MLab

Capitalism is Dead. Long Live Capitalism.

Posted by Gary Hamel on September 21, 2010

I’m a capitalist by conviction and profession. I believe the best economic system is one that rewards entrepreneurship and risk-taking, maximizes customer choice, uses markets to allocate scarce resources and minimizes the regulatory burden on business. If there’s a better recipe for creating prosperity I haven’t seen it.

So why do fewer than four out of ten consumers in the developed world believe that large corporations make a “somewhat” or “generally” positive contribution to society? (This according to a 2007 study by McKinsey & Company.) Why is it that only 19% of Americans tell pollsters they have “quite a lot” or a “great deal” of confidence in big business? (In the 2010 Gallup survey, only Congress scored worse.) It seems that a majority of us expect big companies to behave badly—to ravish the environment, exploit employees and mislead customers. When it comes to feckless irresponsibility, big business seems to be in the same league as Tiger Woods and Lindsay Lohan.

Some blame Wall Street for this state of affairs. In March 2009, the Financial Times claimed that the “credit crisis had destroyed faith in the free market ideology that has dominated Western thinking for a decade.” Around the world, hyperventilating pundits and grandstanding politicians argued that a new model of capitalism was needed—one that would make executives even more accountable to legislators and bureaucrats. Statists spied in the calamity a once-in-a-lifetime opportunity to enlarge their regulatory fiefdoms—and moved swiftly to do so.

While one should never underestimate the ability of risk-besotted financiers to wreak havoc, the real threat to capitalism isn’t unfettered financial cunning. It is, instead, the unwillingness of executives to confront the changing expectations of their stakeholders. In recent years, consumers and citizens have become increasingly disgruntled with the implicit contract that governs the rights and obligations of society’s most powerful economic actors—large corporations. To many, the bargain seems one-sided—it’s worked well for CEOs and shareholders, but not so well for everyone else.

You don’t have to read Adbusters to wonder whose interests big business really serves. When it comes to “free markets,” there’s plenty to be cynical about.

If individuals around the world have lost faith in business, it’s because business has, in many ways, abused that faith. In this sense, the threat to capitalism is both more prosaic and more profound than that posed by marauding bankers—more prosaic in that the danger comes not from the esoteric schemes of “rocket scientists” but from the slowly accreting frustrations and anxieties of “ordinary” folks; and more profound in that the problem is truly existential—it threatens to burden every large company with the sort of regulatory constraints that were once reserved for nuclear power plants. No amount of cuddly, “here’s how much we care” PR is going to avert this danger.

Some may bemoan the fact that capitalism (broadly defined) has no credible challengers, but it doesn’t. Like democracy, it’s the worst sort of system except for all the others—and that’s why each of us has a stake in making it better. If we fail to do so, the growing discontent with business will embolden all those who believe CEOs should answer first and last to civil servants—to those who are eager to replace invisible hand of the market with the iron hand of the state.

This is not an outcome most of us would welcome. While cinching the regulatory straitjacket even tighter would protect us from capitalism’s worst excesses, it would also rob us of its bounties. So we must hope that executives will face up to the fact that an irreversible revolution in expectations has occurred.

Millions of consumers and citizens are already convinced of a fact that many corporate chieftains are still reluctant to admit: the legacy model of economic production that has driven the “modern” economy over the last hundred years is on its last legs. Like a piece of clapped out engine, it’s held together with bailing wire and duct tape, frequently breaks down and befouls the air with noxious fumes.

While we’re grateful that someone invented this clattering, savage machine a century and more ago, we’ll also be happy when it’s finally carted off to the scrap yard and replaced with something a bit less menacing.

We know the future cannot be an extrapolation of the past. As the great grandchildren of the industrial revolution, we have learned, at last, that the heedless pursuit of more is unsustainable and, ultimately, unfulfilling. Our planet, our security, our sense of equanimity and our very souls demand something better, something different.

So we long for a kinder, gentler sort of capitalism—one that views us as more than mere “consumers,” one that understands the difference between maximizing consumption and maximizing happiness, one that doesn’t sacrifice the future for the present and regards our planet as sacred.

So what stands in the way of creating a conscientious, accountable and sustainable sort of capitalism—a system that in the long-term is actually habitable?

It is, I think, a matrix of deeply held beliefs about what business is for, whose interests it serves and how it creates value. Many of these beliefs are near canonical (at least among CEOs of a particular generation or ideological bent). They are also narcissistic and archaic. Among the most toxic . . .

1. The paramount objective of a business is to make money (rather than to enhance human well-being in economically efficient ways).

2. Corporate leaders can only be held accountable for the immediate effects of their actions (and not for the second and third order consequences of their single-minded pursuit of growth and profitability).

3. Executives should be evaluated and compensated on the basis of short-term earnings (rather than on the basis of long-term value creation, both financial and social).

4. The way to establish a business’ social credentials is through high-minded mission statements, green-tinged products and a fat CSR budget (rather than through an unshakeable and sacrificial commitment to doing the right thing).

5. The primary justification for “doing good” is that it helps a company to “do well.” (The implication: a company should do good when there’s an upside and something less when there’s not).

6. Customers care a lot more about value for money than they do about the values that were honored (or defiled) in the making and selling of a product.

7. A firm’s “customers” are the folks who buy its services (rather than all those whose lives are impacted by its actions).

8. It’s legitimate for a company to make money by exploiting customer ignorance, exaggerating product benefits and constraining customer choice.

9. Market power and political leverage are acceptable ways of countering a disruptive technology or thwarting an unconventional competitor.

10. Business is about advantage, focus, differentiation, superiority and excellence (and not about love, joy, honor, beauty and justice).

Perhaps these self-serving convictions were less objectionable 57 years ago when General Motors’ then–chairman, Charles Wilson, proclaimed that “what is good for GM is good for America.” But today, they are discordant and dangerous. It is no good pretending that perceptions haven’t changed or that capitalism’s critics are simply misguided. There is a growing consensus that rampant consumerism debases human values; that pell-mell growth imperils the planet; that unchecked corporate power subverts democracy; and that myopic, profit-besotted CEOs are as likely to destroy value as create it.

I am an ardent supporter of capitalism—but I also understand that while individuals have inalienable, God-given rights, corporations do not. Society can demand of corporations what it likes. That’s why self-serving beliefs are also, ultimately, self-limiting.

Of course, as consumers and citizens, we must be acknowledge that companies can’t remedy every social ill or deliver every social benefit. We must also face up to our own schizophrenia. We can’t expect companies to behave responsibly if we blithely abandon our own principles to save a buck.

As for executives: if you feel your industry is still too lightly regulated, if you secretly long for the regulatory fetters to be tightened even further, if you think that Sarbanes-Oxley, the Patient Protection and Affordable Care Act, the Restoring American Financial Stability Act and Basel III don’t go far enough—then just keep on doing what you’re doing. If, on the other hand, you’ve had enough of sanctimonious politicians and meddling bureaucrats, then you must face up to a simple fact: In the years to come, a company will be able to preserve its freedoms only if it embraces a new and more enlightened view of its responsibilities. Many CEOs have already resigned themselves to this new reality, and a handful have eagerly welcomed it. There are others, though, who still cling to the belief that a company is first and foremost an economic entity rather than a social one. Sooner or later, these holdouts will discover that they face the same hard choice that confronts every teenager—drive responsibly or lose your license. For the sake of capitalism, let’s hope it’s sooner.

So then, dear reader, two questions: Are there other beliefs you belief represent a threat to capitalism? And more generally, what do you think needs to be done to rehabilitate capitalism’s tarnished reputation?

And finally, a really important recommendation. If you’re eager to dig deeper into these issues, pre-order Umair Haque’s new book, “The New Capitalist Manifesto: Building a Disruptively Better Business,” to which I wrote a short foreword. Umair, who writes with uncommon wit and passion, draws a host of essential lessons from companies that have already embraced the challenge of reinventing capitalism. The New Capitalist Manifesto will be launched in January, and I expect it to become one of the most talked about books of 2011.

Comments

Reply to comment | MLab

number lookup free cell phone directory lookup phone cell
reverse phone lookup lookup a cell phone number free

Reply to comment | MLab

phone lookup cell cell phone reverse lookup free cell phone lookup name
free cell phone name lookup

VTWiGWPEMSu

hPuvSmDrdIHO

Reply to comment | MLab

cell phone info lookup reverse phone lookup cell free name reverse cell phone
number lookup free lookup cell phone number

cvxMGenzpPYEtPDo

Reply to comment | MLab

cell lookup phone number free cell phone lookup reverse numbers cell phone reverse lookup phone lookup by number cell phone free

Reply to comment | MLab

reverse cell phone lookup name name lookup cell phone
number cell phone lookup by number free cell phone number lookup by name

Reply to comment | MLab

reverse is there a free cell phone lookup phone number lookup
cell phone number lookup by number reverse lookup cell phone

eWKNPTzzugCWct

Reply to comment | MLab

cell phone information lookup free cell phone reverse lookup name reverse phone lookup cell phone lookup phone

Reply to comment | MLab

phone cell phone lookup by number free number lookup reserve
cell phone lookup free reverse cell phone number lookup name

Reply to comment | MLab

cell phone number lookup by name reverse cell phone lookup free results lookup phone number cell
free reverse phone lookup cell

Reply to comment | MLab

free reverse cell phone lookup lookup cell phone number by
name reverse call lookup cell phone cell phone lookup
by name

Reply to comment | MLab

lookup cell phone number owner reverse cell phone
provider lookup reverse phone cell phone lookup by name free with number lookup

Reply to comment | MLab

reverse number lookup free cell phone name lookup cell phone number free cell phone reverse lookup cell phone free lookup with name

Reply to comment | MLab

reverse number lookup free cell phone reverse number
lookup cell phone free reverse cell phone lookup for free phone
lookup by name

Reply to comment | MLab

reverse free cell phone number lookup phone lookup
cell cell phone provider lookup reverse cell phone lookup

Reply to comment | MLab

cell reverse phone lookup reverse number cell phone lookup by number free phone lookup cell phone reverse lookup for free

Reply to comment | MLab

cell phone free lookup free reverse number lookup cell phone cell
phone info how to lookup who owns a cell phone number

Reply to comment | MLab

phone cell number lookup free cell phone reverse lookup name
cell phone lookup name lookup cell phone number free

Reply to comment | MLab

cell phone lookup by name for free phone lookup cell reverse
cell phone lookup by name reverse phone number lookup for cell
phones

ASbQVvPIyLi

sQrINIGqnN

RuysuXXhxilgfpXnM

TNYRYztxruZNIiED

Reply to comment | MLab

cell phone information lookup cell phone lookup name free
cell reverse cell phone lookup name phone lookup

Reply to comment | MLab

free cell phone reverse lookup phone lookup number free cell phone number reverse lookup cell phone lookup by number for name free

Reply to comment | MLab

cell phone lookup 589f39dc83bc11205026a5a1 free cell
phone information lookup free reverse cell phone lookup
phone information lookup

Reply to comment | MLab

cell phone lookup by name lookup cell phone numbers free
free cell phone provider lookup phone lookup directory

LraZJBYyBLMiNoHgJeC

Reply to comment | MLab

reverse phone cell lookup lookup cell phone number by name cell phone real reverse cell phone lookup number lookup free

Reply to comment | MLab

reverse cell phone lookup by number free reverse lookup cell phone free lookup cell phone number by name of cell phone numbers

vmtXEksMoTMFwmDyJ

JfnBFhZnSn

Reply to comment | MLab

reverse cell phone lookup with name cell phone lookup free by name
free cell phone reverse lookup directory reverse telephone lookup
cell phone

EnoNqXcfsaM

ekJJHcWtaJ

jLEbSulgwOg

Reply to comment | MLab

reserve cell phone lookup free cell phone number lookup by number lookup for cell phone numbers phone cell lookup

iuGGkBTnksOoa

Reply to comment | MLab

free cell phone number lookup name cell phone reverse lookup free reverse cell phone number lookup free reverse cell phone number lookup name name results

EPxKIRBzAz

Reply to comment | MLab

reverse cell phone lookup canada number lookup free cell phone lookup cell phone free free lookup of
cell phone numbers

Reply to comment | MLab

reverse cell phone lookup cell phone number lookup by number cell phone owner lookup by number phone
lookup reverse

Reply to comment | MLab

cell phone number lookup by number cell phone number lookup free phone lookup 589f39dc83bc11205026a5a1 lookup cell phone number

Reply to comment | MLab

reverse free phone lookup cell reverse cell phone lookup lookup cell phone lookup name free phone

Reply to comment | MLab

lookup a cell phone number reverse cell phone lookup name free cell phone number owner lookup free phone
number lookup name

Reply to comment | MLab

reverse free phone lookup cell cell phone lookup
589f39dc83bc11205026a5a1 is there a free cell phone info lookup phone lookup

Reply to comment | MLab

cell phone number lookup by number free phone lookup cell cell phone number lookup name cell phone number reverse lookup

CXaYLZxBBR

Reply to comment | MLab

reverse cell phone number lookup free with name lookup
phone number cell free cell phone reverse number lookup cell phone
lookup address

Reply to comment | MLab

reverse lookup phone number cell free free can you lookup a cell phone number cell phone number cell phone lookup
by name

DfWZKMqcULR

SlQdOPJBNM

Reply to comment | MLab

cell phone owner lookup by number lookup cell phone number free cell phone directory telephone reverse lookup cell phone lookup

nfRmoWLIuNEo

Reply to comment | MLab

lookup cell phone numbers free cell phone lookup by name and address phone phone lookup free cell phone reverse lookup directory

Reply to comment | MLab

number lookup free cell phone free address lookup by cell phone number reverse lookup phone number cell phone info lookup

Reply to comment | MLab

reverse number cell phone lookup is there
a free cell phone lookup cell phone lookup free with name phone reverse
lookup

Reply to comment | MLab

free reverse lookup cell phone
reverse number lookup cell phone reverse lookup of cell phone number cell phone
reverse lookup for free

cwZKgeRZJpRbLzEKa

Reply to comment | MLab

reverse number lookup cell lookup phone number phone free
free cell phone lookup by number for name free cell phone lookup name

Reply to comment | MLab

reverse phone cell lookup free reverse call
lookup cell phone lookup cell phone number by name

Reply to comment | MLab

reverse phone number lookup cell phone lookup by name and address phone free free phone reverse lookup cell
free reverse phone lookup cell with name

Reply to comment | MLab

cell phone free lookup reverse phone lookup cell phone reverse cell phone lookup by name free phone
lookup for free

USKSvHuxmiof

WyohuuDoTvthAoSX

KRCHucKUIx

Reply to comment | MLab

cell phone directory reverse lookup reverse lookup
cell phone number free reverse cell phone lookup free phone lookup cell results

enpzRVSezHGVt

ruaZOJGkvtyBDKk

Reply to comment | MLab

reverse lookup of cell phone number reverse phone cell how do you lookup a cell phone number reserve cell
phone lookup

wbCgDRahuRdil

anQWIswALNXNZQmv

ByhZALeeliloymE

zikdifVijsvJWxWFRvv

KwqfLZpmnRdnoCUBaED

NmKmHnXainh

Reply to comment | MLab

reverse phone number lookup cell phone free free reverse cell phone provider lookup lookup cell phone lookup cell phone number owner

Reply to comment | MLab

fast reverse cell phone lookup cell phone lookup name how to lookup
a cell phone number cell phone provider lookup

Reply to comment | MLab

cell phone no lookup free reverse lookup for cell phone numbers cell
phone lookup free number lookup cell phone

Reply to comment | MLab

cell phone reverse lookup name free cell phone lookup by number for name cell phone
reverse lookup name cell phone reverse lookup for
free

IQHUUFYiyaUN

Reply to comment | MLab

cell phone number owner lookup free phone number
reverse lookup free reverse phone cell lookup free cell phone directory reverse lookup

OrcFJyyahjWya

VKvBWSTbPWKdjeHGa

Reply to comment | MLab

free reverse cell phone lookup by address phone lookup
how to lookup who owns a cell phone number reverse cell phone lookup free

lJvFuPlLwIliADktJ

uFGYutDyTbjInNE