Professor Georges Enderle from the University of Notre Dame has been giving a series of lectures this week at the Kemmy Business School, University of Limerick. One of his most interesting ideas is around the purpose of business, which he sees as the creation of wealth. So far, so Friedman. The cool bit is how he defines wealth. By Sheila Killian.
Briefly, he makes the point that wealth, as in the wealth of a nation, includes public as well as private wealth. Public wealth includes public goods, such as clean air, safe streets, good infrastructure. It also includes a healthy and well-educated population, necessary for economic growth as well as for equity, and a culture that respects human rights, a safe place for all of us to live. Still, it’s framed in monetary terms; his formal definition of wealth creation is:Technological (or other) innovation, made feasible and successful in economic and financial terms.
Creating wealth is not the same as owning it, or investing it. Creating means making something new, something better. So a business such as the well-known Grameen Bank, pioneer of microfinance, creates wealth, both public and private. A company such as Goldman Sachs can create wealth when it links schools that need building with builders that need work. But when it moves money around using complex derivatives, in a way that doesn’t impact on society, that may well make money, but won’t create wealth.
It’s a fabulous framing of the idea of wealth, richer, more complex and more human than the usual simple measure of private financial gain. But why should businesses put energy into this? What motivates people to create public as well as private wealth? Prof Enderle argues that the motivations are both self-regarding and other-regarding; they include self-interest, altruism, entrepreneurship and the gloriously named joie de trouver – the joy of finding something new. A gross simplification would be greed and fun – basic human wants, which can ultimately serve wider human needs.
So, greed is good, especially for the creation of private wealth. But fun is good, maybe better, for both.
It might seem trite, but the implications are quite profound. We have lots of economic and agency theory on how to harness greed to create private wealth. How do we harness the desire for fun, for innovation, in a way that will create public good? How do we foster the joie de trouver to create wealth in that comprehensive sense, for all of us?