Narrator: In 1900, the Quaker industrialist George Cadbury, guided by a belief that great wealth was a "curse," gifted his entire chocolate-making empire to a trust. His goal was the "amelioration of the conditions of the working class," a purpose embodied by the model village of Bournville he built for his employees. A century later, in 2009, the company Cadbury was the subject of a hostile takeover by Kraft Foods. Shortly after the acquisition, Kraft closed a historic Cadbury plant to cut costs, devastating a local community. This tale of two eras encapsulates a fundamental question: what is the true purpose of a business? Is it to serve society and its stakeholders, or is its sole responsibility to generate profit for its owners?

In his book Prosperity: Better Business Makes the Greater Good, author Colin Mayer confronts this question head-on. He argues that the modern, profit-centric view of the corporation, famously championed by economist Milton Friedman, is not only flawed but has become actively detrimental to our society, economy, and planet. Mayer proposes a radical reinvention of the corporation, one where purpose, not profit, is the ultimate goal.

Narrator: For the last half-century, the business world has operated under a powerful doctrine: that the one and only social responsibility of business is to increase its profits for shareholders. This idea, popularized by Milton Friedman, has become the bedrock of corporate governance, business school curricula, and market logic. Mayer argues this foundation is fundamentally broken. He contends that this narrow focus has led to a cascade of negative consequences, from the 2008 financial crisis, fueled by institutions taking excessive risks for short-term gain, to the widespread environmental degradation caused by companies that offload their ecological costs onto the public.

The book uses the 2008 financial crisis as a stark example of this flawed model in action. The relentless pursuit of shareholder value, detached from broader societal well-being, created a system where financial institutions were incentivized to take on immense risks. When the bubble burst, it wasn't just shareholders who paid the price; it was ordinary citizens, communities, and entire economies that suffered. Mayer asserts that the Friedman doctrine is not a law of nature but an influential and damaging idea that has run its course.

Narrator: To build a better system, Mayer insists we must first redefine our terms. He traces the word "prosperity" back to its Sanskrit roots, lakṣ and lakṣa, which together mean "to know and understand your purpose." True prosperity, therefore, is not merely the accumulation of wealth but the fulfillment of a defined purpose. In this framework, profit is not the purpose of a business; it is the product of a business successfully achieving its purpose.

Mayer argues that the purpose of a company is to solve problems for people and the planet. A pharmaceutical company's purpose is to cure disease; a car company's is to provide mobility; a food company's is to provide nourishment. When these companies fulfill their purpose effectively and responsibly, profits will naturally follow. This reframes the entire corporate objective. Instead of asking "How can we maximize profit?", leaders should ask "What is our purpose, and how can we deliver on it?" This shift, Mayer believes, is the key to restoring trust and building a more sustainable and equitable form of capitalism.

Narrator: The book challenges the traditional view of the firm as a simple machine for combining inputs to create outputs. Instead, Mayer presents the corporation as a living, evolving organism. He outlines six distinct "ages" of the corporation, from early merchant trading companies to the modern "mindful corporation." This sixth age is defined by a profound shift from tangible to intangible assets. Forty years ago, 80% of a US corporation's value was in physical assets like factories and machinery. Today, 85% of its value lies in intangibles like patents, brands, and data.

The acquisition of WhatsApp by Facebook for $19 billion perfectly illustrates this "weightless economy." The company's value wasn't in buildings or equipment but in its code, its network, and its brand. Mayer argues that this evolution means the corporation is not just a nexus of contracts but a nexus of relationships, built on trust and commitment. It possesses a form of consciousness—an awareness of its impact on others—that should guide its actions. Viewing the corporation as a conscious entity, rather than an inert machine, opens the door to considering its integrity and moral responsibility.

Narrator: If a corporation's purpose is its guiding star, then its ownership structure is the rudder that steers the ship. Mayer demonstrates how different ownership models dramatically affect a company's ability to remain committed to its long-term purpose. He contrasts the fates of two iconic confectioners: Cadbury and Mars. Cadbury, having lost its founding family's control and become a publicly traded company, was vulnerable to a takeover by Kraft, which prioritized shareholder returns over the company's legacy and community commitments.

In contrast, Mars remains a private, family-owned business. This stable, long-term ownership has allowed it to operate with a consistent vision, reinvesting in its business and upholding its values without the constant pressure of short-term market demands. Similarly, the story of Henry Ford highlights the importance of control. Ford fought his early investors, who wanted quick profits, to retain control and pursue his "idiosyncratic value"—a vision for mass production that only he could see. These examples show that when ownership is dispersed and short-term, a company's purpose can be easily diluted or abandoned.

Narrator: One of the book's most powerful arguments is that our current accounting systems are dangerously incomplete. They measure profit without accounting for the costs imposed on human, social, and natural capital. Mayer calls this "fake profit." The story of inventor Thomas Midgley serves as a chilling illustration. In the 20th century, Midgley's inventions of leaded gasoline and CFCs were immensely profitable for General Motors. However, they came at an incalculable cost: lead poisoning that damaged generations of brains and CFCs that destroyed the ozone layer. These were fake profits, generated by ignoring devastating external costs.

To correct this, Mayer proposes a new model of "fair profit," where the costs of maintaining or restoring all forms of capital are subtracted from revenue. A company that pollutes a river would have to deduct the cost of cleaning it before declaring a profit. The book provides a positive example with the Wimpole Estate in the UK, where the National Trust transitioned a farm to organic methods. By accounting for the enhanced natural capital—improved soil, cleaner water, and greater biodiversity—they found that the sustainable approach created far more value for both the estate and society than intensive farming.

Narrator: Finally, Mayer argues that transforming the corporation requires a new approach to policy and law. The law should not merely set the "rules of the game" within which companies pursue profit. Instead, corporate law should function as a "commitment device"—a legal framework that enables a corporation to credibly commit to its purpose and to all its stakeholders.

This means creating legal structures, such as the benefit corporation, that require boards to be accountable not just to shareholders but to the company's stated social and environmental purpose. It involves reforming regulation to delegitimize harmful practices and creating tax systems that incentivize the creation of "fair profit." Ultimately, Mayer envisions a system where the law empowers corporations to become trustworthy institutions, capable of making and upholding long-term commitments that benefit the greater good.

Narrator: The single most important takeaway from Prosperity is a fundamental reordering of priorities: a corporation's purpose is to solve the problems of people and planet, and profit is the result of doing so successfully, not the goal itself. This simple but profound shift challenges the core tenets of modern capitalism and offers a blueprint for a more responsible, trustworthy, and ultimately more prosperous future.

The book leaves us with a critical challenge. It asks us to look at the businesses that shape our world—as employees, consumers, and investors—and ask a new set of questions. What is their true purpose? Are they creating value for all, or are they generating "fake profits" at the expense of our collective well-being? Answering these questions is the first step toward building an economy where better business truly makes the greater good.