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Free market capitalism
is the greatest source of prosperity the world has ever seen, but capitalism is
on the verge of destroying the planet and destabilizing society. The good news
is we have both the resources and the technology to build a just and
sustainable world – and purpose-driven businesses could be the critical
catalyst that drives the kinds of global, systemic changes we need to reimagine
capitalism in a way that works for everyone.[1] –
Rebecca Henderson
One of the most popular courses at Harvard Business School
is ‘Reimagining Capitalism’. Course leader, Rebecca Henderson, and author of a
recent book[2] on
the subject is hopeful that Covid-19 could be a catalyst for reimagining a more
inclusive and sustainable form of capitalism. In a recent talk for Ceres[3]
she argues that it could provide the jolt needed to the inertia of business as
usual, by providing a stark warning that bad things can happen quickly and
without much warning, while also reminding us of how much we depend on each
other for our security and survival.
She sees business as having a central role to play in
stimulating this re-imagination and making it happen. Although she recognises
that markets alone can’t achieve the required outcomes, without the right
institutions to provide the legal and regulatory frameworks within which
markets operate and the necessary investment in public goods.
Action by individual companies can be an important starting
point, demonstrating that it is possible to run a business in a way which
respects the environment and benefits society at large while still making
money. Co-operation between companies across industries will be critical to
scale up the impact, for example in setting supply chain standards and
isolating free riders. Finance will also have an vital role to play in
investing in firms that are acting sustainably, recognising that it will be
impossible to diversify away from risks, such as those associated with climate
change, in the long run.
Reform will also needed to ensure the right institutional
environment. Henderson identifies the importance of a more participatory
democracy and the need to reduce the ability of those with deeper pockets to
purchase influence. She senses a growing recognition among far sighted businesses
of the need for change in the political environment in which business operates.
It’s sometimes hard to be optimistic given the short term
stresses and strains of coping with the immediate health and economic impacts
of the Covid pandemic. However, the recovery phase does offer opportunities for
improvement. There are reasons to be hopeful that purposeful businesses working
alongside public and third sector institutions can build a fairer, healthier
and more sustainable society - but they can’t be taken for granted.
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