|The New York Stock Exchange. Photo by Jason Schott.
There is a real debate in this country right now about the future of business, including whether we should still have a capitalist system and examining how businesses conduct themselves with regards to the environment and their workers.
Three new books are essential to understanding this discussion: The Enlightened Capitalists by James O'Toole; The Prosperity Paradox by Clayton M. Christensen, Efosa Ojomo, and Karen Dillon; and The Future of Capitalism by Paul Collier.
The Enlightened Capitalists: Cautionary Tales of Business Pioneers Who Tried to Do Well by Doing Good
By James O'Toole
HarperBusiness; hardcover, 592 pages; $35.00
James O'Toole is a Professor Emeritus at the University of Southern California's Marshall School of Business and Founding Director of the Neeley Center for Ethical Leadership and Decision Making.
In the new book The Enlightened Capitalists, O'Toole examines how leaders from the past two centuries who have gone against the grain by attempting to create business organizations that were both profitable and socially responsible, demonstrating how difficult this is to achieve.
Through profiles of these entrepreneurs, he looks at the pioneering practices and accomplishments, along with the travails and tribulations, of men and women including:
Robert Owen, who was the first business reformer during the Industrial Revolution. He provided his workers with living wages, pensions, health care, and decent housing and education for their families and children. His efforts ended up being for naught when his partners rebelled, removed him from company leadership. and restored the worst practices of that era.
William Lever invented bar soap and modern product advertising and shared his wealth with thousands of his employees only to lose control of his company to creditors in the early 1920s. The story of the company, now known as Unilever, is picked up in current times as its current CEO attempts to revive the practices of its founder.
Anita Roddick introduced environmentalism and concerns about healthy personal care products, only to sell her company, The Body Shop, to a giant corporation that did not care much about that.
"For nearly five decades, I have been fascinated by the stories of these and a small group of other (mostly now forgotten) business leaders who attempted to do good while at the same time doing well," writes O'Toole. "I call them enlightened capitalists. I have identified some fifty American and British business leaders who, over the last two centuries, have introduced unusually admirable organizational practices that greatly benefited both their shareowners and society. Each attempted to address the world's most chronic and deeply entrenched problems: unemployment, poverty, unsafe and unhealthy working conditions, low-quality goods, and environmental degradation. By endeavoring to serve the needs of their employees, customers, and the broader community while at the same time successfully meeting the necessity of profit, those leaders hoped the organizations they created would serve as models their fellow capitalists would emulate."
Of the two dozen companies that O'Toole examined, arguably only three maintained the enlightened practices for over two successions of leadership. In all the others, such practices faded when founders retired, were removed from office by their boards, or when their companies were acquired.
As a new generation attempts to make these companies adopt better practices, O'Toole examines a major question being discussed at the moment: Are virtuous corporate practices compatible with shareholder capitalism?
The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty
By Clayton M. Christensen, Efosa Ojomo, and Karen Dillon
HarperBusiness; hardcover, 368 pages, $29.99
The World Bank calculates that more than 750 million people still live in extreme poverty around the world. These people are forced to survive on less than $1.90 a day, with little or no access to clean water, sanitation, education, healthcare, and other basic needs.
Despite the trillions of dollars that have been channeled to these problems over decades, in many regions there has been little progress. At least twenty countries, after receiving billions worth of aid, were actually poorer in 2015 than in 1960.
Renowned Harvard professor and New York Times bestselling author Clayton M. Christensen, in the new book The Prosperity Paradox, asks, "What if we considered this problem through a different lens? What if, instead of trying to fix the visible signs of poverty, we focused instead on creating lasting prosperity? This may require a counterintuitive approach, but one that will let you see the opportunities where you might least expect them."
Christensen wrote the book in collaboration with Efosa Ojomo and Karen Dillon, and it offers a paradigm-shattering approach to helping eradicate global poverty. Applying the rigorous, theory-driven analysis that has made Christensen one of the most revered business visionaries, the team argues for flipping the emphasis to innovation and market-based solutions rather than conventional development-based solutions.
They look at actual cases of entrepreneurship and market-creating innovations that fueled sustained economic development in Japan, South Korea, Nigeria, Rwanda, India, Argentina, and Mexico, as well as examples from America's own economic history, they demonstrate the long-term positive effects of this alternative strategy.
The Future of Capitalism: Facing the New Anxieties
By Paul Collier
Harper; hardcover, 256 pages; $29.99
Paul Collier is the Professor of Economics and Public Policy at the Blavatnik School of Government, Oxford University. He has served as Director of Research Development of the World Bank, was knighted in 2014, and in 2016 won the Presidential Medal of The British Academy.
In the new book, The Future of Capitalism, Collier offers a candid diagnosis of the failures of capitalism and a pragmatic and realistic vision for how we can repair it.
Western society once thrived, but it is now being torn apart by deep new rifts in its social and economic fabric. It is now a battle between populous cities versus rural counties, the highly skilled elite against the less education, wealthy versus developing countries.
As these breaks have deepened, we have lost a sense of ethical obligation to others so crucial to the rise of post-war social democracy in the first place.
These divisions are being addressed by revivalist ideologues and populist mega figures, making this is the age of Brexit, the name for Britain voting to leave the European Union, the election of President Donald Trump, and the return of the far-right in Germany.
Unless something changes, the gap between the promises of prosperity for all that capitalism once offered and the crisis of contempt we find ourselves in will only grow wider and happen faster.
Collier has written a passionate and polemical treatise that presents original and ethical ways of healing these economic, social, and cultural rifts with balanced pragmatism and policy, rather than the fervor of ideological rhetoric. His solution is that people need to find the center. He argues that we have no time for moral or ideological superiority on either side of the political spectrum, and no shiny new economic theory is going to save us this time.
Drawing on the wisdom of some of the world's most distinguished social scientists, Collier crafts an agenda of empowerment to show us how to save capitalism from itself. We need to eschew the ideological baggage of the 20th century and create a practical policy grounded in communitarian ethics to address the rapid rise in inequality that will either end us or propel us into a new economic era.