Does Capitalism Have a Future? Those who demonize capitalism and those who deify it may both be misguided. In the early days of the Occupy Wall Street movement — when it seemed more driven by legitimate grievance than by bizarre and sometimes dangerous street theater — occupiers were often seen holding a sign that, for many, encapsulated their message. It read “Capitalism Is Dead.” It was just the kind of unequivocal, defiant proclamation one would expect from a would-be revolution, but it was nothing new. Since the 19th century, capitalism has been pronounced dead or dying many times. Limited liability corporations were supposedly going to kill it by allowing risk without a threat of real failure. Pensions were going to undermine the incentive to save. Government agencies like the Food and Drug Administration were going to limit free choice in the mar-
ketplace. In 1980, after years of stubborn stagflation, a Time magazine cover story famously asked, “Is Capitalism Working?” Ironically, the ensuing decades brought an economic golden age, fueled by an increasingly vehement belief that free markets, unfettered by government interference, will self-regulate. Then came the Great Meltdown of 2008, and the coroner’s inquest about the demise of capitalism resumed with vigor. In recent years, countless blogs, along with The New York Times, The Washington Post, The Financial Times and even the normally reserved McKinsey Quarterly have all perseverated about the future of capitalism. A 2011 poll by the Canadian firm GlobeScan pronounced the capitalist ideology on the wane almost everywhere in the world except
China, Brazil and Germany. In the United States, the number of Americans who agreed that the world’s best bet was the free-market system had fallen from 80 percent in 2002 to 59 percent in 2010. A strong case can be made, of course, that our current problems emanate not from the capitalist system itself, but from the perversion of it through unfair practices, poor governance, and the bad behavior of a few. “The Occupy protesters are not wrong in indicting our system today for unfairness, crony capitalism, insider dealings and corruption,” said Arthur C. Brooks, president of the American Enterprise Institute. “However, the overwhelming majority of Americans believe fairness means rewarding merit, even if that means some people have a lot more than others.” George M. Taber, the editor who wrote the 1980 Time magazine cover story, recently told Knowledge@ Wharton that he still agrees with the conclusion he offered 30 years ago: “For all its obvious blemishes and needed reforms, capitalism alone
Top: Reuters/Eduardo Munoz. Left: Hal Mayforth
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WHAT’S KEEPING US UP AT NIGHT The 5 most serious business risks cited by C-suite and board-level executives are: 1. Loss of customers/cancelled orders
3. Reputational risk
2. Talent and skills shortages (including succession risk)
4. Currency fluctuation 5. Changing legislation
The risk of talent shortages has escalated dramatically, from a lowly 22nd ranked priority in 2009 to 2nd in 2011. Source: Lloyd’s and Economist Intelligence Unit
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