Reimagining Capitalism Pdf

[Kizzy Burnworth]

Weare capitalists who know that capitalism is fundamentally broken. While free markets have led to prosperity for some, they have also generated devastating inequities across economic, racial, and geographic lines.

We are working with wide range of partners across industries and silos to deliver on a shared vision of success for these historic investments, aligning the resources, infrastructure, and networks required to deliver meaningful economic and climate benefits for both workers and under-served communities.

Reimagining Capitalism is now available for pre-order! It not only outlines how capitalism needs to change if we are to build a just and sustainable world, but also draws on twenty years of research in organizational change, innovation and disruption, and political theory in combination with a series of in-depth case studies to outline a practical roadmap for how we can get there from here. Business can change the world. You can help.

The Americans, in the 1970s, when there was a recession emerging, changed course and very strongly went to a short-term focus, profit orientation only. You maybe remember Milton Friedman: the only responsibility a corporation has is to make money for its shareholders. That form of capitalism, which is called the neo-American capitalism, took off by the 1970s. It was focusing on shareholders in the short term. That is what later came to be called quarterly capitalism. On the other hand, the European countries moved more toward a stakeholder model and a longer-term focus.

If you take what has been practiced in the United States, and also to a large extent in Britain, it resulted in huge income inequalities that eroded the middle class and resulted in less competitiveness and less innovation, while the Scandinavian countries, in particular, and some of the European countries came up in terms of being more competitive and more innovative.

What is capitalism? Is it the greatest source of prosperity and freedom the world has ever seen or a menace on the verge of destroying the planet and our society? Rebecca Henderson argues that capitalism is the only solution to the massive problems that we face and explores the ways in which the private sector can help to reimagine capitalism so that it works for everyone.

Gaps in U.S. Capitalism: Free markets have brought technological innovation, prosperity, and new business models. However, its current version has gaps that need to be addressed for it to be the best and fairest version of capitalism. We believe that:

How We Reimagine It: Most of the work to shift our current landscape requires a systems thinking approach. This includes evaluating the impact of our current structure and its influence on society.

We are committed to hosting events and engagements related to reimagining capitalism throughout the academic year. Recent featured speakers include executives from Levi Strauss, Applegate, Microsoft, Oatley, Poshmark, and more. Our flagship speaker series, the Peterson Speaker Series, is the main platform where we elevate how business and academia can come together to explore how capitalism can better serve the environment and society.

Past internship and job placements have spanned companies across industries such as Nike, General Mills, Google, Levi Strauss, DoorDash, and more. Famed Berkeley Haas led companies Reimagining Capitalism include: Poshmark, Dispatch Goods, Cowgirl Creamery, Blue Forest Conservation, and Diaspora Co., just to name a few.

We partner closely with leading Haas faculty including Henry Chesborough, the Father of Open Innovation, and Sara Beckman, a leader in systems thinking. Additionally campus partners include: The Nordic Center at UC Berkeley, the Institute for European Studies, the Goldman School of Public Policy, and the College of Natural Resources.

1. It would have been helpful to know whether Prof. Henderson is advocating an actual change in the legal regime (i.e., a change in the legal standards for subjecting directors and officers to monetary judgments) or merely a change in how directors and officers think about maximizing value. As the discussion went along, it sounded more and more like the latter is what she has in mind, but it was never made clear as far as I could tell.

The second glaring omission I noted is with regard to Fiduciary Duty. Rebecca notes that she is on the Board of Directors of two publicly-traded capital stock companies, which of course is all well and good.

I was in Lawrence, Ma when Malden mills burned down. My father worked in the mills which provided the jobs of many local Dominicans moving to the area. It offered great benefits and being able to feed and house a family of six while having quintessential childhood experiences.

Doing the right thing for people and the planet is and has been an incentive for companies for a long time. Energy Services companies have been retrofitting buildings for more than 30 years to improve energy efficiencies. Efficiency has been core to the heating and air conditioning business for at least 30 years. Companies have always had an incentive to reduce energy costs and the more energy they consume, the bigger the incentive.

Construction and manufacturing companies connected safety to the bottom line at least 30 years ago. In many industrial companies, safety has been elevated to a value that has become part of their brand. CEOs promote and defend their brand regardless of their personal virtues.

I worry about return on investment calculations that sound good on the surface but then are based on wildly optimistic assumptions or ignore soft costs (or opportunity costs) while embracing soft benefits. That was the caution light going on for me during the interview.

I think that if Walmart genuinely tried to do find the wage level that increases shareholder value over time, people would have trusted the outcome more than the outcome of a Government study, and much more than the conclusion of a Bernie Sanders campaign white paper.

The appeal of someone promising to force corporations to pay higher wages, or to be more environmentally friendly, is that it will force them to genuinely try to do this while still being profitable. Ironically, the best way to convince most people that markets produce good outcomes, is for them to believe that people at the top are more like Rebecca, and are very worried about capitalism.

Of course, I agree with Henderson that business leaders must manage their companies differently in order to create a more humane and stable capitalism. This is great when the owner of the company thinks not only about his comfort, but also about the people who work in his company.

There is little doubt that even the poorest 20th wealth percentile person in the USA is far better off than the 90th wealth percentile person even a few generations ago. Who would trade their situation today for a very wealthy situation in 1920?

The improvement in human life is happening so fast now in medicine, travel, entertainment, nutrition, world peace, and so on that just about every kid will live a far better life than their parent, something that was about 50-50 for most of human history.

Russ Roberts: Today is May 4th, 2020, and my guest today is economist and author, Rebecca Henderson. She is the John and Natty MacArthur University professor at Harvard University and teaches in the Harvard Business School. Her latest book and our topic for today is Reimagining Capitalism in a World on Fire. Rebecca, welcome to EconTalk.

Russ Roberts: I want to alert people listening at home, we are recording this in the middle of the COVID-19 experience, which could affect our audio quality a bit: we're not able to use some of our usual equipment, and broadband is a little iffier in a house with four people at home unexpectedly, often using internet during the day. We may or may not talk about COVID-19. There's plenty to talk about in the book outside that. So, we'll see how this goes.

Rebecca Henderson: Let me begin by saying I'm a huge fan of capitalism. I think it's one of the greatest inventions of the human race. But I think in our current incarnation, we've allowed it to become unbalanced. I see three problems. First, accelerating inequality. A very significant fraction of the productivity gains from our booming economy over the last 20 years went to those at the very top of the distribution.

And, third, and perhaps most important, we have systematically run down our government capacity. 'Government' has become a dirty word. And I think the costs of that happening were visible before the pandemic in our very polarized and ineffective politics, and are very visible during the pandemic, when the costs of not having a fully functional government have become very visible.

Russ Roberts: One other thing I liked about the way you open the book with those three problems is it forced me to think about what my list would look like. I'm going to mention my three; and you can tell me if you think they're problems, and if you think they belong in your top 10. I don't want to spend too much time on this.

Russ Roberts: I thought, what are the three biggest problems--in America at least? Maybe the world is an even tougher question. But, in America, my three would have been the people who are left behind in our economic system--which is related to your concern about inequality. But, I feel very strongly that the focus on inequality--first, I think the data mistake how many people are being left behind. I think it's grossly overestimated the problem; but it's still significant. I think there's a way too large fraction of our population, especially young people, who struggle to get a foot on that ladder of economic growth. So, we semi-agree there.

My second issue would be what I would call the epidemic of loneliness. It's not unrelated to the first one. Some people are not integrating into the workforce; but certainly family life is very different than it was. We're in the middle of an experiment. That may or may not turn out to be so bad, but it doesn't seem so great right now. We have a large, a very high suicide rate among teens, which is deeply disturbing. So, that would be my number two, which I would--it's a cultural problem, but it's related to some economic problems.

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