Sometimes, investing and the real economy don't quite connect in common discussions. One major mistake is the view that value and profits are just numbers. Our economy is made up of people, actually, and the business and investing approach too often lacks empathy, or even common sense.
There is a real world out there.
Thankfully, one approach to business and investing incorporates empathy, and life's web of economic participants. Empathy is required to understand the holistic fabric of investing and growth-oriented companies. People add value to the world in so many ways: in products, transactions, associations, and inventing and innovation.
This is a philosophy called conscious capitalism, and it's based on positivity, not capitalism's reputation for ruthless exploitation.
Who's stealing from whom?
Sadly, these days it can be difficult to understand that there can even be something called "conscious capitalism," or the idea that business and investing in great companies can be hinged on good.
Socioeconomically, today's stereotypes are absurd. One camp calls many lower-income people lazy, entitled, milking America for all it's worth, and physically and economically dangerous.
In a weird twist that is often forgotten, though, middle- and upper-class citizens can be lazy, entitled, milking America for all it's worth and, in some cases, physically and economically dangerous.
Maybe the upper tier is not as directly physically dangerous most of the time, but those who are busted for, say, massive fraud -- hardly a victimless crime -- end up in white-collar prison resorts singing the blues.
The financial crisis showed that powerful people and businesses metaphorically mugged and blackmailed the entire public through fear. It happened in plain sight -- affecting an unimaginable number of people one way or another. It threatened an outcome of economic collapse. Big businesses, some deservedly, acquired a bad reputation.
The ironic and downright sad thing is that those in charge, whose companies received bailouts, were not themselves financially desperate people. Still, some felt utterly persecuted in their ivory towers, given the widely publicized whining that they still deserved huge salaries and bonuses despite safety nets from failure.
The golden rule
Yet not all businesses are equal. Positive, kind managements and companies that practice conscious capitalism understand what real value is, and how it incorporates the great ecosystem of people and ripple effects of people of all kinds -- employees, workers, suppliers -- and even opportunities for people in places at home and overseas who can get a leg up to escape serious poverty.
Whole Foods Market's (NASDAQ: WFM ) co-CEO and founder, John Mackey, has been a major proponent of conscious capitalism, and even wrote an entire book about it, explaining the philosophy and presenting examples beyond his own company's policies and basic philosophy. Whole Foods is run according to this philosophy.
I don't know that CEOs like Jim Sinegal of Costco (NASDAQ: COST ) and Howard Schultz of Starbucks (NASDAQ: SBUX ) particularly bang the gong about conscious capitalism per se, but they walk the walk that investors should want to see more often.
Jim Sinegal's down-to-earth management style has become widely known. He has since retired, but his style is one worthy of respect and emulation. He was modestly paid, and rejected the common Wall Street view that things like employee benefits are profit drains. He answered his own phone, and wore Costco clothes.
Starbucks' Howard Schultz is paid very well, maybe uncomfortably so to many investors. However, he is a visionary who has built a great company that has grown both in stock returns and fundamental financial success -- admirable and real growth and performance.
Unlike many CEOs, Schultz knows what it's like to grow up with major financial difficulties. He grew up in the projects in Brooklyn. He saw firsthand how difficult it is for a family, because his father's blue-collar job lacked benefits and much pay. Starbucks has policies that do show empathy for their employees -- regular people.
These are among the companies that have voluntarily built their business foundations with more kindness than many Wall Street types and corporate heads would deem necessary, or profitable and effective. But these have all been very successful companies.
Whom do we thank?
Wouldn't it be nice if more companies illustrated that they want to retain employees at all levels, and promote from within? How about strongly teaching firsthand a concept that is talked about more than it touches many workers: positive incentives? For some, it must be difficult to imagine doing better if they are disrespected and treated badly.
This is why the whole recent argument that we should, across the board, "thank the wealthy" for their economic boosts is so one-sided and cruel. The individuals who are motivated solely for short-term profit (and gigantic pay for themselves) and dismiss everyone else fly in the face of real market complexities. Empathy and respect for others, as well as embracing positive, responsible capitalism, is strength, not weakness.
Maybe we should thank a great many people for their contributions big and small, some of which relate to a friendly face at a mom-and-pop store or chain retailer, or the lessons we learn from those we encounter who have immigrated here for a better life, and take jobs many Americans don't even want. We should definitely respect corporate managers and shareholders who understand this, and incorporate respect and empathy into their businesses.
People power is a more important business-building and economy-boosting factor than many talk about. Without participation on all levels, there is no marketplace. Without other people, nobody really has anything.
Great investment philosophies
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Check back at Fool.com for more of Alyce Lomax's columns on environmental, social, and governance issues.