Even big business feels the need for change
Most of this blog was written in 2014: I am updating it for the Brexit era because it shows us that many big business leaders share the concerns of the folk in the street. Left to themselves, pressured only by rich shareholders and pension funds, they’ll put profit above all. There’s a high risk that leaving the EU will be engineered to serve big money. However, if we can find intelligent ways to show big money the social and other risks of merely serving themselves, things could be better…
Professor Joseph Bower is a heavyweight at Harvard Business School, sits on big-Company boards and all the rest of it. His new book, Capitalism at Risk, grows out of forum sessions with top business leaders, in the US and internationally: these were held in 2007-8, before the financial crash, which many of these leaders foresaw.
In his talk, Bower briefed us on the concerns of these top business leaders, and played us video clips. Income inequalities, and a backlash, from populist movements and the middle classes, were a top concern. As one leader put it, “Even in the slums, people have TV: everyone can see how each other lives.”
Bower showed some striking figures about the big increases in inequality in the past 20 – 30 years, especially in the US and UK. At one point in discussion, he tried the old line that when the poor get a bit richer, their concerns disappear, but even he could not sustain this in the face of the inequality issue. He had no convincing answer, but voiced hopes that big business would clean up its own act, perhaps under pressure from shareholders. This is happening occasionally in the UK now, but apparently not in the US.
Other concerns for these business leaders included: failure of the rule of law, growth of radical movements, environmental degradation and global warming, failures of public services like health and education, and state capitalism. As Bower said, China may now use a form of capitalism, but it plays by very different rules than Western capitalism, and he sees conflicts as likely.
A key part of Bower’s suggested response to many of these problems is concerted action by a widely-based coalition of businesses: thousands per country. A model for this is CED, which involved over 10,000 UK businesses during World War II in plans to create employment when the armed forces came home. He also cited Colombia, where business exerted leadership to pull the country out of drug-dominated anarchy. Another part of Bower’s response was that many of these problems are a business opportunity if approached creatively. The growth of mobile phone networks and their inventive uses in rural areas across the world is one example.
This talk was hosted by the Harvard Club of London, with plenty of Business School alumni. The response from the audience was somewhat muted and bewildered: it felt like no one had answers to issues of this magnitude. There was certainly no flicker of a coalition of business leaders about to emerge.
One ray of hope which I see is the recent pushbacks from shareholders on excessive pay at the top. If charities, ethical funds, universities and other big institutional investors started to collaborate to use their influence and define some standards, it could be a powerful move.