UBUNTU CAPITALISM: CAN IT BRING US THE RADICAL ECONOMIC TRANSFORMATION THAT SOUTH AFRICA SO DESPERATELY SEEKS?
What on earth is Ubuntu Capitalism (UC)? It is not social entrepreneurship. Social entrepreneurship simply means doing business for a social cause. Ubuntu Capitalism is not sustainable capitalism either based on adherence to the King Report on Corporate Governance. Although it is commendable that the board should ensure that the company is and is seen to be a responsible corporate citizen that is not just “concerned with structure and process but also with an ethical consciousness and conduct,” UC, however is bigger than that.
Furthermore, Ubuntu Capitalism is not compliance with B-BBEE codes of good practice. All three – social entrepreneurship, compliance with King IV Report as well as B-BBEE codes although essential pieces of the UC puzzle, they are still not UC.
The easiest way to explain Ubuntu Capitalism is by contrasting captains of industry with robber barons. Captains of industry are compassionate entrepreneurs who’ve used their wealth and influence in a positive way, making major contributions to their country, and even the world, to improve the lives of people. On the other hand, a robber baron is also a business leader, but one who amassed his or her personal fortune without contributing to the overall well-being of the nation. His wealth is usually gained at the expense of the poor.
Now, think of Ubuntu Capitalism as representing Captains of Industry and Laissez Faire Capitalism as representing Robber Barons. For the purposes of illustration, the words Robber Baron Capitalism or Pre-Bill Gates Capitalism will be used interchangeably in the place of Laissez-Faire capitalism simply because this was business as usual before Bill Gates called for a compassionate form of capitalism, he called “Creative Capitalism.” The term Ubuntu Capitalism is actually a derivative and localisation of Bill Gates’ concept of Creative Capitalism. In his 2008 address to the World Economic Forum in Davos, Switzerland, Microsoft Founder Bill Gates said that, “we have to find a way to make the aspects of capitalism that serve the wealthier serve the poorer.”
The problem with Pre-Bill Gates capitalism is that poverty reduction under regular capitalism is lower and more uneven – it is one of the worst ways to reduce poverty according to Professor of Economics at New York University, William Easterly (2008). In Brian Merchant’s view, we are living in the Era of the Economic Elite Domination. What this means is that the government and big corporations are least concerned with issues of ordinary members of the general public, just the rich and lobbyists. The “quiet voice of the public barely registers under the booming baritone of the wealthy.”
A classic characteristic of the leechlike and morally bankrupt nature of robber barons can be spotted in the recent case study of the pharmaceutical giant, Roche, which was broadcasted by enca’s Checkpoint. Roche is the only manufacturer and distributor of the live-saving cancer drug called Herceptin. Women with HER2 positive, which is an aggressive strain of breast cancer, require trastuzumab, which is marketed in South Africa as Herceptin, but cannot access it because the price is out of reach for many patients.
The Swiss multinational is obviously abusing its first mover-advantage by charging exorbitant prices for the sought-after medicine and suing the pants off of any pharmaceutical company that is trying to create competition for them. Tac.org.za reported that Roche is overcharging because it holds multiple patents on the drug, a monopoly status; they use to block cheaper biosimilars from being sold in South Africa and so they can milk patients for as long as they can. This medicine is a last hope for patients like Tobeka Daki who died last year because Chemo alone wasn’t enough to keep her alive. Daki was diagnosed with HER2 breast cancer in 2013, despite it being recommended by her doctor, her medical aid declined to cover it.
A year-long treatment of Herceptin costs half a million rand in the private sector and almost a quarter of a million rand in the public sector or even more if a higher dose is needed. This is the typical manner in which robber barons stop at nothing to gain great financial benefit and wealth, even if that means their country and citizens suffer as a consequence. It bothers Roche not, that the poor are dying from cancer even though they have the power to lower prices, set a precedent on socio-economic inclusion plus change the status quo.
If Roche was a captain of industry as opposed to the robber baron that it is, it would have come up with a Bottom of the Pyramid (BOP) business model that worked for volume and thin margins, the very first time Treatment Action Campaign (TAC), Fix the Patent Laws Campaign and Cancer Association Of South Africa (CANSA) picketed outside of their offices back in March 2015. Two years later, Roche management is still unfazed by the negative publicity which could cause serious reputational damage to their brand. It is not rocket science that the cheaper the medicine, the more the demand and the greater the profit they stand to make – this is Economics 101. The world’s poverty data back in 2007 indicated that, collectively the poor of the world have $5 trillion in purchasing power. It further reported that BOP population is already $100 billion a year in spending – a $100 billion market opportunity, is a hefty size of the pie, yet in spite of this finding, the BOP market remain underserved.
Real captains of industry serve their nation in a positive way and create opportunities that raise the nation’s standard of living as opposed to turning a blind eye to their petitions.
Did you know that out of the $18 billion profit, Roche made in 2015, $6, 7 billion was from the sale of Herceptin worldwide, and R100 million from South Africans? Roche has clearly made its money from the research and development of Herceptin, therefore, it is high time that they demonstrate a little Ubuntu and slash Herceptin prices to increase access.
Isn’t it a bit of a market failure that when you are poor you aren’t heard? If you are very poor, your voice in the market place is very low. Even if solutions are available, BOP sectors of our nations will remain underserved only because robber barons run the economy. So, you’ll have a drug like Herceptin which can clearly save the lives of the poor, but because it is not in the financial interest of Roche to serve this market, they just avert their eyes. This is why we should advocate for Ubuntu Capitalism. Because Ubuntu Capitalism is about “harnessing the energies and outputs of capitalism to meet the needs of the masses rather than of the privileged, or to combine self-interest and concern for others into one coherent vision which eliminates the evils while preserving the benefits of each.