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Economy of Mutuality

Part of the Virtues and Economics book series (VIEC,volume 1)

Abstract

The paper develops a triad of business archetypes. In each archetype, alternative emphasis goes to elements of profitability and financial independence on the one hand, and poverty alleviation and solidarity on the other. Archetype 1: Business enterprises conducted primarily as for-profit institutions to the end of financial sustainability . Financial self-reliance is a precondition of a firm’s survival and for remaining capable of continuously expanding products or services to new clientele. Archetype 2: The social and financial missions of business enterprises are merged; a coordination of social and financial functions is at the heart of the “promise” of the company as a sustainable enterprise. Archetype 3: Businesses are run with principal allegiance to social missions – outreach to the poor, environmental rectitude, and other facets of sustainability.

The paper argues that the trio of archetypes also serves as alternative teleolog ical exemplars of the purpose and nature of business. Archetype 1 presupposes the essence of business as profit maximization. Under Archetype 2, business is a means for creating varieties of value for a broad range of stakeholder s. For Archetype 3, the purpose of business is serving the common good, with profits secondary and derivative.

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Fig. 12.1
Fig. 12.2

Notes

  1. 1.

    Economy of mutuality is not to be equated with the idea of “economics of mutuality ” (Kay 1991). The theory of economy of mutuality was first conceived in a paper the author presented for the workshop “Teleolog y and Reason in Economic and Social Affairs,” at Blackfriars Hall, University of Oxford in 2014. Some portions of the theory are developed more extensively in “Economy of Mutuality : Merging Financial and Social Sustainability ,” 133(3) Journal of Business Ethics , 499–517 (2016).

  2. 2.

    Mission drift. Commercially-oriented microfinance institutions (MFIs) are sometimes identified as drifting away from an original mission of serving low-income clients, instead serving better-off clients to improve the financial bottom line (Armendariz and Szafarz 2011). An ethical issue arises insofar as such MFIs are found to be using poor clients mainly as a means to attaining profitability (Sandberg 2012). Excessively high interest rates. Interest rates charged by some MFIs can range between 20 and 70% per annum, making them higher than rates commanded by commercial banks (Rosenberg et al. 2009; Sandberg 2012). Group lending abuses. Violent collection practices and oppressive forms of group pressure are sometimes used by MFIs for obtaining repayment of group loans (Montgomery 1996; Ghate 2007).

  3. 3.

    HDFC (A) Harvard Business School Case No. 9-301-093 (2000).

  4. 4.

    Sealed Air Corporation: Globalization and Corporate Culture (A), (B), Harvard Business School Case Nos. 9-398-096, 9-398-097 (1998).

  5. 5.

    AES Honeycomb (A), Harvard Business School Case No. 9-395-132 (1994).

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Correspondence to Kevin T. Jackson .

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Jackson, K.T. (2017). Economy of Mutuality. In: Rona, P., Zsolnai, L. (eds) Economics as a Moral Science. Virtues and Economics, vol 1. Springer, Cham. https://doi.org/10.1007/978-3-319-53291-2_12

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