December 23, 2006

“Profit” is a tricky word that generates dread among the masses. The myth of profit is so strong that majority of people associate profit with greed, exploitation, and corruption. Even the “intellectual elite” often fail to see profit as a facilitator of holistic development of society and nation. They see business and profit together but fail to bring sustainable socio-economic development in this fold. The result of this ignorance: Flow of billions of dollars of money in poverty alleviation programs around the world with hardly any significant impact.

The problem is that we are yet to shun the “give him fish and you feed him for a day” mentality. The issue is all about incorporation of sustainability factor to embrace the philosophy of “teach him fishing to feed him for life”. The problem with poverty stricken people is not that they are not enterprising or that they don’t have capacity to consume. Their problem is getting off the ground. They don’t have even $100 – more often than not sufficient to fund their enterprise – to start a revenue generating activity. What they need is a little finance (typically in the range of $100 - $500), some guidance, counseling, and creation of a market where they can have active economic participation to create their own self-sustaining micro-enterprise.

Sustainability factor can come with the introduction of the element of enterprise. With enterprise, profit will come in picture creating a sustainable loop of “wealth creates wealth” cycle to aid development in the true socio-economic sense. But very few people think on this line, and those who do are making significant impact in the lives of a few million people. Be it the microfinance ventures or companies servicing the bottom-of-the-pyramid (BOP) market or initiatives like ITC’s e-choupal, they are making an impact, though in pockets of civilization, through means of social and economic partnership, enterprise, technology, and profit.

The most contentious issue is the involvement of individuals and enterprises that go to serve the poverty stricken mass with an intention to generate profit and wealth through servicing of this bottom-of-the-pyramid market. The question that is raised frequently is: how can an individual or organization that is interested in profit can help in removal of poverty and acceleration of socio-economic development of suffering masses? The underlying assumption is again the myth that profit is associated with exploitation and that capitalism is good only for a select few. But reality is vastly different. When for-profit ventures operate to serve this BOP market, then the flow of profit and wealth is two-way. The profit accrues to both the for-profit enterprises that serve as well as the BOP customers who get served. It’s a win-win situation with mutual benefits and trade-offs.

Recent success stories like microfinance, HLL’s Project Shakti, ITC’s e-choupal, etc. have demonstrated that for-profit social collaboration is the key to faster socio-economic development of poverty stricken people. These success stories have proved that ensuring active participation of the deprived in economic activities is the most sustainable way of uplifting the masses from the morass of poverty. And the master key is ‘profit’ – the fuel that fires the socio-economic enrichment of the deprived.

If we are really serious about removal of poverty and narrowing the economic divide, it is the right time to start worshipping ‘profit’. Socially Oriented Capitalism is the only way to ensure holistic socio-economic development and enhancement of the quality of life across the entire population.