‘Saving Capitalism from Itself’ by Simon Caulkin, Management Today, September 2011

This article does what magazines like Management Today do very well; it fixes upon a subject that is topical and provides an overview of what a number of leading figures are saying on the current trend to blame the capitalist system for the financial crisis and to offer alternatives that will avoid another one.

The article starts by quoting a number of well-known management thinkers who have, since the financial crisis, questioned the capitalist model. The initial name dropping is quite selective - including some left of centre behavioural gurus like Handy and Mintzberg who would be expected to feel that way - but the author then moves on to focus on a number of other writers who are leading the challenge. These include Michael Porter of Harvard and Dominic Barton Head of McKinsey, both of whose articles on this topic I have reviewed in recent blogs. There is also reference to another leading strategy guru Gary Hamel -well known for his glorification of Enron - and someone else who I had not heard of by the name of Umair Haque. Haque is apparently a ‘cult figure in the blogosphere’ but is conventional enough to also write columns for the Harvard Business review.

The article contains useful summaries of the thinking of these top names, under the headings of diagnosis and treatment. They are all saying much the same thing in a number of different ways, that capitalism has been found wanting and that modern economies need a new model, with less emphasis on maximising shareholder value and more on society’s long term interests. Porter titles this as ‘Shared Value’ and has made it his new theme for latest writing and research. He wants companies to look for innovative ways to create value by solving societies’ problems and to create competitive advantage by so doing.

The other writers put over similar views in different language and to different extremes; Haque says ‘Twentieth Century business, you’re fired’; Hamel blames governments for light touch regulation, Barton says that business schools are partly to blame and have to engage in ‘deep introspection’ (presumably McKinsey and other consultancies have no similar need!).

One thing in common with all these ideas is that they are short on how change is going to be made to happen because, without some form of compulsion, CEOs geared to short term targets are unlikely to change their way of thinking. Hamel makes the valid point that ‘the question is whether we as consumers are prepared to change what we want’. It is not clear what he means by consumers but, if he includes in that every person who has an insurance policy or pension and wants a superior return on investment, he is getting close to the real problem. Unless there is a way to persuade shareholders and those who measure their performance to think differently, this seems just like a bandwagon for gurus to jump on and feel good about themselves.

This is however a very good article for anyone who wants a broad overview of the current arguments and those who are making them.

Click here to read the article in full:

http://www.managementtoday.co.uk/features/1086015/saving-capitalism-itself/