Over the past four years, our system of capitalism has come in for merciless berating from politicians, opinion formers and most tellingly, the general public. Whether it is bankers’ bonuses, business practices, or concerns about rising levels of inequality, it has been ‘open season’ on the ‘greedy capitalists’ looking to dominate the 99% in the interests of the 1%.
Business leaders have been censured on a regular basis and corporations are increasingly viewed as the enemy. In some quarters, the concept of profit-making is now seen as dirtier than any four-letter expletive.
This narrative is depressingly familiar. And there is of course some truth in its caricatured criticism of capitalism. Let us place up front and centre the fact that some of the pain we have suffered – as individuals and collectively – did result from defects in the system. And, as relevantly, defects in the behaviour of individuals operating prominently within that system.
Such failings obviously need to be tackled if we are to regain complete confidence in capitalism as the economic system underpinning our lives, and a fierce public debate has arisen about how to achieve this.
But it’s where this debate is going now that concerns me. About a year ago, and in my capacity as director of a London-based think-tank up to that time predominantly concerned with foreign and security policy matters – The Henry Jackson Society – I decided to undertake a strategic pivot in our focus to encompass the pressing question of the day: what does the future hold for capitalism?
I grew increasingly worried when exploring this new project with my colleagues. Objectively in Britain today, there is no practicable alternative to the model of capitalism that has evolved in Anglo-Saxon countries. Communism failed and is no more. Nobody is seriously suggesting that Russian and Chinese style state-run capitalism can or should be adopted here, not least because it would require an unacceptable sacrifice of personal freedoms to the whim of the state.
It is also evident that capitalism remains the economic system that provides the greatest wealth for the greatest number. Capitalism has made the world healthier, richer and freer than previous generations could have imagined. People in capitalist societies live longer than their forebears, earn more and are better educated.
Yet despite this, we could sense the manifest lack of enthusiasm for ‘business as usual’. Indeed, we felt that such was public disgust with the system, there was a very real danger that politicians could seek to remedy the situation by legislating capitalism out of business. When – as we have come to understand through our research – the only real solutions that can be put forward to restore trust in the system, and which actually stand a chance of bringing economic prosperity, are being led by the private, rather than the public, sector.
Into this breach of comprehension has stepped the Henry Jackson Initiative for Inclusive Capitalism (HJI). A new, ongoing, global project showcasing the contributions that many businesses are already making towards a capitalism fit for our futures, with the intention of becoming a centre for business best practice that we hope yet more will adopt.
Our inaugural report on Towards a More Inclusive Capitalism – ably steered by Dominic Barton, Global Managing Director of McKinsey & Co, and Lady Lynn Forester de Rothschild, CEO of E.L. Rothschild – has taken on board the views and experiences of a taskforce of practitioners and theorists of capitalism on both sides of the Atlantic in forming its conclusions.
The HJI’s intention is not to exonerate a flawed system, and our report purposefully does not shy away from the extent of the mission ahead. But it turns out that rather than being the architects of the demise of our capitalist system, leading businesses are already working towards its salvation in the form of what we have termed ‘Inclusive Capitalism’.
Our findings have been outlined in the three research pathways we undertook to examine: fostering education for employment, nurturing start-ups and SMEs, and reforming management and governance practices to counter short-termism. In each of these areas, as demonstrated through the medium of case studies, we found that business was capable of being the solution to commonly held perceptions about flaws in the system, rather than being part of the problem. Through a better understanding of this research, and by placing a renewed focus on the importance of ethics in business, we believe that the HJI can play an important role in bringing progressive elements of business behaviour into public view, as well as encouraging more businesses to adopt gold standards of practice.
If by doing so, we can also bring some much needed nuance to the public debate on capitalism, then this will be an added bonus. For, in a huge irony, capitalism itself is not too big to fail. The system must be given the opportunity to heal its own ills, as we suggest it can through enlightened practice. The only alternative does not bear contemplation.