Conscious Capitalism: OSU Instructor’s New Theory

Nathan Warren’s Awareness-Driven Theory Prioritizes Life Over Profit

Nathan Warren

In a time when America’s economy is increasingly viewed as deeply entwined with ethical and environmental crises, Nathan Warren seeks to uproot capitalism as we know it, and deliver it to consciousness.

A Corporate Finance instructor at Oregon State University and owner of Harris Bridge Winery in Philomath, Warren believes the rules governing larger capitalist corporations need an update. His new organizational theory would dovetail science-forward tools that help organizations thrive, with accountability for impacts on employees, the environment, the community, and the consumers who support them – making corporations more sustainably profitable and responsible. The key, he says, is awareness.

Without awareness, Warren asserts that organizations have been operating blindly.

Warren’s Conscious Community Theory, or CCT postulates that today’s scientific knowledge and collection of tech tools can make businesses more aware than ever before of the world around them, from capturing subtle hints in today’s rapidly changing market, to better understanding the environmental impact of its operations.

Likewise, CCT maintains that companies now have better communication tools which would allow them to be utterly transparent – which Warren believes would increase corporate accountability.

In his view, some of the world’s largest and most innovative businesses are already evolving to use many of the principles of CCT – from Apple’s agile design and engineering teams to Google’s deep learning, artificial intelligence-driven healthcare diagnostic model work.

Telling components of Warren’s framework are his views that science needs a seat at the corporate boardroom table, and that the value of all life on planet Earth should be included in the quantification behind corporate decisions. Both of these changes would likely require legislation and multi-disciplinary inputs from economists, politicians, and business leaders in order to become meaningfully implemented in the US.

Mandating Awareness
For decades, Warren says scientists have been sounding the alarm to our business community about its impact on the world.

“Relatively powerless academic researchers and corporate whistleblowers are not the best ways to bring awareness to an organization,” he says.

Warren argues for expanding the role of the Chief Analytics Officer, or CAO, within an organization, and adding an Awareness Triad of observation, understanding, and learning – which is rooted in science – to the already established corporate Purpose Triad of mission, vision, and values.

“For example,” he says, “in CCT, all information flows up from the front line employees to the CAO, where it is analyzed for insights and opportunities. This awareness-led, bottom-up approach contrasts with the current profit focused, top-down model in which the Chief Executive Officer (CEO) is the implementation arm of powerful Shareholders. CCT’s awareness-led approach results in a more adaptive, responsive organization.”

Warren postulates that employees, communities, science, and artificial intelligence can all serve as prized awareness structures.

“Humans are walking awareness structures, equipped with eyes and ears and data processing minds,” he says. “And yet most organizations driven by myopic money and power, overlook or even reject intelligence when it threatens profits. Shifting the focus to science and awareness can change this, beginning by asking employees who they are, what they value, and what they know. Every employee can help an organization reflect on the gaps between a corporation’s stated objectives and the reality on the front lines, it just requires leading with questions, and listening to the insights that come from your people.”

Warren puts it this way: “Aware and connected communities bring truth to power in the same way that open and free markets bring fairness to price, and democracy brings truth to politicians.”

Nathan Warren with his wife, Amanda Sever. Photo by Blair Girard.

What Warren Aims to Fix
“For over a century, heavily staffed accounting departments have been gleefully counting their company’s revenues and profits,” Warren explains. “Who is counting the costs that these companies incur to our shared environment and to our shared society? Our current balance sheets of assets and liabilities are incomplete when they fail to capture the unfunded liabilities that corporations are handing to the next generation of children.”

“Our ecosystem on planet earth is by far the biggest economy in existence,” he continues. “Collectively, it is worth almost infinitely more than our myopic monetary systems. Every participant in an ecosystem is important, and combined, all life in an ecosystem represents immense and irreplaceable value in the form of natural resources like clean water, lush forests, food, and a long list of other things that are vital for life on earth.”

Warren says that because we haven’t had to pay for any of this life, our monetary systems have failed to assign any value to it. “This results in corporate activities being labeled ‘profitable’ when they actually destroy much more real value than they create.”

“When everyone knows about toxic waste production or the use of dishonest practices, behavior changes. That is the power of information,” he says. “Before now, we didn’t have the combination of scientific knowledge, information systems, and global communication technology to confront this challenge as a global community of conscious, connected people. We now have all three, and so it’s time to get to work!”

Warren disagrees with business movements that claim “protecting the environment” requires expanding corporate purpose.“How arrogant have humans become when they think they’re going to ride in on a white horse and save a four billion year old planet with capitalist solutions? The solution is to expand human awareness, not human ego and purpose.

“Our earth is talking to us. Our coral reefs and forests, the salmon and whales, our anxious children, these are all talking to us, and we’re not listening. The problem isn’t that we don’t have enough self-obsessed human stakeholders at the table, the problem is that none of them are listening.”

A CCT organization would remedy this by expanding awareness structures to gather information on everything from consumer needs to environmental impacts. This expanded awareness would replace the current emphasis on the purpose of profiteers and power brokers. “When the awareness of a need or opportunity presents itself,” says Warren, “the profit motives attached to that need are secondary, not primary.”

“This single, simple re-prioritization is so critically important to understand,” he continues. “The need becomes primary, and the profits become secondary. CCT would begin working for the needs of our community and our planet, and it would use a capitalist system to assist with the value exchanges involved. That simple re-prioritization – need first, money system second – will remove the existing power and profit-based distortions from the economy.”

Warren’s Views on Capitalism
“Capitalism is no more about your profits than love is about your orgasm,” Warren claims.

“Capitalism is about freedom and value in all directions at once, and love is about connection and life,” he maintains. “Millions of valuable concepts have been inspired into existence by capitalism, and many of the most valuable have been unprofitable. Unprofitability is a symptom, not a punishment.”

“The important questions to ask,” he says, “are what is capitalism and what is love? Once you begin to see past your own ego, your own purpose, your own profits, your own orgasm, you’ll discover that neither capitalism, nor love, are about you. They are about us, and how we thrive together in this shared life, on this beautiful planet. Both of these concepts help us see beyond our own limited paradigms and open ourselves to new people and new ideas. That’s consciousness, and consciousness is more about awareness than purpose.”

Warren poses one more vital question: “Should all life on Earth exist to support a system, or should all systems on Earth exist to support life? If we think that humans should support systems, then our businesses should prioritize profits. If we think that our systems should support life, then we need to feed those systems with the scientific information necessary to get them working for all of us, without the distortions of power and control.

“Without scientific knowledge and information about the needs of our living world, our businesses are just money machines.”

Warren presents on CCT…
Warren will present as a panelist for The Advocate’s CitySpeak event on Thursday, February 27, at 6:30 p.m. at the Corvallis-Benton County Library’s Main Meeting Room. The event will feature a second panel with NAACP President Angel Harris, exploring life in a brown body and local implicit bias. Free and open to the public, an audience Q&A will follow both panel discussions.

Warren’s next step is to initiate pilots of CCT outside of Oregon. Currently, there are several pilots underway around the state. If you would like to be considered for a pilot, contact Warren by phone at (541) 990-5919, or by email at nathan@harrisbridgevineyard.com. More information is also available through the CCT website at www.communitytheory.org.

Beyond Capitalism and Socialism

Warren Responds to Davos World Economic Forum

“Capitalism as we know it is dead.”

Comic by Blair Girard

These words were aired by Marc Benioff, the CEO of Salesforce, as a part of the Davos World Economic Forum on January 21-24. In Davos, capitalists from all over the world participated in “Stakeholder Capitalism” training sessions and forums with the goal of distancing themselves from a long-held belief that corporations exist solely to maximize profits for their Shareholders alone.

OSU Business Instructor Nathan Warren’s new Conscious Community Theory, or CCT, challenges the American business community to go even further. CCT is vying with Stakeholder Theory to replace Shareholder Theory as the Business Roundtable’s new path forward for American business.

Shareholder and Stakeholder Theory, which Warren asserts at a very high level can be summed up as Capitalism and Socialism, respectively, have been debated within the American business community for about 40 years. Since 1978, the Business Roundtable – an association of senior corporate officers – has released guidelines on the purpose of corporations called the Principles of Corporate Governance. Each version of these guidelines issued since 1997 have been focused on serving shareholders as the main objective of a corporation’s existence, following the Shareholder Theory of corporate governance.

Shareholder Theory
Shareholder Theory, credited to Milton Friedman, says that the sole responsibility of a business is to increase profits for shareholders. A shareholder is an owner of the corporation (there can be many owners) who buys shares of stock in the business with the goal of watching their shares increase in value. In other words, if a company operates under the Shareholder Theory, its only obligation is to make money for its owners – a purpose of profit.

Warren says that this can have seriously harmful impacts on workers, consumers, and the environment. For example, a chemical company finds that a pesticide they produce will make a lot of money, but also finds that the product is carcinogenic to humans and other organisms. If the orientation of a corporation’s purpose is to make a profit, then the company moves forward with production of the pesticide because shareholders benefit, regardless of the harm caused.

“Our current business model subjects thousands, maybe even tens of thousands of people to the purpose of a single power center,” Warren explains. “For example, if the mission of the organization involves producing toxic waste, all the employees will continue producing toxic waste until the government, a certification agency, a competitor, or a journalist calls out the toxic practices and external forces put a halt to it. It’s a very ineffective system and ultimately it results in a very few powerful individuals impacting thousands upon thousands of powerless individuals.”

Another example of how functioning under Shareholder Theory can be harmful is through the examination of the dispersal of profits within a company. For example, let’s say that same chemical company is up against some new regulations that ban the use of one of their best-selling pesticides, and profits decline. How does a company still maximize profits to its shareholders if it is making less money?

It can do this through cutting benefits to employees, outsourcing jobs, cutting paychecks, share buybacks, mass layoffs, or increasing automation.

Stakeholder Theory
In August of last year, the Business Roundtable released new language on the purpose of a corporation – a shift to the Stakeholder Theory.

Stakeholder Theory, credited to Edward Freeman, states that a company’s goals must be directed to a larger group, not just the owners. A stakeholder can be defined as anyone who can affect, or be affected by, the actions of the company. Under this theory, a business might owe responsibility to its customers, employees, suppliers, communities, and shareholders – a shared sense of purpose.

These more recent guidelines were released by 188 CEOs making up the current Business Roundtable. Five commitments defining corporate purpose are listed, including the usual “delivering value to our customers,” and “generating long-term value for shareholders.” It veers from there to include new language like “compensating employees fairly and providing benefits,” and “supporting communities and protecting the environment by embracing sustainable practices.”

Even if these 181 CEOs follow through with their goals, there really is no language or guidance in place under Stakeholder Theory to assist them in forming more equal, inclusive, and socially and environmentally responsible organizations. In simple terms, no structural reorganization is mandated, or even theorized – the ‘how to do that’ is missing.

Notably, Walmart President and CEO Doug McMillon – named Business Roundtable Chairman – hiked executive pay (his own by half a million), reported a $20 billion stock buyback program, received $2 billion from the corporate tax bill, and then closed 63 Sam’s Club stores and laid off 10,000 workers in 2017.

New Community-Based Model for Global Business

CCT Inspired by Town of Philomath

“One of the primary inspirations for Conscious Community Theory (CCT),” Nathan Warren shared, “was the community-minded town of Philomath, and the generosity of the Clemens family.”

Nathan Warren’s winery, Harris Bridge Vineyard. Photo by Blair Girard.

The Clemens Foundation has given thousands of full scholarships (the equivalent of OSU tuition) to rural community high school graduates for decades. “This philanthropy has been vital,” says Warren, “resulting in dramatic improvement in the quality of life for the children and families who have benefitted from it, me included.”

Dave Lowther, a member of the Clemens Foundation Board, and also the nephew of Rex Clemens, a Philomath timber pioneer and philanthropist, told the story of how the Clemens Foundation came about

“When Rex Clemens first began his Timber operations in the early 1900’s, he was mostly interested in industrial competition and growth,” he explains. “[Rex] started buying timber land at a time when it was priced fairly low. He would then log some of it to pay it off, and then buy more and so on.”

“After he found financial success – after years of work and building a sawmill to process his timber – he and his wife Ethel started the Clemens Foundation,” Lowther continues. “The idea behind that was to provide a college education for the children of his mill workers and loggers so maybe they wouldn’t have to go into such a dangerous line of work.

“Rex believed in education as the way forward for Philomath. It’s no coincidence that Nathan Warren, the author of CCT, was a graduate of Philomath High School and a recipient of the Clemens Scholarship himself.”

In addition to the Clemens Foundation, Warren describes Starker Forests as being another example of applied Conscious Community Theory in Oregon.

The grounds at Harris Bridge Vineyard, illustrates Warren’s love of nature. Photo by Blair Girard.

Warren believes CCT is a fit for Oregon’s wine industry as well, as exampled by the Harris Bridge Vineyard and the Oregon Solidarity Project, which received the ”Business Innovator of the Year” award for CCT-like business practices in 2019.

“Most of the Oregon wine industry has operated under a different theory than Wall Street for decades,” Warren asserts.“Wine producers rely heavily on scientific awareness of the natural world, and they also rely heavily on community participation and support, both of which are essential in CCT.”

Warren believes Wall Street and Washington, DC can learn from Oregon – from our community minded wine and timber industries, and from our deep love and appreciation for water, forests, and life. As our Philomath timber company Starker Forests says, “We grow forests, not just trees.”

“They get it,” Warren says. “It’s bigger than product and it’s much, much, bigger than profits. It’s life, and it’s in our care, and a Conscious Community Organization never forgets that, no matter what economic or political system it is working within.”

CORRECTION: This article formerly identified Nathan Warren as a professor at Oregon State University. Warren is defined by the University as an instructor.