Olivia: A single invention by one man, Thomas Midgley, earned his company billions. It also poisoned the brains of generations of children and tore a hole in the ozone layer. Today, we're asking: was that profit real, or was it the biggest accounting fraud in history? Jackson: Whoa, that's a heavy start. So we're talking about hidden costs. The kind of costs that don't show up on a quarterly report. Olivia: Exactly. And that's the central question in Colin Mayer's book, Prosperity: Better Business Makes the Greater Good. What's fascinating is that Mayer isn't some anti-capitalist radical; he's a distinguished professor and former dean of Oxford's Saïd Business School. He's an insider who's spent his entire career studying corporations, and he's come to the conclusion that the system is fundamentally broken. Jackson: I like that. It’s not a critique from the outside looking in. It’s someone who’s been in the engine room saying, "Hey, this thing is going in the wrong direction." The book has been pretty widely acclaimed for that reason, but it's also stirred up some controversy for being so ambitious. Olivia: It’s definitely ambitious. He’s essentially trying to rewrite the rules of capitalism. And he starts by attacking the one rule we all think we know.

Olivia: We're all taught that the goal of business is to make a profit. It’s the famous Milton Friedman doctrine: the social responsibility of business is to increase its profits. But Mayer argues that's a surprisingly recent, and destructive, idea. Jackson: Hold on, isn't that just... capitalism? I mean, that's what a business is. You provide a service, you make money. What else is there? Olivia: That’s the modern view, but it’s not the historical one. Mayer takes us back centuries. Look at the early corporations, like the English East India Company. It was a commercial enterprise, for sure, but it was also an arm of the state. It had a dual purpose: to manage trade, yes, but also to govern, to administer justice, to perform public functions. Profit was a part of the equation, but not the only part. Jackson: Okay, but the East India Company wasn't exactly a saint. They did some pretty terrible things in the name of "governance." Olivia: Absolutely. And Mayer doesn't whitewash that. His point isn't that these old models were perfect, but that they prove the 'profit-only' model isn't some eternal, natural law. It's a choice we made. A better example might be the Quaker companies of the 19th century, like Cadbury. Jackson: The chocolate people. Olivia: The very same. George Cadbury didn't just build a factory; he built a town, Bournville, for his workers. It had quality housing, green spaces, schools. He believed that improving the conditions of his workers was integral to his business. His purpose wasn't just to sell chocolate; it was to create a thriving community. The profit was a product of that purpose. Jackson: That makes sense for a family-owned company where the founder has a strong moral compass. But how does that apply to a massive, publicly traded company today, like an Amazon or a Google? They're accountable to thousands of shareholders who just want to see the stock price go up. Olivia: That is the exact tension the book identifies. The shift to dispersed ownership, where shares are traded in milliseconds, has severed that connection to a long-term purpose. We've gone from owners who built communities to renters who are just looking for a quick return. Jackson: It’s like we've been playing Monopoly with only one rule—'get all the money'—when the original game had rules about building houses and hotels, about creating something of value on the board. We just focus on bankrupting everyone else. Olivia: That’s a perfect analogy. Mayer argues that for about 40 years, we've been playing by that one, single, damaging rule. And the consequences are all around us: environmental degradation, social inequality, and a deep-seated mistrust of corporations. He believes it's time to rediscover the other rules of the game.

Jackson: Okay, so if the goal isn't just profit, what is it? This is where it gets a bit philosophical, right? I've heard the book makes some pretty wild comparisons. Olivia: It does, and this is the conceptual heart of the book. Mayer says we need to stop thinking of a corporation as a machine—a cold, lifeless thing that takes in inputs and spits out profit. Instead, we should see it as a living organism. Jackson: A living organism? Like a plant? Or a puppy? Olivia: (laughing) More like a very specific kind of organism. He uses the biological analogy of symbiosis. Think of foraminifera—tiny, single-celled creatures that build shells. Millions of years ago, algae started colonizing the holes in their shells. The algae got a safe place to live and access to the foraminifera's waste products, which they needed. In return, the foraminifera got a constant supply of energy from the algae's photosynthesis. Jackson: So they became a team. Olivia: More than a team. They became a new, more complex organism. Neither could survive as well without the other. Mayer argues a corporation is the same. It's not just a "nexus of contracts" between shareholders, employees, and customers. It's a "nexus of relations" built on commitment and trust. It binds together different forms of capital—financial, human, social—to achieve something none of them could do alone. Jackson: A conscious corporation? That sounds like something out of a sci-fi movie. Are we talking about Skynet? Is my toaster going to start judging my life choices? Olivia: (laughing) Not quite. He’s not talking about self-awareness in the human sense. He’s borrowing from the philosopher Thomas Nagel. A corporation has a 'consciousness' in that it has an accumulated knowledge of its impact on others. It knows what it does, who it affects, and why. It has a purpose, a reason for being. Jackson: Okay, that’s a bit less terrifying. So when a company like Patagonia famously ran that ad saying, "Don't Buy This Jacket," encouraging people to repair their old gear instead of buying new stuff—that's a form of this corporate consciousness in action. They were valuing something, sustainability, over a single, immediate sale. Olivia: Precisely. They were acting on their stated purpose, which is to be in business to save our home planet. That purpose guides their decisions, even when it seems to contradict short-term profit. The problem is that our current legal and financial systems are built for the machine, not the organism. They constantly pressure the organism to act like a machine—to cut costs, to ignore its purpose, to focus only on the financial output. Jackson: And that pressure can kill the very thing that makes the company special. It’s like telling that foraminifera to evict its algae tenant because it’s not paying enough rent, even though the algae is literally feeding it. Olivia: Exactly. And that’s why Mayer argues we don’t just need a new philosophy; we need new plumbing. A whole new system for how we run, regulate, and even measure the success of these corporate organisms.

Olivia: And that brings us to the most practical, and perhaps most radical, part of the book: if we accept this new definition of a corporation, we have to completely change how we measure success. Jackson: Right. Because if profit isn't the main goal, then what is? And how do you put a number on 'doing good'? Olivia: Mayer introduces a brilliant concept to tackle this: the difference between 'fake profits' and 'fair profits'. And this brings us back to our opening story about Thomas Midgley. Jackson: The guy with the leaded gasoline and the CFCs. Olivia: Yes. His inventions, tetraethyllead and Freon, were incredibly profitable for General Motors. They made billions. But what was the true cost? Leaded gasoline pumped neurotoxins into the air, causing brain damage in children and lowering IQs across entire populations. CFCs tore a hole in the ozone layer, increasing rates of skin cancer. The profits were recorded on GM's balance sheet, but the costs were pushed onto society and future generations. Jackson: So those were 'fake profits'. The numbers looked good because you were ignoring the biggest expenses on the ledger. Olivia: Exactly. It's an accounting fraud on a planetary scale. A 'fair profit', Mayer argues, is a profit that has accounted for the cost of remedying the harm it causes. It's profit earned without detriment to others. Jackson: This sounds great in theory, but how on earth do you put a dollar value on 'clean air' or 'employee well-being'? Isn't this just a recipe for companies to do some creative accounting and say, "Yep, we're good!" Olivia: That's the crucial question, and Mayer has a clever answer. He says we shouldn't try to value the invaluable. The goal isn't to put a price tag on a rainforest. The goal is to account for the cost of maintenance and restoration. Jackson: What does that mean? Olivia: He uses the example of the Wimpole Estate in the UK, which is run by the National Trust. The farm there was being run intensively, and the soil was degrading. So they switched to organic farming. It was an investment. They invested in restoring the natural capital of the land. A traditional accountant might see that as just a cost. But a natural capital account showed something amazing. Jackson: What happened? Olivia: The value of the estate to society—in terms of things like carbon sequestration, water quality, and recreation—went up by millions of pounds. The investment in restoring the natural capital paid off in ways that a normal P&L statement would completely miss. Jackson: Okay, I think I get it now. It’s less about saying 'a forest is worth $10 million' and more about saying 'if you cut down a forest, your profit isn't real until you account for the cost of replanting it.' The cost of the damage becomes a liability on your books. Olivia: You’ve got it. It forces companies to internalize their externalities. To clean up their own mess. And this, he argues, is the key to creating a system of trustworthy corporations. When a company's stated purpose is aligned with creating fair profit, then trust can be restored.

Olivia: So, when you put it all together, Mayer's argument is a powerful, three-part reinvention of business. First, we've been using the wrong map for the last 40 years—the idea that profit is the only destination is a historical mistake. Jackson: A broken compass. Olivia: A broken compass. Second, we need a new kind of vehicle. We need to see the corporation not as a machine, but as a living, purposeful organism. Jackson: One that can have a conscience, even if it's not human. Olivia: And third, that new vehicle needs a new dashboard. We need to move beyond measuring just financial profit and start accounting for 'fair profit'—a measure that includes the costs to people and the planet. Jackson: It’s a profound shift. It’s not about destroying capitalism, which is what some critics might fear. It feels more like it’s about restoring it to what it was supposed to be: a system for solving human problems. Olivia: That's the core of it. The book's title says it all: Better Business Makes the Greater Good. Prosperity isn't just about wealth; its root meaning is about fulfilling one's purpose. And the purpose of business should be to help us all prosper. Jackson: It really makes you look at every company differently. The next time you buy a coffee or a new phone, you can't help but ask: is the price I'm paying the real price? Or is someone else, somewhere else, paying the rest? Olivia: A question we should all be asking. This is Aibrary, signing off.