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ABSTRACT
This paper shows how social business, as an approach to serving humanity's most pressing needs within the capitalist mode of production, enjoys edge over its profit-maximizing counterparts at least to the level when they both possess the same level of efficiency. It also explicates how social business provides an interesting alternative outside the existing forms of profit-maximizing business or non-profit organisations. Even with this edge and attractiveness, social business is, however, likely to fail to become the dominant form of business organization to bring a substantial change in the capitalist system, thereby becoming ineffective in addressing the problem of poverty.
JEL Classification: I30; P12; P13; P16.
Keywords: Social Business; Capitalism; Poverty; Profit-Maximizing Business.
1. INTRODUCTION
Capitalism has triumphed over all of its competitors by the end of the 20th century and rooted itself deeply into the world economy. As an economic system, it has brought prosperity for the world as a whole. It has, however, failed to bring any positive change in the lives of a great number of people. Especially the problem of poverty remains as a crucial problem today as it was decades ago. According to Human Development Report 2014, almost 1.2 billion or 22% people live on $1.25 a day or less. This amount increases to almost 2.7 billion or about 50% of people if the income poverty line is measured by $2.5 a day or less (United Nations Development Program 2014: 19). Developing countries are not the only sufferers while taking the functioning of capitalism in to account as a mode of production in economy. Just to cite an example, 23% of the US children were poor in 2012, which was 19% in 2005 (Annie E. Casey Foundation 2014: 24).
Some scholars believe that the business sector can provide a solution to poverty. For instance, C K Prahalad has famously argued that the self-interest of profit-making businesses can effectively be utilized in the fight against poverty (Garrette and Karnani 2010: 29). Prahalad's argument specifically says that multinational companies could make profits from the market made up of poor people by selling products suitable for them. Although the poor population has low purchasing power, its huge number can compensate for it. In this way, the poor people would get low...