Calling on the Private Sector: It's Time to Play a Role

06/13/2011 02:48 pm ET | Updated Aug 13, 2011

For decades, the private sector has allowed government and philanthropies to be in charge of our social conditions. Poverty, unemployment, education and re-education, family assistance, and public health were not the responsibility of corporations. Neither was world peace, the prevention of famine and infant mortality, the stagnation of billions of people in the Third World, or the environmental survival of the planet. Noted economists like Milton Friedman argued that corporations only had a duty to maximize the profits of their shareholders; they owed nothing to society.

With the financial crash of 2008, however, we learned how fragile governments and philanthropies are. It may have been true that in good economic times, those two pillars of social change could handle the crises and disasters of the world but no longer. With severely reduced tax revenues and income, and after years of funding thousands of assistance programs, both domestically and overseas, governments are burdened by so much debt that it is inconceivable they can remain a viable first pillar of social transformation. As for philanthropies, they are losing funding by the billions of dollars each year, causing many to curtail their programs and others simply to go out of business.

More importantly, the belief that the private sector is exempt from social responsibility is myopic and self-defeating. If capitalism is to remain a healthy, vibrant economic system, corporations must participate in taking care of the society and the environment in which they live. The private sector must play a role in ensuring the prosperity and health of the people who comprise its market. It is time for the private sector to become a proactive partner contributing to the efforts of governments and philanthropies.

As a society, we need to construct a new paradigm of cooperation between these three institutions to achieve the scale of meaningful social transformation required to begin making observable progress in building a better world. Each of these institutions is a vital foundation for our fast moving and complex global society, but we cannot generate solutions of a sufficient scale unless all three agree to work in unison towards the same goals and objectives.
In recent years, we have started to see some examples of inspiring collaborations among companies within the private sector, as well as interesting partnerships between corporations and philanthropies. Consider, for example, the Outdoor Industry Association, a group of 200 companies that have agreed to formulate and abide by a new industry Eco-index regarding the environmentally sound production of outdoor sport gear and equipment. Or Code for America, that is a collaboration between government and non-profits with the mission of helping city and community leaders identify and obtain new solutions to improve government efficiency.

But these examples are not enough. We need to develop and disseminate an entirely new paradigm and practice of collaboration that supersedes the traditional silos that have divided governments, philanthropies and private enterprises for decades and replace it with networks of partnerships working together to create a globally prosperous society. We cannot recover from the economic and social consequences of the global recession, much less advance into higher levels of prosperity, without the participation of the private sector, which must now accept its rightful role as a partner in building a better world.