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Can capitalism solve capitalism’s problems?
Capitalism is in trouble – at least judging by recent polls.
A majority of American millennials reject the economic system [washingtonpost.com], while 55% of women age 18 to 54 [axios.com] say they prefer socialism. More Democrats now have a positive view of socialism [pewresearch.org] than capitalism. And globally, 56% of respondents to a new survey agree [reuters.com] “capitalism as it exists today does more harm than good in the world.”
One problem interpreting numbers like these is that there are many definitions of capitalism and socialism. More to the point, people seem to be thinking of a specific form of capitalism that deems the sole purpose of companies is to increase stock prices and enrich investors. Known as shareholder capitalism, it’s been the guiding light of American business [prospect.org] for more than four decades. That’s what the survey meant by “as it exists today.”
As a scholar of socially responsible companies, however, I cannot help but notice a shift in corporate behavior in recent years. A new kind of capitalism seems to be emerging, one in which companies value communities, the environment and workers just as much as profits.
The latest evidence: Companies as diverse as alcohol maker AB InBev [beveragedaily.com], airline JetBlue [businesswire.com] and money manager BlackRock [wsj.com] have all in recent weeks made new commitments to pursue more sustainable business practices.
[...] A 2017 study showed that many companies with climate change goals actually scaled back their ambitions [hbr.org] over time as the reality clashed with their lofty goals.
But businesses can’t afford to ignore their customers’ wishes. Nor can they ignore their workers in a tight labor market. And if they disregard socially responsible investors, they risk both losing out on important investments and facing shareholder resolutions [porticobenefits.org] that force change.
The shareholder value doctrine is not dead, but we are beginning to see major cracks in its armor. And as long as investors, customers and employees continue to push for more responsible behavior, you should expect to see those cracks grow.
The Conversation [theconversation.com]
