All of a sudden capitalism is in question even in places one would least expect.
Debates have been aired recently on radio talk shows, discussed at an Aspen Institute gathering of CEOs, raised in editorials commenting on the burst of protests by fast food workers around the country, and are the topic of a growing number of books.
Why all this attention now? Very simply, the American economy is not working for the vast majority of citizens. Wages have been stagnant and income inequality has been growing for three decades while productivity and corporate profits have flourished.
Remarkably there also is growing consensus among the diverse groups participating in these discussions on a root cause of the problem: American corporations are focusing on maximizing short term shareholder wealth at the expense of workers, communities, and the overall economy.
We agree with this assessment and think alternatives to this narrow conception of capitalism are necessary. That is why we chose to make “Capitalism in Question” the theme of the annual meetings of the Academy of Management, the largest professional association of management professors.
From the program of the conference:
“The recent economic and financial crisis and the emergence of many protest movements around the world have put back on the agenda some big questions about the ‘better world’ part of our vision. What kind of economic system would this world be built on? Would it be a capitalist one? If so, what kind of capitalism? If not, what are the alternatives?”
We were pleased to learn of a range of ideas and actions are underway that, if expanded, might help fix the problem.
Labor leaders noted there is a near perfect correlation between the decline of union membership and increases in income inequality. But they also recognized that a return to the past is not possible. Instead, they described how they are reinventing the labor movement by reaching out and forming new alliances with young workers, students, NGOs and community groups, business and labor relations academics, and progressive employers. They are using lessons learned from the use of social media in building networks and from business entrepreneurs to incubate start-ups capable of giving workers the power to rebuild the economy from the “middle out,” a theme endorsed recently by President Obama.
Health care union leaders described how they are working in partnership with leading employers to empower front-line workers and enable them to drive improvements in quality and affordability in this key industry.
A new, revitalized, and stronger labor movement built to scale from these experiments has to be part of a rebalancing of power in corporate affairs and in empowering workers to contribute to improved economic performance and share its gains.
Others noted there is nothing sacrosanct about the goals of corporations. They called for expansion of employee owned firms, cooperatives, and Benefit Corporations that explicitly build a triple bottom line — profits, good jobs, and environmental sustainability — into their charters.
Even deans of leading business schools are searching for how their institutions can be part of the solution rather than part of the problem. For too long financial theories that privilege shareholder value have dominated business school teaching. Increasingly, new courses are popping up at MIT, Harvard, and other business schools that teach MBAs how to manage business for people, profits, and the planet. All future business leaders need to learn how to manage these multiple objectives and then be held accountable for meeting them.
These ideas alone will not produce a revolution among business leaders or even among those who educate, advise or negotiate with them. One can, however, hope the debates now under way will spark a broader examination of how to assure a better future for everyone. After all, isn’t that capitalism’s promise?
This piece was co-written by Paul Adler, a professor at the University of Southern California’s Marshall School of Business and program chair and president-elect of the Academy of Management.