Beyond Prosperity: How Market-Shaping Firms Advance Progress

The contributions to society of market-based economic systems are undeniable and impressive. Markets have mobilized knowledge to deliver significant advances in prosperity, in terms of greater economic wealth. For decades prosperity had been accompanied by equally impressive gains in progress in terms of improved social well-being. However, while prosperity continues to advance, particularly where markets are most efficient, progress seems to have stalled. Today, scholars are again questioning whether prosperity can adequately deliver progress. We answer, in this paper, that it can—but only if guided by a purpose that is not determined by the blind pursuit of market efficiency and profit maximization. We explain how a relentless pursuit of efficiency allocates resources towards ever greater prosperity but often away from progress. Closing the prosperity–progress gap, we argue, will require a broader role for firms that includes market-shaping. We define market-shaping as the paradoxical process of persistently pursuing a purpose by allocating resources in a way that, on the one hand, shelters them from the market’s forces of efficiency, and on the other hand, redefines what the market indicates is efficient. In this way, markets and firms can reinstate themselves as engines of both prosperity and progress."