the sense of focusing on connecting people, facilitating communication and exchange. The ‘social’ in ‘social business’ is directed at a wider societal dimension, aiming at improving the lives of individual or groups of people.

The general idea was developed by Muhammad Yunus, who won the Peace Nobel Prize in 2006. In a nutshell, instead of being only driven by profit maximization, social busniesses are supposed to be geared towards the improvement of society, fighting poverty and being sustainable. Therefore, investment in such a business should not gain interest but be paid out 1:1 and all profits should be invested either in the business or into other social businesses. The target markets are usually education, housing, other welfare provisions but can also include infrastructure etc.

Muhammad Yunus, Inventor of Social Business

Now, the idea sounds really good but, as I wrote earlier in my blog, there are some shortfalls. In particular, the principles of being a social business are rather vague and nearly anyone can claim to be a social business. But, possibly, this is a way forward as old-style capitalist mechanisms that are so dependent on everlasting economic growth run out of steam.

TOMS Shoes and the Economy of Social Business

Really interesting debate around the social business model that TOMS shoes has taken up in this article. I think it’s important to discuss this and take a look at the implications of these models in the market and ask if they really make a significant difference. A marxist critique mentioned in the article which I’ve also managed to watch by Zizek harshly criticizes this model and its implications for development in impoverished countries.

toms shoes and social business model

My problem has always been that they give these shoes to people but they are made poorly in China. I mean the quality isn’t half bad but the issues surrounding human rights and labour rights in China are just as bad as the countries that they are giving the shoes to. I don’t know if it really solves any issues besides promoting the triple business model that seeks to satisfy everyones needs, Profit & people. I don’t think it can really work this way, the sweatshops will continue to function and the shoes will be continually produced for a high profit by Chinese labourers who are not compensated properly. I much prefer something such as the Adbuster shoe which looks more closely at the equality around the labour process than the actual charitable giving as the social component of their business.